The Federal Energy Regulatory Commission on March 27 approved the proposed takeover of Hawaiian Electric Industries (NYSE: HE) by Florida-based NextEra Energy (NYSE: NEE).
On Jan. 29, Hawaiian Electric Industries filed an application requesting commission authorization for the series of merger transactions through which NextEra Energy will indirectly acquire 100% of the securities of the applicant and its electric utility company affiliates and the surviving company will become a direct, wholly-owned subsidiary of NextEra.
“Although Applicant states that the Proposed Transaction may not require Commission approval under [Federal Power Act] section 203(a)(2), out of an abundance of caution it nevertheless asks the Commission to approve its Application without ruling on the jurisdictional question,” the FERC approval noted. “This order authorizes the Proposed Transaction without making any determination of jurisdiction.”
Hawaiian Electric Industries is a publicly-traded holding company whose principal subsidiaries are engaged in electric utility and banking businesses’ operating primarily in Hawaii. It directly owns Hawaiian Electric and, through Hawaiian Electric, indirectly owns Maui Electric and Hawaii Electric Light. These utilities are engaged in the production, transmission, and distribution of electricity and collectively serve the electric power needs of over 95% of Hawaii’s 1.4 million residents.
Hawaiian Electric Industries pointed out to FERC that because these subsidiaries are engaged in utility service exclusively within the islands of Hawaii and have no sales for resale in interstate commerce or transmission interconnections with the continental United States, neither Hawaiian Electric, Maui Electric or Hawaii Electric Light is a public utility under FPA section 201.
Applicant owns or controls the following generation through its utility subsidiaries:
- Hawaiian Electric – 1,731 MW of firm generating capacity, including three owned generation facilities totaling 1,270 MW and 461 MW of generation purchased from three independent power producers. Hawaiian Electric also purchases 348 MW of non-firm generation.
- Hawaii Electric Light – 290 MW of firm generating capacity, including four owned generation facilities, distributed generation owned by Hawaii Electric Light Company totaling 174 MW, and 16 MW purchased from an independent power producer. Hawaii Electric Light also purchases 115 MW of non-firm generation.
- Maui Electric – 286 MW of firm generating capacity, including five owned generation facilities and distributed generation totaling 188 MW and 98 MW of generation purchased from three independent power producers. Maui Electric also purchases 87 MW of non-firm generation.
NextEra, a Florida corporation, is an energy holding company. Its operations are conducted primarily through two business units: Florida Power & Light, a traditional public utility operating in Florida, and NextEra Energy Resources LLC, the parent company of NextEra’s merchant generation and trading businesses. A third business unit, NextEra Energy Transmission LLC, owns New Hampshire Transmission LLC, a transmission public utility operating in New Hampshire, and Lone Star Transmission LLC, a transmitting utility operating in the Electric Reliability Council of Texas.
Through its subsidiaries, NextEra Energy Resources owns and operates a portfolio of resources that totals over 19,000 MW of net generating capacity located in 25 states and Canada. These resources include approximately 11,700 MW of wind-powered and solar-powered electric generating facilities. NextEra Resources currently does not own any generation in Hawaii, although one of its subsidiaries, Ka La Nui Solar LLC, is developing a 15-MW solar facility on the island of Oahu that is scheduled to begin operation in 2017. The output of the facility is to be sold to Hawaiian Electric under a long-term contract that is pending approval before the Hawaii Public Utilities Commission.
While NextEra does not own any transmission facilities in Hawaii, its NextGrid Hawaii subsidiary has been developing an undersea cable project in the state. If determined to be in the public interest and approved by the Hawaii commission, this transmission project would consist of two high-voltage undersea cables and associated on-island facilities with a system transfer capability of 200 MW. The system would interconnect the Maui Electric electric system on the island of Maui with the Hawaiian Electric system on the island of Oahu, allowing for the bi-directional flow of power. The project is still in the planning stages.