STAND

STAND. COM. REP. NO. 940

Honolulu, Hawaii

, 2005

RE: S.B. No. 1557

S.D. 2

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred S.B. No. 1557, S.D. 1, entitled:

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

begs leave to report as follows:

The purpose of this measure is to amend the Public Utilities Commission laws to clarify rates for electricity purchases and renewable energy provisions and studies.

The Public Utilities Commission (PUC), Hawaii Renewable Energy Alliance, Hawaii Solar Energy Association, Honolulu Seawater Air Conditioning LLC, Inter-Island Solar Supply, PowerLight, the Rocky Mountain Institute, and Sierra Club – Hawaii Chapter submitted testimony in support of this measure. The Hawaiian Electric Company and its subsidiary utility companies, Hawaii Electric Light Company and Maui Electric Company, as well as Puna Geothermal Venture submitted testimony in opposition to this measure. The Department of Commerce and Consumer Affairs submitted comments.

Your Committee finds that Act 95, Session Laws of Hawaii 2004 (Act 95), was enacted to decrease the State's dependency on large amounts of imported fossil fuels and increase the use and development of Hawaii's renewable energy resources. There were, however, several provisions that were not included in Act 95, and this measure amends the PUC statutes to address those provisions by:

(1) Clarifying that the PUC establish a rate for public utilities purchasing electricity that is not less than one hundred percent of the cost avoided by purchasing rather than producing the electrical energy;

(2) Clarifying the definition of "renewable energy";

(3) Amending the renewable portfolio standards percentages for net electricity sales in 2015 and 2020;

(4) Clarifying the circumstances when the electric utility company will be relieved of responsibility for meeting renewable portfolio standards;

(5) Deleting the definition of "cost-effective"; and

(6) Establishing PUC duties with respect to a renewable portfolio standards study in session law rather than in statute.

Your Committee has amended this measure by:

(1) Amending the PUC duties with respect to renewable portfolio standards studies under section 269-95, Hawaii Revised Statutes by:

(a) Clarifying the purpose of developing and implementing the utility ratemaking structure;

(b) Clarifying the purpose of gathering, reviewing, and analyzing data to determine the extent that the utility ratemaking structure would impact profit margins;

(c) Adopting rules to implement incentives and penalties to assist electric utility companies in meeting renewable portfolio standards; and

(d) Clarifying whom the PUC may contract with for independent studies and what the studies shall include;

(2) Deleting the duties outlined for a renewable portfolio standards study in session law; and

(3) Making technical, nonsubstantive changes for style, clarity, and consistency.

Your Committee finds that these amendments have been made to refine the provisions that were not included in Act 95; however, your Committee believes that dialogue should be continued on this measure. Accordingly, your Committee has also amended this measure by inserting an effective date of July 1, 2050 to ensure further discussion.

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. 1557, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1557, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Housing,

		____________________________ RON MENOR, Chair