HB339 HD1

SECTION 1. The legislature finds that the State's ongoing energy transition from fossil fuels to renewable energy has been driven and supported by certain key energy laws and regulatory policies that were established after years, if not decades, of continued advocacy efforts. These laws and regulatory policies include, among others, the renewable portfolio standards established in chapter 269, Hawaii Revised Statutes; the performance-based regulation framework created by the public utilities commission for electric utilities; and the encouragement and oversight of renewable power purchase agreements by the public utilities commission, which are contractual agreements entered into by electric utilities and independent power producers for, among other things, the development and production of new utility-scale renewable energy projects.

The legislature further finds that a bankruptcy or reorganization proceeding involving an electric utility company in the State could result in the acquisition, merger, or consolidation of that electric utility company with an acquiring entity that could ultimately lead to a change in management and control. In a worst-case scenario, the acquiring entity may seek to weaken, alter, or reverse those key state energy laws, policies, frameworks, and agreements that have greatly contributed to the State's progress towards meeting its renewable energy goals, or reduce the electric utility's capacity to maintain a qualified and knowledgeable workforce with the ability to support and pursue Hawaii's renewable energy goals, as well as to ensure the safe, efficient, reliable, and continuous electric utility service to Hawaii consumers and communities.

Accordingly, the purpose of this Act is to:

(1) Require the public utilities commission to consider or impose certain conditions of approval on any order approving, in whole or in part, an application for the proposed acquisition, merger, or consolidation of an electric utility company by an acquiring entity; and

(2) Establish a process to ensure that when an electric utility is subject to an application for a proposed acquisition, merger, or consolidation by a potential acquiring entity that is an investor-owned utility and seeks approval of the application from the public utilities commission, the electric utility shall demonstrate that it solicited bids from potential acquiring entities that operate under non-investor-owned utilities ownership models; and

(3) Require the electric utility to submit acceptable bids from a potential acquiring entity operating under a non-investor-owned utilities ownership model concurrently with an application by a potential acquiring entity that is an investor-owned utility.

SECTION 2. Chapter 269, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§269-A Acquisition, merger, or consolidation of electric utility companies; conditions of approval. (a) Notwithstanding sections 269-7.5, 269-18, and 269-19, in any public utilities commission order approving, in whole or in part, an application for the proposed acquisition, merger, or consolidation of an electric utility company by an acquiring entity, the public utilities commission shall consider or impose certain conditions of approval established under this section, including any other conditions it deems necessary.

(b) Through December 31, 2040, no acquiring entity shall propose or support any change or amendment that may have a material adverse effect on the renewable portfolio standards established under part V of chapter 269, including any change or amendment that:

(1) Is contrary to the purpose of the renewable portfolio standards laws;

(2) Reduces the renewable portfolio standards benchmark percentage requirements established for net electricity sales and generation pursuant to section 269-92;

(3) Extends the deadline by which the electric utility company shall comply with the State's renewable portfolio standards; or

(4) Seeks to reduce, curb, or limit the authority of the public utilities commission to penalize an electric utility company that fails to meet the renewable portfolio standards pursuant to section 269-92 or other commission order.

(c) The acquiring entity shall not propose or support, directly or indirectly, the termination of any existing performance-based regulation framework established for the electric utility company by the public utilities commission, or any change or amendment that may have a material adverse effect on the existing performance-based regulation framework, including any change or amendment that:

(1) Reduces the length of any existing or planned future multi-year rate plan to a period of less than five years;

(2) Uses a traditional cost-of-service rate case, unless the public utilities commission has previously issued an order directing the use of a traditional cost-of-service rate case;

(3) Modifies the existing annual revenue adjustment formula established for the electric utility company by the public utilities commission; or

(4) Modifies existing accelerated performance incentive mechanisms in a manner that is contrary to the purpose of the mechanisms or reduces the net amount of renewable energy procured by the electric utility company;

provided that nothing in this subsection shall limit any re-opener mechanism established for the electric utility company by the public utilities commission.

