HB2167

SECTION 1. The purpose of this Act is to enhance Hawaii's energy and economic security and reduce its vulnerability to wildly fluctuating fuel prices related to electricity generation by removing barriers to the development of solar electric resources and increasing the accessibility of net energy metering.

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

"§269- Optional pricing program. (a) Each electric utility shall offer an optional pricing program that allows its customers to choose to purchase electricity derived from renewable energy sources in amounts equivalent to a portion or to all of the customer's electricity consumption.

(b) For each kilowatt-hour of electricity that a customer purchases under the optional pricing program, that customer shall receive a credit equal to the utility's average cost of fuel used for the generation of electricity during that billing period.

(c) The renewable energy sources used in the optional pricing program shall include a minimum of fifty per cent that are derived from solar photovoltaic generation."

SECTION 3. Section 269-1, Hawaii Revised Statutes, is amended by amending the definition of "public utility" to read as follows:

"Public utility":

(1) 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 shall include:

(A) Any person insofar as that person owns or operates a private sewer company or sewer facility; and

(B) Any telecommunications carrier or telecommunications common carrier;

(2) Shall not include:

(A) Any person insofar as that person owns or operates an aerial transportation enterprise;

(B) Persons owning or operating taxicabs, as defined in this section;

(C) Common carriers transporting only freight on the public highways, unless operating within localities or along routes or between points that the public utilities commission finds to be inadequately serviced without regulation under this chapter;

(D) Persons engaged in the business of warehousing or storage unless the commission finds that regulation thereof is necessary in the public interest;

(E) The business of any carrier by water to the extent that the carrier enters into private contracts for towage, salvage, hauling, or carriage between points within the State and the carriage is not pursuant to either an established schedule or an undertaking to perform carriage services on behalf of the public generally;

(F) The business of any carrier by water, substantially engaged in interstate or foreign commerce, transporting passengers on luxury cruises between points within the State or on luxury round-trip cruises returning to the point of departure;

(G) Any person who:

(i) Controls, operates, or manages plants or facilities for the production, transmission, or furnishing of power primarily or entirely from nonfossil fuel sources; and

(ii) Provides, sells, or transmits all of that power, except such power as is used in its own internal operations, directly to a public utility for transmission to the public;

(H) A telecommunications provider only to the extent determined by the commission pursuant to section 269-16.9;

(I) Any person who controls, operates, or manages plants or facilities developed pursuant to chapter 167 for conveying, distributing, and transmitting water for irrigation and such other purposes that shall be held for public use and purpose;

(J) Any person who owns, controls, operates, or manages plants or facilities for the reclamation of wastewater; provided that:

(i) The services of the facility shall be provided pursuant to a service contract between the person and a state or county agency and at least ten per cent of the wastewater processed is used directly by the State or county which has entered into the service contract;

(ii) The primary function of the facility shall be the processing of secondary treated wastewater that has been produced by a municipal wastewater treatment facility that is owned by a state or county agency;

(iii) The facility shall not make sales of water to residential customers;

(iv) The facility may distribute and sell recycled or reclaimed water to entities not covered by a state or county service contract; provided that, in the absence of regulatory oversight and direct competition, the distribution and sale of recycled or reclaimed water shall be voluntary and its pricing fair and reasonable. For purposes of this subparagraph, "recycled water" and "reclaimed water" mean treated wastewater that by design is intended or used for a beneficial purpose; and

(v) The facility shall not be engaged, either directly or indirectly, in the processing of food wastes; [~~and~~]

(K) Any person who owns, controls, operates, or manages any seawater air conditioning district cooling project; provided that at least fifty per cent of the energy required for the seawater air conditioning district cooling system is provided by a renewable energy resource, such as cold, deep seawater[.]; and

(L) Any person who owns, operates, and maintains electricity generating equipment using solar, wind, biomass, or hydroelectric energy as the sole sources of energy for that person's own electrical consumption, and any person who owns, operates, and maintains electricity generating equipment using only solar, wind, biomass, or hydroelectric energy and sells or otherwise provides that electricity to one or more customers but not for general public use; provided that person does not hold a franchise or charter enacted or granted by the State or have a bona fide operation as a public utility heretofore recognized by the commission.

