HB2141 HD1.DOC

SECTION 1. The legislature finds that all Hawaii residents should be able to participate in and enjoy the economic, environmental, and societal benefits of renewable energy. Spurred by the Hawaii clean energy initiative and increasingly affordable clean energy options, such as solar photovoltaic, customer on-site renewable energy generation technology has become increasingly attainable for all types of consumers over the past several years.

While the residential solar energy use statewide doubled in 2012, many individuals, households, and businesses are currently unable to directly participate in renewable energy because of their location, building type, access to the electric utility grid, and other impediments.

The community-based renewable energy program seeks to rectify this inequity by dramatically expanding the market for eligible renewable energy resources to include residential and commercial renters, residential and commercial buildings with shaded or improperly oriented roofs, and other groups who are unable to access the benefits of onsite clean energy generation. The legislature finds that it is in the public interest to promote broader participation in self-generation by Hawaii residents, public agencies, and businesses through the development of community-based renewable energy facilities in which participants are entitled to generate electricity and receive credit for that electricity on their utility bills.

Community-based renewable energy creates new construction jobs, stimulates the economy, reduces emissions of greenhouse gases, promotes energy independence, and assists in meeting the State's clean energy goals. Further, community-based renewable energy enables schools, colleges, universities, local governments, businesses, and consumers to save money on their electricity bills, thereby helping to fund educational programs, social services, and new hiring.

It is the intent of the legislature that as the public utilities commission works to implement this Act, the commission carefully consider regulatory barriers to distributed generation projects, whether identified or not, and quickly address barriers in a manner that is conducive to the development of distributed generation projects consistent with appropriate ratepayer protections. This Act is not intended to delay or limit electric utilities, regulated by the public utilities commission, from establishing and implementing community-based renewable energy programs. In addition, this Act shall not, absent the issuance of a rule or order by the public utilities commission, regulate the terms or operation of a community-based renewable energy program owned or operated by an electric utility.

The purpose of this Act is to establish the Hawaii community-based renewable energy program to make the benefits of renewable energy more accessible to a greater number of Hawaii residents.

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

"PART . HAWAII COMMUNITY-BASED RENEWABLE ENERGY PROGRAM.

§269-A Definitions. As used in this part:

"Commission" means the public utilities commission.

"Community-based renewable energy facility" means a facility for the generation of electricity, not owned or operated by an electric utility regulated by the commission, which provides community-based renewable energy and meets the following requirements:

(1) Produces renewable energy as defined in section 269-91;

(2) Measures the electrical output of the facility by a production meter capable of recording electrical generation in real time;

(3) Is located within the service territory of an electric utility;

(4) Operates in parallel with the electric utility's transmission and distribution facilities;

(5) Conforms with the electric utility's interconnection requirements;

(6) Is not subject to net energy metering under part VI; and

(7) Achieves initial commercial operation on January 1, 2016, or thereafter.

"Community-based renewable energy tariff" means a tariff approved by the commission by which utility customers may purchase an interest conveying legal ownership in a portion or portions of an eligible community-based renewable energy facility that is selling energy to the utility without respect to the physical siting or interconnection, as defined under section 269-141, of the renewable energy system and allows a utility to implement a billing arrangement to pay those customers for energy purchased by the utility.

§269-B Hawaii community-based renewable energy program. (a) There is established the Hawaii community-based renewable energy program, which shall be placed in the commission for administrative purposes, to make renewable energy more accessible to a greater number of electric utility customers.

(b) A retail customer of a utility may acquire an interest in a community-based renewable energy facility for the purpose of becoming a participant and receiving a bill credit to offset all or a portion of the customer's bill for electrical service. Each participant shall designate one or more benefiting accounts to which the interest shall be attributed.

(c) The commission shall not regulate the prices paid for an interest in a community-based renewable energy facility, but may enforce the required disclosures.

(d) The commission shall allow anyone to propose a community-based renewable energy facility project while preserving grid safety and performance standards, as set forth in section 269-111.

