HE Hawaiian Electric Industries

NextEra Energy Inc. wants to buy the biggest utility in Texas for $18.7 billion, and it is hoping to avoid the state opposition that sunk its plan to buy the largest utility in Hawaii earlier this year.

The fast-growing utility and renewable power company filed papers late Monday requesting regulatory approval for two transactions that would give it ownership of Oncor Electric Delivery Co., part of bankrupt Energy Future Holdings Corp.

The filing formally starts the clock running with the Public Utility Commission of Texas, which now has six months to rule or approval is automatically granted.

NextEra Chief Executive Jim Robo and others have held private discussions with Texas officials in recent weeks to determine what the company must do to satisfy concerns. After a bumpy process in Hawaii, and acrimonious dealings with regulators in its home state of Florida, NextEra has an image problem to overcome.

It is "not known for playing well with other people," Texas Commissioner Ken Anderson said. "They have a reputation among regulators and others as 'my way or the highway.' That's not going to work in Texas."

Oncor plays a pivotal role in Texas' deregulated power market. As the state's biggest energy-delivery utility, it ensures generators are able to hook up to the grid and that electricity retailers can reach consumers in North Texas.

Some observers fear NextEra, which has invested $8 billion in energy assets in the state including wind farms and a retail electricity provider, might pressure Oncor to favor NextEra affiliates.

To address that concern, NextEra is proposing a code of conduct for Oncor "to ensure separation and independence from the business of NextEra Energy's competitive affiliates." It is also proposing to maintain a separate board of directors at the utility, headed by Bob Shapard, Oncor's current chief executive, who would become chairman of the board.

NextEra isn't offering to share merger savings with Oncor customers or to freeze rates, common features of many utility deals. Instead it says it will flow through lower financing costs from its higher credit rating.

"We have tried to be very thoughtful," said Rob Gould, a NextEra spokesman. "But ultimately, it's the commission that must decide how we run our business."

NextEra stumbled badly earlier this year when it failed to win approval to buy Hawaiian Electric Industries Inc. for $4.3 billion. Hawaii wants to get all its electricity from renewable sources by 2045. NextEra is the biggest green-energy producer in the U.S. and Canada, with more than 100 wind farms and two dozen solar farms.

But state officials never much liked NextEra. Emails between Hawaiian utility managers, for example, said they believed NextEra saw HEI as a "snack" before a big dish of mainland utilities.

"It was offensive and showed their true colors," said Jeff Ono, Hawaii's consumer advocate for utility matters.

NextEra has also faced criticism that it opposed efforts by consumers and businesses to produce their own solar power on-site in Florida, which despite its Sunshine State nickname is only 14th in solar penetration, according to the Solar Energy Industries Association. The company has poured $8 million into a Nov. 8 ballot measure that environmentalists say will further cripple solar growth in Florida in coming years.

"NextEra likes solar if they own it and can bill customers for it," said Patrick Altier, incoming Florida president of the Solar Energy Industries Association.

NextEra's Mr. Gould said solar hasn't taken off because its flagship utility, Florida Power & Light Co., has rates 30% below the national average.

Some of the company's harshest critics in Florida are former regulators, who say it goes to unusual lengths to silence critics.

Nancy Argenziano, a Republican, joined the Florida Public Service Commission in 2006 after 12 years in the Florida legislature. In 2009, the PSC gave FPL a rate increase of $75 million—not the $1.3 billion it wanted.

The utility complained to legislators. Within months, Mrs. Argenziano and three other commissioners were rejected for reappointment or not confirmed by the state senate. "You get in their way and you'll get hurt," she said.

NextEra's Mr. Gould said he knows "there's this perception about our company being aggressive" but said it didn't retaliate against anyone, adding, "we take offense to anyone that would suggest that."

Write to Rebecca Smith at rebecca.smith@wsj.com

(END) Dow Jones Newswires

November 01, 2016 09:35 ET (13:35 GMT)

Hawaiian Electric Indust... (NYSE:HE)
Historical Stock Chart
From Mar 2024 to Apr 2024

Hawaiian Electric Indust... (NYSE:HE)
Historical Stock Chart
From Apr 2023 to Apr 2024