Hawaiian Electric Industries Inc. and NextEra Energy Inc. may be forced to respond to further questioning about their proposed $4.3 billion merger.
In a Wednesday filing with the state Public Utilities Commission, the Hawaii Division of Consumer Advocacy requested the PUC subpoena HEI President and Chief Executive Officer Constance Lau and NextEra Chairman, President and Chief Executive Officer James Robo to compel their testimony.
A second Wednesday filing additionally requests the PUC issue an order compelling the companies to respond to information requests seeking data contained in documents prepared by financial services firm J.P. Morgan.
The requests come on the heels of the Division of Consumer Advocacy’s recommendation earlier this month that the PUC deny the application by Florida-based NextEra to assume control of the electric utilities based on Oahu, Maui and the Big Island.
In announcing the recommendation, division Director Jeffrey T. Ono said NextEra had offered “flawed and broad speculative savings estimates, repeatedly touting benefits of millions of dollars in savings for customers.” However, the company’s filings in the docket before the PUC failed to clearly explain how those savings could be realized.
“These kinds of asserted savings based on NextEra’s faulty calculations effectively overstate the potential benefits of the proposed merger, thereby creating an illusory benefit,” Ono said. “Since our mission is to protect and advance the interests of Hawaii’s consumers, we have serious concerns about this proposed merger.”
The consumer advocate argues that the two companies withheld financial and valuation analyses performed by J.P. Morgan, claiming that they contained “confidential and proprietary information.”
“Despite the consumer advocate’s attempts to obtain copies of the material … through (information requests) and at an informal meeting meant to resolve discovery disputes, the Hawaiian Electric Companies and NextEra refuse to produce the documents and/or information …” one of the filings reads.
In its request to take testimony from the CEOs, the consumer advocate says the depositions would be made “upon oral examination (and) shall be recorded by stenographer and video recording.”
In the filing, the advocate notes that there are no specific rules regarding compelling witnesses to testify orally, and therefore recommends the PUC issue a subpoena for both Robo and Lau.
“Without the choices and input made by Mr. Robo with respect to the acquisition of the Hawaiian Electric Companies by NextEra, it is impossible to fully assess the factors considered by NextEra to proceed with its acquisition of the Hawaiian Electric Companies,” the filing reads.
Both CEOs possess “knowledge and information that only (they) can know and possess concerning the circumstances, events, rationale and reasoning that resulted in NextEra deciding to acquire the Hawaiian Electric Companies,” the consumer advocate said.
NextEra has filed nearly 40,000 pages in response to about 2,000 requests for information since the merger docket was opened with the PUC on Jan. 29, argued the company’s Vice President and Chief Communications Officer Robert Gould.
“This is all part of the process,” he said of the consumer advocate’s filings in a phone interview Friday afternoon. “We’ll let the PUC review process play out. Our focus right now is squarely on preparing our responsive testimony we’ll be filing on Aug. 31 that will even further lay out what our plans are.”
Gould maintained that NextEra’s acquisition of the Hawaiian Electric utilities would result in $1 billion in savings for consumers.
“That is what this is all about, trying to help deliver more affordable electricity,” he said.
In response to charges that the company has not been forthcoming with answers to specific questions on how it would achieve savings for consumers, Gould said “we will continue to participate in the process, and hopefully that will address the questions.”
In a prepared statement issued Friday afternoon, HEI Vice President of Corporate Relations Lynne Unemori said she too believed that more answers would be forthcoming.
“We understand how important the proposed merger is to Hawaii’s future and appreciate there are many perspectives,” she said. “The merger review is a long and extensive process, as it should be. Close to 2,000 information requests have been responded to already and that information sharing continues. As more information is provided throughout this process, we believe that others will also conclude that this partnership with NextEra Energy is in the best interests of our customers and Hawaii’s future.”
She added that the company is still reviewing the consumer advocate’s request to subpoena CEO Lau to provide testimony.
“We’re committed to ensuring thorough information has been provided for the PUC to make a fully informed decision,” Unemori said.
Phone calls and emails seeking comment from Consumer Advocate Ono were unsuccessful as of press time.
Email Colin M. Stewart at cstewart@hawaiitribune-herald.com.