Executives from Hawaiian Electric Co. and NextEra Energy fielded questions for an hour and a half Wednesday from more than a dozen Hawaii lawmakers about what their proposed $4.3 billion merger would mean for Hawaii.
Their answers did little to satisfy lawmakers or appease their concerns about the sale of Hawaii’s electric utility to a Florida-based company headquartered 4,600 miles away.
“I was definitely hoping for more detail and I think the public is going to demand more detail,” said Rep. Chris Lee, chair of the House Energy and Environmental Protection Committee, after the hearing. “It’s the only way to know if it’s in the best interest of the public.”
NextEra’s purchase of HECO, which serves Oahu, the Big Island and Maui County, was announced in December and is expected to close by the end of the year. Company executives have repeatedly said that NextEra, with its extensive expertise in renewable energy, strong balance sheet and good credit rating, will do a “better, faster and cheaper” job of moving Hawaii toward its clean energy goals.
It was a message that was reiterated Wednesday. But HECO CEO Alan Oshima and Eric Gleason, a NextEra president overseeing the transaction, were short on specifics.
“You are investing multiple billions of dollars into this deal. How can you not have this question answered already as to which way you are going to go, which way you are going to invest — because your business model depends on it.” — Rep. Chris Lee
The joint House and Senate informational briefing included lawmakers from four committees: the House Energy and Environmental Protection Committee, House Consumer Protection and Commerce Committee, Senate Energy and Environment Committee and Senate Commerce and Consumer Protection Committee.
Lawmakers wanted to know whether NextEra would outsource customer service jobs, if there would be company downsizing, whether the new management team would include local residents, when customers could see a drop in their electricity bills and exactly how much natural gas the company planned to import.
Gleason and Oshima struggled to provide direct answers to the questions, noting that decisions on many of these matters had yet to be made.
NextEra has said that there will be no involuntary layoffs for two years after the merger goes through. But after that, Gleason indicated that there are no guarantees.
Oshima noted that not even HECO can predict what its future workforce would look like.
It’s also not clear whether NextEra may seek to outsource customer service jobs to save money.
“Eric and I just talked about some of this on our way over,” Oshima told lawmakers. “It is really too soon for NextEra to know. They really, really want to get to know our company, how we operate and know the values of our state (first).”
“Hawaii people are passionate about energy, and so we are coming from the mainland — so we have to run through that feedback.” — Eric Gleason, NextEra
Gleason was tight-lipped about any specific renewable energy plans for Hawaii. The company has said that it plans to follow the energy plans that HECO filed last year with Hawaii’s Public Utilities Commission, which are still awaiting approval.
But he stressed that it’s hard to have a concrete roadmap in place, given changing market conditions.
“It is actually quite extraordinary to find a utility with a detailed plan that goes out 15 years,” Gleason said.
Indeed, Hawaii’s own energy plans have been in flux since the Hawaii Clean Energy Initiative was signed in 2008, which requires HECO to convert to 40 percent renewable energy by 2030.
Declines in solar pricing have led to an unanticipated explosion in rooftop solar — about 12 percent of HECO customers now have solar panels on their roofs. A number of proposed renewable energy projects have also fallen by the wayside, in part due to community opposition, including planned wind farms on Molokai and Lanai.
One of the more pressing questions for NextEra has been whether the company plans to push for developing wind and solar energy on Maui that would be transported to Oahu through undersea cables. NextEra is one of a number of companies that have been waiting for several years to bid on a long-delayed request for interisland cable project. The company has invested more than $10 million in pre-development costs for the proposed project.
“In our minds, at least, the jury is still out as to if the cable between Maui and Oahu is in the public’s best interest,” said Gleason. “Our analysis suggests that it is. (HECO) has done some analysis that suggests that it isn’t. It isn’t our top priority right now.”
Lee continued to press Gleason on the interisland cable proposal, noting that it has major implications for the direction of Hawaii’s energy policy. The cables, which would open up the neighbor islands to further renewable energy development, could also reduce the demand for renewable energy projects on Oahu and more rooftop solar.
“You are investing multiple billions of dollars into this deal,” said Lee. “How can you not have this question answered already as to which way you are going to go, which way you are going to invest — because your business model depends on it.”
Gleason reiterated that it’s too early to make a determination, noting that the company also needs to get community input.
“All of these questions are open and it is a very complicated optimization, which includes facts that change over time. And so it would be very irrational of us to come in thinking we had the answer,” he said. “And that is just from a pure technical and economics perspective. And then of course you have the fact that in Hawaii people are passionate about energy, and so we are coming from the mainland — so we have to run through that feedback.”
Gleason told lawmakers that more details about NextEra’s plans will be divulged in proceedings before the PUC, which must approve the sale. However, he noted that many of the company filings, the first of which is expected on Thursday, are expected to be kept confidential.