Sierra Club ‘Underwhelmed’ by NextEra-HEI Merger Rebuttal
NextEra Energy Inc. and Hawaiian Electric provided additional, extensive details on NextEra Energy’s plans for its merger with HEI yesterday, including a comprehensive package of 85 commitments—of which more than 50 are new—that they determine would accelerate the achievement of Hawai‘i’s goal of an affordable, 100 percent renewable energy future by 2045. (See details of the plan below under “NextEra Energy Inc. and Hawaiian Electric Rebuttal.”)
Despite NextEra’s promise of a total of nearly $1 billion in customer savings and economic benefits to the state and additional commitments, the Sierra Club of Hawai‘i issued a press release stating that NextEra’s rebuttal in support of the takeover falls short, adding that the Sierra Club and Earthjustice are “underwhelmed.” In their rebuttal, NextEra still relies on fossil gas, which is inconsistent with the state’s 100% renewable law, the Sierra Club release said.
The Hawaiʻi Public Utilities Commission is hosting “public listening” sessions across the islands to gather the public’s perspective on NextEra’s proposal to take over Hawaiian Electric Industries (Hawaiian Electric Company Inc., Hawai‘i Electric Light Company Inc. and Maui Electric Company Limited, subsidiaries of Hawaiian Electric Industries Inc.).
The first one will be held on Friday, Sept. 4, at 6 p.m. at Lihikai Elementary School in Kahului, Maui.
Sierra Club Comments
“For all the criticism the takeover proposal has received, NextEra’s response is very underwhelming,” said Isaac Moriwake, the Earthjustice attorney representing Sierra Club before the Hawaiʻi Public Utilities Commission. “They quote some bigger dollar figures, but they still have no plan or vision that fulfills Hawaiʻi’s needs.”
This is NextEra’s first filing since Gov. Ige announced his opposition to its proposed takeover and plans to import fossil gas to meet Hawaiʻi’s electricity needs.
“This was their last chance to step up and answer all the criticism, and they fell flat,” Moriwake added. “They still haven’t addressed the fundamental problems of the takeover, including the loss of local control and jobs and how their old-fashioned monopoly just doesn’t fit the future direction for Hawaiʻi.”
“We have waited months for this response,” said Marti Townsend, director of Sierra Club of Hawaiʻi. “Concerned residents, industry leaders, stakeholders across the state have been waiting to see how NextEra would respond to all the criticism, and we received nothing but more unsubstantiated, unrealistic promises.”
“It’s not believable for NextEra to say they fully support 100% renewable energy by 2045, while at the same time calling for the state to invest millions in fracked gas,” Townsend added.
The Sierra Club release also stated that “NextEra continues to rely on buzzwords over actual substance, like this passage from their Transaction Commitments that borders on culturally insensitive:
“‘The Hawai‘i Corporate Responsibility Report will include a detailed description with relevant metrics addressing the progress NextEra Energy is making in operating as a Hawai‘i business, including the Hawaiian concepts of kuleana, malama pono and aloha… ‘”
“NextEra’s response demonstrates to me just how little NextEra either understands or is willing to address the concerns expressed by Hawaiʻi’s residents,” Townsend added. “They just don’t seem to get it: this is not about empty promises of more money with a few Hawaiian concepts sprinkled in.”
NextEra Energy Inc. and Hawaiian Electric Rebuttal
Next Era and Hawaiian Electric’s comprehensive package of 85 commitments were made as part of filings with the Hawai‘i PUC. The companies said the commitments strengthen and underscore the broad range of benefits that the merger will deliver. NextEra says these and other related commitments demonstrate its focus on delivering more affordable electric rates for customers and enhancing the ability of Hawaiian Electric to provide safe and reliable service at a reasonable cost:
- NextEra estimates overall customer savings of nearly $465 million.
- The estimated nearly $465 million in customer savings includes $172 million in capital expenditure savings, $133 million in savings from a four-year general base rate case moratorium, $60 million in guaranteed rate savings from forgoing a portion of the increase in revenues due to decoupling, $67 million in fuel savings, post-rate moratorium $30 million in non-fuel operating and maintenance cost reductions, and $3 million in lower interest expense.
