Regulatory dismissal of NextEra Energy’s takeover application of Hawaiian Electric Industries (HEI) will see the Juno Beach-based suitor pay $95 million in “break-up” fees and other costs, the companies stated. Part of these funds will go towards Hawaii's state policy objective to get off fossil fuels by 2045.
In a 2-0 vote, Hawaii’s Public Utilities Commission (PUC) rejected NextEra’s $4.3 billion offer to take over HEI, whose subsidiaries include Hawaiian Electric Co. on Oahu, Maui Electric Co., Hawaii Electric Light Co. on the Big Island, and American Savings Bank.
In its rejection, the regulator put in questions NextEra’s true intention to help the state of Hawaii meets goal of achieving 100% renewable energy by 2045. The regulator said its decision would not prevent HEI from seeking another partner.
Break-up fee to help fund HEI’s renewable projects
Jim Robo, NextEra Energy chief executive said that “as a result of the PUC’s order, we have terminated our merger agreement.” Apart from the $90 million break-up fee, NextEra will also pay HEI up to $5 million to reimburse any expenses associated with the transaction. The break-up fee had been agreed upfront.
Hawaiian Electric Industries stated that after taxes, the net amount of $60 million will help to fund Hawaii's clean energy transformation, including the 2016 plan to invest approximately $145 million into the utility.
"While the merger would have provided significant benefits for Hawaii, HEI remains a strong company,“ lan Oshima, Hawaiian Electric CEO said, pointing out that the funds help the utility “reduce energy costs, modernize and improve our electric grids … and expand a diverse portfolio of clean energy sources,"
Through its subsidiaries on Oahu, Maui and Big Island, HEI provides electricity to 95% of Hawaii residents. HEI’s bank subsidiary, American Savings Bank, which was to be spun off if the deal went through, will now continue to operate as part of the group.