SB2488 HD1.DOC

SECTION 1. The legislature established net energy metering in Act 272, Session Laws of Hawaii 2001, “to lessen Hawaii’s dependence on imported oil by encouraging the greater use of renewable energy.” The legislature finds that, consistent with the intent of Act 272, net energy metering has been an effective component of Hawaii’s efforts “to encourage the establishment of a market for renewable energy in Hawaii using the State’s renewable energy resources and to further development of these resources.”

Net energy metering is a means to encourage the implementation of distributed renewable generation resources owned by Hawaii residential and commercial utility customers. The legislature finds that distributed generation resources and non-utility-owned resources have an important role to play in Hawaii’s transition from over-reliance on fossil-fuel electrical generation to increased use of renewable generation technologies, and that distributed generation resources provide unique benefits resulting from wide geographical dispersion, relatively small size, availability of ownership by Hawaii residents and businesses, and support for businesses engaged in the installation of distributed generation.

The legislature recognizes that the variability of some renewable energy generation technologies, including some technologies promoted by net energy metering, present special challenges to maintain continuously reliable electrical power service. The legislature maintains as policy the existing principle that it is the responsibility of Hawaii’s electric public utilities to maintain reliable electrical power services, but holds that unsubstantiated reliability concerns should not be used as a reason to dismiss distributed renewable generation or non-utility owned resources, or to digress from Hawaii’s transition from fossil-fuel generation to increased use of renewable energy resources. The legislature does not accept any premise that centralized utility-owned generation is the only or exclusive means to provide reliable electrical power services to Hawaii’s utility customers. It is ultimately the responsibility of the public utilities commission to consider the benefits, challenges, and other characteristics of distributed renewable energy generation and determine the extent to which distributed renewable generation resources, collectively and by individual resource technology type and size, can be incorporated into Hawaii’s electric utility power systems.

The legislature recognizes that the public utilities commission is in the process of considering implementing feed-in tariffs as an additional means to encourage the implementation of several distributed renewable generation technologies. Net energy metering and the feed-in tariffs being considered by the public utilities commission differ in several respects, including eligible technology types, which entities are eligible to subscribe, generation capacity limits on individual projects and on collective subscription, and the amount and terms of payment for delivered electrical power.

Net energy metering is a tariff providing for a transfer of electrical energy between an electric utility customer and an electrical utility, where energy charges to the customer are offset by reductions in energy provided by the utility and by customer-generated energy delivered to the utility. In accordance with the existing statute, net energy metering is a program available to utility customers “intended primarily to offset part or all of the customer's own electrical requirements.” Net energy metering is not intended to encourage projects that generate more energy than a customer uses and no provisions are made for any sale of energy to the utility or for monetary payment to a customer.

Feed-in tariffs, in the form being considered by the public utilities commission, provide standardized contracts for the sale of electrical energy generated by non-utility entities using any of several qualifying distributed renewable generation technologies for purchase by the public utility at regulated, standardized prices. Unlike net energy metering, feed-in tariffs provide for the sale and purchase of energy, are not limited to subscription by utility customers, and are not limited by the amount of energy consumed by customers.

The purpose of this Act, therefore, is to help ensure greater sustainability for the net energy metering program and to provide for a closer examination of distributed generation technologies.

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

"§269‑ Administrative efficiency. An electric utility shall not unreasonably deny, burden, or delay net energy metering service that is requested by an eligible customer-generator."

SECTION 3. Section 269-102, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(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 per cent of the electric utility's system peak demand; provided that the public utilities commission may modify, by rule or order, the total rated generating capacity produced by eligible customer-generators; provided further that the public utilities commission shall ensure that a percentage of the total rated generating capacity produced by eligible customer-generators shall be reserved for electricity produced by eligible residential or small commercial customer-generators. The public utilities commission may define, by rule or order, the maximum capacity for eligible residential or small commercial customer-generators. Notwithstanding the generating capacity requirements of this subsection, the public utilities commission may evaluate, on an island-by-island basis, the applicability of the generating capacity requirements of this subsection and, in its discretion, may exempt an island or a utility grid system from the generating capacity requirements[.] or specify separate generating capacity requirements or limits for individual generation technologies listed in the definition of “eligible customer-generator” in section 269-101.

In determining generating capacity requirements or limits in accordance with this subsection, the public utilities commission shall ensure that the impacts of net energy metering on the rates charged to utility customers are reasonable and shall

(1) The extent to which net energy metering is necessary or useful to further Hawaii’s transition from fossil-fuel generation to renewable generation technologies;

(2) The benefits that distributed generation technologies and non-utility generation resources provide to Hawaii’s electric systems and economy;

(3) The opportunities that net energy metering provide to Hawaii’s residential and commercial customers to hedge future electrical power costs by making investments in generation resources;

(4) The extent to which net energy metering supports a healthy commercial renewable generation installation industry;

(5) The extent of impacts of specific types of generation provided by net energy metering and other distributed generation technologies upon utility system reliability or infrastructure costs;

(6) The comparative benefit and cost to ratepayers of net-energy meter, feed-in tariffs or other mechanisms or programs exist that are available and provide for effective implementation of distributed generation resources; and

(7) The terms agreed to by the State in the October 2008 Hawaii Clean Energy Initiative Energy Agreement."

SECTION 4. Section 269-110, Hawaii Revised Statutes, is amended to read as follows:

"§269-110 [~~Termination by eligible customer-generators.~~] Eligible customer-generators; termination; alternative credits or compensation mechanisms. If an eligible customer-generator terminates the customer relationship with the electric utility, the electric utility shall reconcile the eligible customer‑generator's consumption and production of electricity, including any unused credits for excess electricity from the eligible customer‑generator carried over from prior months, for the period following the last twelve-month reconciliation period to the date of termination of the relationship, according to the requirements set forth in this part.

If the public utilities commission, at any time, establishes alternative mechanisms for crediting or otherwise compensating eligible customer-generators for exported power, eligible customer-generators with existing net energy metering contracts shall have the option of maintaining the existing net energy metering contracts and shall not be required to convert to new alternative credits or compensation mechanisms."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	2488
TWENTY-FIFTH LEGISLATURE, 2010		S.D. 2
STATE OF HAWAII		H.D. 1