HOUSE OF REPRESENTATIVES	H.B. NO.	12
TWENTY-SEVENTH LEGISLATURE, 2013
STATE OF HAWAII

A BILL FOR AN ACT

Relating to the interisland transmission system.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that Act 165, Session Laws of Hawaii 2012, established the regulatory structure under which an interisland high-voltage electric transmission cable system can be developed, financed, and constructed on commercially reasonable terms.  The legislature also finds that while the construction of the cable and any associated on-island transmission infrastructure may provide a public benefit by providing more sustainable and renewable energy to the public, the cost of construction for this project is estimated to be approximately one billion dollars.  Currently, the law permits an electric utility company to recover the capital costs that it prudently incurs for the construction of the on-island transmission infrastructure and concurrently authorizes an entity that will install the interisland cable to collect a surcharge to recover the cable company's costs from ratepayers.  This dual cost recovery could result in a significant increase in electric utility costs for ratepayers.

     Prudent public policy would seem to protect ratepayers from bearing the cost of the construction and use of such a costly project, and dictate that the electric utility company should bear a portion of the cost of the construction and implementation of the interisland and on-island infrastructure.

     The purpose of this Act is to prohibit an electric utility company from commencing its recovery of capital costs for the on-island infrastructure that is constructed for the purpose of connecting with an interisland high-voltage electric transmission cable system for ten years after the initial commercial operations date.

     SECTION 2.  Section 269-135, Hawaii Revised Statutes, is amended as follows:

     (1)  By amending subsections (a) and (b) to read:

     "(a)  An electric utility company may recover, through an automatic rate adjustment clause, its revenue requirement resulting from the capital costs that it prudently incurs for on-island transmission infrastructure; provided that the commission has approved the utility's commitment of capital expenditure costs for the project[.]; provided further that an electric utility company shall not commence the recovery of any capital costs incurred for the construction of the on-island transmission infrastructure until ten years after the commercial operations date of the high-voltage electric transmission cable system.

     (b)  [To] Subject to subsections (a) and (e), to provide for [timely] recovery of the revenue requirement, the commission shall establish a separate automatic rate adjustment clause for that purpose, or modify an existing automatic rate adjustment clause.  The use of the automatic rate adjustment clause to recover the revenue requirement shall be allowed to continue until the revenue requirement is incorporated in rates in an electric utility company's rate case."

     (2)  By amending subsection (e) to read:

     "(e)  The on-island transmission infrastructure shall be available for service before the commercial operations date of the high-voltage electric transmission cable system.  [Notwithstanding any other provision in this chapter to the contrary, at the time the commission approves the electric utility company's commitment of capital expenditure costs for the project, the commission may either:

(1) Allow the electric utility company to recover its approved revenue requirement resulting from the capital costs that it prudently incurs for on-island infrastructure at the time that the infrastructure is available for service; or

(2) Allow the company to continue to accrue an allowance for funds used during construction on such prudently incurred capital costs until the commercial operations date for the high-voltage electric transmission system.]

Not earlier than ten years after the commercial operations date of the high-voltage electric transmission cable system, the electric utility company may file a rate case that incorporates the recovery of its revenue requirement resulting from capital costs that it prudently incurred for on-island transmission infrastructure."

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval.

INTRODUCED BY:

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Report Title:

Interisland Transmission System; Electric Utility Company Costs

Description:

Prohibits an electric utility company from commencing its capital cost recovery for the construction of the on-island transmission infrastructure earlier than 10 years after the commercial operations date of the high-voltage electric transmission cable system.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.