Hawaii PUC Dismisses NextEra Merger with HECO As Unlikely to Offer Ratepayer Benefits
In a 2-0 decision on July 15, the Hawaii Public Utilities Commission (PUC) “dismissed without prejudice” a joint application by Hawaiian Electric (HECO) and NextEra Energy (Docket No. 2015-0022/Order No. 33795) for a merger.
Commissioner Thomas Gorak, a newly appointed member of the PUC, abstained from signing the order – but said he supported it.
In their final decision, the commissioners concluded that the $4.3 billion HECO sale would be unlikely to offer adequate benefits to ratepayers – although the applicants had said it would provide at least $60 million in rate credits in the future.
“The commitments just in general terms were fairly vague. There were no mechanisms to ensure that they would in fact happen,” said PUC Executive Officer Delmond Won in an interview with Hawaii News Now.
Indeed, the National Association of Regulatory Utility Commissioners (NARUC) commented, “The actual impact of the $60 million on ratepayers’ actual monthly bills [would be] … relatively minor. When considered in the context of an actual ratepayers’ monthly bill, the commission observed that the $60 million in rate credits would likely translate to less than a dollar per month in savings over the four-year rate case moratorium.”
In addition, foes of the plan, including Hawaii Governor David Ige (D), worried that the merger would not help Hawaii meet its commitment (HB623) – voted into law by the state legislature in June 2015 – to generate 100 percent of electricity sales from renewable energy resources by 2045.
In July 2015, the Governor announced that he opposed the transaction, noting that merging with Florida-based NextEra might result in a “loss of control.”
Shortly after the decision was released, the two companies said they were reviewing the order; however, by July 18, they had formally terminated the deal – leaving NextEra to pay a $90 million break-up fee, as well as about $5 million in reimbursement for costs associated with the transaction.
In a statement released on July 15, the Governor made it clear that he approved of the latest developments. “I want to thank the Public Utilities Commission and stakeholders for their participation in this historic process,” he said, adding, “This ruling gives us a chance to reset and refocus on our goal of achieving 100 percent renewable energy by 2045. The proceeding helped define the characteristics and parameters of Hawaii’s preferred energy future. We look forward to creating a process to find the best partner in the world.”
Hawaiian Electric and NextEra first announced their plans to merge in December 2014.
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