NextEra’s interest in buying Hawaiian Electric (HECO) has generated multiple commentaries and pious declarations from both companies.  Many have pointed out that the promises of a brighter energy future for all of Hawaii ring hollow when we look closely at NextEra’s history and its dismal track record as Florida Power & Light.

I have been privy to what HECO considers good business practice because I have been advising one of the bidders who responded to HECO’s RFP for geothermal energy. This is also deeply personal. I live on Hawaii island.

My patience, like that of other ratepayers has just about run out. Our feeling is one of having been played.

I say that simply because the timing of the proposed NextEra/HECO deal speaks volumes about the lack of good faith in how HECO has behaved even while professing to want to “strengthen Hawaii’s energy infrastructure, meet our clean energy goals, lower customer bills and continue our active support of our local communities.” (Oshima letter to ratepayers).

I have witnessed firsthand how, for the last two years, HECO has sent geothermal bidders on a very expensive ride in one direction while it was quietly pursuing a journey to a different destination.

volcano geothermal


HECO’s own website lays out the painful journey from the completion of its Geothermal Request for Information (RFI) process in 2011 to the issuing of its Final Geothermal Request for Proposals (RFP) on February 28, 2013 for “up to 50 MW of firm, dispatchable, renewable geothermal power on the Island of Hawaii.” Bidders, including my client, submitted their bids by the deadline of Tuesday April 30, 2013.

And then the waiting began.

On Jul 12, 2013, HECO stated publicly on its website that “the evaluation of Bids is proceeding in accordance with the schedule set forth in the Geothermal RFP.”

But as the months passed, we learned via a slow drip that the schedule had been “updated” (September 18, 2013); that a decision would not be made by the new end-November deadline and that “an update” would be provided by the end of the year (November 29, 2013). That update consisted of a notice that none of the bids met HECO’s requirements and that a request would be sent to the bidders for additional information so that HECO could “make an informed decision that is in the best interests of our customers and residents and that meets the goals of the Geothermal RFP.”

The saga continued through 2014. We ended 2014 with no award made for the development of additional geothermal energy to relieve Hawaii residents of the burden of the highest rates for electricity in the nation. Most recently the company has abandoned the RFP process for a Best and Final Offer (BAFO) and promises a decision by mid-February 2015.

Lucy was kinder to Charlie Brown than HECO has been to its bidders.

The Timing Tells Its Own Story

During this period, HECO, under orders from the PUC, developed a so-called Power Supply Improvement Plan (PSIP). DBEDT “was not able to conclude that the PSIPs were consistent with the State’s energy policy goals, directives and objectives.” DBEDT pointed out that while appearing to support “distributed generation (DG), a condition that enjoys strong public sentiment and clearly is in the public interest,” the HEI appears to state goals and then propose measures that may prohibit them from achieving those same goals.” DBEDT noted that HECO’s plans to import LNG appear to be a “doubling down on a vertically integrated business model.”

Jay Fidell recently sang a hymn of praise to the NextEra deal and opined in the Star Advertiser (Dec. 23, 2014) that the PUC is “where knee-jerk naysayers set the agenda.” Perhaps he takes the same dim view of DBEDT, given its criticism of the PSIP?

It appears that the deficiencies in the PSIP and HECO’s inability to choose a bidder for its geothermal RFP were perhaps a consequence of its efforts to court NextEra in the same time period. This raises serious questions about the integrity of the RFP process. Geothermal energy was also conspicuously absent from the happy talk accompanying the NextEra/HECO deal.

If Hawaii is serious about its oft-stated renewable energy goals, we need the following:

  1. Close public and legislative scrutiny of the NextEra/HECO deal;
  2. Strengthening of the energy policy framework to advance ALL of Hawaii’s renewable energy resources and a prohibition on the expansion of fossil fuel consumption in Hawaii;
  3. Explicit commitments to a timeline for terminating the HECO fossil fuel plants and instituting improvements that benefit ratepayers including the business community, not just NextEra’s and HECO’s shareholders and executives.
  4. New State legislation that directs the PUC to:

In addition, we need to require that a significant portion of the $4 billion from the merger transaction be placed in escrow so that the money can be used by the PUC to order upgrades of the statewide transmission grid;

  1. Require that the current surcharges allocating HECO costs on to ratepayers be repealed;
  2. Repudiate the Lingle-HECO Agreement of 2008 recognizing HECO as a State- sanctioned monopoly; and
  3. Activate the Wheeling Docket of 2007 to ensure diversity and competition in Hawaii’s energy markets.

Ending HECO’s monopoly status would indeed signal that the administration and legislature have embarked on a new era. On this Fidell is right: why stay with a way of doing business that we didn’t like before? Ending the monopoly would be a lot better than simply hoping that the same actors with new partners of the same ilk do better by Hawaii. They have not earned our trust.

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