SB2488 SD1.DOC

SECTION 1. The legislature finds that net energy metering is uniquely helpful to Hawaii's homeowners and business owners because it allows them to fully hedge their future power costs and to know their future energy costs with certainty.

The legislature finds that net energy metering should persist even after the public utilities commission has established alternative compensation systems such as the feed in tariff because net energy metering serves a different need in the renewable energy marketplace.

The legislature finds that there is no technical justification for setting net energy metering project size limits at the current statutory maximum of fifty kilowatts. This is evidenced by the public utilities commission's recent decision to allow feed in tariff projects as large as five megawatts without reference to the type of circuit to which they are interconnected. It is also evidenced by the Hawaiian Electric Company, Inc. and its affiliates (HECO Companies), proposals for systems that range from up to five hundred kilowatts in the feed in tariff docket to two megawatts in the public utilities host docket. The legislature further finds that the HECO Companies already have a process in place to manage reliability issues associated with distributed generation via its Rule 14H. Because all net energy metered systems are distributed systems, Rule 14H provides a limit on the level of net energy metering penetration that is intended to engineer out technical problems caused by distributed energy systems.

In conclusion, the legislature finds that net energy metering should be perpetuated irrespective of the eventual introduction and uptake level of feed in tariff systems. The existence of feed in tariffs does not in any way constitute a justification for eliminating or reducing net energy metering. The legislature further finds that no changes to procurement rules or options can justify transferring customer-generators with net energy metering contracts off of those contracts. Customer-generators with net energy metering contracts should not be removed against their will from those contracts during the term of the contracts. Finally, the legislature finds that this Act applies only to investor-owned utilities.

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. The utility shall not unreasonably deny, burden, or delay net energy metering service that is requested by an eligible customer-generator of the utility."

SECTION 3. Section 269-101, Hawaii Revised Statutes, is amended by:

1. Adding two new definitions to be appropriately inserted and to read as follows:

""Net surplus customer-generator" means an eligible customer-generator who has generated excess electricity, as determined by the net energy metering calculation in section 269-105, at the end of the eligible customer-generator's twelve‑month reconciliation period.

"Net surplus electricity compensation rate" means the rate established for exported energy under the feed-in tariff for that project size."

2. By amending "eligible customer-generator" to read as follows:

""Eligible customer-generator" means a metered residential or commercial customer, including a government entity, of an electric utility who owns and operates, leases, or purchases electricity from a solar, wind turbine, biomass, or hydroelectric energy generating facility, or a hybrid system consisting of two or more of these facilities, that is:

(1) Located on the customer's premises;

(2) Operated in parallel with the utility's transmission and distribution facilities;

(3) In conformance with the utility's interconnection requirements; and

(4) Intended primarily to offset part or all of the customer's own electrical requirements."

SECTION 4. 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 kilowatts;~~] two megawatts; 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~~] two megawatts by rule or order."

SECTION 5. 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~~;] on a distribution feeder reaches fifteen per cent of that distribution feeder's penetration level or the penetration level that triggers additional technical study, as determined by the public utilities commission by rule or order, whichever is higher; provided that [~~the~~]:

(1) The public utilities commission may modify, by rule or order, the total rated generating capacity produced by eligible customer-generators; [~~provided further that the~~] and

(2) 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."

SECTION 6. 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 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;~~] on a distribution feeder reaches fifteen per cent of that distribution feeder's penetration level or the penetration level that triggers additional technical study, as determined by the public utilities commission by rule or order, whichever is higher; provided that the public utilities commission may increase, by rule or order, the allowable percentage of the [~~electric utility's system peak demand~~] distribution feeder's penetration level 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 7. Section 269-106, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) [~~Credits~~] The electric utility shall compensate the net surplus customer-generator for any credits for excess electricity from the [~~eligible~~] net surplus customer-generator that remain unused after each twelve-month reconciliation period [~~may not be carried over to the next twelve-month period.~~] at the net surplus electricity compensation rate established by the public utilities commission; provided that the public utilities commission compensates the net surplus electricity compensation rate set at the prevailing feed-in tariff rate for the project size for the year the project is placed in service."

SECTION 8. Section 269-108, Hawaii Revised Statutes, is amended to read as follows:

"§269-108 Net electricity producers; excess electricity credits and credit carry over. 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 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.]"

SECTION 9. 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 those existing net energy metering contracts rather than converting to new alternative credits or compensation mechanisms."

SECTION 10. Section 269-111, Hawaii Revised Statutes, is amended to read as follows:

"§269-111 Safety and performance 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~~] one hundred 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~~] five hundred kilowatts[,] on the island of Oahu, two hundred fifty kilowatts on the islands of Hawaii and Maui, and up to one hundred kilowatts on the islands of Molokai and Lanai, the public utilities 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.

(d) The public utilities commission shall initiate a rulemaking proceeding by August 1, 2010 to adopt best practices interconnection standards for solar, wind turbine, biomass, and hydroelectric energy generating facilities.

Upon adoption, the standards shall become the interconnection requirements of each utility subject to the jurisdiction of the public utilities commission. As part of the rulemaking proceeding, the public utilities commission shall consider:

(1) Standards for comparably-sized feed-in tariffs;

(2) Interconnection standards adopted by other states within the twenty-four months prior to the rulemaking proceeding;

(3) Standards adopted by the Federal Energy Regulatory Commission; and

(4) Model standards developed by nonprofit organizations whose primary purpose is to promote renewable energy.

The public utilities commission shall adopt best practices interconnection standards no later than December 31, 2010."

SECTION 11. (a) The public utilities commission shall establish the net surplus electricity compensation rate, as defined by section 269-101, Hawaii Revised Statutes, by rule or order no later than January 1, 2011. The net surplus electricity compensation rate shall provide the net surplus customer-generator, as defined by section 269-101, Hawaii Revised Statutes, just and reasonable compensation for the value of net surplus electricity, while leaving other ratepayers unaffected.

(b) The net surplus electricity compensation rate shall apply to net surplus electricity credits that have accrued for any twelve-month reconciliation period that is in progress on September 1, 2010 and any twelve-month reconciliation period occurring thereafter.

(c) Payment for net surplus electricity credits that have accrued between September 1, 2010 and the date of the establishment of the net surplus electricity compensation rate shall be made by the electric utility within sixty days from the date of the establishment of the net surplus electricity compensation rate.

(d) Payment for net surplus electricity credits that accrue on or after the date of establishment of the net surplus electricity compensation rate shall be made by the electric utility within sixty days of the end of the applicable twelve‑month reconciliation period.

(e) For the purposes of this Act, "net surplus electricity credits" means the credits, in kilowatt-hours, for excess electricity generated by an eligible customer-generator at the end of the eligible customer-generator's twelve-month reconciliation period, as determined by the net energy metering calculation in section 269-105, Hawaii Revised Statutes.

SECTION 12. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 13. This Act shall take effect on July 1, 2010.

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