STAND. COM. REP. NO. 2744

Honolulu, Hawaii

RE: S.B. No. 2939

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2939, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO ENERGY,"

begs leave to report as follows:

The purpose and intent of this measure is to protect consumers by proactively ensuring that the existing utility business and regulatory model will be updated for the twenty-first century by requiring that electric utility rates be considered just and reasonable only if the rates are derived from a performance-based model for determining utility revenues.

Your Committee received written comments in support of this measure from the Division of Consumer Advocacy of the Department of Commerce and Consumer Affairs and the Sierra Club of Hawaii.

Your Committee received written comments in opposition to this measure from the Hawaiian Electric Company, Inc.

Your Committee received written comments on this measure from the Public Utilities Commission.

Your Committee finds that the existing regulatory compact misaligns the interests of customers and utilities because it may result in a bias toward expending utility capital on utility-owned projects that may displace more efficient or cost-effective options, such as distributed energy resources owned by customers or projects implemented by independent third parties. Your Committee believes that the benchmarks and performance mechanisms established in this measure will promote decisions and strategies that will maximize public benefit, reduce ratepayer risk, and meet Hawaii's energy goals.

Your Committee has amended this measure by making technical nonsubstantive changes for purposes of clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2939, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2939, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

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DONOVAN M. DELA CRUZ, Chair