$4.3B NextEra bid scrutinized
The FPL parent firm wants to buy Hawaii’s largest electric utility.
Juno Beach-based NextEra Energy’s proposed $4.3 billion purchase of Hawaiian Electric Industries Inc., Hawaii’s largest electric utility, is being scrutinized during hearings before the Hawaii Public Utilities Commission.
On Tuesday, the hearings in Honolulu entered their 10th day. They are scheduled to conclude today, but could spill over into January.
Hawaii’s consumer advocate, Jeffrey Ono, opposes the proposed merger, saying it does not provide tangible and substantial net benefits to Hawaii’s consumers.
Ono has proposed a detailed rate plan and a series of other conditions, that if adopted in total by the commission could support a finding that NextEra is fit, willing and able and the merger is in the public interest, according to documents filed in the case.
NextEra is the parent company of Florida Power & Light Co., which in 2013 completed the roll-out of smart meters to 4.8 million customers.
Last week Bryan Olnick, FPL’s vice president of distribution operations, testified that FPL’s experience will make a smart meter program in Hawaii go more quickly. Switching to smart meters could cost HEI customers up to $350 million.
HEI customers are projected to save close to $465 million over the next four years if the merger goes through, NextEra officials have said.
The estimate includes $172 million in capital expenditure savings, $133 million in savings from a four-year general base rate case moratorium, $60 million in guaranteed rate savings from forgoing a portion of the increase in revenues due to decoupling, $67 million in fuel savings, post-rate moratorium $30 million in non-fuel operating and maintenance cost reductions, and $3 million in lower interest expense.
NextEra Energy estimates that the cumulative net savings per residential customer of Hawaiian Electric by island for the first five years — from 2016 to 2020 — after the completion of the merger ranges from roughly $345 to $475.
On Monday, John Reed, chairman and CEO of Massachusetts-based Concentric Energy Advisors, testified that the projected 10 percent savings can be achieved in the first four to five years after the merger. Reed, whose company has been paid more than $513,000 in merger-related costs by NextEra and HEI, said he doesn’t see any other alternatives except the merger or HEI remaining a stand-alone company.
However, intervenors have suggested that other options such as electric cooperatives and a municipally-owned utility are a possibility.
Hawaii Gov. David Ige remains opposed to the merger, saying it is not in the public’s best interest, according to published reports. One of his major concerns is whether NextEra is the best partner to ensure that Hawaii reaches its goal of generating all of its power from renewables such as wind and solar by 2045.
The PUC hearings can be viewed on You Tube.