(d) The acquiring entity shall not terminate any existing and valid power purchase agreement between the electric utility company and an independent power producer of energy services based solely on the completion of the acquisition, merger, or consolidation; provided that nothing in this subsection shall prevent the termination of a contractual agreement as permitted by its terms, subject to approval from the public utilities commission. The acquiring entity shall not attempt to renegotiate any material provisions of any existing and valid power purchase agreement, including but not limited to the established payment rates for energy or energy storage or other commercial terms; provided that nothing in this subsection shall prevent the amending of a contractual agreement as may be permitted under its terms, subject to approval by the public utilities commission. Before the completion of the acquisition, merger, or consolidation of the electric utility company, the acquiring entity shall not unduly influence the terms of any power purchase agreement that is under negotiation between the electric utility company and an independent power producer of energy services.

(e) The acquiring entity shall assume and be bound by the terms and conditions of any existing collective bargaining agreement in place at the time of the acquisition, merger, or consolidation, as it applies to covered employees.

(f) The acquiring entity shall retain all covered employees and shall not induce or cause a reduction in force, or terminate a covered employee, other than for cause consistent with any applicable collective bargaining agreement.

(g) As used in this section:

"Acquiring entity" means the entity that acquires all or some classes of an electric utility company's interests in an interest exchange, including but not limited to interest in any road, line, plant, system, or other real or personal property necessary for the performance of the electric utility's duties to the public or any franchise or permit, or right thereunder.

"Covered employee" means an individual who is employed by and party to a collective bargaining agreement with an electric utility company immediately prior to an acquisition, merger, or consolidation approved by the public utilities commission, of such electric utility company by an acquiring entity.

"Electric utility company" means a public utility as defined in section 269-1, for the production of, conveyance, transmission, delivery, or furnishing of electric power.

§269-B Acquisition, merger, and consolidation of electric utility companies; investor-owned acquiring entities; consideration of alternative applications. (a) Notwithstanding sections 269-7.5, 269-18, and 269-19, if an electric utility is subject to an application for a proposed acquisition, merger, or consolidation by a potential acquiring entity that is an investor-owned utility and seeks approval of the application from the public utilities commission, the electric utility shall demonstrate that it solicited bids from potential acquiring entities that operate under non-investor-owned utility ownership models and specify whether any potential acquiring entities that operate under such an ownership model submitted bids and the reasons why such bids were or were not accepted. Upon receiving an acceptable bid from a potential acquiring entity that operates under a non-investor-owned utilities ownership model, the electric utility company shall present the bid to the public utilities commission concurrently with an application by a potential acquiring entity that is an investor-owned utility.

(b) The public utilities commission shall, upon receiving an application for the acquisition, merger, or consolidation of an electric utility company, commence a regulatory proceeding to review the application; provided that any bids submitted concurrently pursuant to subsection (a) shall be reviewed concurrently.

(c) The electric utility company shall have no obligation to affirmatively state its position in support of or in opposition to any pending application.

(d) Notwithstanding any law or rule to the contrary, the public utilities commission shall have the power to consolidate its review of all submitted applications pursuant to this section.

(e) This section shall not apply to the acquisition of a not-for-profit enterprise that is not owned by shareholders.

(f) For the purposes of this section:

"Acquiring entity" has the same meaning as in section 269-A.

"Electric utility company" means a public utility as defined in section 269-1, for the production of, conveyance, transmission, delivery, or furnishing of electric power.

"Non-investor-owned utility ownership model" means a member-owned cooperative utility or any not-for-profit enterprise that is not owned by shareholders."

SECTION 3. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 4. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 3000.

HOUSE OF REPRESENTATIVES	H.B. NO.	339
THIRTY-THIRD LEGISLATURE, 2025		H.D. 1
STATE OF HAWAII