If the application of this chapter is ordered by the commission in any case provided in paragraphs (2)(C), (2)(D), (2)(H), and (2)(I), 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. Section 269-101, Hawaii Revised Statutes, is amended by amending the definition of "net energy metering" to read as follows:

"Net energy metering" means measuring the difference between the electricity supplied through the electric grid and the electricity generated by an eligible customer-generator and fed back to the electric grid over a monthly billing period; provided that:

(1) Net energy metering shall be accomplished using a single meter capable of registering the flow of electricity in two directions;

(2) An additional meter or meters to monitor the flow of electricity in each direction may be installed with the consent of the customer-generator, at the expense of the electric utility, and the additional metering shall be used only to provide the information necessary to accurately bill or credit the customer-generator, or to collect solar, wind turbine, biomass, or hydroelectric energy generating system performance information for research purposes;

(3) If the existing electrical meter of an eligible customer-generator is not capable of measuring the flow of electricity in two directions, the electric utility shall be responsible for all expenses involved in purchasing and installing a meter that is able to measure electricity flow in two directions;

(4) If an additional meter or meters are installed, the net energy metering calculation shall yield a result identical to that of a single meter; [~~and~~]

(5) An eligible customer-generator who already owns an existing solar, wind turbine, biomass, or hydroelectric energy generating facility, or a hybrid system consisting of two or more of these facilities, is eligible to receive net energy metering service in accordance with this part[.]; and

(6) The electric utility shall not unreasonably deny, burden, or delay net energy metering services upon request by an eligible customer-generator of the electric utility."

SECTION 5. Section 269-101.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§269-101.5[]] Maximum capacity of eligible customer-generator. The eligible customer-generator shall have a capacity of not more than [~~fifty~~] five hundred kilowatts[;] in 2008, one megawatt in 2009, and two megawatts thereafter; provided that the public utilities commission may increase the maximum allowable capacity that eligible customer-generators may have to an amount greater than [~~fifty kilowatts~~] these amounts by rule or order."

SECTION 6. Section 269-102, Hawaii Revised Statutes, is amended to read as follows:

"§269-102 Standard contract or tariff; rate structure. (a) Every electric utility shall develop a standard contract or tariff providing for net energy metering and shall make this contract available to eligible customer-generators, upon request, on a first-come-first-served basis until the time that the total rated generating capacity produced by eligible customer-generators equals [.5] one per cent of the electric utility's system peak demand[;] in 2008, two per cent of the electric utility's system peak demand in 2009, five per cent of the electric utility's system peak demand in 2010, and without limitation thereafter; provided that the public utilities commission may increase, by rule or order, the total rated generating capacity produced by eligible customer-generators to an amount above [~~.5 per cent of the electric utility's system peak demand.~~] the limitations specified in this section.

(b) Each net energy metering contract or tariff shall be identical, with respect to rate structure, to the contract or tariff to which the same customer would be assigned if the customer was not an eligible customer-generator. The charges for all retail rate components for eligible customer-generators shall be based exclusively on the eligible customer-generator's net kilowatt-hour consumption over a monthly billing period. Any new or additional demand charge, standby charge, customer charge, minimum monthly charge, interconnection charge, or other charge that would increase an eligible customer-generator's costs beyond those of other customers in the rate class to which the eligible customer-generator would otherwise be assigned are contrary to the intent of this section, and shall not form a part of net energy metering contracts or tariffs.

