Hawaiian Electric LNG Plan Withdrawn
Hawaiian Electric Industries (HEI) and NextEra Energy have ended their plans for a merger following a rejection by Hawaii's Public Utilities Commission. The termination of the agreement also means that Hawaiian Electric's plans to import LNG from Canada for use in its Kahe Generating Station will not go forward, and on Tuesday the utility formally withdrew the proposal.
HEI had signed an agreement with Canadian natural gas firm Fortis, the operator of the Tilbury LNG facility in Delta, British Columbia, for the provision of 0.8 mtpa of liquified natural gas, beginning in 2021. Hawaiian Electric said in a statement that the LNG import plan would have been dependent on NextEra's resources, and that without the merger, it cannot move forward.
"We're committed to transitioning to 100 percent renewable energy in the most cost-effective way possible while ensuring reliable service," said Ron Cox, Hawaiian Electric vice president of power supply. "We'll continue to evaluate all options to modernize generation using a cleaner fuel to bring price stability and support adding renewable energy for our customers."
The fallout from the failed merger has other implications for HEI. NextEra Energy will pay the utility a $90 million termination fee plus as much as $5 million in reimbursement for expenses related to the transaction. The utility will also keep a banking subsidiary, American Savings Bank, which it had intended to spin off if the merger went through.
The state of Hawaii has a formal goal of reaching 100 renewable electrical power generation by 2045, and Governor David Ige had expressed strong opposition to the plan to import LNG for power generation. HEI was at 23 percent renewable generation as of last year, and says that it supports the state's objectives with a variety of new initiatives.
Governor Ige confirmed in comments to local media this week that other entities are interested in making a bid for HEI, but the utility said in a statement Tuesday that it "will move forward as an independent company," at least for now. The Public Utility Commission said in its ruling that although it did not believe that the NextEra merger was appropriate, it was not opposed to a merger in general and encouraged the utility to consider a list of specific changes for any future proposal.