Molokai Weighs In On NextEra Merger

Representatives of NextEra, the Florida-based energy company proposing a merger with Hawaiian Electric, visited Molokai last week with plans to hold an open house to meet residents and answer questions. Concerned community members, however, had other plans.

Standing in a circle amid NextEra’s large, colorful posters and blue-shirted staff, local attendees requested a meeting format in which all their answers could be answered at once and heard by all.

“We want to know what is going on, as a group – that’s Molokai style,” said local activist Walter Ritte.

NextEra officials, joined by Maui Electric representatives, obliged.  With no seating planned for the open house format, everyone stood for the next three hours and discussed the merger and its implications for Hawaii’s energy future.

Many residents wondered how the company could help Molokai’s energy challenges and current limitations on rooftop solar through Maui Electric’s Net Energy Metering program. The island has the highest percentage of rooftop solar anywhere in the nation, boasting 51 percent compared to peak energy demand.

“You guys are truly ground zero for distributed generation penetration [rooftop solar],” said NextEra Hawaii President Eric Gleason. “We don’t have the silver bullet for [Molokai’s energy challenges]… I’m not going to tell you we can wave the magic wand but we can bring some additional tools to the table.”

He said being a large company, however, they can buy equipment and supplies more cheaply, and with a higher credit rating than Hawaiian Electric, they can access capital at lower rates, thus helping Hawaiian Electric lower their operating costs.

‘Think Small’

The proposed $4.3 million merger process began in December, said Steve Stengel, NextEra Energy Resources director of communications.

“We’re in month four since we announced the transaction,” said Stengel, in an interview prior the meeting, adding that because the company is still in the early stages of the merger, a lot of communication still needs to take place in order to understand the priorities and needs of customers.

Officials came ready to discuss the big numbers.

“We’ve committed to saving of a total of $60 million [across the state] in the first three years,” said Gleason. “We’re in the process of becoming more specific about that.”

But Molokai residents wanted to hear specifics, urging the multi-billion-dollar company — known for larger-scale renewable energy projects — to “think small.”

“I think you need to do your homework in terms of each of the islands are different,” said Cheryl Corbiell, a member of the local energy advocacy group I Aloha Molokai. “You’re not going to have a blanket solution for Oahu, Maui, Big Island and here — we’re different…. Big is not better on this island.”

Matt Yamashita, an independent solar sales representative, agreed, explaining that Molokai has been looking at what it means to be sustainable in many areas, including in terms of food, economy and energy.

“I think as a community, we’ve all come to see very clearly that sustainability is about being on that local, small community scale,” he said. “So when you look at energy sustainability and that energy is the highest cost of living for us on this island, the answer is not to go bigger and corporate and to deal with someone that’s based in another state. The answer is to go local and smaller. That’s why distributed, rooftop solar makes sense for us.”

Gleason admitted that there’s a lot the company still has to learn, and emphasized that’s what this process is for. He also explained that as a merger, NextEra is committed to Maui Electric’s proposed plan for the coming years, which representatives brought to Molokai residents last month.

Sharon Suzuki, president of Maui Electric, said that plan includes a smart grid program, a switch to 50 percent Liquefied Natural Gas (LNG) in 2018, conversion to biofuel for the other half of the island’s diesel generators in 2023, and increasing solar photovoltaic energy installed on Molokai. Suzuki said those plans are not set in stone, and still subject to change and feedback.

“We didn’t come here with all the answers,” said Gleason. “We didn’t come here with, ‘here’s our plan for Molokai, and here’s what the price is going to be.’”

He was specific that while NextEra’s goal is to hold Hawaiian Electric’s operating costs flat, the company is making no promises to keep electric rates flat. Gleason said the main goal is to reduce Hawaii’s dependence on oil, which accounts for about 50 percent of customers’ electric bills, and is also a major factor in rate increases reflective of the cost of fuel.

“I can’t promise you your rates won’t go up,” he said. “Because right now, if oil prices go up, your rates will probably go up.”

I Aloha Molokai member Larry Tool urged the company to get specific.

“All I can see is, we’re giving up our independence [to be under a large company]; what are we getting? It’s too early to tell. And that doesn’t sound like a good deal,” he said.

Questioning the Costs

Many attendees wondered why NextEra wanted to come to Hawaii.

“We’re a renewable energy company,” said Gleason. “And we look at Hawaii as a place that’s blessed with renewable energy resources and paying the highest bills in the country. There is an opportunity to replace oil with renewable energy and save money. So for a clean energy company’s that’s exciting…. We are big believers that renewable energy and cleaner energy can come at a benefit to customers in terms of costs.”