(e) The commission may authorize the establishment of a community-based renewable energy program owned or operated by a utility that is not subject to this part provided that the program is operated by a utility.

§269-C Community-based renewable energy tariffs. (a) The commission shall establish, upon application by a utility or upon the commission's own motion, a community-based renewable energy contract, tariff, or tariffs and shall make this contract, tariff, or tariffs available to participants. The commission may amend the rate structure, standard contract, or tariff by rule or order.

(b) The contract, tariff, or tariffs established pursuant to subsection (a) shall:

(1) Calculate the value of the bill credit or bill owed for the benefiting account's kilowatt-hour production and consumption based on a time-of-use rate structure that, at a minimum:

(A) Reflects the time-dependent value of the participant's energy generated and time-dependent cost of the participant's energy consumed, as such value changes based on utility demand and on the availability of energy resources; and

(B) Reflects the value of ancillary services or demand response capability provided by the community-based renewable energy facility and participants; or

(2) Calculate the value of the bill credit or bill owed for the benefiting account's kilowatt-hour production and consumption:

(A) At the retail rate of the rate class to which the benefiting account would normally be assigned if the customer were not a participant;

(B) With an allowable fixed monthly charge that reflects the utility's fixed costs associated with the participant's use of the utility's transmission, distribution, and other infrastructure; and

(C) With a monthly credit based on the value of any ancillary services or demand response capability provided by the community-based renewable energy facility and participants."

SECTION 3. Section 269-1, Hawaii Revised Statutes, is amended by amending the definition of "public utility" to read as follows:

""Public utility":

(1) Includes every person who may own, control, operate, or manage as owner, lessee, trustee, receiver, or otherwise, whether under a franchise, charter, license, articles of association, or otherwise, any plant or equipment, or any part thereof, directly or indirectly for public use for the transportation of passengers or freight; for the conveyance or transmission of telecommunications messages; for the furnishing of facilities for the transmission of intelligence by electricity within the State or between points within the State by land, water, or air; for the production, conveyance, transmission, delivery, or furnishing of light, power, heat, cold, water, gas, or oil; for the storage or warehousing of goods; or for the disposal of sewage; provided that the term shall include:

(A) An owner or operator of a private sewer company or sewer facility; and

(B) A telecommunications carrier or telecommunications common carrier; and

(2) Shall not include:

(A) An owner or operator of an aerial transportation enterprise;

(B) An owner or operator of a taxicab as defined in this section;

(C) Common carriers that transport only freight on the public highways, unless operating within localities, along routes, or between points that the public utilities commission finds to be inadequately serviced without regulation under this chapter;

(D) Persons engaged in the business of warehousing or storage unless the commission finds that regulation is necessary in the public interest;

(E) A carrier by water to the extent that the carrier enters into private contracts for towage, salvage, hauling, or carriage between points within the State; provided that the towing, salvage, hauling, or carriage is not pursuant to either an established schedule or an undertaking to perform carriage services on behalf of the public generally;

(F) A carrier by water, substantially engaged in interstate or foreign commerce, that transports passengers on luxury cruises between points within the State or on luxury round-trip cruises returning to the point of departure;

(G) Any user, owner, or operator of the Hawaii electric system as defined under section 269-141;

(H) A telecommunications provider only to the extent determined by the public utilities commission pursuant to section 269-16.9;

(I) Any person who controls, operates, or manages plants or facilities developed pursuant to chapter 167 for conveying, distributing, and transmitting water for irrigation and other purposes for public use and purpose;

(J) Any person who owns, controls, operates, or manages plants or facilities for the reclamation of wastewater; provided that:

(i) The services of the facility are provided pursuant to a service contract between the person and a state or county agency and at least ten per cent of the wastewater processed is used directly by the state or county agency that entered into the service contract;

(ii) The primary function of the facility is the processing of secondary treated wastewater that has been produced by a municipal wastewater treatment facility owned by a state or county agency;

(iii) The facility does not make sales of water to residential customers;

