Allows the public utilities commission to regulate electric cooperatives in Hawaii. Allows electric cooperatives to opt out of the commission's regulation by allowing the member-consumers of the electric cooperative to exempt themselves from regulation under certain conditions. Defines "electric cooperative."

A BILL FOR AN ACT

SECTION 2. Chapter 269, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . ELECTRICAL COOPERATIVES

§269-A General supervision by commission. The commission shall have general supervision over all electric cooperatives with power to fix and establish rates and to adopt rules pursuant to chapter 91 affecting their services, operation, and the management and conduct of their business. The commission shall have full visitorial and inquisitorial power to examine electric cooperatives and keep informed as to their general conditions, their capitalization, rates, plants, equipment, apparatus, and other property owned, leased, controlled or operated, their value, the management, conduct, operation, practices and services; not only with respect to the adequacy, security, and accommodation afforded by their service, but also with respect to their compliance with this chapter, orders of the commission, and all other applicable laws of this State. This part shall not apply to generation and transmission associations or cooperative corporations, or transmission associations or cooperative corporations.

§269-B Rate investigations; notice of proposed rate increases. (a) An electric cooperative shall be subject to rate investigations by the commission pursuant to section 269-A unless a proposed increase in rates and charges does not exceed three per cent based on the previous twelve months revenue generated by the existing rates; provided that the electric cooperative shall be subject to section 269-A if:

(b) Each such electric cooperative not subject to rate investigation, at least ninety days before the effective date of any proposed rate increase, shall notify the commission and each of its member-consumers of the proposed rate increase. Notice to the commission shall include a verified statement showing the then total number of member-consumers of the electric cooperative. Notice by the electric cooperative to its member-consumers shall:

(1) Be in a form prescribed by the commission;

(3) Include:

(A) A schedule of the proposed rate schedules;

(c) The member-consumers of an electric cooperative may petition the commission to examine and determine the reasonableness of the rates and charges proposed by the electric cooperative pursuant to subsection (a)(2). The form of such a petition shall be prescribed by the commission. A petition substantially in compliance with the form shall not be deemed invalid due to minor errors in its form.

(d) If, by the effective date of this proposed increase in rates and charges, the commission has received petitions from fewer than the number of member-consumers as set out in subsection (a)(2), requesting that the commission examine the proposed increase in rates and charges, the commission shall immediately certify that fact to the electric cooperative. If, on or before the effective date of the proposed increase in rates and charges, the commission has received petitions from the number of member-consumers as set out in subsection (a)(2) or more, the commission shall notify the electric cooperative that it will examine and determine the reasonableness of the proposed increase in rates and charges. Rates and charges established by the commission or by an electric cooperative pursuant to this part shall be in force for not less than one year and no further increases in rates and charges shall be permitted during the one-year period.

(e) No electric cooperative shall have the right to receive more than one rate increase per year for any reason or under any procedures.

(f) In addition to the procedure for petition prior to any proposed increase in rates and charges pursuant to subsections (a) to (d), the member-consumers of an electric cooperative at any time may petition the commission to declare the electric cooperative be subject to full-scale rate investigation. If the commission determines that a majority of the member-consumers of an electric cooperative have properly petitioned that the electric cooperative be subject to full-scale rate regulation, the commission shall certify that fact to the electric cooperative and thereafter the electric cooperative shall be subject to full-scale rate investigation by the commission until at least a majority of the member-consumers of the electric cooperative properly petition that the electric cooperative shall no longer be subject to such full-scale rate investigations by the commission. The form of such a petition shall be prescribed by the commission. A petition substantially in compliance with the form shall not be deemed invalid due to minor errors in its form.

(g) Subsections (a) to (f) shall apply only to the rates and charges and shall have no effect on the commission's jurisdiction over the electric cooperative or the rules governing the operations of electric utilities.

(h) Each electric cooperative, when determining how rates and charges, established under subsection (b), are to be allocated to the different rate classes, shall apportion such rates and charges in a manner that reflects, as closely as practicable, the costs of providing service to that class.

