HOUSE OF REPRESENTATIVES

H.B. NO.

338

THIRTY-THIRD LEGISLATURE, 2025

H.D. 1

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO RENEWABLE ENERGY.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  The legislature finds that reliable and affordable energy is in the public interest.  The procurement and successful deployment of renewable clean energy are necessary to ensure that energy in the State is provided at a low cost and will be available when existing electricity generating units are retired or converted due to obsolescence and permitting challenges.

     The legislature further 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 its 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 specify that adjustments required to compensate for certain unavoidable increases in financing costs, if proven by a producer of nonfossil fuel generated electricity by clear and convincing evidence, are mechanisms for reasonable and appropriate incremental adjustments that the public utilities commission may include in the rate payable to the producer.

     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 required to compensate for unavoidable increases in financing costs resulting from the public utility's credit status if proven by the producer by clear and convincing evidence, or other acceptable adjustment mechanisms."

     SECTION 3.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect on July 1, 3000.

 

 

Report Title:

PUC; Renewable Energy; Rate for Electricity Generated from Nonfossil Fuels; Adjustment Mechanisms

 

Description:

Specifies that adjustments required to compensate for certain unavoidable increases in financing costs, if proven by a producer of nonfossil fuel generated electricity by clear and convincing evidence, are mechanisms for reasonable and appropriate incremental adjustments that the Public Utilities Commission may include in the rate payable to the producer.  Effective 7/1/3000.  (HD1)

 

 

 

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