HB1449.DOC

HOUSE OF REPRESENTATIVES	H.B. NO.	1449
TWENTY-SEVENTH LEGISLATURE, 2013
STATE OF HAWAII

A BILL FOR AN ACT

relating to electricity rates.

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

SECTION 1. The legislature finds that Hawaii's agricultural industry is dependent on access to affordable resources. The public utilities commission has established preferential rates for potable water that is used for agricultural activities. This has provided our farmers with access to water at affordable rates. However, preferential rates for electricity that is used for the same activities have not been established. Farmers need affordable electricity rates to be able to comply with government regulations while remaining competitive and self-sustaining. For example, local farmers use significant amounts of electricity to refrigerate their products in compliance with food safety regulations.

The purpose of this Act is to establish a pilot program to determine whether preferential electricity rates for agricultural activities will better aid in the sustainable perpetuation of local agriculture in Hawaii.

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

"§269- Rates for electricity; pilot program for agricultural use. (a) It is the policy of the State to promote the long-term viability of agriculture by establishing mechanisms that provide for preferential rates for electricity for agricultural activities. The public utilities commission shall have the authority to establish a preferential rate pilot program for electricity used for agricultural activities in a public utility's service area. The pilot program shall measure:

(1) Whether preferential rates will better aid the

sustainable perpetuation of local agriculture in

Hawaii; and

(2) The effects the program may have on all electrical

ratepayers.

(b) Beginning no later than January 1, 2014, the preferential rate pilot program shall require a public utility to:

(1) Discover the average electricity consumption for each

agricultural category as determined by acreage;

(2) Propose to the public utilities commission for

approval, preferential rates for electricity to be

used only for qualified agricultural activities, upon

the utility's receipt of:

(A) A bona fide customer request for preferential

rates for electricity to be used for agricultural

activities; and

(B) Satisfactory evidence that the customer engages in

agricultural activities on land within

agricultural districts; and

(3) Establish preferential rate ceilings, wherein standard

electricity rates will be applied to electricity

consumed in excess of the discovered average usage for

each agricultural category.

All such rates approved by the public utilities commission shall be subsidized by the electricity rates charged to other customers of the public utility, if required, as determined by the public utilities commission. In reviewing the proposed preferential rates, the public utilities commission, in consultation with the department of agriculture, may establish additional criteria to qualify bona fide agribusinesses for electricity used solely for agricultural activities. For rate cases initiated pursuant to this section, the public utilities commission shall allow the recovery of any reasonable unamortized costs incurred by the public utility in its previous rate case; provided, however, upon full amortization of these costs, rates shall be adjusted accordingly.

(c) The preferential rate pilot program shall be in effect for a minimum period of two years, and shall not exceed five years."

SECTION 3. New statutory material is underscored.

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

INTRODUCED BY:	_____________________________