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Thursday, January 29, 2015
NextEra, HECO Formally Request PUC Approval of Merger
By News Release @ 9:34 PM :: 2754 Views :: Energy

NextEra Energy and Hawaiian Electric File Joint Application with the Hawaii Public Utilities Commission

News Release from HECO and NextEra

JUNO BEACH, Fla., and HONOLULU, Jan. 29, 2015 — NextEra Energy, Inc. (NYSE: NEE) and Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company Limited (collectively referred to as Hawaiian Electric), subsidiaries of Hawaiian Electric Industries, Inc. (NYSE: HE) (HEI), today filed an application with the Hawaii Public Utilities Commission (PUC) requesting approval of the proposed merger involving Hawaiian Electric.

The filing details the companies’ commitments to Hawaiian Electric’s communities, employees and customers for enhancing service reliability, continuing community and charitable support, continuing to locally manage Hawaiian Electric’s utilities from their existing operating locations, delivering savings and value for customers, and strengthening and accelerating a cleaner energy future. Highlights of the application include a commitment to not file a request with the PUC for a general base rate increase for at least four years post-transaction close and approximately $60 million in quantified customer savings, both subject to approval of certain conditions.

Hawaiian Electric stands at the forefront in addressing a vast array of complex issues associated withHawaii’s clean energy transformation. By combining with NextEra Energy, Hawaiian Electric will gain a leading-edge partner, with deep operational, technical and managerial expertise, financial capacity and a proven clean energy track record. The proposed combination is expected to provide Hawaiian Electric with the added capacity, resources and access to expertise to strengthen and accelerate Hawaii’s transition to a more affordable, equitable and inclusive clean energy future, while delivering substantial customer benefits, including lower costs and improved reliability over time.

“The filing of this application begins an important review process that we believe will ultimately result in a more affordable clean energy future for Hawaii,” said Eric Gleason, president of NextEra Energy Hawaii, LLC. “We share Hawaiian Electric’s vision of increasing renewable energy, modernizing its grid, reducingHawaii’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. We welcome the opportunity to engage directly with the PUC and the communities that Hawaiian Electric serves. As we move forward, our focus will be on applying our expertise and resources, alongside Hawaiian Electric’s, to bring significant benefits, savings and value to Hawaiian Electric customers and to create the clean energy future we all want for Hawaii.”

“This application represents a significant milestone in this process,” said Alan Oshima, Hawaiian Electric’s president and chief executive officer. “As the filing outlines, joining with NextEra Energy provides Hawaiian Electric with the unique opportunity to strengthen and accelerate our clean energy transformation. Importantly, this partnership will help us deliver substantial value to Hawaiian Electric’s customers, including through NextEra Energy’s commitment not to request an increase in general base rates for at least four years following the close of the transaction and to forego rate increases for recovery of operation and maintenance increases during that same period.”

Delivering Significant Value and Increased Savings to Customers

  • Delivering sustained savings for customers, managing costs effectively and improving service reliability
    • As detailed in the application, NextEra Energy pledges that, for at least four years following the completion of the transaction, subject to approval of certain conditions, Hawaiian Electric will not submit any applications seeking a general base rate increase and will forego recovery of the incremental operations and maintenance revenue adjustment under its decoupling rate mechanism during that period, which amounts to approximately $60 million in cumulative savings for customers.
    • NextEra Energy is committed to maintaining and improving over time the reliability of the Hawaiian Electric Companies’ electrical systems and will support the ongoing efforts of the Reliability Standards Working Group and its subgroups.
    • The companies expect that the combination will also provide significant customer savings and benefits from improved financial standing, strong vendor relationships and economies of scale, and technical expertise.
  • Providing customer protections

    • NextEra Energy will not seek to recover through rates any acquisition premium, transaction or transition costs that may arise from the transaction.
    • NextEra Energy will also maintain various protections designed to ensure that Hawaiian Electric and its customers are not impacted by the activities and businesses of other NextEra Energy entities and subsidiaries.

