HB2301 HD1

SECTION 1. The legislature finds that establishing aggressive clean energy goals and mandates, such as the energy efficiency portfolio standards and one hundred per cent renewable energy goal in the electricity sector, as well as Hawaii Clean Energy Initiative's 165 million gallons of petroleum used per year for ground transportation by 2030 target, are required for Hawaii to become energy independent, both economically and environmentally.

Energy advocates believe that with continued momentum, the State is generally on-track to reach its 2030 targets for renewable energy; however, with more than two-thirds of the fossil fuel imported into the State being used for transportation, the State must accelerate the transition to cleaner transportation, beginning with its own fleet vehicles.

Based on the State of Hawaii Energy Efficiency Potential Study, Project Number 1488 (study) prepared by EnerNoc Utility Solutions Consulting Inc. for the Hawaii public utilities commission on January 15, 2014, the legislature finds that the commercial sector, which includes government, consumes over half of statewide electricity use, and therefore concludes that a significant opportunity exists to both contribute to Hawaii's clean energy goals and reduce energy costs in the commercial sector, specifically in government.

With only a limited number of financing mechanisms available for state agencies to install solar photovoltaic systems, state agencies have lowered their energy costs by entering into energy performance contracts and power purchase agreements with private partners to install and own energy retrofits and solar systems on their behalf. While individual results are dependent on the negotiated terms of the consummated energy performance contract or power purchase agreement, many of these arrangements have successfully reduced the cost of energy for the State. Additionally, most agreements include an option for state agencies to purchase the installed equipment during the term of the agreement. Using an actual power purchase agreement between a state agency and an investor executed on September 30, 2016, as an example, over the twenty-year term of the power purchase agreement, the agency is estimated to reduce its energy cost by forty-two per cent. If, however, this state agency had access to financing under section 196-62.5, Hawaii Revised Statutes, to exercise its purchase option, over the same twenty-year term of the power purchase agreement, the agency is estimated to reduce its energy cost by sixty-one per cent. This sixty-one per cent, which includes the loan repayment and ongoing equipment maintenance costs, would be a significant savings for taxpayers. With the number of energy performance contracts and power purchase agreements in existence throughout the State, there is a tremendous opportunity for additional energy savings: savings that can be utilized to finance the conversion of the State's retiring internal combustion fleet to electric vehicles and to install electric vehicle charging systems, while remaining budget neutral. Using the example above, this agency could install one level 3 charging system and purchase four or lease seven electric vehicles with its savings.

The purpose of this Act is to expand the objective of the $50,000,000 sub-fund within the Hawaii green infrastructure special fund to allow state agencies to finance its purchase option under existing energy performance contracts and power purchase agreements to further reduce and stabilize future energy costs. An agency may also utilize these savings to finance the installation of electric vehicle charging systems and the lease or purchase of electric vehicles.

SECTION 2. Section 196-61, Hawaii Revised Statutes, is amended by adding five new definitions to be appropriately inserted and to read as follows:

""Electric vehicle" shall have the same meaning as in section 291-71.

"Electric vehicle charging system" shall have the same meaning as in section 291-71.

"Energy performance contract" shall have the same meaning as in section 36-41.

"Option to purchase" means a legally binding agreement between a buyer and a seller, which gives the buyer the option, but not the obligation, to purchase the solar system or other installed equipment at an agreed upon price, prior to the maturity date of the power purchase agreement or energy performance contract.

"Power purchase agreement" means a contract between two parties, one which generates electricity, the seller, and one which is looking to purchase electricity, the buyer, that defines all of the commercial terms for the sale of electricity between the two parties."

SECTION 3. Section 196-62.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§196-62.5[]] Financing for state government agencies. (a) [~~With the approval of the governor, a~~] Any state agency may apply for financing, subject to availability under the revolving line of credit for fiscal year 2018-2019, and annually thereafter, from the green infrastructure loan program pursuant to section 196‑65(b)(2), upon terms and conditions as are agreed to between the department or agency and the Hawaii green infrastructure authority; provided that the loans shall be issued at an interest rate of 3.5 per cent a year; provided further that the loans shall not adversely affect the sustainability of the sub-fund or Hawaii green infrastructure special fund such that the replenishment of funds requires a higher interest rate in other financing agreements or an appropriation from the general fund.

(b) [An] As may be applicable, an agency shall consult with the public benefits fee administrator of the public utilities commission prior to planning an energy-efficiency measure subject to this section. The agency's proposed energy-efficiency measures shall meet or exceed the public benefits fee administrator's enhanced efficiency levels and requirements to be eligible for the Hawaii green infrastructure loan program. The agency shall coordinate with the public benefits fee administrator throughout the entire project cycle to ensure that energy efficiency is maximized. All supporting documentation required by the public benefits fee administrator shall be provided by the agency to ensure compliance with the State's energy-efficiency portfolio standard under section 269-96.

(c) An agency shall submit an expenditure plan to the executive director of the Hawaii green infrastructure authority, who shall serve as the fiscal administrator for the loans issued pursuant to subsection (a) and shall make payment on behalf of the agency, as appropriate, upon submission of requests for payment from the agency.

(d) Beginning with fiscal year [~~2018-2019,~~] 2020-2021, and annually thereafter, an agency shall repay a loan issued pursuant to subsection (a) using general revenue savings that result from reduced [~~utility~~] energy costs due to [~~implementation of~~] financing the purchase of solar systems or other clean energy equipment, implementing energy-efficient lighting and other energy-efficiency measures[.], as well as operational and fuel cost savings achieved by the conversion of internal combustion vehicles to electric vehicles."

SECTION 4. Section 196-65, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Moneys in the Hawaii green infrastructure special fund may be used, subject to the approval of the public utilities commission, for the purposes of:

(1) Making green infrastructure loans, including for installation costs for energy-efficient lighting and other energy-efficiency measures[;], to finance the option to purchase solar systems and other clean energy equipment under existing power purchase agreements and energy performance contracts, or to finance the purchase or lease of electric vehicles or installation of electric vehicle charging systems;

(2) Creating a $50,000,000 sub-fund, as a revolving line of credit within the Hawaii green infrastructure special fund, for any state agency to obtain financing to implement cost-effective energy-efficiency measures[;], finance the option to purchase solar systems and other clean energy equipment under existing power purchase agreements and energy performance contracts, or finance the purchase or lease of electric vehicles or installation of electric vehicle charging systems;

(3) Paying administrative costs of the Hawaii green infrastructure loan program;

(4) Paying any other costs related to the Hawaii green infrastructure loan program; or

(5) Paying financing costs, as defined in section 269-161, to the extent permitted by the public utilities commission in a financing order issued pursuant to section 269-163."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2050.

HOUSE OF REPRESENTATIVES	H.B. NO.	2301
THIRTIETH LEGISLATURE, 2020		H.D. 1
STATE OF HAWAII