Hawaiian Electric Industries Inc. (HEI) has scrapped plans for a liquefied natural gas (LNG) contract with Fortis Hawaii Energy Inc. as well as plans to convert an existing power plant to natural gas following the termination of its proposed merger with NextEra Energy Inc.
"Because of the resources these specific combined projects required, one condition of the LNG contract was approval of the proposed merger with NextEra Energy," HEI said Tuesday." "On Monday, NextEra Energy announced it would no longer pursue the merger after the application was dismissed without prejudice by the Hawaii Public Utilities Commission.
"We're committed to transitioning to 100% renewable energy in the most cost-effective way possible while ensuring reliable service," said Ron Cox, Hawaiian Electric vice president of power supply.
Under the terms of the merger agreement, NextEra is to pay HEI a $90 million termination fee and up to $5 million for reimbursement of expenses associated with the transaction. After payment of taxes, the net amount of $60 million will help to fund Hawaii's clean energy transformation, including the 2016 plan to invest about $145 million into Hawaiian Electric, the company said.
Last year, Hawaii Gov. David Ige did an about-face on his support for LNG as a "transitional fuel" for his state. Ige said at the time that "much has changed" since LNG had his support. LNG is no longer expected to save ratepayers money, he said, and meeting new federal environmental regulations, assuming they take effect, can be accomplished in other ways. "And the capital plans of those wishing to import LNG are anything but small [see Daily GPI, Aug. 28, 2015]." Ige did give a nod last August to continued containerized LNG imports by Hawaii Gas as long as none of that gas gets burned in HEI power plants (see Daily GPI, Oct. 30, 2014).
Following the governor's remarks, then-merger partners NextEra and HEI reiterated their support for the renewable energy goals of Hawaii (see Daily GPI, Sept. 1, 2015).