Hawaiian Electric, NextEra walk away from merger plans

NextEra will now pay HEI a $90 million termination fee and up to $5 million for reimbursement of expenses associated with the transaction.

The deal I’m talking about is NextEra Energy’s (NYSE:NEE) proposed $2.6 billion buyout of Hawaiian Electric Industries (NYSE:HE), the state of Hawaii’s largest electricity provider. They called the companies’ proposed $60 million in benefits to ratepayers – who pay the highest electricity rates in the nation – inadequate and uncertain.

As a result of the deal cancellation, NextEra will pay a break-up fee of Dollars 90 million along with up to USD 5 million for reimbursement of expenses associated with the transaction, it said. Hawaiian Electric had recently been lambasted by regulators for dragging its feet on connecting rooftop solar systems to the grid, while NextEra Energy owns Florida Power & Light, which has fought solar in the sunshine state.

The PUC voted 2-0 against the proposed deal, following the companies failure to demonstrate that the merger was in the public interest. They said the companies also didn’t prove they would provide adequate benefits to ratepayers or help the state meet its aggressive renewable energy goals.

When the deal was announced in December 2014, NextEra Chief Executive Officer Jim Robo said that Hawaiian Electric could be a testing ground for a transition from fossil fuels to power generated from the sun and wind. But the commission said the companies had not shown the merger to be in the public interest with respect to five areas, including clean energy commitments and the effect on competition in local energy markets.

Commissioner Thomas Gorak, a newly appointed member of the PUC, abstained from signing the order – but said he supported it.

In dismissing the application, the commission emphasized that it is not precluding HEI from seeking another partner or from renewing discussions with NextEra. “All of us at HEI, Hawaiian Electric and American Savings Bank remain committed to serving our customers, and we look forward to working together with communities across our state to realize the clean energy future we all want for Hawaii and to ensure a vibrant local economy”.

“I think NextEra is a good company”, he said. A Fortune 200 company and included in the S&P 100 index, NextEra Energy has been recognized often by third parties for its efforts in sustainability, corporate responsibility, ethics and compliance, and diversity, and has been ranked No. 1 in the electric and gas utilities industry in Fortune’s 2016 list of “World’s Most Admired Companies”.

More on the PUC’s decision can be found here.