Prior to the combination officially being called off, the Hawaii Public Utilities Commission (PUC) voted 2-0 July 15 against the proposed merger between NextEra Energy (NYSE:NEE) and Hawaiian Electric Industries (NYSE:HE) (HEI).
NextEra and the parent company of Hawaiian Electric Companies (HECO) subsequently announced the formal termination of the proposed $4.3bn merger on the following Monday, July 18.
Commissioner Thomas Gorak abstained from signing the decision and order. Gorak did not make any mention of the proposed merger during a presentation days earlier to the Energy Information Administration (EIA) conference in Washington, D.C.
Commissioner Lorraine Akiba and Chairman Randall Iwase evidently voted to reject the merger.
Based on its review of the record, the PUC concluded that while the applicants demonstrated that NextEra is fit, willing, and able to perform the services currently offered by the HECO Companies, “the Applicants failed to demonstrate that the Application is reasonable and in the public interest,” according to a summary of the order.
“In reaching this conclusion, the Commission focused on five fundamental areas of concern: (1) benefits to ratepayers; (2) risks to ratepayers; (3) Applicants’ clean energy commitments; (4) the proposed Change of Control’s effect on local governance; and (5) the proposed Change of Control’s effect on competition in local energy markets,” the PUC said.
The PUC said the benefits offered by the applicants in the proposed merger were “both inadequate and uncertain.”
The PUC concluded that NextEra possesses considerable resources and experience with renewable energy. Two of NextEra’s primary subsidiaries, NextEra Energy Resources, Inc., and Florida Power and Light, have extensive experience in developing utility scale renewable energy projects and implementing smart meters and grid modernization, respectively. “However, the Commission observed that NextEra lacks direct experience in the specific and unique renewable energy issues facing Hawaii, such as integrating very high levels of distributed energy resources – particularly residential rooftop solar PV systems – into isolated island grids,” the PUC said.
The PUC also cited lack of specific details on meeting Hawaii’s goal of going 100% renewable over 30 years.
In dismissing the Application, the Commission was careful to clarify that its decision did not mean that the commission would not approve, in the future, a merger, acquisition, or other change in control of the HECO Companies,” according to a summary of the Order in Decision and Order No. 33795, Docket No. 2015-0022.