HOUSE OF REPRESENTATIVES	H.B. NO.	2567
TWENTY-EIGHTH LEGISLATURE, 2016
STATE OF HAWAII

A BILL FOR AN ACT

relating to the public utilities commission.

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

     SECTION 1.  The public utilities commission issued Order No. 32695, at the initiation of the Hawaiian Electric Company, Inc., and NextEra, Inc., merger proceeding (Docket No. 2015-0022), which states:  "Since HRS §269-19 does not contain specific criteria or standards for the commission to consider in the transfer or assignment of a franchise, the commission historically, in its review of applications for the sale of public utility assets and the transfers of certificates of public convenience and necessity (CPCN) and franchises, pursuant to HRS §269-19, has utilized the same standards of review found at HRS §269-7.5 for guidance, to wit, that the applicant is "fit, willing, and able properly to 'perform the service proposed.'"

     The consumer advocate noted that other mergers of major utilities have reached settlement agreements stipulating that a "substantial net benefit" exists for the merger.

     The purpose of this Act is to adopt "substantial net benefit" as the standard for a transfer or assignment of a franchise for public utilities.

     SECTION 2.  Section 269-19, Hawaii Revised Statutes, is amended to read as follows:

"§269-19  Merger and consolidation of public utilities.  (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.  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.

     (b)  A public utility, under circumstances that it deems exigent and in its judgment require a response that rapidly restores one of its customers to normal, or near normal, operating status in order to prevent serious disruption of essential public services, or avoid serious risk to public safety, or to mitigate severe economic losses to that customer, may transfer, assign, or otherwise dispose of its property without prior approval from the public utilities commission as required in subsection (a); provided that in so doing:

     (1)  The public utility does not unduly hinder or degrade the public utility's operation with respect to its services or other customers;

     (2)  The public utility is duly compensated for its property; and

     (3)  The public utility reports in detail to the public utilities commission within thirty days of any such action unless otherwise approved by the public utilities commission for good cause shown.

     For purposes of this subsection, "property" does not include real property.

(c)  The specific standard for the public utilities commission to consider in the transfer or assignment of a franchise shall be substantial net benefit.  The commission may establish reasonable criteria for specific mergers."

     SECTION 3.  New statutory material is underscored.

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

INTRODUCED BY:

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Report Title:

Public Utilities Commission; Merger

Description:

Establishes "substantial net benefit" as the Public Utilities Commission's standard for a transfer or assignment of a franchise.

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