������Ƶ

And so it begins — again.

A month and a half after going into recess, regulatory hearings to decide the fate of NextEra Energy’s $4.3 billion acquisition of Hawaiian Electric Industries resumed Monday.

HEI Executive Vice President and Chief Financial Officer James Ajello, who was part of the negotiating team on the merger, testified about his analysis of the company’s position in the run-up to the December 2014 announcement of a deal.

Ajello acknowledged, under questioning from Consumer Advocate Jeff Ono, that Hawaiian Electric was late to understanding the epic changes washing over the industry.

Hawaii has, by far, the most renewable energy per capita in the country, and a sizable swath of the population has invested to place solar panels on their roofs in the last eight years.

The shift toward solar, along with improvements in conservation and efficiency, have translated into declining electricity consumption in the islands, which initially hurt Hawaiian Electric’s bottom line and then drove regulatory changes that altered its business model. The company no longer profits from the amount of electricity it sells; it benefits financially from the investments it makes to maintain and improve the electric system.

The power company’s chief financial officer mentioned several unforeseen forces that undermined Hawaiian Electric’s dominant position in the islands. One was the Fukushima nuclear disaster in Japan, which sparked a surge in the price of the oil Hawaii uses to generate its electricity.

The impact of the acquisition falling through, if that were to happen, he said, could spell trouble for Hawaiian Electric.

On the flip side, Ajello noted the generous tax breaks — for solar and wind energy — that boosted momentum for those renewable sources by helping individuals to produce competitively priced electricity for themselves.

“All of this happened, pretty much like a tidal wave, in a two- or three-year (period of) time,” Ajello said.

Ono asked if Hawaiian Electric had a “blind spot” about where things were going.

Ajello said Hawaiian Electric could have done a better job in responding to the great flux in the industry, given the consumer trends toward reduced electricity consumption and rooftop solar.

“In hindsight, we could have reacted a little faster, sure,” said Ajello.

Under questioning from Ono, Ajello noted the repercussions of the company’s lethargic response: the large backlog in rooftop solar applications several years ago. It led to a widespread perception HECO was trying to slow the rise of solar, which Ajello said undermined the company’s credibility with customers — even though he said the company eventually adapted to deal with that backlog.

Such problems, he noted, can weaken a company in the eyes of ratings agencies and investors.

Despite such difficulties prior to the announcement of the Hawaiian Electric-NextEra deal, he said that his company did not need a “white knight” to save it.

But the impact of the acquisition falling through, if that were to happen, he said, could spell trouble for Hawaiian Electric.

“Any time a transaction like this fails, it represents a significant challenge for the company involved,” Ajello testified, adding that this could lead to a devaluing of the company.

While several intervening parties in the case have repeatedly said that the sale of the power company to a far-off mainland company would amount to a loss of local control, Ajello suggested such fears are unfounded “frankly because there was no local control.”

While most of the members of the board have official addresses in the islands, ownership of the company is largely in the hands of bondholders who are all over the world.

The pace and tone of the hearings suggested that little changed during the month-and-a-half break, but some external factors have changed.

For one, oil prices continued their attention-grabbing decline. Given that the cost of oil passes directly through to electricity customers — albeit with a few months’ delay — electricity prices in the islands continue to descend, even if residents still pay by far the highest rates in the country.

Hawaii Gas also recently made a high-profile announcement about potentially inking a deal to bring liquefied natural gas to the islands to generate electricity, although it would need buy-in from a wide array of regulatory, political and business actors before that could happen.

And efforts to create electricity co-ops in the three counties where Hawaiian Electric provides power have continued to advance in small steps on the Big Island, Maui and Honolulu.

As for the hearing at Neal S. Blaisdell Center that is expected to last until Feb. 10, if not longer, lawyers for the partners in the acquisition deal will soon have the right to cross-examine about 40 experts and witnesses.