Updated 4:50 p.m., 6/29/2016
Gov. David Ige is booting Mike Champley from the state Public Utilities Commission just days before the three-member body was expected to release its final decision on the $4.3 billion deal to sell Hawaiian Electric Industries to Florida-based NextEra Energy.
Rather than hold Champley over past the end of his term, which is set to expire Thursday, Ige has made an interim appointment of Tom Gorak, the commission’s chief legal counsel, who will take over starting Friday.
The timing of Ige’s decision has raised questions about undue political influence in the NextEra merger. And the commission’s former chair, Mina Morita, has her doubts over whether the governor even has the authority to replace Champley unless he resigns.
Ige has opposed the NextEra merger ever since his administration first commented on the filings with the commission last July, saying the deal is not in the public interest and questioning NextEra’s commitment to the state-mandated goal of achieving 100 percent of its electricity needs from renewable sources by 2045 — a view shared by roughly two dozen intervening parties in the merger docket.
Ige told reporters Wednesday afternoon at the Capitol that he does not know where Gorak stands on the merger deal. He said asking about that would have been inappropriate and potentially jeopardized the proceeding, which is also why he didn’t ask about his thoughts on liquefied natural gas and other open dockets.
“He needs to have the independence to serve,” Ige said. “We talked about general kinds of philosophies about decision-making.”
The governor said he also does not know whether Champley wants the buyout to go through, nor does he know the intentions of Commissioner Lorraine Akiba or Chair Randy Iwase.
Iwase said Wednesday that he’s hopeful a decision will be made on the NextEra merger by the end of next week.
“I want to get the decision out sooner than later,” he said. “The public expects it. I expect it. But the commissioners have to feel comfortable with the decision after reviewing the staff recommendation and determine if they want to make any amendments to the proposal or just accept it as is.”
Ige said the decision to replace Champley was due to his belief that Gorak is more closely aligned with the governor’s overall philosophy and approach toward energy and other utilities regulated by the commission.
“It’s really about trying to find people that share core values and share the long-term vision,” Ige said.
When asked repeatedly what Champley may have done or said that made Ige think he wasn’t as well suited for the job, the governor said he hadn’t reviewed Champley’s record or past decisions.
“It’s not based on any specific review of the record,” Ige said. “I didn’t really review his position on anything. For me, it’s just about finding people who are aligned more personally with my views.”
Pressed again, Ige said there was “anecdotal information” that Champley may have held up prior decisions when working under Morita. The governor did not elaborate much.
“I do know and am aware that Mr. Champley had disagreed with the previous chair in the commission, and on many instances had voted or prevented the previous chair of the commission from moving forward,” Ige said.
Champley was a senior executive at a big electric and gas company in Michigan, DTE Energy, before moving to Maui with plans to retire. He was doing consulting work when Gov. Neil Abercrombie appointed him to the commission in September 2011.
Champley filled a seat being vacated by Carl Caliboso, and served on an interim basis until the Senate confirmed him the following year.
Abercrombie was also responsible for Morita’s appointment as chair in March 2011, but three years later decided he was not going to reappoint her to another term.
When news of that decision got out in February 2014, a power struggle ensued in the commission that delayed the release of decisions on various dockets, according to energy-industry observers familiar with the matter.
Aside from the looming NextEra decision, the timing of Gorak’s appointment is also important in that it bypassed going through the Senate confirmation process this past legislative session, which started in January and ended in May.
Gorak’s appointment is still subject to Senate confirmation, but he’ll be able to start serving Friday on an interim basis. He can continue serving without Senate confirmation until the end of the next legislative session, according to the state constitution.
It’s unclear if Gorak even wants a six-year term or merely intends to serve on an interim basis for the next several months until the next legislative session starts and the governor can appoint someone else to a full term.
The governor hinted that part of his motivation in appointing Gorak now is that he’s tired of waiting for the commission to make a decision on the NextEra case.
“There’s been more than adequate time for a decision to be issued,” Ige said, adding that the appointment is “an opportunity to keep the momentum moving forward.”
Gorak, who has been chief counsel the past three years, said he’s been “intimately involved” with the NextEra docket since it was filed with the commission in January 2015.
He said a draft staff recommendation has been circulating internally, but he couldn’t say if the commission was close to reaching a decision.
The governor said a major factor under consideration in making the appointment was that it not delay the decision on the NextEra deal or other pending dockets.
