NextEra Electric Merger Rejected
By Catherine Cluett Pactol
A $4.3 billion merger deal between Hawaiian Electric Companies and Florida-based NextEra Energy was rejected last week by the state Public Utilities Commission (PUC). Many Molokai residents, along with others around the state, had raised concerns about the merger and what it could mean for Hawaii’s energy future. Commissioners of the PUC shared many of those concerns in the decision they issued last Friday.
Commissioners based their rejection on two major factors: whether the merger was in the public interest, and if the utility company was fit and able to perform the service currently offered. The PUC identified five major areas of concern: 1) benefits to ratepayers; 2) risks to ratepayers; 3) Applicants’ clean energy commitments; 4) the proposed Change of Control’s effect on local governance; and 5) the proposed Change of Control’s effect on competition in local energy markets.
While the commission concluded that the utility met the second criteria, the application failed to demonstrate its benefit to public interest.
“…The Commission concluded that the benefits offered by applicants are both inadequate and uncertain,” states a PUC press release. “The applicants proposed a combination of rate credits, investment funds, and a rate case moratorium. Upon reviewing the record, the Commission concluded that each of these lacked sufficient assurances that they would translate into tangible, enforceable benefits to ratepayers.”
If the merger had moved forward, it would have been one of the biggest business deals in Hawaii history.
Last September, the PUC conducted a public hearing on Molokai. A majority of attendees testified that they opposed the merger.
“Big is not better any longer,” said Cheryl Corbiell, a member of I Aloha Molokai, a group that advocates for local energy alternatives, saying she was “adamantly against” a merger. “They [NextEra] got a lot of money but they don’t have vested interest in the individual islands… There needs to be a changing perspective in energy… going smaller rather than bigger.”
Matt Yamashita, who used to work in the solar industry on Molokai, said at the September hearing he has been skeptical of NextEra since the company’s first meeting on Molokai in the spring of 2015.
“From what I understand, community meetings across island have shown close to 90 percent opposition [to the merger, from news reports],” he said. “I found [NextEra’s] track record was questionable and didn’t meet the needs of the community.”
For many, keeping it local and finding smaller-scale solutions to fit the electricity needs of each community is foremost.
“For me, I want to advocate any way that Molokai can be separated from Oahu’s needs and other islands,” said Office of Hawaiian Affairs Molokai Trustee Collette Machado at the meeting. “My position now is ‘no’ because inadequate information has been provided…. NextEra is the giant and you [PUC] are the advocates for us.”
NextEra has a track record of large-scale renewable energy projects, but Molokai residents said that’s not the answer for the island, and they questioned NextEra’s potential support of additional rooftop solar for individual homes. The island has the highest percentage of rooftop solar anywhere in the nation. Yet when NextEra officials first visited Molokai in April 2015 to speak with residents, the company didn’t have a lot of answers or specifics for inquiring ratepayers.
“You guys are truly ground zero for distributed generation penetration [rooftop solar],” NextEra Hawaii President Eric Gleason said at the time. “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.”
The application was rejected without prejudice, meaning the companies are free to resubmit a revised application.
“In dismissing the application, the Commission emphasized that it is not precluding the HECO Companies from seeking another partner, or from renewing discussions with NextEra,” stated the PUC release. “As part of its decision, the Commission included a section that provides guidance on key elements that should serve as the foundation for any future applications seeking a change of control of the HECO Companies.”
The complete decision and order, as well as links to the docket record, may be found on the PUC website, puc.hawaii.gov/.