Report Title:

Electric Utility Charges and Discounts; Moratorium


Imposes a    year moratorium on the practice of an electric utility charging standby charges and offering customer retention discounts for customer self-generation and distributed energy resources.


H.B. NO.












SECTION 1. The legislature finds that increased use of customer self-generation and distributed energy resources (DERs) can provide electricity with greater reliability, lower cost, and greater energy efficiency than utility generation. DER systems can use renewable energy providing economic, environmental, and fuel diversity benefits that would contribute to further development of indigenous renewable energy. Many DER systems offer the advantages of new, highly advanced technologies and some will use hydrogen fuels that could be produced in Hawaii in the near future. These advantages will also help reduce Hawaii’s dependence on imported oil, which is subject to sudden and sharp price spikes that threaten Hawaii’s economic stability.

Operated in coordination with Hawaii's electric utilities, DERs could serve a peak shaving function and back up intermittent renewables and reduce costly reserve capacity requirements. DERs can also enhance Hawaii's energy system security in the face of natural disasters or other emergencies.

The legislature further finds that DERs offer important benefits to Hawaii's people, energy, and economic security, as well as an opportunity for economic development and diversity by becoming a leader in DER systems.

The legislature further finds certain pricing practices and agreements discourage the use of customer self-generation and DER systems and, thus, jeopardize Hawaii’s ability to reap these benefits.

The purpose of this Act is to create a more equitable regulatory environment by imposing a moratorium on an electric utility's practice of charging standby charges and offering customer retention discounts for customer self-generation and distributed energy resources.

The legislature acknowledges that the moratorium will result in a shifting of the economic burden to pay a utility's fixed costs to electricity customers who do not use DERs. However, the burden, if structured correctly, may only be temporary and minimal when apportioned among the thousands of electric consumers, and only if additional costs occur at all. By encouraging self-generators and DERs to remain on the utility electrical grid, through proper system integration, all rate classes will benefit through decreased reliance on imported fossil fuels and increased energy security and operating efficiencies.

SECTION 2. (a) Notwithstanding chapter 269, Hawaii Revised Statutes, or any authorization by the public utilities commission to any public utility to the contrary, there shall be a _____-year moratorium on the practice of an electric utility charging a standby charge and offering customer retention discounts for customer self-generation and distributed energy resources.

(b) For purposes of this section:

"Customer retention discount" means an offer by a utility to prevent a major commercial or industrial customer from installing on-site generation that would reduce electric load on the company system. The "customer retention discount" is intended to preserve market share and retain customer revenues that contribute to the fixed costs of the utility.

"Customer self-generation" means the production of electricity and, in many cases, useful thermal energy (heat or stream) used for industrial, commercial, heating, or cooling purposes by a metered customer of an electric utility who owns and operates the facility that is:

(1) Located on the customer's premises;

(2) Operated in parallel with the utility's transmission and distribution facilities;

(3) In conformity with the utility's interconnecting requirements; and

(4) Intended primarily to offset part or all of the customer's owner electricity requirements.

"Distributed energy resources" means modular electric generation or storage located near the point of use. Distributed energy resources include biomass-based generators, combustion turbines, concentrating solar power and photovoltaic systems, fuel cells, wind turbines, microturbines, engines/generator sets, and storage and control technologies. Distributed energy resources can either be grid connected or operated independently of the grid. In contrast to large, central-station power plants, distributed energy resources systems typically range from less than a kilowatt to tens of megawatts in size. Distributed energy resources can be utility-owned or customer-owned.

"Incumbent utility company" includes every person who may own, control, operate, or manage as owner, lessee, trustee, receiver, or otherwise, whether under a franchise, charter, license, articles of association, or otherwise, any plant or equipment, or any part thereof, directly or indirectly for public use, for the production, transmission, delivery, or furnishing of electricity; provided that the term shall not include any person who:

(1) Controls, operates, or manages plants or facilities for the production, transmission, or furnishing of power primarily or entirely from nonfossil fuel sources; and

(2) Provides, sells, or transmits all of that power, except such power as is used in its own internal operations, directly to a public utility for transmission to the public.

"Standby charge" means any charge by the incumbent utility company for services to a customer who obtains electric power from sources other than the incumbent utility company, including standby services that back up the customer's non-utility source of energy during those periods when that source is not available to provide electric energy for the customer's electric load.

SECTION 4. This Act shall take effect upon its approval, and shall be repealed on ________________________.