Hawaiian Electric Falls After Governor Taps New State Regulator

  • New commissioner could be more skeptical of NextEra takeover
  • State regulators will decide ‘soon’ on $2.6 billion merger

Hawaiian Electric Industries Inc. fell the most in more than six years after Hawaii’s governor appointed a utility regulator who analysts say may be skeptical of NextEra Energy Inc.’s proposed $2.6 billion takeover of the power supplier.

Hawaii Governor David Ige said Wednesday that Thomas Gorak, chief counsel for the state Public Utilities Commission, will replace a member whose term expires Thursday. Ige, a Democrat, has called for the state to source all of its electricity from renewable resources by 2045 and has voiced opposition to NextEra’s takeover bid.

Gorak’s appointment to the three-member panel may threaten the tie-up as Ige has said he prefers a commissioner more closely aligned with his clean energy goals. Juno Beach, Florida-based NextEra, North America’s largest generator of wind and solar, is vying to buy a utility in a state where the highest electricity rates in the nation are driving customers to renewables.

"Gorak will be more in line with Chairman Randy Iwase, who has indicated concerns with the deal," Peter Cohn, an analyst with Height Securities LLC, wrote Thursday in a research note. The new commissioner is replacing Michael Champley, a former utility executive who was seen as “potentially sympathetic” toward the merger, according to Cohn.

Hawaiian Electric tumbled as much as 7 percent to $32.07, the most since May 6, 2010, and was trading at $32.30 at 11:35 a.m. in New York. Spokesmen for NextEra and Hawaiian Electric declined to comment.

Local Opposition

The announcement is the latest twist in the merger announced Dec. 3, 2014. The takeover has drawn intense opposition from local officials, environmental groups and solar companies. Iwase said earlier this month he was hopeful that the panel would rule on the merger by the end of June.

Ige said Wednesday he expects the commission to decide “soon’’ on the deal and that he hasn’t discussed the merger with Gorak or other commissioners. The appointment shouldn’t delay a ruling since Gorak is familiar with the case and could vote on the tie-up as soon as he officially joins on July 1, Ige said.

“The prospects for the merger to be denied could be perceived to be higher, given the fact that the governor, who has voiced strong opposition to the deal, has appointed a new commissioner shortly before a decision is expected,” said Paul Patterson, a New York based-analyst at Glenrock Associates LLC.

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