SB2990

SECTION 1. The legislature notes that renewable energy resources can greatly benefit Hawaii's economy, environment, energy security, and sustainability. The increased use of Hawaii's abundant renewable energy resources, such as wind, solar, ocean thermal, wave, and biomass resources, are keys to reducing Hawaii's dependence on imported fossil fuels, reducing Hawaii's green house gas emissions and contribution to global warming, and creating new job opportunities and economic diversification.

The legislature finds that Hawaii's trade deficit is also a significant impediment to Hawaii's goal of economic and energy security and sustainability. Specifically, in 2006, Hawaii exported only $16,300,000,000 in goods and services, including visitor spending, while importing approximately $24,000,000,000. The legislature further finds that Hawaii's oil imports totaled $3,400,000,000 for the year, accounting for approximately fifteen per cent of the total imports. Over ninety-three per cent of Hawaii's energy is supplied by fossil fuel.

Act 95, Session Laws of Hawaii 2004, established a renewable portfolio standard, which requires that each electric utility company shall generate ten per cent of its net electricity sales from renewable resources by December 31, 2010, fifteen per cent by December 31, 2015, and twenty per cent by December 31, 2020. Hawaii's electric utilities used fossil fuel to generate ninety-two per cent of the electricity they sold in 2006. This represented almost twenty-five per cent of the total fossil fuel imports and cost approximately $749,102,000. Since electric utilities can most readily use renewable energy relative to Hawaii's other energy sectors, the legislature mandated the renewable portfolio standards.

The renewable portfolio standards, however, also included electrical energy savings brought about by the use of renewable displacement or off-set technologies, as well as electrical energy savings brought about by the use of energy efficiency technologies including energy efficiency programs. This is unique among the twenty-nine states that have renewable portfolio standard requirements. It also results in double counting the energy savings in calculating the renewable portfolio standard achieved by the electric utilities.

From 2001 to the end of 2006, the Hawaiian Electric companies (HECO utilities) have increased their electricity generation from renewable resources by thirty-seven per cent. During the same period, the electric utilities' electricity sales increased by 746 gigawatthours from 9,370 gigawatthours in 2001 to 10,116 gigawatthours in 2006. However, the amount generated from renewable resources at facilities owned by the electric utilities or purchased from independent power producers only increased by 221.6 gigawatthours, from 606 gigawatthours in 2001 to 827.6 gigawatthours in 2006. This supplied less than one-third of the increase in the utilities' electricity sales. In 2006, the utilities' reported renewable portfolio standards achieved under the current law which includes energy savings from the use of renewable displacement or off-set technologies as well as from energy efficiency and conservation programs totaled 1,399 gigawatthours, fifty-nine per cent of which is accounted by the electricity generation from renewable resources.

To ensure that the intent and purpose of this Act are clearly and unambiguously communicated, the legislature states its unequivocal support for all cost-effective, technically feasible uses of energy efficiency and conservation resources and technology and displacement or off-set technologies. Therefore, nothing in this Act shall be taken to mean that the legislature intends to prevent, preclude, or in any way inhibit the use of such resources and technologies as the first and best choice for diminishing Hawaii's dangerous dependency on imported fossil fuels, especially petroleum. Moreover, the legislature finds that in addition to strengthening Hawaii's renewable portfolio standards, which is the purpose of the Act, the separate establishment of similarly robust energy efficiency standards is an extremely attractive policy option and deserves serious consideration on its own merits, which are undeniably significant.

The purpose of this Act is to ensure that more renewable resources will be deployed in energy generation to meet the renewable portfolio standards with attendant reductions in greenhouse gas emissions, replacement of fossil fuel oil, and other economic and environmental benefits.

SECTION 2. Section 269-91, Hawaii Revised Statutes, is amended to read as follows:

"§269-91 [[]Definitions[]]. For the purposes of this [[]part[]]:

"Biofuels" means liquid or gaseous fuels produced from organic sources such as biomass crops, agricultural residues and oil crops, such as palm oil, canola oil, soybean oil, waste cooking oil, grease, and food wastes, animal residues and wastes, and sewage and landfill wastes.