Committed to Local Customers, Employees and the Communities We Serve

  • Hawaiian Electric will continue to be locally managed
    • Upon completion of the combination, Hawaiian Electric will become a third principal business within the NextEra Energy family of companies. Hawaiian Electric will continue to operate under its current name and continue to be headquartered in Honolulu. Hawaiian Electric will continue to be locally managed from existing operating locations.
    • No involuntary reductions to Hawaiian Electric’s workforce will occur as a result of the transaction for at least two years after the closing of the transaction, and all of its union labor agreements will be honored.
  • Serving and supporting Hawaii’s communities

    • NextEra Energy has been recognized for an unprecedented eighth consecutive year as No. 1 on the utility industry list of Fortune’s “Most Admired Companies” and enjoys a longstanding reputation as a strong corporate citizen throughout the communities in which it operates. Consistent with that, NextEra Energy expects to maintain HEI’s overall current level of corporate giving in HEI’s communities.
    • In addition, NextEra Energy has committed to establish a local, independent advisory board to be made up of six to 12 members, all of whom will have substantial ties to the Hawaii community. The purpose of the board will be to provide input on matters of local and community interest.

Strengthening and Accelerating Hawaii’s Clean Energy Future

The combination of NextEra Energy and Hawaiian Electric brings together two industry leaders in clean and renewable energy. Hawaiian Electric has put Hawaii on the leading edge of clean energy nationally, successfully integrating rooftop solar with 12 percent of residential customers—including 11,000 new installations in 2014 alone—and helping achieve 21 percent renewable energy. Hawaiian Electric has filed plans with the Hawaii PUC that seek to enhance Hawaii’s energy future by lowering electric bills, giving customers more service options and nearly tripling the amount of distributed solar, while achieving among the nation’s highest levels of renewable energy by 2030. NextEra Energy adds its strength as the nation’s leading clean energy company and is supportive of Hawaiian Electric’s plans to accomplish these clean energy goals. As part of the merger filing, NextEra Energy commits to strengthening and accelerating Hawaiian Electric’s clean energy transformation through increased renewable energy – including integrating more rooftop solar energy – electric grid modernizations, energy storage and customer demand response programs.

NextEra Energy’s principal subsidiaries include Florida Power & Light Company (FPL), one of the nation’s largest and most well-respected electric utilities, and NextEra Energy Resources, LLC, which together with its affiliated entities (NextEra Energy Resources), is North America’s largest producer of renewable energy from the wind and sun. Through NextEra Energy Resources, NextEra Energy brings to bear all the capabilities of a renewable energy leader, including utility-scale and distributed solar, wind and battery storage, as well as the resources to help accelerate Hawaiian Electric’s efforts to pursue a new energy future in Hawaii. Together, FPL and NextEra Energy Resources have completed more than $24 billionworth of major capital projects since 2003, overall on time and under budget.

FPL serves approximately 4.7 million customers in a state that, like Hawaii, has no indigenous fossil fuels and was once the largest consumer of oil among all U.S. utilities. Since 2001, FPL has reduced its reliance on foreign oil by more than 99 percent, improved its overall fuel efficiency by 20 percent and saved its customers more than $7.5 billion in fuel costs. FPL’s operational excellence has supported low customer bills, including typical residential customer electric bills that are approximately 25 percent lower than the national average. Additionally, FPL’s highly efficient generation fleet is one of the cleanest and most modern among utilities nationwide. FPL also has developed, built and operates one of the nation’s most modern grid networks and offers the highest reliability among Florida’s investor-owned utilities, ranking in the top quartile nationally, with more than 99.98 percent reliability. In 2014, FPL received two prestigious reliability-related awards by PA Consulting Group – Outstanding Technology and Innovation in the U.S. and Outstanding Reliability Performance in the U.S. South region.

Merger Approval Process

In addition to the filing made with the Hawaii PUC by NextEra Energy and Hawaiian Electric, HEI today filed for merger approval with the Federal Energy Regulatory Commission. The transaction is also subject to approval by HEI shareholders, the expiration or termination of the waiting period under the Hart-Scott-Rodino Act, Securities and Exchange Commission (SEC) effectiveness of registration statements, the spinoff of ASB Hawaii and additional regulatory approvals and other customary conditions. The companies expect the transaction, which has been unanimously approved by both companies’ boards of directors, to be completed in the fourth quarter of 2015.

Website

Additional information about the benefits of the transaction is available at www.forhawaiisfuture.com

PDF: Application for Approval of the Proposed Change of Control.

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