- NextEra estimates that the cumulative net savings per residential customer of Hawaiian Electric by island for the first five years (2016-20) after the completion of the merger ranges from roughly $345-$475, for an average across all islands of nearly $400.
- NextEra Energy commits to establish a $10 million customer benefit fund paid over four years following the close of the merger to be used at the PUC’s discretion for what it deems appropriate and in the public interest.
- NextEra estimates a total of nearly $1 billion in customer savings and economic benefits.
- NextEra estimates economic benefits for the state of approximately $500 million in the first five years following the close of the merger.
- NextEra says customers will benefit from NextEra Energy’s ability to accelerate the development of more modern grids throughout the islands through the deployment of smart meters, including time-of-use rate options, as well as improvements to overall service, reliability and performance.
- NextEra Energy will coordinate with key customers in developing updated emergency response plans for Hawaiian Electric and will file the plans with the PUC within 12 months of the merger’s completion.
- NextEra Energy commits to corporate giving of at least $2.2 million annually for a minimum of 10 years post-closing, consistent with HEI’s 2014 charitable giving.
- NextEra Energy is committing to broad, Hawai‘i-focused geographic representation on the local, independent Hawaiian Electric advisory board that will be established.
- NextEra Energy commits that the board will include members from the counties of O‘ahu, Maui and Hawai‘i.
- NextEra Energy will prepare an annual Hawai‘i-specific Corporate Responsibility Report that tracks its progress in operating as a Hawai‘i business, including how it is living up to the Hawai‘i values of kuleana, mālama pono and aloha.
- NextEra Energy is committed to supporting local control and governance and has reaffirmed its proposal to preserve local headquarters, local management and the Hawaiian Electric name.
- NextEra Energy has committed to ensuring that Hawaiian Electric will have the same independent authority as NextEra Energy’s two other principal businesses in approving capital expenditures up to $20 million without additional approvals.
- NextEra Energy commits to make available incremental internship programs and recruiting opportunities above those already made available by Hawaiian Electric. This commitment includes adding the University of Hawai‘i System to the list of colleges and universities at which NextEra Energy recruits candidates for employment opportunities nationwide.
- NextEra Energy also has reaffirmed its commitment that, for at least two years after closing, there will be no involuntary layoffs as a result of the transaction and compensation and benefits offered will be substantially comparable to those provided prior to the merger.
- NextEra Energy has committed to honor all existing union labor agreements.
“Our expanded set of commitments is a clear reflection of the thoughtful input we have received from many key stakeholders, including the governor and the consumer advocate,” said Eric Gleason, president of NextEra Energy Hawaii LLC. “We fully embrace Hawai‘i’s goal of 100 percent renewable energy by 2045 and believe this partnership represents the best path forward to achieving this goal—the most ambitious of its kind in the nation. This is a goal that will be accomplished by many people working together collaboratively, and we hope to play a major role in that effort. As the world’s leading generator of renewable energy from the wind and sun, we are well positioned, alongside Hawaiian Electric, to partner with the state to achieve its 100 percent renewable portfolio standard by 2045, as well as integrate more rooftop solar, modernize the electric grids and lower customer bills. We will continue to listen, learn and constructively engage with stakeholders and communities throughout the state—including Gov. Ige and his administration—as we respond to questions and present our vision to the PUC.”
“Achieving Hawai‘i’s 100 percent renewable energy goal is of critical importance to all of us and we firmly believe that the combination of NextEra Energy and Hawaiian Electric will best position our state to realize this future,” said Alan Oshima, Hawaiian Electric’s president and chief executive officer. “As one of the world’s most innovative companies, NextEra Energy’s expertise and resources will significantly accelerate our efforts to strengthen Hawai‘i’s energy infrastructure, lower customer bills and continue our active support of our local communities. In NextEra Energy, we have a partner whose corporate values closely align with our local values to do what’s best for customers and our communities. NextEra Energy has underscored this with a substantial set of commitments to the state of Hawai‘i.”
For more information about Hawaiian Electric and its subsidiaries, go online.