Is NextEra Energy being unfairly put through the ringer as it seeks regulatory approval for its $4.3 billion purchase of Hawaiian Electric Industries?
That was the underlying question that emerged on the 18th day of regulatory hearings to help decide whether NextEra’s purchase of Hawaii’s historic power company should go through.
In recent days, the hearings before the Public Utilities Commission have been driven forward by NextEra and Hawaiian Electric’s cross-examinations of witnesses who have argued against the deal.
On Tuesday afternoon, a pair of top executives of Hawaii Gas took the stand. The gas company, as an intervening party in the case, has suggested that regulators tack 15 new conditions dealing with issues such as competition and affiliate abuse onto the deal before it can go through.
NextEra lawyers grilled the Hawaii Gas executives, suggesting the company is acting hypocritically, given its own acquisition deal a decade ago, and that its motivations are to usurp business and undermine a competitor in the energy field.
“One of the key concerns that we had,” said NextEra spokesman Rob Gould after the hearing, “is that the rules of the road are equally applied.”
When The Gas Company Was Sold
Throughout the hearings, the three-member Public Utilities Commission has been told that Florida-based NextEra is too big, too ambitious and too far away to listen to local concerns and serve the state’s interests. Critics of the deal have also suggested the company’s culture is too different from local values.
So it was intriguing when Bryan Anderson, a top attorney for NextEra, questioned Hawaii Gas President Alicia Moy about the 2006 sale of the gas company to Macquarie Infrastructure Co. for $238 million.
Partly as a result of that deal, the head of Hawaii Gas reports to Macquarie Infrastructure’s CEO James Hooke in New York.
Macquarie Infrastructure owns, among other things, an airport service corporation, an energy business and Hawaii Gas.
When the sale of Hawaii Gas was considered by regulators, Macquarie representatives said there would be no changes in management and no job eliminations, but Moy said she didn’t know whether those promises were sought during the regulatory process — as has been the case for NextEra.
News reports show that Macquarie representatives then, like NextEra now, said they were engaging in a long-term investment and that no job reductions were planned. Moy noted that Hawaii Gas didn’t need to reduce its staff, which consists of about 320 people today.
Another Hawaii Gas executive and an expert witness hired by the company are among the nearly two dozen witnesses who have yet to be cross-examined.
PUC Chair Randy Iwase noted early on that Hawaii Gas is owned by a company that is not local, but he asked Anderson about the relevance of the questioning. After all, he said, the two deals brought up very different issues under distinct circumstances at very different times. It was, Iwase said, a “totally different set of facts.”
“What happened 10 years ago happened 10 years ago,” said Iwase. “Ten years ago, I had hair.”
NextEra’s attorney pointed to the 2006 conditional approval agreement that allowed for the sale of Hawaii Gas to contrast financial details with the current deal. Among other things, that agreement included a promise of a $4.1 million bill credit that would be shared with all non-delinquent customers after the deal went through.
Anderson noted that NextEra has promised $60 million in savings for customers over the first four years of its ownership of the utility in Hawaii.
The suggestion: $4.1 million was enough for Hawaii Gas customers a decade ago, but $60 million isn’t enough now in the eyes of critics of the current acquisition?
The concerns that Hawaii Gas has brought up about the NextEra deal with regulators demonstrate that the company is “all too happy to load this transaction up with conditions … that they were not subject to,” said NextEra’s Gould.
The Florida-based company’s lawyers then turned toward asking about the recent Hawaii Gas announcement that it was near the finalization of an agreement that would allow the company to generate electricity with natural gas in the island — if they get buy-in from policymakers and potential partners like Hawaiian Electric.
The lawyers repeatedly asked both Moy and Hawaii Gas Chief Operating Officer Thomas Young to confirm that this would make the gas company into a direct competitor of Hawaiian Electric, but both repeatedly refused to do so, suggesting it would be more of a partnership.
When a NextEra attorney noted that Hawaii Gas’s liquefied natural gas plan would be in competition with Hawaiian Electric’s own natural gas import plan, and that if the gas company won out, it could earn hundreds of millions, if not billions, of dollars that currently go to Hawaiian Electric, Moy said that her company only intended to be “the distributor” of such energy.
Anderson called on Moy to admit that her company was heading toward direct competition with Hawaiian Electric. She replied, “I have a hard time agreeing with that.”
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