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NextEra Energy and Hawaiian Electric are piling on the promises to help their proposed $4.3 billion merger deal win the approval of the state Public Utilities Commission over the coming year.
The companies have added 54 binding commitments, bringing the total to date up to 85, including guarantees that resource plans will be updated within a year of the sale going through, the company won’t be resold for at least 10 years, and customers will have smart meters by the end of 2019 along with dynamic time-of-use pricing.
Top executives and the companies’ expert witnesses submitted more than 1,000 pages of information to the commission Monday in a much-anticipated response to a litany of concerns put forward by the 28 parties that have intervened in the biggest utility case in Hawaii’s history.
The latest filing follows more than 40,000 pages of testimony that the companies have already submitted in response to more than 4,000 questions from the intervenors since the case began in January.
Despite the voluminous nature of their responses to date, the shortcoming of answers to many questions has been highly criticized, prompting several intervenors to call on the commission to reject the sale outright.
NextEra Energy Hawaii President Eric Gleason, Hawaiian Electric President Alan Oshima, other top executives and expert witnesses attempted to assuage many of those concerns with their responses Monday while trying to win back the public support of Gov. David Ige and key agencies in his administration that have come out against the deal as it currently stands.
“In some instances, there may have been misunderstandings, which we will try to correct; in some instances, we respectfully disagree, and will make our case to support our position; and in a number of other instances, we will offer one or more new commitments to address the concern,” Gleason said in his 190-page response.
NextEra won’t be giving Hawaiian Electric’s management team the power to create its own budgets without any review or approval by NextEra Energy, which the state Planning Office recommended.
And the company doesn’t intend to divulge much about its overall plans and intentions, whether it’s liquefied natural gas or an inter-island cable. In fact, many of the new commitments were promises of what would be done after the deal is done.
“Right now our primary focus necessarily is on getting ready to bring these two companies together as part of a comprehensive merger integration planning process,” Gleason said in his filing. “So while all of these questions are understandable, at this stage in the proceeding the Applicants have provided the documents and information we have that are appropriate and responsive to the information requests, and indeed, everything that could reasonably be expected at this stage of a corporate merger.”
Aside from making new commitments and modifying others, the companies also dealt out a healthy dose of flattery and humility, recognizing they are new to the islands, have much to learn but are committed to being the partner the state deserves.
In their separate filings Monday, Gleason and Oshima use the word “eloquent” to describe Ige’s comments at a July 21 press conference in which he came out against the deal.
“Simply put, NextEra Energy shares the hopes and vision for Hawaii’s energy future that the Governor so eloquently described,” Gleason said in his testimony.
Ige isn’t so sure the companies share his vision though, whether it’s the state’s commitment to be powered 100 percent by renewable energy within the next 30 years or the role LNG should play in Hawaii’s energy landscape.
The governor made headlines at an energy conference last week when he announced his opposition to LNG, which the companies believe is a critical “bridge fuel” that would help Hawaii achieve its renewable energy goal.
Gleason addressed the concern many intervenors have expressed with NextEra being based in Florida and Hawaiian Electric being one of the oldest companies in Hawaii.
“We have come to understand that Hawaii’s past experience with outsiders leads many to fear the prospect of a mainland company assuming ownership of such a vital institution,” Gleason said. “In other words, at a time when Hawaii needs an exceptional utility, we perceive a shortage of trust for the Hawaiian Electric Companies as incumbent utilities, and NextEra Energy as a prospective mainland acquirer.”
Gleason’s response is speckled with Hawaiian words and phrases. He talks about kulia i ka nuu (to strive for the summit), aohe hana nui i ke alu ia (no task is too big when done together by all), and plenty about pono, kuleana and aloha. (Note: Diacritical marks were removed to ensure online readability.)
“We are totally committed to achieving Hawaii’s aggressive 100% (renewable portfolio standards),” he wrote. “Not just because it is the law, with established penalties for non-compliance, but also because it is pono, the right thing to do for Hawaii.”
But while Gleason has embraced Hawaiian language, he goes on to explain a fundamental way in which the Hawaiian Electric companies really aren’t local — that today, only 25 percent of Hawaiian Electric Industries’ shares are held by residents of Hawaii.
“The Hawaiian Electric Companies are not locally-owned and controlled, and have not been so for decades,” he said.
HEI is the parent of Hawaiian Electric Co., which serves Oahu; Maui Electric Co., which serves Maui, Lanai and Molokai; and Hawaiian Electric and Light Co., which serves the Big Island. Together, they serve more than 450,000 customers and employee 2,800 people.
