Report Title:

Public Utilities; Electric Transmission

 

Description:

Requires the commission to implement a program to standardize interconnection requirements between electric utilities that provide electricity and existing distribution grids. Requires all electric utilities to comply with these interconnection requirements.

 

HOUSE OF REPRESENTATIVES

H.B. NO.

1653

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to public utilities.

 

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

SECTION 1. The legislature finds that there is a need to increase competition in the production of electricity in Hawaii.

Currently, the production of electricity is controlled by a monopoly in which the Hawaiian Electric Company, or its subsidiaries in each of the counties, dictates the terms of agreements with independent power producers. These independent producers must sell to Hawaiian Electric, which in turn sells to its customers.

However, the legislature finds that if a producer can sell electricity at a lower rate, they should be able to sell it directly to consumers. The problem is that there is currently no motivation for these producers to sell because the market is controlled by a monopoly.

For example, various hotels and other organizations that would like to produce their own electricity must first be connected to the grid. However, standby charges and other Hawaiian Electric requirements that exceed allowable industry standards make this very expensive, such that these organizations do not save money by producing their own electricity. Because of the expense to independent producers to hook up to the electricity grid, which is owned by Hawaiian Electric, these producers have little incentive or motivation to produce their own electricity because they cannot save money by doing so.

The legislature finds that taking the interconnect provisions away from Hawaiian Electric and giving them to the public utilities commission is one way to free up competition and encourage alternative electricity producers to sell electricity at a cheaper rate.

Another factor is that the public utilities commission sets rates for utilities. Another way to allow other producers to have competitive market is therefore to provide that the commission is not to set rates for those producers who do not own the lines, poles, or other portions of the distribution grid.

The legislature finds that these measures will help to encourage greater competition in the electricity market in Hawaii, and encourage independent producers to produce electricity to sell to customers.

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

"§269-A Obligations of electric utilities in regards to electrical transmissions. (a) The commission shall implement a program to standardize interconnection requirements between electric utilities that provide electricity and existing distribution grids.

(b) All electric utilities shall comply with interconnection requirements established by the commission pursuant to subsection (a).

(c) Electric utilities may sell electricity directly to consumers so long as the commission is satisfied that the electricity producer can reliably and consistently produce the amount of electricity necessary to provide for the customer's needs.

(d) An electricity producer shall only be required to input electricity into the grid where customers reside.

(e) The commission shall adopt such rules as may be necessary pursuant to chapter 91 to implement this section.

§269-B Electric utilities not owning distribution grid; exemption from chapter. (a) Notwithstanding any provision of this chapter to the contrary, the commission, upon its own motion or upon the application of any person, and upon notice and hearing, may exempt an electric utility that does not own any portion of the distribution grid from any or all of the provisions of this chapter, including the regulation of utility rates under section 269-16, except the provisions of section 269-C, upon a determination that the exemption is in the public interest. In determining whether an exemption is in the public interest, the commission shall consider whether the exemption promotes state policies in electricity production, the development, maintenance, and operation of effective and economically efficient electricity services, and the furnishing of those services at just and reasonable rates and in a fair manner in view of the needs of the various customer segments of the electricity industry. Among the specific factors the commission may consider are:

(1) The responsiveness of the exemption to changes in the structure and technology of the State's electricity industry;

(2) The benefits accruing to the customers and users of the exempt electric utility;

(3) The impact of the exemption on the quality, efficiency, and availability of electricity;

(4) The impact of the exemption on the maintenance of fair, just, and reasonable rates for electricity;

(5) The effect of the exemption on the preservation and promotion of affordable electricity as those services are determined by the commission;

(6) The resulting subsidization, if any, of the exempt electric utility by nonexempt services;

(7) The improvements in the regulatory system to be gained from the exemption, including the reduction in regulatory delays and costs;

(8) The impact of the exemption on promoting alternative or renewable energy resources;

(9) The opportunity provided by the exemption for electric utilities to respond to competition; and

(10) The potential for the exercise of substantial market power by the exempt provider or by a provider of the exempt electric utility.

(b) The commission shall expedite, where practicable, the regulatory process with respect to exemptions and shall adopt guidelines under which each provider of an exempted service shall be subject to similar terms and conditions.

(c) The commission may condition or limit any exemption as the commission deems necessary in the public interest. The commission may provide a trial period for any exemption and may terminate the exemption or continue it for such period and under such conditions and limitations as it deems appropriate.

(d) The commission may require an electricity producer to apply for a certificate of public convenience and necessity pursuant to section 269-7.5; provided that the commission may waive any application requirement whenever it deems the waiver to be in furtherance of the purposes of this section. The exemptions under this section may be granted in a proceeding for certification or in a separate proceeding.

(e) The commission may waive other regulatory requirements under this chapter applicable to electric utilities when it determines that competition will serve the same purpose as public interest regulation.

(f) If any exempt electricity producer elects to terminate its service, it shall provide notice of this to its customers and the commission. The notice shall be in writing and given not less than six months before the intended termination date. Upon termination of service by an exempt producer, the appropriate electric utility providing basic electric service shall ensure that all customers affected by the termination receive service.

(g) Upon the petition of any person or upon its own motion, the commission may rescind any exemption or waiver granted under this section if, after notice and hearing, it finds that:

(1) The conditions prompting the granting of the exemption or waiver no longer apply;

(2) The exemption or waiver is no longer in the public interest; or

(3) The electric utility has failed to comply with one or more of the conditions of the exemption or applicable statutory or regulatory requirements.

(h) For purposes of this section, the commission, upon determination that any area of the State has less than adequate competition for electric services, shall require the existing provider to show cause as to why the commission should not authorize an alternative electric utility for that area under the terms and conditions of this section.

§269-C Obligations of electric utilities that own all or portions of the distribution grid. In accordance with conditions and guidelines established by the commission to facilitate the introduction of competition into the State's electricity marketplace, each electric utility that owns all or portions of the distribution grid, upon bona fide request, shall provide access to the grid based on industry standards, on reasonable terms and conditions, to an electric utility that does not own any portion of the distribution grid and that seeks to produce electricity and either use the electricity for its own purposes or sell the electricity to customers, including:

(1) Interconnection to the distribution grid owner's facilities at any technically feasible and economically reasonable point within the grid so that the electric lines are fully interoperable;

(2) Nondiscriminatory and equal access to the distribution grid owner's facilities, functions, and the information necessary to the production and transmission of electricity and the interoperability of both utilities' systems;

(3) Nondiscriminatory access among all electric utilities, where technically feasible and economically reasonable, and where safety or the provision of existing electrical service is not at risk, to the poles, lines, rights-of-way and other portions of the distribution grid that are owned or controlled by the electric utility, or the commission shall authorize access to electric utilities' poles as provided by the joint pole agreement, commission tariffs, rules, orders, or Federal Communications Commission rules and regulations;

(4) Electricity functions without unreasonable restrictions on the resale or sharing of distribution grid functions; and

(5) Nondiscriminatory access of customers to the electric utility of their choice. The commission shall determine the equitable distribution of costs among the authorized electric utilities that will use such access and shall establish rules to ensure such access.

Where possible, electric utilities shall enter into negotiations to agree on the provision of services or information services without requiring intervention by the commission; provided that any such agreement shall be subject to review by the commission to ensure compliance with the requirements of this section."

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. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:

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