HECO and NextEra Energy file merger plan with regulator

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email

An application has been put forward to Hawaii’s regulator to approve NextEra Energy’s proposed merger with the state's main electric utility, Hawaii Electric Co (HECO), a move the two bodies have claimed will boost Hawaii's clean energy ambitions.

Under the terms of the filing to the Hawaii Public Utilities’ Commission (PUC), HECO said, the utility will not ask to increase the general rate base applied to its customers for four years following the transaction. In addition, the benefit to customers in savings will be worth around US$60 million, HECO said.

The two companies announced their intention to merge in December, with the deal reportedly worth US$4.3 billion, although many commentators described it as a “takeover” of HECO, with NextEra Energy set to assume US$1.7 billion of HECO’s debt. A website set up to promote the move touts the benefit to shareholders of both.

NextEra Energy and HECO claimed on a press release that the merger is in part intended to “strengthen and accelerate Hawaii’s clean energy future”. The island state has set itself an ambitious goal of meeting 65% of its electricity generation from solar by the year 2030. The target is also meant to be achieved in tandem with tripling installed rooftop solar capacity and lowering consumer energy bills by 20% by that time.

In a separate filing with the US Securities and Exchanges Commission (SEC), required for mergers and acquisitions by publicly traded companies, NextEra Energy claimed its “proven track record of reducing oil dependence, improving fuel efficiency and lowering emissions” would be a good fit for helping HECO achieve one of its key goals of moving its generation portfolio to cleaner energy sources.

The merger, HECO and NextEra have said, should leave Hawaiian Electric managed by local workforce and should not lead to involuntary redundancies at HECO for at least two years.

NextEra Energy Hawaii’s president Eric Gleason said his company believed the merger could lead to a “more affordable clean energy future for Hawaii”.

“We share Hawaiian Electric's vision of increasing renewable energy, modernizing its grid, reducing Hawaii's dependence on imported oil, integrating more rooftop solar energy and, importantly, lowering customer bills, and we believe our combination will help to accelerate Hawaii's clean energy transformation,” Gleason said.

Hawaii is per capita among the most oil-dependent states in the US, consisting of small islands without their own fossil fuel resources. Its energy isolation has led to the rapid growth of solar, with as many as one in 10 customers’ houses in some service areas sporting rooftop solar. According to HECO, 11,000 new PV systems were installed in 2014. In addition, several of the state’s islands have installed large-scale battery systems to mitigate the variability of solar output and to provide grid stability.

HECO solar plan

In related news, HECO put forward a new rooftop solar plan on 20 January to the Hawaii PUC, which essentially amounted to charging customers who newly joined local net energy metering (NEM) schemes for their residential PV systems for use of the grid.

In common with similar discussions going on elsewhere in the US and around the globe, HECO claimed this would be a fairer way of distributing the cost of using the grid among all ratepayers. The company’s vice president of customer service Jim Albert was quoted as saying that the yearly “cost shift” away from customers with rooftop solar increased in 2014 by US$15 million from US$38 million the previous year to US$53 million.

However, while HECO highlighted this supposed cost shift, the majority of these figures appeared to be made up of the amount solar system owners saved on their electricity bills, rather than the transferred burden of grid operating costs that were conferred onto non-solar residents. A statement from HECO included the lines:  

“…many NEM customers are able to lower their bills to the point that they do not help pay for the cost of operating and maintaining the electric grid. As a result, those costs are increasingly being shifted from those who have solar to those who don’t. The new transitional programme would create a more sustainable system and ensure the costs of operating and maintaining the electric grid are more fairly shared among all customers.”

In return for being granted the rate rise for solar residents, HECO said the new programme, “Transitional Distributed Generation”, could allow the capacity of solar that neighbourhood electrical networks could take on to be doubled.

The rooftop solar plan faces opposition from local and national solar industry groups, which made their own filing with the local PUC. Local organisations Hawaii PV Coalition, Hawaii Solar Energy Foundation, Blue Planet Foundation and the national rooftop solar advocacy group The Alliance for Solar Choice, as well as national environmental law non-profit Earthjustice made a filing asking that the merger and related plans are not considered until a number of existing issues are resolved including regulations on interconnection.