Gleason said the company has nine million customers in Florida, and residential ratepayers pay 9.7 cents per kilowatt hour (kWh) of electricity – 25 cents below the national average.

“I am not promising you the rates in Molokai will go to 9.7 cents,” he said. “What I am saying is we have a track record of focusing on costs, driving costs down.”

But while Molokai has the second highest electricity rate in the nation at 46 cents per kWh, residents made clear that cost isn’t all that matters to them.

Many attendees shared their concerns about LNG, a fuel they feel is neither renewable nor environmentally friendly.

“The cost of producing that liquid is left on the local community that it’s being taken from, with polluted water, air quality, the works,” said one attendee. “To me it’s a no-brainer on this island that that LNG is not going to help us in the long run.”

Other residents echoed the concern that even if the environmental consequences are not in their backyard, it’s still reason to reconsider.

“In full disclosure, we are the largest purchaser of natural gas in the utility industry in the United States,” said Gleason. “Most of our customers… are more than satisfied with the service they’re getting. [But] in Florida, people aren’t as worried about it. We get that the priorities here are different, we get that there are concerns about LNG.”

He stressed that the merger “is not about LNG” and that Maui Electric’s plan to reduce customers’ costs “not essential” to include LNG.

“There’s so much consciousness about doing the right thing… and challenging us,” said Gleason. “I love that.”

Gleason also touched on Molokai’s concern about an interisland, undersea cable.

“We have never been part of any effort to develop a Big Wind project or a cable to Lanai or Molokai,” he said. “We don’t actually think that’s a good idea… because it’s very clear that the community is not supportive.”

He said the company would therefore not consider such a project for Molokai, but that they are looking at the possibility of a cable between Maui and Oahu, though that would only move forward if the Public Utilities Commission deemed it in the public interest.

Looking at Other Angles

Yamashita pointed out Florida’s low rate of rooftop solar – a statistic that some link to an apparent NextEra policy against distributed photovoltaic.

However, Gleason said such a policy doesn’t exist. Instead, because of Florida’s low electric rates, there is no incentive for customers to install rooftop solar.

“[As a customer], paying a lot of money for electricity is not a problem I have,” he explained. “So from my perspective, rooftop solar industry is offering me a solution to a problem I don’t have.”

Kanoho Helm, president of I Aloha Molokai, offered strong support for those employed locally by the solar industry.

“Whatever job they have left on this island, we need to take care of those people, because we don’t have many jobs left… I’d like to express my support to them,” he said.

Helm added that I Aloha Molokai supports the idea of an electric co-op formed by resident shareholders for Molokai, a proposal that was recently put forward by Maui County Mayor Alan Arakawa, following in Kauai’s footsteps.

“It’s going to be a long and hard road in the path moving forward to create a co-op for this island, going to have to work together,” said Helm. “Go sign up to kokua, because if we want energy independence, we’re going to have to do it ourselves.”

Meanwhile, Ritte urged NextEra officials to educate themselves on Hawaii’s history and the legal ramifications of the overthrow of the Hawaiian Kingdom, pointing to the recent Department of the Interior hearing held to discuss sovereignty.

“You should have your lawyer realize that because of the history and the place you’re in, you need to understand what [the situation is],” said Ritte. “What you have is a very shaky situation… what are the liabilities that you guys are going to be carrying? … I’m going to be filing papers… and trying to get your guys in court… because of all those liability issues.”

Moving forward, much of the timeline is at the hands of the Public Utilities Commission, said Gould. With nearly 30 organizations and groups accepted by the PUC as interveners to add input to the merger case, as well as PUC public hearings that remain to be scheduled, there’s a lot that’s still up in the air.

“We’re hoping we can complete it within a year of when we began the transaction, which was in December,” said Gould. “The process… will be dictated by the PUC and their schedule.”

In the meantime, residents can submit their testimony to the PUC anytime or learn more about the merger process by visiting puc.hawaii.gov and searching docket number 2015-0022.

NextEra staff will continue a schedule of open houses on all the islands. While Molokai residents left the meeting with questions still left to be answered, NextEra officials felt it was a productive event.

“We walked away with a great appreciation for the issue of energy but more importantly for the entire island,” said Gould afterwards, adding that he thought representatives got a strong sense of Molokai’s priorities, values and concerns. “I also felt a mutual respect for our efforts.”