Hawaiian Electric's Unit To Acquire 60MW Plant In Hawaii
Zacks Investment Research | Sep 20, 2017 09:25PM ET
Hawaiian Electric Industries (NYSE:HE) announced that its subsidiary Pacific Current has entered into an agreement with ArcLight Capital Partners to buy Hamakua Energy Partners' 60-megawatt (MW) power plant on the Big Island, Hawaii.
The plant currently has a long-term power purchase agreement (PPA) with Hawaii Electric Light Co. (“HELCO”). Power produced from the plant is being sold to HELCO, a subsidiary of Hawaiian Electric. The handover of ownership will not impact the rates or the PPA, which expires in 2030.
The current purchase consideration is kept under wraps. HELCO had made an offer to acquire the plant on December 2015 for $84.5 million. The application was denied by Hawaii Public Utilities Commission (“PUC”), stating that direct ownership of the plant will not benefit the customers.
What This Acquisition Entails
This indirect ownership when completed will further strengthen Hawaiian Electric operation in the State of Hawaii. Hawaiian Electric supplies electricity to 95% of the states’ population.
In addition, this acquisition will help in realization of the company’s goal to generate 100% electricity from renewable sources in Hawaii.
Our View
Hawaiian Electric continues making systematic investments in utility infrastructure development projects, primarily adding new generation facilities, replacing aging infrastructure and restoring transmission and distribution assets. The company plans to invest nearly $470 million in 2017 to further strengthen its operation.
At present, the company is awaiting the PUC’s decision on its Power Supply Improvement Plans, which outlined a detailed five-year plan charting the near-term actions that will provide a foundation to meet its 100% renewable goal by 2045. This 60 MW power plant purchase will be a positive move in that direction.
Price Movement
In the last month, shares of Hawaiian Electric have gained 0.5% against a decline of 1.2% of the Zacks Investment Research
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