[~~(c) The public utilities commission may amend the rate structure or standard contract or tariff by rule or order.~~]"

SECTION 7. Section 269-104, Hawaii Revised Statutes, is amended to read as follows:

"§269-104 Additional customer-generators. Notwithstanding section 269-102, an electric utility [~~is not obligated~~] may choose to provide net energy metering to additional customer-generators in its service area when the combined total peak generating capacity of all eligible customer-generators served by all the electric utilities in that service area furnishing net energy metering to eligible customer-generators equals [~~.5 per cent of the system peak demand of those electric utilities;~~] the limitations specified in section 269-102(a); provided that the public utilities commission may increase, by rule or order, the allowable percentage of the electric utility's system peak demand produced from eligible customer-generators in the electric utility's service area, whereupon the electric utility will be obligated to provide net energy metering to additional eligible customer-generators in that service area up to the increased percentage amount."

SECTION 8. Section 269-105, Hawaii Revised Statutes, is amended to read as follows:

"§269-105 Calculation. The net energy metering calculation shall be made by measuring the difference between the electricity supplied to the eligible customer-generator and:

(1) The electricity generated by the eligible customer-generator and fed back to the electric grid over a monthly billing period; and

(2) Any unused kilowatt-hour credits for excess electricity from the eligible customer-generator carried over from previous months since the last twelve-month reconciliation period."

SECTION 9. Section 269-106, Hawaii Revised Statutes, is amended to read as follows:

"§269-106 Billing periods; twelve-month reconciliation. (a) Billing of net energy metering customers shall be on a monthly basis; provided that the last monthly bill for each twelve-month period shall reconcile for that twelve-month period the net electricity provided by the electric utility with:

(1) The electricity generated by the eligible customer-generator and fed back to the electric grid over the monthly billing period; and

(2) Any unused kilowatt-hour credits for excess electricity from the eligible customer-generator carried over from prior months since the last twelve-month reconciliation period.

(b) Kilowatt-hour credits for excess electricity from the eligible customer-generator that remain unused after each twelve-month reconciliation period [~~may not be carried over to the next twelve-month period.~~] shall be compensated at the average fuel cost for the prior twelve-month period."

SECTION 10. Section 269-107, Hawaii Revised Statutes, is amended to read as follows:

"§269-107 Net electricity consumers. At the end of each monthly billing period, where the electricity supplied during the period by the electric utility exceeds:

(1) The electricity generated by the eligible customer-generator during that same period; and

(2) Any unused kilowatt-hour credits for excess electricity from the eligible customer-generator carried over from prior months since the last twelve-month reconciliation period,

the eligible customer-generator is a net electricity consumer and the electric utility shall be owed compensation for the eligible customer-generator's net kilowatt-hour consumption over that same period. The compensation owed for the eligible customer-generator's net monthly kilowatt-hour consumption shall be calculated at the retail rate of the rate class the customer is normally assigned to."

SECTION 11. Section 269-108, Hawaii Revised Statutes, is amended to read as follows:

"§269-108 Net electricity producers; excess electricity credits and credit carry over. (a) At the end of each monthly billing period, where the electricity generated by the eligible customer-generator during the month exceeds the electricity supplied by the electric utility during that same period, the eligible customer-generator is a net electricity producer and the electric utility shall retain any excess kilowatt-hours generated during the prior monthly billing period; provided that the excess electricity generated by the customer-generator, if any, in each monthly billing period shall be carried over to the next month as a [~~monetary~~] kilowatt-hour value to the credit of the eligible customer-generator, which credit may accumulate and be used to offset the compensation owed the electric utility for the eligible customer-generator's net kilowatt-hour consumption for succeeding months within each twelve-month period; provided further that the electric utility shall reconcile the eligible customer-generator's electricity production and consumption for each twelve-month period as set forth in section 269-106. [The eligible customer-generator shall not be owed any compensation for excess kilowatt-hours unless the electric utility enters into a purchase agreement with the eligible customer-generator for those excess kilowatt-hours.]

(b) Subject to the limitations of subsection (a) and section 269-106, an eligible customer-generator shall have a transferable ownership interest in any excess electricity credits that the customer-generator may accumulate pursuant to this section."

