STAND. COM. REP. NO. 907-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2345
                                     S.D. 2
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Energy and Environmental Protection, to
which was referred S.B. No. 2345, S.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO RENEWABLE ENERGY RESOURCES,"

begs leave to report as follows:

     The purpose of this bill is to implement "renewables
portfolio standards" (RPS) to ensure that renewable energy is
included in the portfolio of electricity resources serving
Hawaii.

     This bill seeks to achieve market penetration for renewable
energy in the State by requiring qualified electric utility
companies to possess a minimum percentage of renewable energy
resources within their overall resource portfolios.  In addition,
this bill requires the Public Utilities Commission (PUC) to
establish a program to issue renewable credits to renewable
energy generators.

     Testimony in support of this measure was submitted by the
Department of Business, Economic Development, and Tourism
(DBEDT), Renewable Energy Services, Inc., Puna Geothermal
Venture, the Pacific Region PowerLight Corporation, The Solaray
Corporation, Zond Pacific, Amfac Sugar Kauai, Hawaii Renewable
Energy Alliance, Kauai Renewable Energy Hui, and several
individuals.  The Sierra Club, Hawaii Chapter, the Kauai County
Council, and the University of Hawaii's Environmental Center
supported the intent of this bill.  Hawaiian Electric Company and

 
 
                                 STAND. COM. REP. NO. 907-00
                                 Page 2

 
its subsidiary utilities, Maui Electric Company and Hawaii
Electric Light Company, and Kauai Electric opposed passage of
this measure, and the Consumer Advocate, Life of the Land, and
Ogden Energy Group, Inc., offered comments.

     The DBEDT's testimony was especially insightful.  According
to this agency:

     (1)  Instituting an RPS has been identified as the single
          most effective means of accomplishing the objectives of
          the State Energy Plan;

     (2)  The diversification of fuel supplies and reduced
          reliance on imported oil will help to reduce the risk
          and cost to ratepayers and to our economy in the event
          of oil price increases or supply disruptions;

     (3)  One of the identified barriers to renewable energy is
          the Energy Cost Adjustment Clause (Renewable Energy
          Resource Investigation Report, Docket No. 94-0266).
          This provision allows the utility to automatically pass
          through 100 percent of any fuel price increases to the
          ratepayers.  As a result, the utility bears no risk to
          its bottom line if oil prices increase and, therefore,
          has little incentive to minimize this type of risk.  On
          the other hand, increased use of renewables will dampen
          the effects of oil market volatility since costs
          incurred for renewable facilities are generally fixed
          over time; and

     (4)  In an article published in Public Utilities Fortnightly
          (February 15, 2000) entitled: "Getting It Right:  The
          Real Cost Impacts of a Renewables Portfolio Standard":

               "Several recent analyses estimate the costs
               associated with RPS requirements and draw
               similar conclusions: They find that any
               additional costs incurred in attaining the
               desired levels of renewable energy are
               'minimal' as compared to an all-fossil
               portfolio."

     Upon further consideration, your Committee has amended
this bill by deleting its substance and inserting provisions
found in H.B. No. 1883, H.D. 1, which was reported out
earlier by your Committee after a public hearing on February
17, 2000.  As amended, this bill essentially adds a new part
to the bill that provides for a "solar RPS" as a component
of the RPS.  These new provisions are necessary, because

 
                                 STAND. COM. REP. NO. 907-00
                                 Page 3

 
solar energy at present prices cannot compete with other
renewables within the RPS.

     Your Committee has further amended this bill by:

     (1)  Increasing the RPS between 2002 and 2010 by 0.5
          percentage points instead of 0.35 percentage
          points each year up to a minimum of 11.5 percent
          instead of ten percent on January 1, 2010; and

     (2)  Defining "renewable energy generator" as a
          facility that produces electricity from renewable
          energy.

     Your Committee finds that solar electric energy
production can provide unquantified benefits by enhancing:

     (1)  Facility reliability;

     (2)  Security of important telecommunications;

     (3)  Financial data and public health and safety
          functions; and

     (4)  Job creation and economic development from
          potential in-state manufacturing or assembly
          facilities.

     Your Committee further finds that development of solar
electric energy production offers great export technology
potential should these incentives attract a manufacturing or
assembly plant.

     As affirmed by the record of votes of the members of your
Committee on Energy and Environmental Protection that is attached
to this report, your Committee is in accord with the intent and
purpose of S.B. No. 2345, S.D. 2, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as S.B. No. 2345, S.D. 2, H.D. 1, and be referred to the
Committee on Consumer Protection and Commerce.


 
 
 
 
 
 
 
 
                                 STAND. COM. REP. NO. 907-00
                                 Page 4

 
                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Energy and
                                   Environmental Protection,



                                   ______________________________
                                   HERMINA M. MORITA, Chair