Hawaiian Electric loses interest in mergers

Published: Jul. 20, 2016 at 9:13 AM HST|Updated: Jul. 20, 2016 at 10:07 AM HST
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HONOLULU (HawaiiNewsNow) - Two important decisions by Hawaiian Electric Industries herald a new era for the state's largest electric utility.

The board of directors authorized a terse news release Tuesday evening that it has decided "to remain independent."

And the company has abandoned plans for a new supply line for liquefied natural gas, a clean-burning fossil fuel.

The release was framed as reaction to "market rumors and speculation," though Gov. David Ige confirmed on the record that "multiple" companies had expressed interest in buying HEI.

HEI said it is not "currently" in discussions with any other party about merger "and does not intend to initiate any such discussions."

Not wanting to be acquired isn't necessarily enough to deter a prospective buyer from making an offer for HEI. But as a practical matter such a bidder might be given pause by a combination of the company's new view of things and the new knowledge of how firm Hawaii's regulators can be. The Public Utilities Commission took its time reviewing NextEra Energy's bid for HEI and ultimately rejected the plan.

"The business and affairs of HEI are managed under the direction of its boards of directors," the statement said. "In accordance with its fiduciary duties, the boards have determined that it is in the best interests of the company and all of the stakeholders that it services – including shareholders, customers, employees and communities – to remain independent and to work forward realizing the clean energy future and vibrant local economy we all want for Hawaii."

LNG plan dropped

Earlier, HEI notified the Securities & Exchange Commission it is abandoning a plan to spend more than $100 million on a terminal for liquefied natural gas, which can be used in power stations that now burn heavier fossil fuels.

The proximate cause appears to be merger rejection, which means HEI no longer has access to NextEra cash. But it can also be read as a fresh commitment to the official state policy of pursuing 100% renewable energy. LNG was always regarded as a stopgap, attractive mainly because it was much cheaper than other fuel. But companies around the world had the same idea, creating demand for LNG and raising the price. Cheaper crude oil further reduced the margin of savings.

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