The state Public Utilities Commission has rejected the $4.3 billion proposal to sell Hawaiian Electric Industries to Florida-based NextEra Energy.

In a 2-0 vote Friday, Chair Randy Iwase and Commissioner Lorraine Akiba dismissed the application without prejudice. Commissioner Tom Gorak, whose recent appointment has drawn criticism, abstained from voting, but he expressed his full support for the decision.

The decision comes nearly 20 months after Hawaiian Electric Industries CEO Connie Lau announced that the two companies had agreed to one of the biggest business deals in Hawaii history.

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The deal would have placed the HEI-owned utilities for Oahu, Maui and the Big Island under the control of one of the country’s largest power companies. It was also slated to result in the spinning off of American Savings Bank, which is owned by HEI.

What ensued since December 2014 was a series of public meetings, a lengthy evidentiary hearing, elaborate campaigns for and against the merger and tens of thousands of pages of testimony for state energy regulators to consider.

The commissioners based their decision on two standards of review: whether the application was reasonable and in the public interest; and if the acquiring utility was fit, willing and able to perform the service currently offered.

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The commission concluded that NextEra was indeed fit to do the job. But regulators had five fundamental areas of concern: benefits to ratepayers; risks to ratepayers; applicants’ clean energy commitments; the proposal’s effect on local governance; and the proposal’s effect on competition in local energy markets.

“We are in receipt of today’s PUC order and are currently reviewing it,” NextEra and Hawaiian Electric officials said in a joint statement. They did not elaborate.

Critics of the merger were quick to applaud the commission’s decision.

“NextEra made this a no-brainer,” said Isaac Moriwake, staff attorney for Earthjustice, one of nearly two dozen intervening parties in the case.

“Outright rejection of the takeover was the only realistic option. NextEra refused to provide its plans for Hawaii, other than to give us a ‘bigger HECO,'” he said. “Based on its opposition to clean energy in Florida and failure to chart a different path in this state, NextEra is not what Hawaii wants or needs.”

Do you agree w/ the Public Utilities Commission's decision to reject the sale of Hawaiian Electric to NextEra? — Honolulu Civil Beat (@CivilBeat) July 16, 2016

The commissioners said in a joint news release that the benefits that NextEra and Hawaiian Electric promised — rate credits, investment funds and a rate case moratorium — were “inadequate and uncertain.”

NextEra had promised $60 million in guaranteed rate savings, averaging roughly $345 to $475 per customer over the first five years, and estimated nearly $1 billion in overall statewide benefits.

The commission found these calculations to be “based on assumptions and/or unrealistic expectations about the future.”

Regulators also were concerned that the companies failed to offer any reliable means to

track these estimated benefits to determine whether or not they actually occurred, not to mention an enforcement or penalty mechanism in the event that such benefits did not happen.

The commission was also concerned about the complex corporate structure of NextEra, a company with $75 billion in total assets that operates in 27 states and Canada.

“Unlike the HECO Companies, NextEra is a large corporate family, with hundreds of affiliates and subsidiaries,” the commission said in its decision. “While the Commission believed that its existing regulatory power would offer ratepayers some protection, primarily through preventing various types of cost-recovery by NextEra, it expressed serious concern over the risk posed by the potential bankruptcy of NextEra and/or one of its many subsidiaries or affiliates.”

The commission’s decision came down around 2:30 p.m. Friday after the New York Stock Exchange had closed, so it remains to be seen how investors will react.

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HEI’s top executives stood to make more than $17 million if the acquisition was approved. Lau alone would have received a roughly $10.6 million “golden parachute,” as the compensation payout packages are often called.

Hawaii Gov. David Ige, who was strongly opposed to the merger deal, released a statement thanking the commission and stakeholders for a “historic process.”

“This ruling gives us a chance to reset and refocus on our goal of achieving 100 percent renewable energy by 2045,” he said, referring to the state mandate he signed into law last year.

