Dive Brief:
- The Kuokoa group was in negotiations in 2011 to purchase The Hawaiian Electric Company for $6 billion with the intention to transform it into a private, largely renewables-consuming utility.
- The transformation was to be financed by (1) the sale of the company-owned American Savings Bank and (2) by using the utility’s income and an accelerated private fund and capital program to (a) build geothermal and new transmission and distribution infrastructure for wind and solar and to (b) obtain new backing with an IPO.
- The Kuokoa group’s analysis showed Hawaii’s electricity price, so high because it is 75% sourced in imported oil, could be kept flat for the 95% of Hawaiians that HECO serves with its 2,400 megawatt generation capacity.
Dive Insight:
Similar to many IOUs, HECO cannot increase its quarterly expenses with the big grid overhaul investments needed to rejuvenate its generation but it also cannot sustain its legacy generation because of the costly clean air standard upgrades required of it. Because of Hawaii’s high power prices, the penetration of solar and energy efficiency is reaching higher levels than anywhere else in the U.S., cutting HECO’s revenues and destabilizing its unwieldy grid.
The Kuokoa group showed HECO could do much better with the island’s rich renewable resources, a conclusion confirmed by the Governor’s rebuke to the utility for its most recent IRP. The group obtained “several billion dollars” in debt backing from “a banking behemoth” and “a global private equity firm” was ready with “several billion dollars” more but HECO declined the offer.
Kuokoa dropped its offer but HECO continues to face “an existential threat” that another takeover offer could take advantage of now that CEO Richard Rosenblum has announced his imminent retirement. Rosenblum insists HECO was never approached by Kuakoa.
