NextEra Energy and Hawaiian Electric Industries filed a joint application with Hawaii’s Public Utilities Commission on Thursday seeking approval of their $4.3 billion merger agreement.
The filing includes a pledge by NextEra not to seek an increase in base rates for at least four years after the deal closes. The company also says that it will forgo revenues under HECO’s decoupling mechanism during that time, saving customers an estimated $60 million.
After the four years, NextEra says that it’s open to implementing an “incentive-based ratemaking” model.
Under the agreement, American Savings Bank will be spun off into an independent entity, while Florida-based NextEra will assume ownership of Hawaiian Electric Co., which operates the electric utilities on Oahu, the Big Island and in Maui County.
“The filing of this application begins an important review process that we believe will ultimately result in a more affordable clean energy future for Hawaii,” Eric Gleason, president of NextEra Energy Hawaii, said in a statement. “We share Hawaiian Electric’s vision of increasing renewable energy, modernizing its grid, reducing Hawaii’s dependence on imported oil, integrating more rooftop solar energy and, importantly, lowering customer bills, and we believe our combination will help to accelerate Hawaii’s clean energy transformation.”
The PUC must determine that the deal is reasonable and in the public interest.
Local energy companies, government officials and clean energy advocates have been anxiously awaiting the filing, in hopes that it will shed more light on NextEra’s plans for Hawaii.
NextEra, which operates Florida’s largest electric utility, Florida Power & Light, is one of the largest developers of utility-scale wind and solar in the country. It has a reputation of being a well-run company, with a strong balance sheet and good credit rating. NextEra officials stress that they will be able to help Hawaii transition to renewable energy faster and cheaper.
However, the company indicated in its PUC filing that it doesn’t plan to discuss any specific energy projects until the deal is approved.
“Unless and until the proposed change in control is approved and consummated, NextEra Energy will be unable to identify the specific plans and projects that NextEra Energy would implement as the owner of the Hawaiian Electric Companies, as such plans and projects can only feasibly be developed after NextEra Energy has sufficient time and access to information and resources as owner to better understand the strengths and any limitations in the Hawaiian Electric Companies’ respective electric grids, systems, operations, and plans,” according to the company’s filings.
Numerous parties are expected to intervene in the PUC’s review of the merger.
Shortly after NextEra and HEI submitted their application to the PUC, Henry Curtis, executive director of Life of the Land, filed a request to participate in the review.
“The HECO-NextEra deal is more than just changing the ownership of the HECO companies,” Curtis said in an email to the media. “It is also about the game plan and the speed of transition to some future. The issues include ratepayer bills, reliability, smart grids, inter-island cables and liquefied natural gas.”
The pending sale of the utility prompted a dozen environmental and community groups to petition the PUC to hold off on approval of the NextEra/HEI deal until commissioners finalize ongoing reviews that are expected to give greater clarity and direction to the utility’s business model and long-range energy plans.
NextEra has objected to any delay in the PUC’s review of the merger, arguing that the reviews should occur simultaneously.
You can read the filings below: