It’s a familiar story: A large merger is proposed that puts an important piece of Hawaii’s future at stake. Questions are asked about the details of the merger and we’re told, “trust us, we’ve got this handled.” Ask yourself, how many of those promises became reality once that company had control? For the Hawaiian Electric/NextEra merger, now is the time to ensure real commitments for residents and ratepayers, before we lose our chance to do so. Time and again, we’ve learned there is a big difference between firm commitments and empty promises.
NextEra’s latest promises continue this cynical trend. Of the 54 new “commitments,” 44 of them are either legal obligations they already had, actions Hawaiian Electric had planned before the merger, or conditions that nearly every Public Utility Commission in the United States routinely imposes on mergers, and should have been included in their original application. The remaining 10 deserve our attention.
We applaud NextEra’s movement towards protecting Hawaii’s ratepayers from unforeseen financial catastrophe of the parent company. Unfortunately they still fall short of providing true bankruptcy protections through the type of remote ring fencing provisions seen in other mergers. We support the $10 million fund for Hawaii’s Public Utilities Commission to deploy against its highest social priorities. We believe incentives and penalties for fuel costs provide the right motivation to focus on what matters, but should be modified to focus management attention on the substitution of low cost renewables for fossil fuels.
We reject the fake math behind NextEra’s billion-dollar promise. That figure is fantasy, based on NextEra achieving all of the possible merger savings, passing them through to consumers thus transferring those rate savings to the economy. But that is not what they are committing to.
They are not committing to achieving the $465 million of possible merger synergies. In fact, whatever savings they do get, they can keep for themselves during the four-year rate moratorium. They will only pass savings on to customers after the next rate case, whenever that may be. Instead, NextEra is committing to $60 million in reductions in RAM that Hawaiian Electric had previously inflated. This is not unlike department store sales offering discounts to overpriced items. On behalf of ratepayers, we are asking for $100 million of unconditional rate credits, which will immediately result in lower rates to consumers.
NextEra recognizes our desire to reach 100 percent renewables and improve grid reliability. They finally acknowledge that Hawaiian Electric’s plans are grossly inadequate, and only after we asked for it, are they committing to filing their plans within the first 12 months after the merger. That’s nice, but leaves the people of Hawaii in a very vulnerable position. Tangible, firm commitments to accelerate the mandated Renewable Portfolio Standard goals and improve reliability are what are needed from the outset of this merger. Anything they promise down the road simply can’t be trusted. Accountability will motivate utility management to develop and execute plans.
Approval of this merger is all about trust. But, to earn our trust, NextEra needs to make real commitments.