- Special Projects
When it comes to the utility that provides us with our electricity, what do we care more about, value or local values?
That question hung in the air at the end of the 12th day of testimony at the Public Utilities Commission’s hearing to decide whether NextEra Energy’s proposed $4.3 billion purchase of Hawaiian Electric Industries should go through. Regulators are attempting to assess whether or not the deal is in the best interests of the state.
Moray Dewhurst, the vice-chairman and chief financial officer of NextEra Energy, spent most of seven hours testifying Wednesday, deftly parrying questions about his company’s plans, capacities, intentions and commitments, leading to a bit of drama at the end.
Dewhurst was surprisingly forthcoming at times.
He made clear Hawaiian Electric needs to adapt to thrive in the fast-evolving electricity sector. To encourage that process, he confirmed that NextEra would expect to send a handful of its employees to Hawaii to make the company more dynamic.
“There is just a lot to be done and I don’t think the current organization has all the capacities,” Dewhurst said in response to a question from Commissioner Michael Champley toward the end of the day.
Dewhurst readily noted HECO’s need for fresh blood and cultural change, to make the company more efficient and accountable, saying, “It is part of how you change.”
To Commissioner Lorraine Akiba, he highlighted his belief that Hawaiian Electric employees “aren’t sufficiently accountable.”
If Hawaiian Electric is purchased by NextEra, he said, the company will likely have fewer employees doing the same amount of work a decade from now, if it wants to bring down rates.
That said, as a condition of its purchase offer, NextEra has promised a two-year moratorium on layoffs, so change for employees could only begin after that.
If the deal does not go through, the Hawaiian Electric Co. has made clear it cannot offer any similar promise for those first 24 months.
NextEra’s CFO also confirmed, under questioning, that retirement benefits of employees were not explicitly protected in the 85 purchase commitments that NextEra filed with regulators.
Such observations during seven hours of round-robin questioning made Dewhurt’s final exchange, with commission Chairman Randy Iwase at the very end of the day, that much more interesting.
Given the three-member commission’s deciding role in the hearing, various parties to the case — including the many intervening parties that questioned Dewhurst — have been looking for signs that betray the commission’s leanings. They have found few clear indications.
So it grabbed attention when, in the final exchange before the holiday recess, the chairman pointed out how a company — in this case, a mainland company — might focus on financial value at the detriment of local values in the islands.
First, Iwase queried Dewhurst about how involved he has been with the merger. The CFO said he has visited Hawaii twice since the deal was announced. He has also spoken extensively with NextEra staff, but not any of the HECO employees who could, at some point in the future, face layoffs.
Iwase asked him how many employees Hawaii’s utility has; Dewhurst acknowledged that he didn’t know. Pushed by Iwase for a number, the NextEra CFO guessed 4,000.
“So you don’t know how much of a work force reduction will be needed?” Iwase asked.
No, Dewhurst replied.
Iwase then returned to the issue of retirement benefits. He noted that there is no indication in NextEra’s 85 merger-related commitments of any guarantees for Hawaiian Electric employees’ retirement benefits. “Talking about retirees, you said they have no protection. They’re not protected.” Iwase reiterated. “Their benefits are not protected.”
Asked why not, Dewhurst said he didn’t know, but added that the commitments might not be the place to address that issue.
Then Iwase went on a detour, reminding Dewhurst of the seven-stop listening tour that the commission and the parties in the merger took to get a sense of the concerns of customers around the islands.
“Part of that journey throughout the state for the last few months was to glean the values and culture,” said Iwase. “Was that your understanding?”
“Not exactly,” said Dewhurst. “The principal purpose was to hear views on the proposed merger.” That said, he added, the process did offer other insights.
The chairman asked if understanding Hawaii’s values and culture is important for NextEra, and Dewhurst confirmed that it was.
Iwase then ventured into a lesson on Hawaiian language and culture, noting the importance of kupuna in Hawaii. He even cited a Hawaiian dictionary to define the kupuna “as a grandparent, ancestor, relative or close friend of the grandparents’ generation.”
Iwase noted that there are often multiple layers to the meaning of Hawaiian words.
Kupuna are “a starting point” or “the source,” the commissioner explained. “When you have an understanding of that, you understand why you honor your grandparents, and the relatives and friends of the grandparents’ generation. They’re not just old people. They’re the source.”
Dewhurst, who seemed unflappable throughout his testimony, suddenly appeared perplexed by an unexpected turn.
Iwase then asked why NextEra didn’t include a guaranteed commitment to Hawaii’s kupuna in a company that was founded under King David Kalakaua in the late 19th century.
Dewhurst, of course, had no idea.
Iwase then pivoted to values that Dewhurst is more familiar with — three core values of NextEra that he had cited: excellence, doing the right thing and treating people with respect.
“Excluding retirees, excluding kupuna’s protection from commitments,” Iwase asked, “is that doing the right thing?”
“No, certainly not,” said Dewhurst, who noted that just because there is no absolute commitment to keep things as they are today, that the situation will change dramatically in the future.
Iwase continued. “Do you think it is treating people with respect, to exclude them.”
Dewhurst said he doesn’t “think it is inconsistent with respect” to not include a group in the commitments.
Earlier in the day, Dewhurst repeatedly said that he was comfortable with the 85 commitments — which include guarantees of $60 million in savings for customers over four years and another $10 million dedicated to local charities.
Under questioning, about whether the commitments covered all of the necessary bases, Dewhurst said in the early afternoon that if there is a “big gaping hole” in NextEra’s promises, the commission should point to it out and give the Florida-based company a chance to fill it.
In the final exchange before he declared the hearing in recess, Iwase may have issued a hint. That gaping hole may just be big enough for some of Hawaii’s retirees to fit through.
The hearing is slated to start up again at the beginning of February in the same room at the Neal S. Blaisdell Center, although the commission made clear that it may do so sooner if it finds a suitable location in January.
And then, in the spirit of aloha, Iwase thanked everyone for their civility during the 12 days of hearings up until now.
Then, after some season’s greetings, the hearing went into recess.