State Consumer Advocate Recommends Rejecting NextEra-HECO Merger

Calls Purported Benefits Illusory and Inadequate

News Release from DCCA, August 19, 2015

HONOLULU – The Division of Consumer Advocacy (Consumer Advocate) of the state Department of Commerce and Consumer Affairs today filed its Direct Testimony recommending that the Public Utilities Commission (PUC) reject the $4.3 billion NextEra Energy, Inc. – HECO Companies merger as proposed.

Consumer Advocate Jeffrey Ono believes that the current proposal is not in the public interest, because NextEra has not met its burden of proving that the merger will result in significant quantifiable benefits to consumers.

Among many questionable claims, NextEra offers flawed and broad speculative savings estimates, repeatedly touting benefits of millions of dollars in savings for customers. The company’s filings do not clearly or consistently explain how these savings will materialize to the full extent they have been claimed. This includes, for example, millions of dollars in purported savings resulting from broad reductions in operations and maintenance expenses that have not been clearly laid out despite the company having ample opportunity to clarify these and other benefits during the discovery period.

“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,” said Ono.  “Since our mission is to protect and advance the interests of Hawaii’s consumers, we have serious concerns about this proposed merger.”

If the PUC plans to approve the merger, the Consumer Advocate recommends several conditions that need to be adopted to protect consumers and to immediately return merger synergy savings to consumers.

A copy of the Consumer Advocate’s testimony, as well as a list of upcoming public “listening sessions” and evidentiary hearings, is available online at: cca.hawaii.gov/dca/.

The Consumer Advocate’s office is a state agency established to protect and represent the interests of consumers  before the PUC and other federal agencies with regulatory jurisdiction over public utility services, including electricity, telecommunications, pipeline gas, private water and wastewater, and interisland water transportation.

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