(i) In no event, and under no circumstances, shall the procedures provided in this part be used for the purpose of establishing special competitive rates in any area in which an electric cooperative is in direct competition with another regulated retail electric supplier.

§269-C Petition by member consumers. Petitions requesting the commission to examine and determine the reasonableness of a proposed increase in rates and charges, or requesting rate regulation of an electric cooperative, shall be in a form established by the commission by rules adopted pursuant to chapter 91. Petitions may only be signed by the member-consumers of the electric cooperative.

§269-D Enforcement. Upon proceedings brought by an interested person or by action of the commission, the commission shall have the jurisdiction to enforce compliance with this part and may impose such penalties for violations of this part as may be appropriate as provided in section 269-28.

§269-E Exemption from regulation. (a) Electric cooperatives, that are owned by the member-consumers they serve, are regulated by the member-consumers themselves acting through an elected governing board. It is declared that the regulation by the commission under this part may be duplicative of the self-regulation by the electric cooperative and may be neither necessary nor cost-effective. It is therefore the purpose of this section to determine the necessity of regulation of rates and charges by the commission by allowing the member-consumers of an electric cooperative to exempt themselves from regulation by the commission except as provided in this section.

(b) Except as otherwise provided in subsections (d), (e), (f), and (g), this part shall not apply to electric cooperatives with less than seventeen thousand meters that comply with subsection (c).

(c) To be exempt under subsection (b), an electric cooperative shall poll its members as follows:

(d) In the event the member-consumers have voted, pursuant to subsection (c), to exempt themselves from regulation by the commission, any such electric cooperative may vote no more than once every twelve months to place the electric cooperative under the regulation of the commission, as provided in this part. The question shall be submitted to the member-consumers of the electric cooperative if at least five per cent of the members of the electric cooperative sign a petition requesting such an election. The petition shall be submitted to the membership in the same manner as provided for in subsection (c).

(e) Each electric cooperative that has voted to exempt itself from commission regulation under this part, when determining how rates and charges established after that exemption are to be allocated to the different rate classes, shall apportion those rates and charges in a manner that reflects, as closely as practicable, the costs of providing service to that class.

(f) In no event, and under no circumstances, shall rates and charges established in this part be used for the purpose of establishing special competitive rates in any area in which an electric cooperative is in direct competition with another regulated retail utility supplier.

(g) Notwithstanding this part, the commission shall retain jurisdiction over all electric cooperatives that have voted to exempt themselves from commission regulation under this part for proceedings brought by a regulated utility relating to alleged discriminatory or anti-competitive rates established by an exempt electric cooperative, or relating to actions to acquire existing customers of a regulated utility using those rates."

SECTION 3. Chapter 269-1, Hawaii Revised Statutes, is amended as follows:

1. By adding a new definition to be appropriately inserted and to read:

""Electric cooperative" means any private corporation or association organized for purposes of transmitting or distributing electricity exclusively to its stockholders or members at cost."

2. By amending the definition of "public utility" to read:

""Public utility" includes every person who may own, control, operate, or manage as owner, lessee, trustee, receiver, or otherwise, whether under a franchise, charter, license, articles of association, or otherwise, any plant or equipment, or any part thereof, directly or indirectly for public use, for the transportation of passengers or freight, or the conveyance or transmission of telecommunications messages, or the furnishing of facilities for the transmission of intelligence by electricity by land or water or air within the State, or between points within the State, or for the production, conveyance, transmission, delivery, or furnishing of light, power, heat, cold, water, gas, or oil, or for the storage or warehousing of goods, or the disposal of sewage; provided that the term:

(7) Shall not include:

(8) Shall not include any person who:

and

In the event the application of this chapter is ordered by the commission in any case provided in paragraphs (5), (6), (9), and (10), the business of any public utility that presents evidence of bona fide operation on the date of the commencement of the proceedings resulting in the order shall be presumed to be necessary to public convenience and necessity, but any certificate issued under this proviso shall nevertheless be subject to such terms and conditions as the commission may prescribe, as provided in sections 269-16.9 and 269-20."

SECTION 4. In codifying the new sections added by section 2, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.