STAND. COM. REP. NO. 1129

Honolulu, Hawaii

RE:    H.B. No. 848

       H.D. 2

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2017

State of Hawaii

Sir:

     Your Committees on Higher Education and Transportation and Energy, to which was referred H.B. No. 848, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO ENERGY MODERNIZATION AT THE UNIVERSITY OF HAWAII SYSTEM,"

beg leave to report as follows:

     The purpose and intent of this measure is to authorize, encourage, and facilitate the development and use of microgrids at the various campuses and facilities operated by the University of Hawaii by exempting microgrids that promote and serve public higher education institutions from regulation as a public utility by the Public Utilities Commission.

     Your Committees received testimony in support of this measure from the University of Hawai‘i System, University of Hawai‘i at Hilo, University of Hawai‘i West Oahu, Americans for Democratic Action, Energy Research Systems, Sierra Club of Hawai‘i, and three individuals.  Your Committees received testimony in opposition to this measure from Hawaiian Electric Company, Inc.; International Brotherhood of Electrical Workers Local Union 1260; Chamber of Commerce Hawaii; Graham Builders; and Land Use Research Foundation of Hawaii.  Your Committees received comments on this measure from the Public Utilities Commission, Department of Commerce and Consumer Affairs, Life of the Land, and Hawaii Energy Policy Forum.

     Your Committees support the advancement of renewable energy and energy efficiency in Hawaii, and recognize that microgrids are an increasingly utilized technology that can help expand the use of clean energy in the State.  Microgrids can facilitate the achievement of Hawaii's clean energy policies by enabling the integration of higher levels of renewable energy and advanced distributed energy resources, including energy storage and demand response.

     Your Committees find that the University of Hawaii needs to develop large-scale renewable energy projects to benefit students, the community, and to successfully achieve the State's goal of one hundred percent clean energy by 2045.  Your Committees acknowledge the significant amount that the University expends each year for electricity, and that this measure would improve the University's ability to pursue renewable energy projects.  However, your Committees heard concerns about this measure, including that exempting certain microgrids from regulation by the Public Utilities Commission would leave unsettled important issues such as the establishment of reasonable rates and minimum standards for interconnection and reliability.  While your Committees appreciate the need for microgrids and the advancement of energy efficiency efforts at the University of Hawaii, your Committees have concerns about the scope of this measure and the unresolved issues surrounding wheeling, rates, and regulation.

     Accordingly, your Committees have amended this measure by:

     (1)  Requiring the University of Hawaii to develop a microgrid plan for one demonstration project at any property owned, leased, or controlled by the University and authorizing the University to select the location for the project;

     (2)  Requiring the University of Hawaii to submit a report on the microgrid project to the Legislature prior to the Regular Session of 2018;

     (3)  Removing provisions that:

          (A)  Authorized the University of Hawaii to establish one or more microgrid projects at any properties owned, leased, or controlled by the University;

          (B)  Exempted microgrids that promote and serve public higher education institutions from regulation as a public utility by the Public Utilities Commission; and

          (C)  Defined the term "microgrid";

     (4)  Updating the purpose section; and

     (5)  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 Higher Education and Transportation and Energy that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 848, H.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 848, H.D. 2, S.D. 1, and be referred to your Committees on Commerce, Consumer Protection, and Health and Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Higher Education and Transportation and Energy,

________________________________ LORRAINE R. INOUYE, Chair

________________________________ KAIALI'I KAHELE, Chair