(iv) The facility may distribute and sell recycled or reclaimed water to entities not covered by a state or county service contract; provided that, in the absence of regulatory oversight and direct competition, the distribution and sale of recycled or reclaimed water shall be voluntary and its pricing fair and reasonable. For purposes of this subparagraph, "recycled water" and "reclaimed water" means treated wastewater that by design is intended or used for a beneficial purpose; and

(v) The facility is not engaged, either directly or indirectly, in the processing of food wastes;

(K) Any person who owns, controls, operates, or manages any seawater air conditioning district cooling project; provided that at least fifty per cent of the energy required for the seawater air conditioning district cooling system is provided by a renewable energy resource, such as cold, deep seawater;

(L) Any person who owns, controls, operates, or manages plants or facilities primarily used to charge or discharge a vehicle battery that provides power for vehicle propulsion;

(M) Any person who:

(i) Owns, controls, operates, or manages a renewable energy system that is located on a customer's property; and

(ii) Provides, sells, or transmits the power generated from that renewable energy system to an electric utility or to the customer on whose property the renewable energy system is located; provided that, for purposes of this subparagraph, a customer's property shall include all contiguous property owned or leased by the customer without regard to interruptions in contiguity caused by easements, public thoroughfares, transportation rights-of-way, and utility rights-of-way; [~~and~~]

(N) Any person who owns, controls, operates, or manages a renewable energy system that is located on such person's property and provides, sells, or transmits the power generated from that renewable energy system to an electric utility or to lessees or tenants on the person's property where the renewable energy system is located; provided that:

(i) An interconnection, as defined in section 269-141, is maintained with an electric public utility to preserve the lessees' or tenants' ability to be served by an electric utility;

(ii) Such person does not use an electric public utility's transmission or distribution lines to provide, sell, or transmit electricity to lessees or tenants;

(iii) At the time that the lease agreement is signed, the rate charged to the lessee or tenant for the power generated by the renewable energy system shall be no greater than the effective rate charged per kilowatt hour from the applicable electric utility schedule filed with the public utilities commission;

(iv) The rate schedule or formula shall be established for the duration of the lease, and the lease agreement entered into by the lessee or tenant shall reflect such rate schedule or formula;

(v) The lease agreement shall not abrogate any terms or conditions of applicable tariffs for termination of services for non-payment of electric utility services or rules regarding health, safety, and welfare;

(vi) The lease agreement shall disclose: (1) the rate schedule or formula for the duration of the lease agreement; (2) that, at the time that the lease agreement is signed, the rate charged to the lessee or tenant for the power generated by the renewable energy system shall be no greater than the effective rate charged per kilowatt hour from the applicable electric utility schedule filed with the public utilities commission; (3) that the lease agreement shall not abrogate any terms or conditions of applicable tariffs for termination of services for non-payment of electric utility services or rules regarding health, safety, and welfare; and (4) whether the lease is contingent upon the purchase of electricity from the renewable energy system; provided further that any disputes concerning the requirements of this provision shall be resolved pursuant to the provisions of the lease agreement or chapter 521, if applicable; and

(vii) Nothing in this section shall be construed to permit wheeling[.]; and

(O) A person engaged directly or indirectly in developing, producing, delivering, participating in, or selling interests in a community-based renewable energy facility pursuant to part .

If the application of this chapter is ordered by the commission in any case provided in paragraph (2)(C), (D), (H), and (I), the business of any public utility that presents evidence of bona fide operation on the date of the commencement of the proceedings resulting in the order shall be presumed to be necessary to the public convenience and necessity, but any certificate issued under this proviso shall nevertheless be subject to terms and conditions as the public utilities commission may prescribe."

SECTION 4. The public utilities commission shall prepare a report exploring options and procedures for the implementation of the Hawaii community-based renewable energy program. The public utilities commission shall submit the report to the legislature, including findings, recommendations, and any proposed legislation, no later than twenty days prior to the convening of the regular session of 2015.

SECTION 5. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on June 15, 2750.

HOUSE OF REPRESENTATIVES	H.B. NO.	2141
TWENTY-SEVENTH LEGISLATURE, 2014		H.D. 1
STATE OF HAWAII