HB272 HD1

SECTION 1. Chapter 269, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§269- Public utility; basic exchange service; exemption; consumer complaints. (a) Except for any requirements under federal law and sections 269-7 and 269-16.9, no public utility providing basic exchange service to every county in the State or any affiliate or parent of such public utility shall be subject to the regulatory requirements of this chapter or the jurisdiction of the public utilities commission or the consumer advocate. All rules, regulations, decisions, orders, and other regulatory provisions, except federal requirements, relating to the regulation of public utilities providing basic exchange service to every county in the State as public utilities pursuant to this chapter may be invalid beginning on the effective date of Act , Session Laws of Hawaii 2019, at the discretion of the public utility providing basic exchange service to every county in the State.

(b) Consumer complaints relating to the basic exchange service shall be referred to the office of consumer protection within the department of commerce and consumer affairs."

SECTION 2. Section 269-8.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§269-8.5[]] Annual financial reports. All annual financial reports required to be filed with the commission by public utilities shall include a certification that such report conforms with the applicable uniform system of accounts adopted by the commission. Notwithstanding any law to the contrary, a public utility providing basic exchange service to every county in the State and whose stock or that of its parent is directly or indirectly publicly traded, shall not be required to file any financial reports with the commission."

SECTION 3. Section 269-16.85, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Notwithstanding section 269-16.9 or any other law to the contrary, the public utilities commission shall treat retail intrastate telecommunications services, under the commission's classification of services relating to costs, rates, and pricing, as fully competitive and apply all commission rules in accordance with that designation. In addition, a telecommunications carrier shall not be required to obtain approval or provide any cost support or other information to establish or otherwise modify in any manner its rates, fares, and charges, or to bundle any service offerings into a single or combined price package[; provided that a telecommunications carrier, except upon receiving the approval of the commission, shall not charge a higher rate for any retail telecommunications basic exchange service than the rate for the same service included in the telecommunications carrier's filed tariff. All rates, fares, charges, and bundled service offerings shall be filed with the public utilities commission for information purposes only]."

SECTION 4. Section 269-17, Hawaii Revised Statutes, is amended to read as follows:

"§269-17 Issuance of securities. [A] (a) Except as provided in subsection (c), a public utility corporation may, on securing the prior approval of the public utilities commission, and not otherwise, issue stocks and stock certificates, bonds, notes, and other evidences of indebtedness, payable at periods of more than twelve months after the date thereof, for the following purposes and no other, namely: for the acquisition of property or for the construction, completion, extension, or improvement of or addition to its facilities or service, or for the discharge or lawful refunding of its obligations or for the reimbursement of moneys actually expended from income or from any other moneys in its treasury not secured by or obtained from the issue of its stocks or stock certificates, or bonds, notes, or other evidences of indebtedness, for any of the aforesaid purposes except maintenance of service, replacements, and substitutions not constituting capital expenditure in cases where the corporation has kept its accounts for such expenditures in such manner as to enable the commission to ascertain the amount of moneys so expended and the purposes for which the expenditures were made, and the sources of the funds in its treasury applied to the expenditures. As used herein, "property" and "facilities", mean property and facilities used in all operations of a public utility corporation whether or not included in its public utility operations or rate base. A public utility corporation may not issue securities to acquire property or to construct, complete, extend or improve or add to its facilities or service if the commission determines that the proposed purpose will have a material adverse effect on its public utility operations.

(b) All stock and every stock certificate, and every bond, note, or other evidence of indebtedness of a public utility corporation not payable within twelve months, issued without an order of the commission authorizing the same, then in effect, shall be void.

(c) Any public utility providing basic exchange service to every county in the State shall be exempt from this section and may, without securing approval of the public utilities commission, issue stocks and stock certificates, bonds, notes, and other evidences of indebtedness payable at periods of more than twelve months after the date thereof, for any purpose."

SECTION 5. Section 269-17.5, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) No more than twenty-five per cent of the issued and outstanding voting stock of a corporation organized under the laws of the State and who owns, controls, operates, or manages any plant or equipment, or any part thereof, as a public utility within the definition set forth in section 269-1 shall be held, whether directly or indirectly, by any single foreign corporation or any single nonresident alien, or held by any person, unless prior written approval is obtained from the public utilities commission, or unless a transaction is exempt. An exempt transaction is:

(1) Any purchase or sale by an underwriter; [or]

(2) Any transaction involving a public utility providing basic exchange service to every county in the State; or

[~~(2)~~] (3) A transaction to acquire shares of a corporation with less than one hundred shareholders and less than $1,000,000 in assets.

Every assignment, transfer, contract, or agreement for assignment or transfer of any shares in violation of this section shall be void and of no effect; and no such transfer shall be made on the books of the corporation. Nothing herein shall be construed to make illegal the holding of stock lawfully held, directly or indirectly, prior to June 4, 1977."

SECTION 6. 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),~~] subsections (b) and (c), 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[.], except as provided in subsections (b) and (c).

(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) Notwithstanding any law to the contrary, a public utility providing basic exchange service to every county in the State may sell, lease, assign, 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, by any means, directly or indirectly, merge or consolidate with any other public utility; provided that the public utility shall notify the public utilities commission of such transaction within thirty days thereof."

SECTION 7. Section 269-19.5, Hawaii Revised Statutes, is amended by amending subsection (h) to read as follows:

"(h) Transactions between affiliated Hawaii based utilities, and any transactions by public utilities providing basic exchange service to every county in the State, shall be exempt from the provisions of this section."

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect on July 1, 3000; provided that this Act shall be repealed on July 1, 2023.

HOUSE OF REPRESENTATIVES	H.B. NO.	272
THIRTIETH LEGISLATURE, 2019		H.D. 1
STATE OF HAWAII