SECTION 12. Section 269-111, Hawaii Revised Statutes, is amended to read as follows:

"§269-111 Safety and performance standards[.]; interconnection standards. (a) A solar, wind turbine, biomass, or hydroelectric energy generating system, or a hybrid system consisting of two or more of these facilities, used by an eligible customer-generator shall meet all applicable safety and performance standards established by the National Electrical Code, the Institute of Electrical and Electronics Engineers, and accredited testing laboratories such as the Underwriters Laboratories and, where applicable, rules of the public utilities commission regarding safety and reliability.

(b) For systems of ten kilowatts or less, an eligible customer-generator whose solar, wind turbine, biomass, or hydroelectric energy generating system, or whose hybrid system consisting of two or more of these facilities, meets the standards and rules under subsection (a) shall not be required to install additional controls, perform or pay for additional tests, or purchase additional liability insurance.

[~~(c) For eligible customer-generator systems of greater than ten kilowatts, the commission, either through decision and order, by tariff adoption, or by rule, shall:~~

~~(1)~~ ~~Set forth safety, performance, and reliability standards and requirements; and~~

~~(2)~~ ~~Establish the qualifications for exemption from a requirement to install additional controls, perform or pay for additional tests, or purchase additional liability insurance.~~]

(c) No later than September 1, 2009, the commission shall adopt rules pursuant to chapter 91 that incorporate best practices interconnection standards. Upon adoption, the standards shall become the interconnection requirements of each utility subject to the authority of the commission. As part of the rulemaking process, the commission shall consider interconnection standards adopted within the previous thirty-six months by other states, standards promulgated by the United States Federal Energy Regulatory Commission, and model standards developed by nonprofit organizations with the primary purpose of promoting renewable energy."

SECTION 13. Section 205-4.5, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) Within the agricultural district, all lands with soil classified by the land study bureau's detailed land classification as overall (master) productivity rating class C, D, E, or U shall be restricted to the uses permitted for agricultural districts as set forth in section 205-5(b)[.]; provided that it shall be a permissible use of all lands with soil classified by the land study bureau's detailed land classification as overall (master) productivity rating class C and D for photovoltaic energy facilities, including the appurtenances associated with the production and transmission of solar generated energy."

SECTION 14. (a) The public utilities commission shall engage an independent consultant to perform an analytical review of increasing penetration levels of distributed solar electric generation in Hawaii; provided that funding for the consultant shall not exceed $85,000; provided further that funding shall be derived from the existing integrated resource planning surcharge that is collected from all electric ratepayers.

(b) The public utilities commission shall establish the following criteria for competitive selection of the consultant:

(1) The consultant shall have extensive experience in performing utility photovoltaic value analyses;

(2) The consultant shall have been published in the area of photovoltaic value analysis, included capacity credit calculations, and other distributed generation valuation methodologies;

(3) The consultant shall demonstrate solid experience in working with utility personnel on value analysis studies; and

(4) The consultant shall have access to site and time-specific solar resource data for Hawaii.

(c) The consultant shall analyze and report on the following values and costs of distributed photovoltaic generation on the islands of Hawaii, Kauai, Maui, and Oahu at penetration levels of two per cent, five per cent, ten per cent, and twenty per cent:

(1) The values including, but not limited to, fuel and maintenance cost reduction value, capacity value, grid support (including voltage and voltage amp reactive support), mitigation of new transmission and distribution facilities and upgrades, and environmental and carbon benefits; and

(2) The incremental costs to the utility grid including, but not limited to, additional capital investment in utility infrastructure, fuel and maintenance costs associated with spinning reserves, and costs of equipment and resources required to follow changes in load patterns that result from the deployment of the distributed photovoltaic generation.

These analyses shall assume photovoltaic penetration equivalence by major customer type: residential, commercial, and industrial.

(d) The public utility companies, Hawaiian Electric Company, Inc., Maui Electric Company, Ltd., Hawaii Electric Light Company, and Kauai Island Utility Co-op, shall provide all data requested by the consultant necessary for the purposes of performing its analyses.

(e) The commission shall submit a report of the consultant's findings to the legislature no later than twenty days prior to the convening of the regular session of 2009.

SECTION 15. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 16. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 17. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 18. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2167
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII