I’m a bit puzzled now that Governor David Ige and several state agencies have come out in opposition to the NextEra-Hawaiian Electric merger.
The solar industry had been taking the lead in opposing the deal, and has now been joined by the state.
The Star-Advertiser reported on the governor’s stance this morning (“Ige opposes NextEra deal“).
Ige signed into law last month a bill that sets a goal of 100 percent of the state’s electric power coming from renewable energy sources by 2045. The governor said Monday he is not convinced NextEra is the company to get the state there.
“We are committed to a 100 percent renewable future, standing alone among the 50 states in the nation in that action. We need an electric company that sees Hawaii as the center of its work and the opportunity we represent as one of the greatest moments in history for any utility,” Ige said. “We have not seen that in this proposal.”
NextEra spokesman Rob Gould, reached late Monday on the East Coast, said the company could not immediately comment on Ige’s stance.
NextEra said last month the state’s 2045 goal “may prove to be very aggressive.”
That answer was unacceptable for the state.
And Henry Curtis (Ililani Media) quoted extensively this morning from a filing by the Office of State Planning
“The Office of Planning understands that Applicant Hawaiian Electric Companies are very important to the State of Hawai?i, not only in the area of energy, but also to areas such as the economy, labor, employment, governance, and the community. The Hawaiian Electric Companies have been intertwined with the entire fabric of Hawai?i for well over a century. The Hawaiian Electric Companies have had a monopoly in supplying power to approximately 90% of our island state, occupying a special and unique role in Hawai?i. And being a company in such a circumstance, comes with high expectations from the State and its residents in a variety of areas, including but not limited to the aforementioned areas.
Therefore, when a significant shift occurs to a company of great importance to Hawai?i, such as the Proposed Transaction, it triggers not only the typical rate impact analysis, but also an impacts analysis that is not usually addressed by the PUC. In the instant docket, consistent with its statutory role in providing recommendations to state agencies on conflicts between the Hawai?i State Plan and state programs, the Office of Planning strongly recommends that the PUC consider the issues covered by the Office of Planning in its review of the Proposed Transaction. See HRS § 226-53(1).”
“For the most part, the Applicants have focused on the “business” side of the Proposed Transaction, although as evident from the Office of Planning’s testimony of witness Mr. Hempling, questions remain that need to be considered and resolved, before approval of the Proposed Transaction is issued by the PUC.
Likewise, on the “societal” side of the Proposed Transaction, there remain questions or uncertainty on issues such as commitments to corporate giving, impacts to employees/employment/labor, corporate governance and community values.
A couple of things strike me.
First, there’s the “100% renewables” law. NextEra calls it “very aggressive,” a characterization that the state reportedly deems “unacceptable.”
But, quite honestly, it is aggressive, don’t you think? It’s the first such policy in the country, which somewhat by definition makes it aggressive in comparison to other jurisdictions. It depends on lots of factors outside the control of the utility or the state, including dramatic progress in battery technology or other technologies to even out the flow of solar, wind, and the intermittent energy sources. Most of those can’t be legislated, especially not at the state level.
Then there’s the question of cost. It is going to cost a lot to upgrade the grid to accommodate increasingly higher levels of renewable and intermittent power if we’re to have any hope of reaching the 100% goal.
And one thing we’ve learned in the discussion since the proposed merger was announced is that while Hawaiian Electric has been a big company in our small state, it is actually a small utility, and a relatively small player in the national financial world.
The company’s chairman has characterized HEI as a collection of small, independent utilities, which results in higher borrowing costs than a larger utility with deeper pockets would incur.
So how will blocking the NextEra merger and keeping Hawaiian Electric as a local, independent company solve the financial equation? Will the state step in to provide the deep pockets and support for the necessary debt? I doubt it. Can stockholders be forced to bear the cost? Theoretically, yes, but it would drive down the value of HEI shares and create a further drag on HEI’s access to financial markets.
So getting from here to the desired future without the ability to access the deep pockets of a utility giant like NextEra is a big problem that will remain if this merger is turned down.
And then there are those social impacts of Hawaiian Electric that are highlighted by the Office of State Planning. Before the merger, these were seen, more often than not, as problems associated with the company’s monopoly position, and the power it derived from its impact on employment and politics, its interlocks with other parts of the local power structure, were widely considered problematic by many of the same interests that now oppose the merger with NextEra.
The rest of our economy has pretty much been taken over and integrated into the wide world of corporate ownership and finance. Local media? Out of state owners. Hotels? National and international owners. Retail chains? Largely national ownership. The days of the locally owned “Big Five” are long gone, and there really isn’t much nostalgia for those old days. So why the sudden outspoke fear that out of state ownership of the local utility will be a game changer, while outside ownership of other major parts of our island life now goes without comment?
In the end, what energy future does the state really want? And if the NextEra merger is turned down, how will that propel us towards that preferred future?
I, for one, am interested in seeing the answers to that question.
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http://www.greentechmedia.com/articles/read/NextEras-4.3B-Acquisition-of-HEI-Opposed-by-Hawaii-State-Agencies-Govern
Do I think that 100% renewables by 2045 is aggressive? Yes. Do I think that it is too aggressive? No. Unless someone sets an aggressive goal we will just coast along, business as usual with no sense of urgency. As Jon Kennedy said about going to the moon; “We chose to do these things, not because they are easy, but because they are hard.”
If, in 1985 someone had said that in 30 years we want everyone to have a battery powered, pocket device which is not only a wireless telephone, but provides internet (what’s that) access and has more memory and more computing power than any mainframe computer at the time; would that have been called aggressive? Yet here we are.
