The marriage is off: NextEra and Hawaiian Electric won’t merge

NextEra Energy (NYSE:NEE) and Hawaiian Electric Industries (NYSE:HE) (HEI) have terminated their plans to merge, citing the Hawaii Public Utilities Commission’s (PUC) order to dismiss the companies’ merger application.

The two power companies announced the merger was off via news releases early July 18.

Under the terms of the merger agreement, NextEra Energy will pay Hawaiian Electric Industries a $90m break-up fee and up to $5m for reimbursement of expenses associated with the transaction.

“As a result of the PUC’s order, we have terminated our merger agreement,” said NextEra Energy Chairman and CEO Jim Robo. “We wish Hawaiian Electric the best as it serves the current and future energy needs of Hawaii, including helping the state meet its goal of 100% renewable energy by 2045. Looking forward, NextEra Energy remains extremely well-positioned to execute on our strategy and deliver exceptional results for our customers and shareholders,” Robo said.

“We appreciate NextEra Energy’s interest in Hawaii and in our company,” said Connie Lau, HEI’s President and CEO and chairman of the boards of Hawaiian Electric and American Savings Bank.

HEI would have divested the bank had the NextEra merger been consummated.

“All of us at HEI, Hawaiian Electric and American Savings Bank remain committed to serving our customers, and we look forward to working together with communities across our state to realize the clean energy future we all want for Hawaii and to ensure a vibrant local economy,” Lau said.

Hawaii PUC Commissioner Thomas Gorak made no mention of the status of the proposed NextEra, HEI merger on July 12 when he addressed an Energy Information Administration (EIA) conference in Washington, D.C.

The Federal Energy Regulatory Commission (FERC) had approved the proposed merger back in March 2015, but there had been speculation since them that the merger would not go through.

The two companies had originally announced their merger plans back in December 2014. The transaction was valued at about $4.3bn and included the assumption of $1.7bn in HEI debt.

Hawaiian Electric stresses renewable projects in the pipeline

HEI also reaffirmed its financial and operational strength as a stand-alone company and its 2016 earnings per share guidance range of $1.62 to $1.75 per share.

The Hawaiian utility holding company also stressed that it continues to make steady progress toward the state’s ambitious renewable energy plans.

The company reached a record 23% of energy needs from renewable generation in 2015 – well ahead of the 15% clean energy goal. This achievement includes attaining 49% renewable energy on Hawaii Island and 35% renewable energy across Maui County.

Hawaiian Electric has a number of clean energy initiatives in progress, subject to regulatory approval, including:

•A proposed foundational smart grid project for modernizing the company’s wireless communication network, including installation of smart meters, a customer web/mobile portal, expansion of its outage management system, and other enhanced;

•Future requests for proposals (RFPs) for a variety of renewable energy projects with a combined capacity of about 330 MW to be developed by 2022;

•Demand response programs to allow customers to provide energy services to the grid to help maximize the reliable integration of renewable energy while lowering customer costs; 

•Energy storage options, including both utility-scale systems, energy storage integrated with rooftop PV systems, and pilot programs evaluating new technologies;

•Community-Based Renewable Energy programs to allow customers who cannot or choose not to take advantage of rooftop solar to receive the benefits of participating in a renewable energy program;

•Microgrids at military facilities interconnected to the utility grid that provide resiliency and energy security for all customers by using diversified locations for firm generation. This includes a 50-MW Schofield Generating Station, powered by a biofuel blend, scheduled to be in service by late 2017;

•Electrification of transportation initiatives that will facilitate the use of renewable energy as a substitute fuel for transportation.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at