Where do we go from here?

It’s been nearly a month since the Hawaii Public Utilities Commission unanimously rejected NextEra Energy’s $4.3 billion bid to buy Hawaiian Electric Industries, the holding company that includes Hawaiian Electric Co., the utilities on Maui and the Big Island and American Savings Bank.

As Civil Beat reported the day the PUC decision came down, “With NextEra seemingly out of the picture, Hawaii is back to Hawaiian Electric, a company that has frequently been criticized over some of the highest electric rates in the country.”

And that could very well be the end of that — back to square one. Gov. David Ige has said other companies are interested in acquiring HEI, though he has refused to name any, and the utility released a statement last month saying that it “is not currently in discussions with any other party regarding a business combination and does not intend to initiate any such discussions.”

HEI HECO Waiau power plant outside1. 14 april 2016.
Hawaii consumers pay the highest price in the country for electricity, largely because the power plants, like this one in Pearl City, run on expensive oil. Cory Lum/Civil Beat

But Hawaiian Electric can’t go back to business as usual. Key leaders and stakeholders won’t allow it. And the good news is the utility more and more seems to be on board with the change that Hawaii’s clean energy policy requires.

Eric Pape’s deeply reported recent Civil Beat series, “Electric Dreams,” traced the history of HECO and how it has helped to shape the development of Hawaii over the past 125 years. As major institutions sometimes do, however, HECO had become disconnected from a customer base that was both dissatisfied with paying sky-high rates and interested in alternative energy sources.

NextEra entered the picture promising an aggressive approach to meeting the state’s clean energy goals and modest savings for Hawaii ratepayers. In the PUC’s analysis, however, the projected rate savings were “based on assumptions and/or unrealistic expectations about the future.” And it called NextEra’s clean-energy commitments one of five fundamental areas of concern that caused the commission to reject the deal.

In the final installment of the series, though, HECO President Alan Oshima sounded like a leader who had emerged from the 19-month review process for the NextEra proposal with a new vision, prepared to lead the company in new ways.

Adoption of solar in Hawaii happened “much faster than anyone predicted. …We were caught by surprise, I think, at the pace,” he said.

“I see a utility structure where people are trying hard to change,” Oshima told Pape. “There are things we are doing now that we couldn’t do a year ago. … What comforts me is that I see the organization responding to putting the customer first.”

Oshima believes where major change is concerned, a measured approach is required, given the big investments and major technical challenges required to alter a sizable utility’s operating standards and practices. While that might prevent HECO from transforming as quickly as some might hope, there’s no doubt that it is moving now more quickly than it had been.

Oshima highlighted three efforts that caught our attention, chief among them, implementing the smart grid that Oahu, Maui and Big Island ratepayers so desperately need. NextEra had claimed it would bring the smart grid online in three years, but Oshima says HECO’s timeline is more like five years.

Oshima said HECO is also partnering with the U.S. Navy on a 20-megawatt solar farm in West Loch, near Ewa Beach and Pearl Habor and a 27-megawatt wind energy facility in Kahuku known as the Na Pua Makani project.

Oshima also rightly points to the nation-leading implementation of solar systems in Hawaii — nearly 66,000 commercial and residential photovoltaic installations by the end of June, and 77,000 rooftop approvals. In a recent appearance on Hawaii Public Radio’s The Conversation, Oshima acknowledged there’s a community perception that HECO is “holding up rooftop solar,” but argues that’s not the case.

Adoption of solar in Hawaii happened “much faster than anyone predicted. …We were caught by surprise, I think, at the pace,” he said, noting that it “caused some grid issues that required us to protect the grid and protect other customers.”

Still, he conceded that the confluence of sky-high rates, the challenges of solar implementation and other factors have “absolutely” created a PR problem for the utility. “And I get the distrust. We’re working hard on it,” he said. “We will be doing much more in the community.”

That’s exactly what opponents of the NextEra/HEI merger called for last month following the PUC decision, saying at a Capitol press conference that HECO “must now change its approach to charting the state’s energy future and work more collaboratively with others.”

State Rep. Chris Lee, chief architect of the clean energy initiative, said the utility must “change and adapt” and ensure the people of Hawaii buy in to HECO’s future decisions and its path toward statewide, 100 percent renewable energy by 2045.

“Everyone wants a say,” Lee said.

We won’t devote any more time here to deconstructing the pros and cons of the NextEra deal or the PUC decision. It’s time to move forward and begin the hard work of tackling the challenges of Hawaii’s energy future, collaboratively, as a state.

What that future will look like is anyone’s guess. As Ige intimates, it could feature another big corporate entity seeking to acquire HEI or a substantial percentage of the company. It could include exploration of the co-op model that Lee and others have pushed for and that seems to work so well for Kauai.

As Ige put it: “No matter who owns the company, the energy vision for Hawaii remains very clear: 100 percent renewable energy with a transformation to a customer-centered utility focusing on smart meters, smart grid, distributed local solutions and as much consumer choice as possible.”

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