NextEra Energy Inc.'s recent statement that it would take $30 billion for Hawaii to achieve the goal of 100 percent renewable energy by 2045 was criticized as an extreme estimate that would place a heavy burden on ratepayers.
Eric Gleason, president of NextEra Energy Hawaii LLC, said at a Waikiki business luncheon this week that getting the state off its dependence on oil would cost $30 billion over the next three decades.
"There is no utility in the country that has as much on its shoulders as Hawaiian Electric does right now," Gleason said. "Hawaii needs a financially very strong utility to either make or backstop something like $30 billion of investments over the next few decades. ... There is a big need for capital to make all of this happen."
Gleason is leading NextEra's efforts to win support in the state for the company's proposal to buy Hawaiian Electric Industries Inc. for $4.3 billion. The sale must be approved by the state Public Utilities Commission before it can close.
Jeff Ono, the PUC's consumer advocate, said he was concerned with the $30 billion estimate.
"It is a big number," Ono said. "If all of that is rate-based and consumers have to pay for that, bills will go up."
If the $30 billion were divided among Hawaiian Electric's 455,000 ratepayers on Oahu, Maui and Hawaii island, each customer would pay an additional $183 per month for 30 years.
"This means billions in profit for NextEra and potentially billions in extra costs Hawaii residents will be forced to pay," said state Rep. Chris Lee (D, Kailua-Waimanalo), chairman of the Committee on Energy and Environmental Protection. "The utility has the financial incentive to drive infrastructure costs as high as possible to boost utility profits, unfortunately at the expense of higher costs of ratepayers."
Florida-based NextEra said its size and strong credit rating means it can raise money at a lower cost than HEI.
NextEra also said the full $30 billion would not be paid by ratepayers. It would be paid by a mix of the utility and third parties; customers; solar and other distributed-energy companies; and independent power producers, Gleason said.
"That doesn't all need to be invested by Hawaiian Electric, but a substantial portion -- let's say half, maybe more," Gleason said. "But ultimately all of the investments rely on a strong utility."
Whether the investment is made by independent power producers or customers with rooftop solar, they will "rely on a strong utility that is going to be there for them," Gleason said.
"This is total scare tactics," said Isaac Moriwake, attorney at Earthjustice. "The more they spend, the more profit they make; that is the way the system works. That's the whole point. Ratepayers end up having to pay for everything."
The PUC allows Hawaiian Electric Co. to earn a 10 percent profit on investments it makes.
NextEra's estimate "is five times more than what HECO estimated," Moriwake said.
HECO said it needed to invest about $7 billion to get the state to 65 percent renewable energy by 2030 in plans filed with the PUC in August 2014.
Henry Curtis, executive director of Life of the Land, said NextEra is looking at building a "gold-plate system." The change to 100 percent renewables could be done for a lot less than $30 billion, he said.
"NextEra doesn't understand how to integrate renewables on the grid," Curtis said. "Anyone can gold-plate the system."
But the estimate doesn't include the savings with avoided oil costs, NextEra said.
"It will reduce and ultimately eliminate the need to import oil," said Rob Gould, spokesman for NextEra.
The state spends around $3 billion per year on electricity, and a large portion of that is buying fossil fuels. The adoption of renewables will offset that.
"As we transition to renewables, we should be spending a lot less on fuel," said Richard Wallsgrove, program director at Blue Planet Foundation. "So if we are examining capital expenditures by the utility, we also need to examine projected fuel cost savings. When the cost of fuel rises, as it has done historically, those fuel savings will grow."
Wallsgrove said it's time to rethink the way HECO is compensated for investments.
"If we are going to have this new utility come in, we should change the way the utility gets paid," he said. "We should get an incentive-based system so it isn't just cost for cost, so it isn't just the more you spend, the more you make. That is the only way we can guarantee the whole transition isn't going to cost everyone a bunch of money."
Gleason also said shipping in liquefied natural gas to fuel power plants is still on the table. Gov. David Ige has said he is opposed to using LNG.
"For some period of time we are going to be using some fossil fuels. Is that going to be oil, or is that going to be natural gas?" Gleason said. "If natural gas can save customers money and be better for the environment than oil and not slow down the adoption of renewable energy, then we think it should be something that should be seriously considered."