Ige said he informed Champley last week that he would be replaced as commissioner, effective July 1, but did not talk to him personally.
In a three-sentence letter dated June 21, Ige thanked Champley for his public service and notified him that his term would end June 30.
“The commitment and professionalism you have demonstrated is greatly appreciated by the people of Hawaii,” Ige said in the letter. “I wish you the best of luck in your future endeavors.”
State law requires each commission member to hold office until his or her successor is “appointed and qualified.” There’s some disagreement over what “qualified” means though.
Ige said Gorak was deemed qualified after the governor received an opinion from Attorney General Doug Chin confirming his authority to make the interim appointment.
But Morita maintains that “qualified” means securing the Senate’s consent.
“I don’t believe that the governor can force him out,” she said. “If Commissioner Champley doesn’t tender any kind of resignation, I think there should be a real concern about the legitimacy of Tom Gorak participating in any kind of decision-making authority.”
Champley could not be reached for comment. It’s unclear if he intends to resign or try to hold on to his seat.
In March, Champley said the decision was up to the governor. “I stand ready to serve if asked,” he said at the time.
Morita said there’s a reason that commissioners serve six-year terms, which is to bypass typical political cycles and go beyond one particular administration — just like the U.S. Senate does to lessen the political impact on decisions.
The governor has been vocal in his opposition to the NextEra merger, she said, which “makes his action more suspect than anything else.”
“Just the appearance of what is happening is pretty bad, and pretty bad for the PUC as an institution that’s supposed to be independent,” Morita said.
State law says in appointing a commissioner, the governor shall select someone who has had experience in accounting, business, engineering, government, finance, law or other similar fields.
The law also says the commissioners shall be devoted full-time to their duties and not hold any other public office or employment during their term. The commissioner also can’t own any stock or bonds of any public utility corporation.
Iwase wasn’t bothered by the timing of Ige’s appointment. He said Champley’s term was up Thursday anyway, and there are several important dockets aside from the merger case that the commission needs to focus on.
Many in the energy world, from Florida to Hawaii, applauded the appointment, including Iwase.
“I’m pleased with the appointment of our chief counsel because he can hit the ground running,” Iwase said, not just in the NextEra case but other dockets that will set the “clean energy blueprint” for Hawaii.
Rep. Chris Lee, who chairs the House Energy and Environmental Protection Committee, called Gorak a “logical choice.”
“I think of anybody, Tom Gorak is someone who has a lot of background in all the dockets before the PUC right now, as well as just general experience in utilities both here and around the country,” Lee said. “That’s something that’s invaluable in anyone you’re going to pick.”
Henry Curtis of Life of the Land, a nonprofit that’s intervening in the NextEra docket, didn’t take issue with the timing of the appointment and had no qualms about Ige choosing Gorak.
“There is a very small selection of people who would be qualified,” Curtis said. “You’d have to be up to speed on the merger, and yet not part of any of the parties involved in the proceeding, and therefore it would have to be a staff member to the PUC or somebody like that.”
The news quickly spread as far as Florida, home to NextEra’s largest subsidiary, Florida Power & Light.
Nathan Skop, former member of the Florida Public Service Commission, the equivalent of Hawaii’s Public Utilities Commission, said Ige made a “thoughtful and excellent choice” based on Gorak’s subject-matter expertise in the numerous pending dockets.
“His appointment represents a seamless transition and he will be able to advance Gov. Ige’s renewable energy goals to move Hawaii toward energy independence,” Skop said.
It’s still anyone’s best guess how the commission will rule on the NextEra case. The commission can reject the deal, approve it, or sign off on it with conditions.
“Commissioners act as judges, and so we don’t see a lot of the behind the scenes and due diligence that they’re going through, the staff reports everyone’s been working on,” Lee said.
“So it’s hard to say,” he said. “But I have to imagine that going forward the decision at the PUC and all that background probably points in one direction, and I expect at this point it’s a question of the commissioners executing or finding what conditions to place upon it to protect the public interest. That’s something that Commissioner Gorak will certainly have to deal with.”
Curtis was similarly unsure.
“I’ve been unable to read the tea leaves on how the decision is going, so I have no idea how this would change it,” he said.
Meanwhile, NextEra has reportedly made an offer to buy Oncor Electric, a Texas company valued at up to $18 billion, according to a Bloomberg news story Monday.
Read Gorak’s curriculum vitae below.