Hawaiian Electric: 'Walk away' deadline won't kill NextEra merger deal
- The proposed $4.3 billion merger of Hawaiian Electric Industries (HEI) and NextEra Energy can continue moving forward after June 3 without any action by the two utilities if Hawaii regulators do not reach a decision on the deal, HEI officials told Honolulu Civil Beat.
- Both companies have until June 3 to pull out of the negotiations without paying "walk away" fees. After June 3, NextEra must pay a $90 million termination fee and up to $5 million in legal fees if the deal falls through. But that does not mean the merger is off even if the Hawaii Public Utilities Commission (HPUC) does not rule on the acquisition on June 3, HEI officials said.
- HPUC Chair Randy Iwase said he hopes the commission will have a decision by the end of June. The HEI officials said nothing about termination and NextEra declined to comment to Civil Beat. NextEra has also said nothing to HEI, according to Hawaiian Electric Company (HECO) President/CEO Alan Oshima.
Florida-based NextEra Energy is a multi-state power producer with over 45 GW of generation and the owner of Florida Power & Light, the third-largest regulated utility in the country, with more than 4 million customers. The company announced plans to buy HEI, the parent company to HECO, Maui Electric, and Hawaii Electric Light, in December 2014.
A poll by Civil Beat in February showed a majority of residents oppose the NextEra acquisition, along with Gov. David Ige, the state energy agency, and the consumer advocate.
After a year and a half of public campaigns and weeks of evidentiary hearings before the PUC, almost all the stakeholders who participated in the proceeding remain opposed to the merger, with the notable exceptions of the Hawaii Department of Defense and the local chapter of the International Brotherhood of Electrical Workers.
Electricity is a closely-followed issue in Hawaii, the state with the highest power rates in the U.S. The Civil Beat poll showed more than 60% of respondents thought electricity prices would rise if the merger went through. NextEra's ownership of FPL has also been an issue, with renewable energy advocates questioning the Florida utility's track record on rooftop solar.
In recent weeks, some financial analysts have speculated that NextEra will withdraw from the merger, possibly to pursue Texas utility Oncor, whose acquisition by Hunt Consolidated fell through last month. If that happens, it could open up an opportunity for a new suitor for HEI, or for the state to explore cooperative or municipal utility business models, a merger brief by the state Office of Planning pointed out.
Correction: An earlier version of this post indicated that either company would be responsible for paying termination and legal fees if they ended the merger after June 3. That was incorrect. After June 3, NextEra is responsible for the fees if the deal falls through.