SCR229

WHEREAS, the Division of Consumer Advocacy in the Department of Commerce and Consumer Affairs was created to protect and advance the interests of Hawaii's consumers of regulated public utility and transportation services; and

WHEREAS, despite the numerous statutes and administrative rules that have been enacted and adopted to set forth the division's duties and mandates, the Legislature finds that the division is not performing certain functions; and

WHEREAS, the Legislature finds that a comprehensive management audit is necessary to evaluate the effectiveness of the division in representing, protecting, and advancing consumer and public interests in light of evolving clean energy and climate imperatives, consumer preferences, and utility regulatory priorities; and

WHEREAS, in 1975, a management audit of the State's public utilities program found there was "considerable confusion" with respect to the role of the division, which at that time was called the Public Utilities Division; and

WHEREAS, in 1989, another management audit found that "ambiguities and deficiencies" in the functions and duties of the Public Utilities Commission and the division "still exist" and the agencies "have been passive and reactive" rather than "pro-active in defining and carrying out their separate roles"; and

WHEREAS, a 2003 comprehensive evaluation of the State's energy utility regulation expanded on these concerns, observing that, unlike as in most states, the division combines two functions, the first being an "audit and litigation" function that involves traditional accounting review and litigation of utility ratemaking (which in other states is usually performed by internal public utilities commission staff), and the second being "true consumer advocacy", which is a role that in other states has historically involved advocating as a change agent for progressive initiatives in consumers' interests; and

WHEREAS, the Public Utilities Commission has built up its own internal, independent staff capacity and no longer needs to rely on the Division of Consumer Advocacy for staff support, yet the division continues to combine its two historical functions by acting as the lead or sole public agency party in commission proceedings, while also retaining its specific title and function focused on consumers; and

WHEREAS, in 2004, another management audit conducted on the commission and the division found that the agencies lacked strategic plans and "a vision of Hawaii's regulatory future and [their] role in that process" with the result that the agencies "trudge through daily operational work mired in process and individual case details"; and

WHEREAS, the 2004 audit also cited the "planning and organization deficiencies" found in the 1975 and 1989 audits, concluding that since the time of those audits, "neither agency has planned strategies to correct the deficiencies and many of the same serious problems persist"; and

WHEREAS, in the fifteen years since the 2004 audit, the electric services sector in Hawaii has evolved significantly with the emergence of new technologies, consumer preferences, and environmental and climate imperatives, and segments of the electric sector have increasingly opened up to market competition, creating lower costs to consumers and an increased range of energy services and choices; and

WHEREAS, recent statutory developments such as the renewable energy portfolio standard, carbon neutrality, and ratepayer protection have passed during a time of unprecedented climate change as well as a full-scale transition to renewable energy in the State and across the nation; and

WHEREAS, the Legislature finds that these statutory developments necessitate an expanded, long-term, and visionary perspective in utility regulation and consumer advocacy to advance customer and public interests in clean energy transformation and reduced economic, environmental, and climate costs; and

WHEREAS, the Legislature also finds that utility regulatory practices must change from their traditional focus on auditing utility costs and rates to a new focus on aligning utility incentives with a broader, modern view of the consumer and public interests as the Public Utilities Commission itself articulated in its landmark inclinations document in 2014, and as the Legislature set forth in enacting in Act 5, Session Laws of Hawaii 2018, which was the nation's first mandate to "break the direct link" between utility investments and revenues; now, therefore,

BE IT RESOLVED by the Senate of the Thirtieth Legislature of the State of Hawaii, Regular Session of 2020, the House of Representatives concurring, that the Auditor is requested to conduct a comprehensive management audit of the Division of Consumer Advocacy in the Department of Commerce and Consumer Affairs; and

BE IT FURTHER RESOLVED that the audit include:

(1) Any updates to the findings in previous audits, including the inherent ambiguity and conflict in the division's roles and lack of strategic vision;

(2) The actions, initiatives, and performance of the division in promoting Hawaii's clean energy goals, including the State's commitment to its one hundred percent renewable energy mandate and other greenhouse gas and climate goals;

(3) The actions, initiatives, and performance of the division relating to its statutory duty to represent, protect, and advance the interests of all consumers, including the interests of consumers who adopt clean energy resources such as distributed renewables and energy efficiency; and

(4) Any recommendations to update, redefine, or realign the division's mission and organization based upon the evolving needs of utility regulation as well as consumer and public interests; and

BE IT FURTHER RESOLVED that in conducting the audit, the Auditor is requested to solicit comprehensive and, as necessary, confidential feedback from the State's clean energy stakeholder community; and

BE IT FURTHER RESOLVED that the Auditor is further requested to submit a report of findings and recommendations, including any proposed legislation, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2020; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Auditor, Chair of the Public Utilities Commission, Director of Commerce and Consumer Affairs, and Executive Director of the Division of Consumer Advocacy in the Department of Commerce and Consumer Affairs.

	OFFERED BY:	_____________________________

Report Title:

DCCA

THE SENATE	S.C.R. NO.	229
THIRTIETH LEGISLATURE, 2020
STATE OF HAWAII