"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 consistent with the methodology set by the public utilities commission in accordance with section 269-27.2.

"Electric utility company" means a public utility as defined under section 269-1, for the production, conveyance, transmission, delivery, or furnishing of power.

"Renewable electrical energy" means[:

~~(1)~~ ~~Electrical~~] Electrical energy generated using renewable energy as the source~~[;]~~

~~(2)~~ Electrical energy savings brought about by the use of renewable displacement or off-set technologies, including solar water heating, seawater air-conditioning district cooling systems, solar air-conditioning, and customer-sited, grid-connected renewable energy systems; or

[(3)] Electrical energy savings brought about by the use of energy efficiency technologies, including heat pump water heating, ice storage, ratepayer-funded energy efficiency programs, and 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].

"Renewable energy" means energy generated or produced utilizing the following sources:

(1) Wind;

(2) The sun;

(3) Falling water;

(4) Biogas, including landfill and sewage-based digester gas;

(5) Geothermal;

(6) Ocean water, currents, and waves;

(7) Biomass, including biomass crops, agricultural and animal residues and wastes, and municipal solid waste;

(8) Biofuels; and

(9) Hydrogen produced from renewable energy sources.

"Renewable portfolio standard" means the percentage of electrical energy sales that is [~~represented~~] generated by renewable [~~electrical~~] energy."

SECTION 3. Section 269-92, Hawaii Revised Statutes, is amended to read as follows:

"§269-92 Renewable portfolio standards. (a) Each electric utility company that sells electricity for consumption in the State shall establish a renewable portfolio standard of:

(1) Ten per cent of its net electricity sales by December 31, 2010;

(2) Fifteen per cent of its net electricity sales by December 31, 2015; and

(3) Twenty per cent of its net electricity sales by December 31, 2020.

(b) The public utilities commission may establish standards for each utility that prescribe what portion of the renewable portfolio standards shall be met by specific types of renewable [~~electrical~~] energy resources; provided that:

(1) [~~At least fifty per cent of the~~] The renewable portfolio standards shall be met by electrical energy generated using renewable energy as the source;

(2) Where electrical energy is generated or displaced by a combination of renewable and nonrenewable means, the proportion attributable to the renewable means shall be credited as renewable energy; and

(3) Where fossil and renewable fuels are co-fired in the same generating unit, the unit shall be considered to generate renewable electrical energy (electricity) in direct proportion to the percentage of the total heat value represented by the heat value of the renewable fuels.

(c) If the public utilities commission determines that an electric utility company failed to meet the renewable portfolio standard, after a hearing in accordance with chapter 91, the utility shall be subject to penalties to be established by the public utilities commission; provided that if the commission determines that the electric utility company is unable to meet the renewable portfolio standards due to reasons beyond the reasonable control of an electric utility, as set forth in subsection (d), the commission, in its discretion, may waive in whole or in part any otherwise applicable penalties.

(d) Events or circumstances that are outside of an electric utility company's reasonable control may include, to the extent the event or circumstance could not be reasonably foreseen and ameliorated:

(1) Weather-related damage;

(2) Natural disasters;

(3) Mechanical or resource failure;

(4) Failure of renewable [~~electrical~~] energy producers to meet contractual obligations to the electric utility company;

(5) Labor strikes or lockouts;

(6) Actions of governmental authorities that adversely affect the generation, transmission, or distribution of renewable electrical energy under contract to an electric utility company;

(7) Inability to acquire sufficient renewable electrical energy due to lapsing of tax credits related to renewable energy development;

(8) Inability to obtain permits or land use approvals for renewable [~~electrical~~] energy projects;

(9) Inability to acquire sufficient cost-effective renewable [~~electrical~~] energy;

(10) Substantial limitations, restrictions, or prohibitions on utility renewable [~~electrical~~] energy projects; and

(11) Other events and circumstances of a similar nature."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

BY REQUEST

THE SENATE	S.B. NO.	2990
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII