SB2474 SD1

SECTION 1. The legislature finds that accelerating the development of renewable energy to reduce greenhouse gases is a high priority. The legislature has enacted numerous acts to achieve this objective, including:

(1) Act 97, Session Laws of Hawaii 2015, which established a renewable energy portfolio standards target of one hundred per cent renewable electric energy by 2045;

(2) Act 15, Session Laws of Hawaii 2018, which established a statewide zero emissions clean economy target to sequester throughout the State more atmospheric carbon and greenhouse gases than emitted, as quickly as practicable but no later than 2045; and

(3) Act 23, Session Laws of Hawaii 2020, which prohibits the further use of coal in Hawaii for electricity production.

The legislature believes that the timely completion of renewable energy projects is also a high priority.

The legislature recognizes that in November 2020, the public utilities commission issued a letter to the parties in docket numbers 2015-0389, 2017-0352, and 2018-0165, stating that it "is markedly concerned that Hawaiian Electric [Company]'s interconnection processes and policies are increasing development costs and extending renewable project timelines".

In addition, in docket number 2018-0088 (Performance Based Regulation), the public utilities commission issued order number 37507 on December 23, 2020, indicating that the commission was concerned about interconnection delays and will implement a performance incentive mechanism to encourage Hawaiian Electric Company to accelerate the interconnection process. Order number 37507 also stated that "the scheduled retirement of the AES Power Plant in 2022, as well as [Hawaiian Electric Company, Inc.; Hawaii Electric Light Company, Inc.; and Maui Electric Company, Limited's] proposal to delay interconnecting several renewable energy and storage projects recently approved by the commission, underscores the need for expeditiously securing alternative sources of grid services to ensure that system needs are met".

The legislature notes that during procurement phase 1, all eight projects had delayed commercial operations dates relative to the commercial operations dates provided in each project's power purchase agreement. During procurement phase 2, eight of the eleven projects had delayed commercial operations dates relative to the commercial operations dates provided in each project's power purchase agreement. The public utilities commission has opened a docket, docket number 2021-0024, to review Hawaiian Electric Company's interconnection process and transition plans for retirement of fossil fuel plants. The legislature also believes that these delays, coupled with the retiring of the AES Coal Plant, may cause electric grid reliability issues.

The legislature further notes that Hawaiian Electric Company's significant delays in completing its interconnection process makes it difficult to plan for the design and construction of utility-scale renewable energy projects that require interconnection with Hawaiian Electric Company's electric grid.

The legislature further finds that facilitating the timely interconnection of utility-scale renewable energy projects will:

(1) Help to bring utility-scale renewable energy projects online sooner;

(2) Decrease electricity rates for consumers by providing project developers with added certainty regarding project timelines to lower bid pricing;

(3) Help to achieve the State's renewable portfolio standard goals in a timely manner; and

(4) Help to reduce greenhouse gas emissions and mitigate the effects of climate change sooner.

Accordingly, the purpose of this Act is to facilitate the timely interconnection of utility-scale renewable energy projects.

SECTION 2. Section 269-142, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) The commission [~~may~~] shall adopt, by rule or order, reliability standards and interconnection requirements. Reliability standards and interconnection requirements adopted by the commission shall apply to any electric utility and any user, owner, or operator of the Hawaii electric system. The commission shall not contract for the performance of the functions under this subsection to any other entity as provided under section 269-147.

(b) The commission [~~may~~] shall develop reliability standards and interconnection requirements as it determines necessary or upon recommendation from any entity, including an entity contracted by the commission to serve as the Hawaii electricity reliability administrator provided for under this part, for the continuing reliable design and operation of the Hawaii electric system. Any reliability standard or interconnection requirement developed by the commission shall be adopted by the commission in accordance with subsection (a) in order to be effective. The commission shall not contract for the performance of the functions under this subsection to any other entity as provided under section 269-147."

