Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2474, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to require electric utilities to establish renewable portfolio standards of twenty per cent by December 31, 2015, and thirty per cent by December 31, 2020, and to require the Public Utility Commission (PUC) to study the feasibility of implementing a rate structure and an incentives program to encourage the use of renewable energy.

Testimony in favor of the measure was received from the following: Department of Commerce and Consumer Affairs, PUC, Department of Business, Economic Development, and Tourism (DBEDT), Hawaii PV Coalition, Hawaii Renewable Energy Alliance, Honolulu Seawater Air Conditioning LLC, Na Leo Pohai, Powerlight Corporation, Apollo Energy Corporation, Maui Sierra Club, Hawaii Solar Energy Association, Vulcan Power Company, Sierra Club Hawaii Chapter, Life of the Land, Respiratory and Environmental Disabilities Association of Hawaii, and seventeen individuals. The Chamber of Commerce of Hawaii, Hawaii Business Roundtable, and Hawaiian Electric Company, Inc. opposed the measure.

Your Committee finds that the State must ensure greater use of its abundant renewable energy sources, including the sun, wind, ocean, and earth. The utilization of renewable energy offers numerous advantages, including the retention of dollars in the State's economy that would otherwise be paid out to import fossil fuels, economic diversification and job creation, and enhanced environmental protection. This measure would help to realize these benefits by requiring electric utilities to establish renewable portfolio standards (RPS) of twenty per cent of their net electricity sales by December 31, 2015, and thirty per cent by December 31, 2020. Further, these goals are consistent with the Administration's goal to achieve twenty per cent renewable energy use by 2020.

While your Committee supports the intent of this measure to increase Hawaii's usage of renewable energy sources, the testimonies presented indicate that several issues remain unresolved, and that further discussion and work on this measure is required.

One of the unresolved issues relates to the appropriate RPS levels that the law should establish since testifiers offered varying percentage amounts. Your Committee finds that it is critical to establish realistic and achievable RPS requirements since this measure establishes mandates, and several testifiers have advocated for the imposition of penalties upon parties that violate the mandates.

Other matters that require further consideration include, but are not limited to:

Another issue that warrants further consideration and dialogue is the issue of interim milestones. This measure establishes only two milestones after 2010, in 2015 and 2020. DBEDT proposes the establishment of interim milestones at least every two years to facilitate the monitoring of progress in achieving RPS levels by the Legislature and other stakeholders. As DBEDT officials acknowledged in their testimony, this issue requires further evaluation and input from other stakeholders.

DBEDT, a key proponent of this measure, testified that this measure remains a work-in-progress and requires further discussion and refinement. Therefore, to facilitate continued dialogue between the parties, your Committee has amended this measure by leaving the RPS percentage amounts blank. Additionally, your Committee amended this measure to reflect preferred drafting style.

Finally, your Committee recognizes the importance of passing this measure out of the Senate since a companion House measure failed to pass out of that legislative body. Your Committee remains open regarding the unresolved issues and looks forward to a continuing dialogue with all of the parties as this bill moves forward through the legislative process.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2474, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2474, S.D. 2.