Hawaiian Electric Against ‘Substantial Net Benefit’ For Utility Merger
The company is fighting lawmakers’ efforts to make it a legal standard for mergers, replacing one that requires no net harm.
Hawaiian Electric Co. officials said they aren鈥檛 exactly sure what 鈥渟ubstantial net benefit鈥 means, but they know they don鈥檛 want state lawmakers to require the Public Utilities Commission to use that standard for聽determining whether to聽approve a utility merger.
Kevin Katsura, HECO鈥檚 assistant deputy general counsel, gave the House Energy and Environmental Protection Committee, chaired by Rep. Chris Lee, a list of reasons to not pass before the committee聽went ahead and did so.
Katsura聽cautioned against unintended consequences, highlighted the need for energy regulators to have the discretion to establish reasonable criteria for specific mergers and said the PUC has already adopted the commonly used 鈥減ublic interest鈥 standard that, at a minimum, ensures a merger will have no net harm.
Plus, Katsura said, 鈥淚t is also unclear what 鈥榮ubstantial net benefit鈥 means.鈥
He鈥檚 likely not alone there, and the legislation doesn鈥檛 define it. The bill also doesn鈥檛 say who should be guaranteed a substantial net benefit, although the state Consumer Advocate argued in favor of ratepayers.
The bill would聽specifically protect the commission鈥檚 ability to set reasonable criteria for specific mergers. But there鈥檚 debate over whether this new standard would apply to the pending $4.3 billion sale of Hawaiian Electric Industries to Florida-based NextEra Energy.
The PUC, currently in the middle of a quasi-judicial hearing on the proposed merger, expects to make a decision sometime this summer; but it could be later. The legislative session ends May 5.
Katsura said there would be 鈥渄ue process and constitutional concerns鈥 in applying the standard retroactively, but Lee maintains that it would and should apply to the NextEra-HEI case.
Lee pressed Katsura on why Hawaiian Electric doesn’t support being held to a legal standard of substantial net benefit, but Katsura kept coming back to the PUC needing discretion and that the agency already requires 鈥渟ignificant, quantifiable benefits to the HECO Companies’ ratepayers鈥 in the NextEra buyout.
鈥淲e strongly support fixing this right now.” — Mickey Knox, Consumer Advocate staff attorney
Consumer Advocate staff attorney Mickey Knox said the office hasn鈥檛 done a legal analysis on the bill to know if it would apply to the NextEra case. But the Consumer Advocate does support having a substantial net benefit for ratepayers as the standard in the NextEra merger and future cases.
鈥淲e strongly support fixing this right now,鈥 he said.
PUC Chair Randy Iwase declined to comment because he didn鈥檛 want to say anything that might affect the NextEra proceedings and because he wasn鈥檛 sure whether the bill would apply to that case.
Katsura said that adopting a “substantial net benefit” standard could set a precedent. He pointed at the 2006聽approval of the sale of The Gas Company to Macquarie Gas Holding, and the $4.1 million that sale saved customers in rate credits.
“Had the commission adopted a ‘substantial net benefit’ standard it would have not only limited its discretion, but also established a target of what is ‘substantial,'” he said.
Knox said if that type of precedent is indeed set, it would be a good thing for consumers.
House Bill 2567 now heads to the Consumer Protection Committee, headed by Rep. Angus McKelvey.
Eric Pape contributed reporting to this story.
