STAND. COM. REP. NO. 1050

Honolulu, Hawaii

RE: S.B. No. 1501

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 1501, 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 authorize the Department of Budget and Finance to enter into step-in agreements to guarantee payments from electric utilities under certain power purchase agreements.

Your Committee received written comments in support of this measure from the Public Utilities Commission, Ulupono Initiative, Longroad Energy, Plus Power, Hawaii Executive Collaborative, Climate Hawaii, Ameresco, Clearway Energy Group, Hawaiian Electric, Nexamp, and AES Hawaii.

Your Committee received written comments on this measure from the Department of Commerce and Consumer Affairs, Division of Consumer Advocacy; Department of Budget and Finance; and Department of the Attorney General.

Your Committee finds that the uncertainty of Hawaiian Electric Company's financial situation has increased the perceived risk of default regarding the company's obligations to pay independent power producers. Your Committee believes that the step-in agreements authorized by this measure will help to reduce the risks associated with financing independent power producers in the State and help the State continue to make progress toward meeting its clean energy goals.

Your Committee has amended this measure by:

(1) Removing various references to July 1, 2025, to ensure that the step-in agreements apply to all future power purchase agreements;

(2) Authorizing the Department of Budget and Finance to conduct due diligence on a prospective obligee before entering into a step-in agreement;

(3) Establishing the Power Purchase Costs Trust Fund outside of the state treasury;

(4) Amending the definition of "obligee" to require that the obligee not claim a tax credit for a project system under section 235-12.5, Hawaii Revised Statutes; and

(5) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

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. 1501, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1501, 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