- Special Projects
Sometimes a Public Utilities Commission hearing isn’t public at all.
That was the case on Tuesday afternoon at Blaisdell Center where, on the second day of a quasi-judicial process that will decide whether NextEra Energy’s $4.3 billion acquisition of Hawaiian Electric is allowed to go through, the public was cleared from the room for 45 minutes while the PUC and other parties directly involved in the hearing met behind closed doors.
The reason? Hawaii Consumer Advocate Jeff Ono and Hawaii Gas wanted to refer to confidential documents in their questioning of Hawaiian Electric Co. President and CEO Alan Oshima.
Public Utilities Commission Chairman Randy Iwase told reporters to leave the room, along with any of the other nearly 100 people in attendance who hadn’t signed a non-disclosure agreement. Recording devices were turned off, as was the Olelo cable TV feed.
Such actions raise obvious questions about transparency as regulators vet whether one of the largest business deals in Hawaii history — and one that involves a crucial public utility — is in the public interest or not.
That doesn’t mean that the state’s top utility regulator wanted this to happen. Over the course of the day, Iwase, who acts as a sort of chief judge at the hearing, highlighted his efforts to keep things public.
But representatives of the nonprofits, government bodies and private companies that have intervenor status allowing them to question Oshima said they intended to reference documents that Hawaiian Electric and NextEra’s lawyers designated as confidential or restricted.
Iwase repeatedly encouraged the intervenors to obtain permission from the parties in the merger to allow the documents to be shared, or to reference the documents only vaguely.
Iwase ultimately convinced all but two of the parties questioning Oshima — Hawaii Gas and the Consumer Advocate — to do as he asked.
Before clearing the room, Iwase warned Ono and Hawaii Gas that he would end the closed session if they didn’t bring up issues that were germane to the PUC’s focus, which is to assess whether the merger is in the best interests of Hawaii and its people.
Brian Black, the executive director of the nonprofit Civil Beat Law Center for the Public Interest, which works to bolster public access and overcome unnecessary government secrecy in the islands, explained in an interview that the state’s Sunshine Law includes an exception for quasi-judicial proceedings like the one the PUC is overseeing.
The commission’s own confidentiality rules, he said, take precedence. While the legal framework for openness in court is generally much clearer, Black said that PUC orders relating to transparency tend to be pretty thorough and fairly limited.
That said, he noted, “They should provide some context so that people can see why it is appropriate to be confidential.”
“If you are not told why it is closed and why it is appropriate to be closed, all you can do is speculate.”
And that is clearly something the PUC chair hoped to avoid.
“It is not something we wanted to do,” Iwase said in an interview after the hearing.
“We didn’t have to do public listening sessions, but we did. We granted access to Olelo. We didn’t have to; we wanted to,” he said. “It doesn’t make sense to have that kind of media access and streaming, and then we close the hearing. But we have obligations under our protective order, and we’re going to follow it.”
Iwase refused to say what subject matter the confidential documents related to or what was discussed in the closed-door session. But if a party in the case wants to reference documents that are covered by the hearing’s protective order, the commission has no choice but to abide by it, he said.
Once the hearing resumed in public, Oshima finished up his second day of testimony.
Earlier in the day, intervenors continued to seek precise details that Oshima only rarely provided, as well as some of his opinions on what benefits the merger might bring for Hawaii and what benefit it might bring to him.
Oshima confirmed at several points that if the merger goes through, he could become the CEO of the NextEra-owned utility in Hawaii.
Intervenor Henry Curtis, who leads the nonprofit Life of the Land, asked Oshima when discussion of that job possibility first came up.
Immediately after the merger announcement, said Oshima, who was appointed head of the Hawaiian Electric Co. in October 2014 — just in time for the announcement of the proposed deal two months later.
Asked who initiated the discussion, Oshima said it was NextEra Chairman and CEO Jim Robo.
When Curtis asked whether such a position include a pay increase, Oshima said salary has not been discussed.
Plenty of other people’s employment status was also discussed, but in a less hopeful way.
The Consumer Advocate was one of several people who questioned Oshima about the likelihood that NextEra might lay off numerous Hawaiian Electric employees as soon as its two-year commitment to avoid post-merger layoffs was up.
Oshima readily acknowledged that this could happen. After all, in an industry going through such transformation, and given Hawaii’s ever-evolving business, regulatory and economic environment, he said his own company couldn’t even promise not to lay anyone off in the coming two years. Oshima noted that the company is looking for “efficiencies” to best serve its customers.
“I would not be able to tell you with certainty that we will not do some of these things,” he said.
Overall, Oshima emphasized his view that Hawaiian Electric needs to go through a transformation similar to one that NextEra has already gone through — and that it could be facilitated by the Florida-based company’s experience with smart meters, vast purchasing power, cheaper access to capital and a lot more.
NextEra is “clearly approvable,” Oshima told the commission. “Clearly NextEra has shown that they are fit, willing and able.”
Not surprisingly, many of the remaining intervenors continue to disagree.
Will Rolston, the Big Island’s energy coordinator, said that his county’s perspective has not changed, and that it is unlikely to unless a larger share of the profits destined for Hawaiian Electric shareholders are redirected toward electricity consumers.
Or, he said, guarantees of future savings going to ratepayers could work.
After all, he argued, NextEra is offering Hawaiian Electric shareholders a premium that has been estimated at $568 million over the actual value of Hawaiian Electric Industries stock at the time NextEra made its offer.
NextEra has pledged $60 million in savings for customers via a four-year moratorium on base-rate increases.
But Hawaii County wants consumers to enjoy more than $1 in savings for every $10 that goes to shareholders, Rolston said.
He suggested that an immediate and guaranteed 10 percent cut in rates statewide, increasing to 20 percent within five years, would make the deal palatable.
“If you are the company you claim to be, the best company in the world at renewable energy development, as a regulated utility you should be able to find lots of efficiency improvements and lots of things you can do to drive rates down,” Rolston insisted.
“From where we sit, for this merger to be good it has to result in (substantial) rate reductions for the consumer,” he said. “We have not seen that yet.”
Wednesday’s session is slated to begin with the testimony of NextEra Energy Hawaii’s Eric Gleason, who may well be the most highly anticipated witness.