STAND. COM. REP. NO. 1160

Honolulu, Hawaii

RE:    S.C.R. No. 37

       S.D. 1

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2013

State of Hawaii

Madam:

     Your Committees on Energy and Environment and Commerce and Consumer Protection, to which was referred S.C.R. No. 37 entitled:

"SENATE CONCURRENT RESOLUTION REQUESTING THE PUBLIC UTILITIES COMMISSION TO ESTABLISH A STRANDED COST RECOVERY MECHANISM TO ENCOURAGE THE ACCELERATED RETIREMENT OF ELECTRIC UTILITY FOSSIL FUEL ELECTRIC GENERATION PLANTS,"

beg leave to report as follows:

     The purpose and intent of this measure is to request the Public Utilities Commission to establish a stranded cost recovery mechanism to encourage the accelerated retirement of electric utility fossil fuel electric generation plants.

     Your Committees received testimony in support of this measure from Sierra Club Hawaii.  Your Committees received comments on this measure from the Public Utilities Commission and the Department of Commerce and Consumer Affairs.

     Your Committees find that the overall efficiency of a modern fossil fuel electric generation plant is about forty percent, meaning that sixty percent of the energy input to the system is wasted.  These efficiencies, however, may be as low as thirty percent in some older plants.  Your Committees further find that electric utilities may have financial difficulties in retiring these fossil fuel plants due to the fact that shutting down the plant without a plan for cost recovery of investments in that plant means that those costs usually cannot be made up.  Utilities need a means of recovering stranded costs due to early retirement of power plants for the purpose of switching power source from fossil to renewable fuels.  In light of this, your Committees would like more information on the factors, including stranded cost recovery, that play into the electric utilities' decision not to retire any of their oil-fired generation plants and the relative importance of those factors.

     Your Committees have amended this measure by:

     (1)  Deleting the language requesting the Public Utilities Commission to establish a stranded cost recovery mechanism;

     (2)  Inserting language to request the Public Utilities Commission to take into consideration:

          (A)  Whether stranded costs are a significant factor in the electric utilities' failure to retire old, oil-fired generation plants; and

          (B)  Any appropriate measures that would encourage the electric utilities to retire old, oil-fired generation plants and the potential impact this would have on ratepayers; and

     (3)  Changing the title of the measure accordingly; and

     (4)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the records of votes of the members of your Committees on Energy and Environment and Commerce and Consumer Protection that are attached to this report, your Committees concur with the intent and purpose of S.C.R. No. 37, as amended herein, and recommend that it be referred to the Committee on Ways and Means, in the form attached hereto as S.C.R. No. 37, S.D. 1.

Respectfully submitted on behalf of the members of the Committees on Energy and Environment and Commerce and Consumer Protection,

____________________________ ROSALYN H. BAKER, Chair

____________________________ MIKE GABBARD, Chair