26 January 2022
Join this free webinar for our analysis of the growth of N-Type technology including; new capacity expansions and production output. We'll also be looking at the global manufacturing footprint with forecasts on how much product will be made outside of China this year and which companies are driving technology change across the crystalline silicon value chain.
23 February 2022
Held annually since 2016, the Energy Storage Summit Europe is the place to be for senior stakeholders in the European storage industry. Designed to accelerate deployment of storage, we examine evolving chemistries, business models, project design, revenue stacks and use cases for storage. The 2022 edition will include exclusive content around longer duration solutions, energy strategies for wide-scale deployment of EVs and "EnTech", the event which sits at the intersection of digitisation, decentralisation and decarbonation of the power system. Come to meet TSOs, DSOs, Utilities, Developers, Investors and Lenders and leave with new contacts, partners and a wealth of information.
7 March 2022
Take your chance to join the most powerful platform in the MENA region. Middle East Energy (MEE), Intersolar, and ees, the leading energy exhibitions are joining hands to co-deliver an outstanding renewables and energy storage event at Middle East Energy 2021. Renewables and energy storage at MEE is the largest gathering of solar and renewable energy industry professionals in the Middle East & Africa, offering the most effective trade focused platform to international manufacturers and distributors looking to meet regional buyers.
8 March 2022
As Solar Finance & Investment enters its ninth year, we sit on the cusp of a new power market with solar at its heart. The 2022 edition of the event will build on our years of expertise and relationships to bring investors and lenders together with top developers. Connect with leaders in the field and use exclusive insights to drive investment and development decisions for the future. Meet new and existing project partners at the largest gathering of European solar investors and lenders.
23 March 2022
When it comes to storage, the US market exceeded a gigawatt of advanced energy storage installations (weighted towards lithium ion) at 1.46 GW, more than the previous six years in total! An exponential growth rate could see the market hit 7.5 GW p.a. by 2025. The summit will provide a wealth of content around this vital piece in the US power puzzle, with sessions dedicated to explore how companies are making money from batteries, the latest chemistries and their applications as they apply to different use-cases. We ask how investors can match ESG criteria to batteries and we will bring case studies of successful deployment and project execution onto the stage to examine how you can ensure your own projects are successful.
29 March 2022
Now in its 10th sell-out year, Large Scale Solar returns to Lisbon in 2022. We are excited to gather together face-to-face with the European solar industry as we provide unique and exclusive access to a powerful selection of the market's key stakeholders. Join this elite summit to find out how the market is maturing, which new markets are becoming more exciting, how technology is evolving and who's driving the market forward into the 2020s. Always senior, packed with developers, EPCs, utilities and investors this is the event for companies serious about European solar PV.

Read Next

January 21, 2022
Toronto-based renewables developer Amp Energy has closed on a US$350 million credit facility to advance on a global portfolio of renewables and battery energy storage assets.
January 21, 2022
India is at risk of a supply and demand mismatch for solar equipment if domestic PV manufacturers are unable to meet the quantity and quality required by project developers, Fitch Solutions has warned.
January 21, 2022
The European Commission has launched a public consultation on solar energy on the continent as it continues preparations to publish its solar strategy later this year.
January 21, 2022
US solar installer SunPower is to be hit by a cracking issue discovered in connectors associated with equipment installed in some commercial and industrial (C&I) projects, resulting in charges of around US$31 million.
PV Tech Premium
January 21, 2022
Greece is on track to accelerate solar deployment in the coming years, with the sector boosted by rising demand for renewable offtake agreements from corporations and clean energy policies from the EU, according to the general manager of Greek industrial group Mytilineos’s renewables business.
January 20, 2022
Mississippi authorities have expanded the state’s net metering programme to improve total compensation rates for solar customers and prioritise the adoption of distributed PV for low- to moderate-income (LMI) households.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
January 26, 2022
Free Webinar
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 8, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal