Report Title:
Renewable Portfolio Standards; Public Utilities; Energy
Description:
Amends the renewable portfolio standard law to clarify the events considered as outside a utility's control in meeting the standard, implements penalties and alternate compliance mechanisms, and provides for a study of green power pricing. (HD1)
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
1434 |
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TWENTY-THIRD LEGISLATURE, 2005 |
H.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to renewable energy.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that a conducive regulatory structure addressing the design of rates, incentives, and penalties must be in place to achieve the renewable portfolio standard of producing twenty per cent of the State's net electricity from renewable energy resources by the year 2020.
During this 2004 regular session, the legislature gave guidance to state agencies on facilitating the implementation of the renewable portfolio standard. The purpose of this Act is to amend Act 95, Session Laws of Hawaii 2004, to give further clarification and additional guidance to the public utilities commission.
SECTION 2. Section 196-41, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b) The department of land and natural resources shall[:
(1) Develop and publish a catalog by December 31, 2006, and every five years thereafter, of potential sites for the development of renewable energy; and
(2) Work] work with electric utility companies and [with other] renewable energy developers on all applicable planning and permitting processes to [expedite the development of] develop renewable energy resources."
SECTION 3. Section 269-91, Hawaii Revised Statutes, is amended to read as follows:
"§269-91 [[]Definitions.[]] For the purposes of this [[]part[]]:
"Cost-effective" means the ability to produce or purchase electric energy or firm capacity, or both, from renewable energy resources at or below avoided costs. The calculation of avoided costs shall account for risks attendant to fossil fuel generation, including environmental, cultural, and economic costs, where fossil fuel generation is being avoided.
"Electric utility company," means a public utility as defined under section 269-1, for the production, conveyance, transmission, delivery, or furnishing of power.
"Renewable energy" means electrical energy produced by wind, solar energy, hydropower, landfill gas, waste to energy, geothermal resources, ocean thermal energy conversion, wave energy, biomass, including municipal solid waste, biofuels, or fuels derived from organic sources, hydrogen fuels derived from renewable energy, or fuel cells where the fuel is derived from renewable sources. Where biofuels, hydrogen, or fuel cell fuels are produced by a combination of renewable and nonrenewable means, the proportion attributable to the renewable means shall be credited as renewable energy. Where fossil and renewable fuels are co-fired in the same generating unit, the unit shall be considered to produce renewable electricity in direct proportion to the percentage of the total heat value represented by the heat value of the renewable fuels. "Renewable energy" also means electrical energy savings brought about by the use of solar [and heat pump] water heating, seawater air-conditioning district cooling systems, solar air-conditioning [and ice storage, quantifiable energy conservation measures, use of rejected heat from co-generation and combined heat and power systems excluding fossil-fueled qualifying facilities that sell electricity to electric utility companies, and central station power projects.], and all renewable electricity generated by eligible customer-generators.
"Renewable portfolio standard" means the percentage of electrical energy sales that is represented by renewable energy."
SECTION 4. Section 269-92, Hawaii Revised Statutes, is amended to read as follows:
"§269-92 Renewable portfolio standards. Each electric utility company that sells electricity for consumption in the State shall establish a renewable portfolio standard of:
(1) Seven per cent of its net electricity sales by December 31, 2003;
(2) Eight per cent of its net electricity sales by December 31, 2005;
(3) Ten per cent of its net electricity sales by December 31, 2010;
(4) Fifteen per cent of its net electricity sales by December 31, 2015; and
(5) Twenty per cent of its net electricity sales by December 31, 2020.
The public utilities commission shall determine if an electric utility company is unable to meet the renewable portfolio standards in a cost-effective manner, or as a result of circumstances beyond its control [which] that could not have been reasonably anticipated or ameliorated. [If this determination is made, the electric utility company] An electric utility company is responsible for conducting sufficient advance planning to acquire its percentage of net electricity sales. Events or circumstances that are outside of the electric utility company's reasonable control may include weather-related damage, mechanical failure, failure of the renewable power provider to meet its contractual obligations to the electric utility company, strikes, lockouts, or actions of governmental authority that adversely affect the generation, transmission, or distribution of renewable energy from an eligible resource under contract to an electric utility purchaser. If the determination is made that an electric utility company is unable to meet the renewable portfolio standard, either from building renewable power, purchasing renewable power from renewable power producers, or purchasing renewable energy credits, the electric utility company shall be relieved of responsibility for meeting the renewable portfolio standard for the period of time that it is unable to meet the standard."
SECTION 5. Section 269-95, Hawaii Revised Statutes, is amended to read as follows:
"[[]§269-95[]] Renewable portfolio standards study. The public utilities commission shall:
(1) By December 31, 2006, develop and implement a utility ratemaking structure, which may include but is not limited to performance-based ratemaking, to provide incentives, penalties, and alternative compliance mechanisms that encourage Hawaii's electric utility companies to use cost-effective renewable energy resources found in Hawaii to meet the renewable portfolio standards established in section 269-92, while allowing for deviation from the standards in the event that the standards cannot be met in a cost-effective manner, or as a result of circumstances beyond the control of the utility which could not have been reasonably anticipated or ameliorated;
(2) Gather, review, and analyze empirical data to determine the extent to which any proposed utility ratemaking structure would impact electric utility companies' profit margins, and to ensure that [these profit margins do not decrease] the electric utility companies' opportunity to earn a fair rate of return is not diminished as a result of the implementation of the proposed ratemaking structure;
(3) Using funds from the public utilities special fund, contract with the Hawaii natural energy institute of the University of Hawaii to conduct independent studies to be reviewed by a panel of experts from entities such as the United States Department of Energy, National Renewable Energy Laboratory, Electric Power Research Institute, Hawaii electric utility companies, and other similar institutions with the required expertise. These studies shall include findings and recommendations regarding:
(A) The capability of Hawaii's electric utility companies to achieve renewable portfolio standards in a cost-effective manner, and shall assess factors such as the impact on consumer rates, utility system reliability and stability, costs and availability of appropriate renewable energy resources and technologies, the effect of power purchase agreement terms on the viability of renewable power producers, permitting approvals, impacts on the economy, culture, community, environment, land and water, demographics, and other factors deemed appropriate by the commission; [and]
(B) Projected renewable portfolio standards to be set five and ten years beyond the then current standards; and
(C) The capability of Hawaii's electric utility companies to implement a green power pricing program in which residential and commercial customers can opt to have the energy cost adjustment on their electric bill replaced entirely, or in part, by a green choice power charge. The green choice power charge would be based on the cost of renewable supply which would remain fixed for ten years;
(4) Revise the standards based on the best information available at the time if the results of the studies conflict with the renewable portfolio standards established by section 269-92; [and]
(5) Investigate, and if feasible as a means of enhancing the renewable portfolio standard, implement the following programs:
(A) The intra-state trading program;
(B) The green power pricing system; and
(C) The photovoltaic buydown program; and
[(5)] (6) Report its findings and revisions to the renewable portfolio standards based on its own studies and those contracted under paragraph (3), to the legislature no later than twenty days before the convening of the regular session of 2009, and every five years thereafter."
SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 7. This Act shall take effect upon its approval.