STAND. COM. REP. NO. 1283-04
Honolulu, Hawaii
, 2004
RE: S.B. No. 2474
S.D. 3
H.D. 2
Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twenty-Second State Legislature
Regular Session of 2004
State of Hawaii
Sir:
Your Committee on Consumer Protection and Commerce, to which was referred S.B. No. 2474, S.D. 3, H.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO RENEWABLE ENERGY,"
begs leave to report as follows:
The purpose of this bill is to encourage the development and increased use of renewable energy resources in Hawaii by:
(1) Increasing renewable portfolio standards (RPS)--i.e., the percentage of a utility's electricity sales that must be composed of renewable energy--to 15 percent of net sales by December 31, 2015, and 20 percent by December 31, 2020;
(2) Expanding the definition of "renewable energy" to allow the RPS to recognize the renewable portion of fuels or energy produced using a combination of renewable and nonrenewable means;
(3) Requiring the Public Utilities Commission (PUC) to:
(A) Adopt incentives and penalties by rule, and implement a utility rate structure by December 31, 2006, that will encourage utilities to meet the RPS;
(B) Determine the rate structure's impact on utility profit margins to ensure they do not decrease for five years following implementation of the rate structure;
(C) Perform studies reviewed by experts on whether Hawaii's utilities can meet the RPS in a cost-effective manner or must be adjusted, and on the RPS proposed for the fifth and tenth years beyond current standards; and
(D) Report findings and proposed legislation to the 2009 Legislature, and every five years thereafter.
The Department of Business, Economic Development and Tourism (DBEDT) testified in support of this bill. PUC, Hawaiian Electric Company, Maui Electric Company, Hawaii Electric Light Company, and Hawaii Business Roundtable supported the intent of the bill but could not support the current form of the bill. The Chamber of Commerce of Hawaii opposed the bill.
At the hearing of this bill, your Committee circulated a proposed House Draft 2 developed by DBEDT. Your Committee recognizes that portions of the proposed bill are still disagreed upon by the interested parties, but that taken as a whole, the bill takes a substantial step toward the goal of energy self-sufficiency. Your Committee finds that the proposed bill establishes an interdepartmental State commitment to a supportive, working partnership with the private sector that is designed to succeed.
Your Committee has adopted the proposed amendments by:
(1) Requiring electric utilities to "establish" rather than "meet" renewable portfolio standards;
(2) Providing that PUC must determine if a utility is unable to meet the RPS in a cost-effective manner or as a result of circumstances beyond its control which could not have been reasonably anticipated or ameliorated;
(3) Relieving a utility from responsibility for meeting the RPS pursuant to the PUC determination;
(4) Defining "cost-effective" as the ability to produce or purchase electric energy or firm capacity, or both, from renewable energy resources at or below avoided costs;
(5) Requiring DBEDT and DLNR to support and facilitate the private sector's development of renewable energy projects, including specific mandates that:
(A) DLNR annually develop and publish a catalog of potential sites for development of renewable energy, and streamline the planning and permitting processes for renewable energy projects; and
(B) DBEDT develop a program to maximize state agency use of renewable energy, work with federal agencies to develop funding and technical support to help Hawaii achieve the RPS, and biennially issue a progress report to the Governor and Legislature;
(6) Deleting the requirement that PUC adopt penalties and incentives by rule;
(7) Removing the reference to the "period of five years" in the requirement that the PUC rate structure adopted to provide incentives to meet the RPS, not decrease electric utility profit margins for a period of five years;
(8) Amending PUC's authority to set the rate for renewable energy supplied to a utility, by providing that the rate shall be not "more," rather than "less," than 100 percent of the utility's avoided cost, and removing specified factors that PUC must consider in setting the rate; and
(9) Expanding the definition of "renewable energy" to include additional methods, such as ice storage, by which electrical energy savings may be brought about.
Technical, nonsubstantive amendments were also made for clarity, consistency, and style.
As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2474, S.D. 3, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2474, S.D. 3, H.D. 2.
Respectfully submitted on behalf of the members of the Committee on Consumer Protection and Commerce,
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____________________________ KENNETH T. HIRAKI, Chair |
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