HB1501.DOC

SECTION 1. Utilities provide an important and essential service to the public that ensures quality of life and a functioning economy for the State's citizens and businesses. These companies are regulated entities to which the State granted a franchise that results in the utilities having a monopoly over the provision of service to customers in their service territory. This monopoly power provides a number of benefits to many utility investors including commission-mandated rates that provide a guaranteed opportunity to earn a return on capital investments and a stable customer base that purchases electrical services in predictable amounts. In return, the utilities agree to be regulated by the public utilities commission and to serve all customers that meet the terms and conditions of receiving electrical service.

Such regulation is a proxy for competition, providing incentives for utilities to adopt new methods, improve quality, increase efficiency, lower costs, and adapt to meet changing customer demand Utility regulation also serves to prevent excessive profits and unreasonable price discrimination, support social goals such as energy efficiency and service to low-income residents, and ensure public safety and reliability.

The role of a public utility commissioner is critical in creating appropriate regulations and applying these regulations consistently and fairly. Commissioners must establish public faith and confidence in the market and the government. The legislature finds public utilities have attempted to influence the regulatory process to serve their own interests. For example, a major news media outlet reported utilities in Florida spent millions of dollars in political contributions while pushing to remove commissioners that voted to deny a thirty per cent rate increase. In California, media reports shed light on one utility that was charged with negotiating deals to support one commissioner in exchange for higher profits on regulated projects.

The legislature finds it is necessary to hold utilities and commissioners to high ethical standards to ensure the public is protected against abuse and to foster faith and confidence in the regulatory process.

The purpose of this Act is to increase transparency, increase public participation, and provide the public utilities commission with resources to more effectively hold utilities accountable to the public interest by requiring:

(1) Certain restrictions on post-employment for commissioners and their employees;

(2) Public input on a proposed merger or consolidation of public utilities; and

(3) The auditor to conduct a study that compares the salaries of employees at the public utilities commission with employees of comparable positions in the private sector to ensure that the salaries are competitive enough to promote employee retention.

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

"§269- Restrictions on post employment. (a) No former commissioner or employee of the public utilities commission pursuant to sections 269-2 and 269-3, within twenty-four months after termination of the commissioner's or employee's employment shall represent or be employed for a fee or other consideration by a public utility.

(b) This section shall not prohibit any agency from contracting with a former commissioner or employee to act on a matter on behalf of the State within the period of limitations stated herein, and shall not prevent such commissioner or employee from appearing before any agency in relation to such employment.

(c) This section shall not apply to any person who is employed by the public utilities commission for a period less than one hundred and eighty-one days.

(d) For purposes of this section, "represent" means to engage in direct communication on behalf of any public utility with a legislator, legislative employee, state agency or subdivision thereof, or their employees, or any other public utility."

SECTION 3. Section 269-19, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Except as provided in subsection (b), no public utility shall sell, lease, assign, mortgage, or otherwise dispose of or encumber the whole or any part of its road, line, plant, system, or other property necessary or useful in the performance of its duties to the public, or any franchise or permit, or any right thereunder, nor by any means, directly or indirectly, merge or consolidate with any other public utility without first having secured from the public utilities commission an order authorizing it so to do. For applications for a proposed merger or consolidation with another public utility, the public utilities commission shall not issue an order authorizing the merger or consolidation pursuant to this subsection without first having afforded consumers or patrons an opportunity to provide input on the application. The consumer advocate shall be a party to all dockets involved in the proposed merger or consolidation. Every such sale, lease, assignment, mortgage, disposition, encumbrance, merger, or consolidation, made other than in accordance with the order of the commission shall be void."

SECTION 4. (a) The auditor shall conduct a study that compares the salaries of employees at the public utilities commission with employees of comparable positions in the private sector.

(b) When conducting the study, the auditor shall examine whether the salaries of employees at the public utilities commission are competitive enough with the private sector to promote employee retention.

(c) The auditor shall submit the study, including its findings and recommendations, to the legislature no later than November 30, 2015.

SECTION 5. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2015-2016 for the auditor to conduct a study that compares the salaries of employees at the public utilities commission with the salaries of employees of comparable positions in the private sector to determine whether commission employee salaries are competitive.

The sum appropriated shall be expended by the auditor for the purposes of this Act.
SECTION 6. New statutory material is underscored. SECTION 7. This Act shall take effect on July 1, 2015.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1501
TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII