What Is At Stake For Hawaii In NextEra Energy - HECO Merger

by William Pentland Forbes Magazine January 30, 2015 (excerpts)

... the Federal Energy Regulatory Commission (FERC) only regulates energy sold in interstate commerce. Hawaii’s power system is isolated.

In the 1970s, FLP (Parent company of NextEra) sued the FERC to limit the scope of federal energy regulation to sales of electricity that actually crossed state lines. The lawsuit went all of the way to the U.S. Supreme Court. The Supreme Court held that federal regulators have jurisdiction over any transmission lines that are part of a power grid that crosses state lines.

Hawaii and Alaska are the only two states with power grids that are physically isolated from any other state....

This issue is especially important right now because Hawaii is considering construction of an undersea cable that would interconnect the power grids on the islands of Oahu and Maui. Currently, Hawaii has three stand-alone power grids: one grid serves the Big Island, another grid serves Maui and a third grid serves Oahu.

In nearly any other state, the inter-island cable project being considered in Hawaii would be subject to various federal rules and regulations designed to ensure consumers receive the benefits of robust competition.

If the Oahu-Maui cable proceeds, this burden will fall entirely to the Hawaiian Public Utilities Commission. Given FPL’s notorious reputation for self-dealing in Florida, this will be a daunting task.

“FPL designs RFPs that could only be won by one entity – FPL,” said David Cruthirds, a regulatory lawyer who writes for RTO Insider and publishes The Cruthirds Report newsletter. “To the best of my knowledge, FPL has won every major power supply RFP it has issued in the past 15 years.”

FLP’s self-dealing on power supply projects has been systemically ignored by utility regulators in Florida. The Florida Public Service Commission is supposed to balance the interests of customers and utility shareholders. Last year, Nancy Argenziano, who served as a Commissioner from 2007 to 2010, described the current PSC as “a wholly-owned subsidiary of the state’s biggest power companies.”

Argenziano, a Republican state legislator from 1997 to 2007, was not reappointed for a second term as a Commissioner after she rejected a requested rate increase from FPL.

...

Hawaiians should think long and hard about NextEra’s track record in the Sunshine State before approving any merger. There are signs some of them are doing so.

“We know that companies like NextEra and others coming into Hawaii give out tremendous political contributions to gain political influence in other states and we want to prevent that from happening here,” said state Rep. Chris Lee, chair of the House Energy and Environmental Protection Committee, in an interview with Hawaii News Now earlier this week.

It is by no means certain that NextEra Energy would behave in Hawaii in the future as it has behaved in Florida in the past. On the other hand, if it did, the consequences could be catastrophic for Hawaii.

read ... Big Cable Coming