SECTION 3. Section 269-145, Hawaii Revised Statutes, is amended to read as follows:

"[[]§269-145[]] Grid access; procedures for interconnection; dispute resolution. (a) Each user, owner, or operator of the Hawaii electric system, or any other person, business, or entity seeking to make an interconnection on the Hawaii electric system shall do so in accordance with procedures to be established by the commission by rule or order.

(b) The commission shall establish interconnection procedures as follows:

(1) The commission shall include in any interconnection procedures established pursuant to this section, requirements that the electric public utilities:

(A) Complete the interconnection design;

(B) Reach agreement with the renewable energy project developer;

(D) Shall meet the requirements under subparagraphs (A) through (C) as soon as practicable, but no later than two hundred seventy days after the renewable energy project power purchase agreement is filed with the commission for review and approval; and

(E) Shall submit interim reports to the commission on the status of the electric public utility's efforts to comply with the requirements of this subsection both ninety days and one hundred eighty days after the renewable energy project power purchase agreement is filed with the commission for review and approval;

(2) If the electric public utility is unable to comply with the requirements of this subsection, the electric public utility shall report, in writing, the reasons for noncompliance to the commission within ten calendar days after the expiration of the two hundred seventy-day period;

(3) If the electric public utility fails to meet the requirements established by the commission pursuant to this subsection within the two hundred seventy-day period, the electric public utility shall forfeit and return all moneys or other financial incentives that the electric public utility has received as part of any performance incentive mechanism program or similar incentive-based award recognized by the commission in connection with the renewable energy project;

(4) The commission shall submit a report to the governor and legislature regarding any failure to meet the timing under this subsection by any electric public utility within thirty days of the commission receiving notice of this failure; and

(5) Upon the filing of a request for interconnection or line extension approval by an electric public utility under this subsection, the commission shall either approve or disapprove the request within one hundred twenty days of the filing of the request;

provided that this subsection shall only apply to utility-scale renewable energy projects that are five megawatts in total output capacity or larger.

[~~(b)~~] (c) The commission shall have the authority to make final determinations regarding any dispute between any user, owner, or operator of the Hawaii electric system, or any other person, business, or entity connecting to the Hawaii electric system, concerning either an existing interconnection on the Hawaii electric system or an interconnection to the Hawaii electric system created under the processes established by the commission under this section."

SECTION 4. Section 269-147, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The commission [~~may~~] shall contract for the performance of its functions under this part with a person, business, or organization, except for a public utility as defined under this chapter, that will serve as the Hawaii electricity reliability administrator provided for under this part; provided that the commission shall not contract for the performance of its functions under sections 269-142(a) and (b) and 269-146."

SECTION 5. Section 269-149, Hawaii Revised Statutes, is amended to read as follows:

"[[]§269-149[]] Funding; reporting. (a) The Hawaii electricity reliability administrator shall use funds collected through the Hawaii electricity reliability surcharge provided for under section 269-146 to carry out its operations, including administrative, technological, or other related requirements for effectively ensuring the reliability of the Hawaii electric system.

(b) The Hawaii electricity reliability administrator shall report to the commission each year on the date of agreement under section 269-147 following the original contracting between the Hawaii electricity reliability administrator and the commission on the status of its operations, financial position, and a projected operational budget for the fiscal year following the date of the report.

(c) The Hawaii electricity reliability administrator shall be subject to regulation by the commission under any provision applicable to a public utility in sections 269-7, 269-8, 269‑8.2, 269-8.5, 269-9, 269-10, 269-13, 269-15, 269-19.5, and 269-28. Notwithstanding any other provision of law to the contrary, the Hawaii electricity reliability administrator shall not be an electric public utility or an electric public utility affiliate.

(d) Within thirty days of receipt of the Hawaii electric reliability administrator's report submitted to the commission pursuant to this section, the commission shall submit to the legislature the report and the commission's assessment of the status and progress of the Hawaii electric reliability administrator in achieving and accomplishing the objectives of this part."

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect upon its approval.

THE SENATE	S.B. NO.	2474
THIRTY-FIRST LEGISLATURE, 2022		S.D. 1
STATE OF HAWAII