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HOUSE OF REPRESENTATIVES |
H.B. NO. |
338 |
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THIRTY-THIRD LEGISLATURE, 2025 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to renewable energy.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
The legislature also finds that the
renewable energy from independent power producers and community-based renewable
producers will also help to achieve the State's goals of one hundred per cent
renewable energy portfolio standards, energy resilience through resource
diversification, decarbonization, and energy equity.
The procurement, contracting, and
delivery of an operational renewable energy facility has faced challenges with a
certain investor-owned electric utility's stage 2 and stage 3 requests for proposals
and in its next Integrated Grid Planning Request for Proposals. The community-based renewable energy (CBRE)
projects procured by this investor-owned electric utility also face the same
challenges.
The legislature further finds that
the procurement and successful delivery of these renewable energy facilities are
now jeopardized by the sudden sub-investment-grade status of this investor-owned
electric utility and its subsidiaries. The
power producers would need to finance their renewable utility or CBRE projects.
These set price bids include the cost of
financing based on the investor-owned electric utility's former investment-grade
financial strength. The ability of power
producers to obtain a loan to finance these projects is now in question, which
impacts the reliability and affordability of electricity for consumers. If a loan is even possible, a premium or
higher-than-average interest rate will be required to finance these projects. The high-yield credit, or higher‑than‑average
interest rate, threatens to cancel projects due to the inability of a power
producer to increase their bid price to reflect the increased interest rate.
The ability of a power producer to
obtain a loan may be mitigated through a proposed state step-in agreement. However, the inability for power producers to
increase the prices of the renewable energy generated by these projects to
reflect the increased costs from a premium interest rate for high-yield credit
remains.
Accordingly, the purpose of this Act is to clarify that incremental adjustments that are linked to premium interest rates for high yield credit are just and reasonable and to authorize the public utilities commission to include these incremental adjustments to the rate for electricity generated from nonfossil fuels.
SECTION 2. Section 269-27.2, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) The rate payable by the public utility to the
producer for the nonfossil fuel generated electricity supplied to the public
utility shall be as agreed between the public utility and the supplier and as
approved by the public utilities commission; provided that in the event the
public utility and the supplier fail to reach an agreement for a rate, the rate
shall be as prescribed by the public utilities commission according to the
powers and procedures provided in this chapter.
The commission's determination of the just and reasonable rate shall be accomplished by establishing a methodology that removes or significantly reduces any linkage between the price of fossil fuels and the rate for the nonfossil fuel generated electricity to potentially enable utility customers to share in the benefits of fuel cost savings resulting from the use of nonfossil fuel generated electricity. As the commission deems appropriate, the just and reasonable rate for nonfossil fuel generated electricity supplied to the public utility by the producer may include mechanisms for reasonable and appropriate incremental adjustments, such as adjustments linked to consumer price indices for inflation, adjustments linked to premium interest rates for high yield credit, or other acceptable adjustment mechanisms."
SECTION 3. New statutory material is underscored.
SECTION 4. This Act shall take effect upon its approval.
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INTRODUCED BY: |
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Report Title:
PUC; Renewable Energy; Rate for Electricity Generated from Nonfossil Fuels; Adjustment Mechanisms
Description:
Clarifies that adjustments linked to premium interest rates for high yield credit are just and reasonable. Authorizes the Public Utilities Commission to include these incremental adjustments to the rate for electricity generated from nonfossil fuels.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.