SB382 CD1.DOC

SECTION 1. The legislature finds that the public utilities commission's primary purpose is to provide effective, proactive, and informed oversight of all regulated companies to ensure these companies efficiently and safely provide their customers with adequate and reliable services at just and reasonable rates, while providing regulated companies with a fair opportunity to earn a reasonable rate of return.

The legislature further finds that due to the commission's increasing responsibilities and the evolution of the regulatory landscape, it is essential that the structure and operations of the public utilities commission be updated, consistent with best practices, to enable the commission to operate more efficiently and effectively.

The legislature additionally finds that the public utilities commission and its commissioners must fill three equally essential and nonexclusive roles. In their quasi-administrative capacity, commissioners interpret policy and apply technical expertise to the routines of rulemaking, implementation, and enforcement. In their quasi-legislative capacity, commissioners craft policy and inform and support policymaking by other bodies. In their quasi-judicial capacity, commissioners must make findings and rulings in the context of particular cases, in accordance with established law and legal procedures. Commissioners serving on the public utilities commission therefore fill a unique role, and as such, have a responsibility to regulate in the public interest with the highest ethical standards. The legislature notes that this adherence to high ethical standards necessarily extends to commission staff, but in particular, the senior staff members of the commission, including its chief counsel, executive officer, chief of policy and research, and other staff who must engage in discussions with outside parties.

The legislature also finds that advancements in technology have enabled people to participate and work remotely, without having to be physically present in the same location as their colleagues. Permitting the use of teleconference or videoconference technology for public hearings and briefings before the commission, or meetings with other commissioners and staff, will enable commissioners to participate in public hearings and commissioner or staff meetings in a convenient and engaging manner.

The legislature further finds that the office of the auditor last conducted a management audit on the public utilities commission in 2004. At that time, the auditor's report identified core deficiencies that resulted from a lack of vision and planning. As it has been thirteen years since the last management audit, the legislature concludes that another audit is appropriate. This will ensure that any previously identified issues have been addressed and will also aid in the transition to a more efficient and effective commission.

The purpose of this Act is to update the structure and operation of the commission to increase efficiency and effectiveness by:

(1) Establishing guiding principles of the commission;

(2) Allowing a commissioner to attend a public hearing or meeting or work with staff by teleconference or videoconference in specific situations;

(3) Ensuring that commissioners who are residents of a county other than the city and county of Honolulu receive travel expenses; and

(4) Requiring a management audit to aid in the commission's transition to a better functioning entity.

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

"§269- Guiding principles of the public utilities commission. The guiding principles of the public utilities commission shall be to:

(1) Ensure reliability and delivery of all essential services provided by regulated entities at all times;

(2) Provide oversight of resource planning efforts to ensure adequacy and resiliency to ensure essential services are available when needed;

(3) Strive for affordability for consumers while allowing regulated entities an opportunity to maintain reasonable earnings;

(4) Align private interest with public interest through the proactive, aggressive pursuit of factual information and technical competency to result in fair and timely decisions and orders in pursuit of the public interest;

(5) Regulate in the public interest; and

(6) Encourage and facilitate competition for the benefit of consumers.

§269- Hearing attendance by teleconference or video conference. (a) A commissioner may attend a public hearing of the public utilities commission, or a meeting scheduled by other commissioners, by teleconference or videoconference to allow a commissioner residing on an island other than Oahu to attend a public hearing of the commission, or a meeting scheduled by other commissioners, held on Oahu and a commissioner residing on the island of Oahu to attend a public hearing of the commission, or a meeting scheduled by other commissioners, held on an island other than Oahu by teleconference or videoconference; provided that commissioner participation by teleconference or videoconference shall not be permitted at contested case or evidentiary hearings.

(b) Each commissioner participating in a public hearing by teleconference or videoconference shall be considered present at the meeting for purposes of determining quorum and participating in all proceedings.

(1) Need not have a quorum present at any one location; and

(2) Is subject to the notice requirements under section 269-12.

(d) The notice of each teleconference or videoconference public hearing shall specify all physical locations from which the commissioners will participate.

(e) Each commissioner may work with staff via teleconference or videoconference on commission-related matters."

SECTION 3. Section 269-2, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

"(e) Notwithstanding section 26-35(a)(5) to the contrary, the commission's operational expenditures, such as the purchase of supplies, equipment, furniture, dues and subscriptions, travel, consultant services, and staff training, shall be determined by the chairperson and may be delegated to the executive officer appointed and employed pursuant to section 269-3; provided that such expenditures shall be subject to all applicable procurement laws and procedures. The commission's budget shall provide for travel expenses equal to at least one round trip per week for any commissioner who is a resident of a county other than the city and county of Honolulu; provided that the chairperson of the commission shall not have the authority to withhold basic travel requirements from any commissioner who is not a resident of the city and county of Honolulu."

SECTION 4. (a) The state auditor shall conduct a management audit to evaluate the efficiency and effectiveness of the public utilities commission and aid in the commission's transition to a better functioning entity. The management audit shall include but not be limited to:

(1) Appropriateness and applicability of current utility legislation;

(2) Adequacy of coverage of current public utilities commission policies, rules, and procedures, including the commission's current strategic plan;

(3) Management of the public utilities commission in terms of:

(A) Providing technical and analytical staff support in case management and enforcement of the public utilities commission's rules; and

(B) The ability of individual commissioners to request or select the services of a staff attorney, researcher, or clerical or support staff to assist the requesting commissioner with that commissioner's duties; and

(4) The effectiveness of the public utilities commission in dealing with telecommunications, energy, and other utility issues.

(b) The auditor may also review public utilities commissions in other jurisdictions to determine any generally considered best practices for a public utilities commission, including any emphasis on efficiency in operations or collaborations amongst members and any examples of other commissions that require more diverse backgrounds amongst commissioners or any commissions that have the ability to consider more than one docket at a time.

(c) The auditor shall submit a report to the legislature of findings and recommendations, including any proposed legislation, no later than twenty days prior to the convening of the regular session of 2018.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2017.

THE SENATE	S.B. NO.	382
TWENTY-NINTH LEGISLATURE, 2017		S.D. 2
STATE OF HAWAII		H.D. 1
		C.D. 1