I agree that solar and wind will not get us there but we are surrounded by a virtually limitless ocean. There is OTEC which is a mostly untapped resource. There is wave energy which in spite of some half hearted development is totally untapped. Add developments in battery and other storage technologies, conservation technologies such as LED lighting, better control systems, more efficient devices, micro grids, neighborhood energy cooperatives.
In order to make all of this happen we need to recognize that the current obsolete, monolithic utility business model is unsustainable. That will not happen with Hawaiian Electric, NextEra or any combination thereof.
“So getting from here to the desired future without the ability to access the deep pockets of a utility giant like NextEra is a big problem that will remain if this merger is turned down.” This seems like a conclusion without any substantive evidence being offered. Do you have some examples from other places you would point to where “deep pockets” were necessary to reach a “desired energy future?” Also, what evidence do you have to support your assertion that “It is going to cost a lot to upgrade the grid to accommodate increasingly higher levels of renewable and intermittent power if we’re to have any hope of reaching the 100% goal?”
Essentially parroting the stated positions of NextEra and HECO doesn’t really advance the dialog and won’t help you answer your questions. Lastly, your final question of “In the end, what energy future does the state really want?” can partially be answered by reading the law you deem “aggressive” and by looking at the growing efforts state-wide to decentralize and build public involvement in energy independence (KIUC, Parker Ranch, Hawaii Island Energy Cooperative, KULOLO, Maui County and Honolulu exploring municipalization, etc…).
Unfortunately, I don’t think 2045 is aggressive enough to avert environmental catastrophe. Energy technology is changing very rapidly, including efficient batteries and lighting. Most European countries expect to ditch petroleum based energy production well before 2045–and Denmark just last week produced 140% of its electricity needs from renewable sources–mostly wind energy– and sold the excess to surrounding countries. Some of those countries have means of storing energy for later use-something it’s important for Hawaii to explore.
Rather than being a partner in solving the issues involved in a transition to renewables, Hawaiian Electric has worked in every way it could to block expansion of alternative forms of energy, just as NextEra is reported to have done in Florida. And though you think that a merger of the two might result in cheaper financing, there is no indication at all that NextEra is thinking of financing renewables to any substantial degree.
I totally agree with MBarb. A merger of NextEra and Hawaiian Electric may or may not make for cheaper financing but the critical question is: financing for what? Is it financing to perpetrate the centralized generation and grid distribution model or something else? All indications are that neither HECo nor NE is interested in customers becoming energy independent. Also, it is becoming abundantly clear that financing will come from private sources as it becomes more economical for customers to provide for their own energy needs.
Hmmmm. Since Hawaiian Electric apparently has a higher percentage of customers with rooftop solar than any other utility in the country, it’s hard to say that they aren’t interested in customers pursuing this direction. Customer independence? You’re probably right, since from the perspective of all customers, it is better to keep us all in the system. Independence means independence only for those who can afford it, at least that’s the way HEi and the PUC appear to see it.
There’s “it’s aggressive and we love it and we’re going to use Hawaii as a test bed to make it happen! Yay!”
And then there’s “it’s aggressive and we don’t really think it can happen and so we aren’t really interested in that goal from the outset.”
And NextEra has given every indication that the latter is the way they are thinking.
NextEra has made clear they want to use LNG as a “bridging” fuel. Two problems with that:
First, if you check the full lifecycle of LNG it is currently dirtier than coal. The amount of methane leaked through the drilling (fracking) process and transportation far outweighs the benefits from the fact that LNG burns cleaner than oil or coal.
Second, the amount of money required to convert our power plants to burn LNG directly affects the amount of money available (or that the utility would want to set aside) to convert to a smart grid and install utility-scale storage.
Storage does not have to depend on technological breakthroughs. There are myriad options on the table right now to use the excess power generated during the daytime to create storage for firm power at night. They include pumping water uphill and having it run downhill driving micro-turbines in the water lines – an option currently being examined by the Board Of Water Supply. They also include the hydrogen option raised in a column in Civil Beat today. They include having some customers start to use some battery storage and Time Of Use software to reduce their electric consumption at periods of peak demand. etc, etc. The issue here is to have a utility attuned to local concerns,and local needs that is committed to our locally-generated goals.
NextEra has done NOTHING to show that it gets this or that it wants to use the opportunity provided by its proposal to devour HEI to push the frontiers of renewable power.
The issue of social equity is a real one. That is what the GEMS bill, passed in 2011 is intended to address – HECO has been dragging its feet, but the legislation is in place to make rooftop solar available and affordable to all.
HECO may be reluctant to tread the path to 100% renewables, how much worse would NextEra be? How much could we anticipate the company spending on lobbyists etc to dilute and subvert our goal? NextEra is a Trojan Horse.
Re GEMS, mentioned by Anthony Aalto: whatever the intentions behind this program were, they have paved that proverbial route to purgatory. And the fault cannot be laid at Hawaiian Electric’s door. Two years after the Legislature approved this program, not one household has been helped. Instead, every ratepayer gets a monthly bill to cover interest on the $143 million bond the state took out. And the folks at DBEDT in charge of the program have been looking to expand it in ways never anticipated by the Legislature. Most recently, before (apparently — so far as I can learn) the first solar panel under GEMS has been mounted on any homeowner’s roof, DBEDT informed the PUC it would be expanding the pool of eligibility to small businesses wanting to finance energy-efficiency measures. All well and good, but hardly what the Leg and GEMS supporters had in mind. (For extra background on GEMS, see the March 2015 cover story in Environment Hawaii, reprinted in Civil Beat, and also the July 2015 article in Environment Hawaii.)
In light of this discussion, this is a fun post with extensive comments to review:
http://www.ilind.net/2011/12/30/hawaiian-electric-blending-news-and-advertising/