“The proceeding helped define the characteristics and parameters of Hawaii’s preferred energy future. We look forward to creating a process to find the best partner in the world,” he said. “No matter who owns the company, the energy vision for Hawaii remains very clear – 100 percent renewable energy with a transformation to a customer-centered utility focusing on smart meters, smart grid, distributed local solutions, and as much consumer choice as possible.”

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Jeff Ono, who heads the state Division of Consumer Advocacy, supported the commission’s decision but said the proceeding may not be completed.

“We’re not assuming that this proceeding is over yet,” he said in a statement. “Applicants are reviewing the PUC’s order and evaluating whether they are willing to accept the PUC’s decision or will seek a reconsideration of Order No. 33795. Although we agree with the PUC that the Applicants did not promise adequate customer benefits and provided inadequate support of the merger, we are reviewing the order to determine if any clarification to the order may be necessary.”

With NextEra seemingly out of the picture, Hawaii is back to Hawaiian Electric, a company that has frequently been criticized over some of the highest electric rates in the country.

Hawaiian Electric has also faced repeated accusations that it attempted to slow the rise of solar in the islands — something representatives of the company have sharply denied.

(Read Civil Beat’s special report on the history of HECO, “Electric Dreams.” The series continues Monday.)

Legislators and the governor have given the Public Utilities Commission goals to aim for, including 100 percent renewable energy by 2045.

There are also constraints on the path there, particularly Ige’s opposition to using liquefied natural gas as a bridge fuel that burns cleaner and is cheaper than the oil currently used to generate most electricity.

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NextEra is free to essentially start over and file a new application with the commission, if Hawaiian Electric remains open to it. NextEra could also ask the commission to reconsider, or it could appeal the rejection to the Hawaii Supreme Court.

Earlier Friday, former Public Utilities Commission Chair Mina Morita filed a lawsuit challenging the legality of Ige’s appointment of Gorak last month.

The complaint centers around the legal issue of whether a vacancy was created when Commissioner Mike Champley’s term expired June 30 or if he legally should have remained in office on a holdover basis until his successor, Gorak, was confirmed by the Senate.

“I filed this complaint because this is an important matter of law that can only be resolved by the judiciary of the State of Hawaii and it must be decided as soon as possible to protect the integrity of the PUC — whose decisions affect every Hawaii resident and business — from undue political interference and to preserve the separation of powers between the legislative and executive branches of government,” Morita said in a statement.

“I believe Thomas Gorak had no legal right to take office without the Senate’s approval of his nomination, and his having done so puts at risk all PUC proceedings and every decision and order in which he participates,” she said.

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Attorney General Doug Chin released an opinion Friday morning that said the Hawaii Constitution authorized Ige’s interim appointment. The opinion was in response to a request from Senate President Ron Kouchi, who has said senators were concerned about the appointment and were considering a lawsuit.

For Washington Analysis, which bills itself as an independent research institution that focuses on public policy’s impact on financial markets, the decision “signals an imminent departure by NextEra, given what we perceive to be a rough road to approval.”

“To be clear, NextEra may request a rehearing since the order is without prejudice, but the chances that the PUC reconsiders its denial appear low,” the institution said in an update Friday. “Media reports have indicated that another suitor may try its luck at acquiring Hawaii Electric, but we foresee similar regulatory hurdles.”

While the PUC decision came after more than 19 months of engagement around a deal that is almost certain not to go through in its current form, it does lay out the factors the commission would like to see from any future suitors of Hawaiian Electric.

They include benefits for ratepayers, the mitigation of risk for Hawaiian Electric, successfully reaching the state’s clean energy goals, increasing competition in Hawaii’s energy markets, improved corporate governance and the transformation of HECO into a more customer-focused, cost-efficient and performance-driven electric utility.

Read the 410-page decision below.

Eric Pape contributed to this report.

Read about Hawaiian Electric’s role in the modern development of Hawaii in our ongoing look at the history of the company here.