Gleason made time Monday morning for several print and online reporters to ask questions about the companies’ filing during a conference call. A few of the responses and a press release were provided 30 minutes before the call, embargoed until the response was filed with the PUC around 4 p.m., making it difficult to ask questions about the filing itself.
But he did answer questions about what NextEra thinks about how the rate case is progressing and discussed in greater detail some of the huge numbers the company has touted as benefits of the merger.
NextEra has said the deal would amount to almost $1 billion in customer savings and economic benefits in the first five years.
Only $60 million of that amount is guaranteed, but he said the rest is a “conservative estimate.”
NextEra estimates a savings of roughly $345 to $475 per residential customer over the five-year period. But that doesn’t mean customers should expect to see an average of $6.50 come off their bills for the next 60 months.
The volatility of the price of oil, which Hawaii still relies on to provide the vast majority of its electricity, affects bills dramatically because that cost is passed on to customers.
“What we’re showing is savings relative to the utility on its own,” Gleason said, adding that the company can’t promise that bills will go down.
“We need to get off of oil, and that’s going to take time,” he said.
NextEra, which has often touted its expertise in the energy industry as one of the biggest benefits to Hawaii, does know something about getting off of oil.
Florida Power & Light, a subsidiary, reduced its consumption of oil by 99 percent since 2001, which NextEra says has saved customers more than $7.5 billion.
But that doesn’t mean the company turned to renewables.
While the company is a leader in utility-scale solar and wind energy, renewable energy accounted for just 2.3 percent of Florida’s total net electricity generation in 2014, according to the U.S. Energy Information Administration.
Florida gets 61 percent of its power from natural gas, 23 percent from coal, 12 percent from nuclear power plants and the rest from renewables, according to the EIA.
Gleason said concerns about NextEra’s supposed opposition to rooftop solar are unfounded. The real issue is economics.
Hawaii’s average electric rates are roughly triple Florida’s, according to the U.S. Energy Information Administration. The typical residential rate for NextEra customers is 9.7 cents per kilowatt-hour, which doesn’t create nearly the incentive that Hawaii has for rooftop solar.
In August, typical residential electric bills on Oahu were $142.51, based on 500 kilowatt-hours of use, according to HECO spokesman Darren Pai.
Oshima said that while Hawaiian Electric is making progress on its plans to transform, the company needs help.
“Combination with NextEra Energy with its greater scale, much greater financial capability, a vast array of renewable and other electric energy technical expertise, and a proven dedication to the customers and communities it serves in my view cannot be anything but a very good thing for Hawaiian Electric Companies customers, employees, and the well-being of our entire state,” he said.
Meanwhile, state energy regulators are preparing to take the merger case on the road.
The general public will have an opportunity to tell members of the PUC and the Division of Consumer Advocacy what it thinks about the proposed sale during seven “listening sessions” on six islands starting Friday on Maui and ending Oct. 27 on Oahu.
“These public listening sessions are intended to provide an opportunity for members of the broader public, who are not parties to the proceeding, to offer their views, opinions, and concerns for the commission to consider as part of its overall analysis,” Commission Chair Randy Iwase said.
The public listening sessions will serve as a precursor to formal evidentiary hearings that begin Nov. 30 at Blaisdell Arena. That’s when NextEra, HEI, the Consumer Advocate and 28 other appointed intervenors will formally present their case before the PUC.
During the eight months since the merger application was filed, the PUC has been receiving reams of testimony from the two electric companies, the Consumer Advocate and the intervenors, which include state agencies, solar businesses, environmental nonprofits and others..
Sally Kaye of the Friends of Lanai, an intervenor in the case, said in an interview last week that the responses Hawaiian Electric and NextEra filed Monday would be “significant because the bulk of the intervenors thus far have said the application is completely inadequate and this would be their chance to rebut what was raised.”
The intervenors will be scrutinizing the responses in the coming days, looking to see whether the companies just rehashed previous filings or provided new answers to their questions.
Henry Curtis, who heads the non-profit Life of the Land, another intervenor, said the parties will likely submit a flurry of follow-up requests for information based on what HEI and NextEra filed.
The PUC, which is comprised of Iwase and Commissioners Lorraine Akiba and Michael Champley, expects to make a decision on the proposed merger by next June.
Kaye encouraged the public to take advantage of the opportunity to provide public input at the listening sessions.
“People in Hawaii, pay attention,” she said. “Speak up. It’s a big deal.”
Each person is limited to three minutes of testimony.
Here’s the complete schedule of the public listening sessions.