Report Title:

Electrical Cooperatives

 

Description:

Allows the public utilities commission to regulate electric cooperatives in Hawaii. Allows electric cooperatives to opt out of the commission's regulation by allowing the member-consumers of the electric cooperative to exempt themselves from regulation under certain conditions. Defines "electric cooperative."

 

HOUSE OF REPRESENTATIVES

H.B. NO.

739

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO ELECTRICAL COOPERATIVES.

 

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

SECTION 1. The purpose of this Act is to allow the public utilities commission to regulate electric cooperatives in this State, as well as to allow electric cooperatives to opt out of the commission's regulation by allowing the member-consumers of the electric cooperative to exempt themselves from regulation under certain conditions.

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

"PART . ELECTRICAL COOPERATIVES

269-A General supervision by commission. The commission shall have general supervision over all electric cooperatives with power to fix and establish rates and to adopt rules pursuant to chapter 91 affecting their services, operation, and the management and conduct of their business. The commission shall have full visitorial and inquisitorial power to examine electric cooperatives and keep informed as to their general conditions, their capitalization, rates, plants, equipment, apparatus, and other property owned, leased, controlled or operated, their value, the management, conduct, operation, practices and services; not only with respect to the adequacy, security, and accommodation afforded by their service, but also with respect to their compliance with this chapter, orders of the commission, and all other applicable laws of this State. This part shall not apply to generation and transmission associations or cooperative corporations, or transmission associations or cooperative corporations.

269-B Rate investigations; notice of proposed rate increases. (a) An electric cooperative shall be subject to rate investigations by the commission pursuant to section 269-A unless a proposed increase in rates and charges does not exceed three per cent based on the previous twelve months revenue generated by the existing rates; provided that the electric cooperative shall be subject to section 269-A if:

(1) The electric cooperative elects, by action of its board of trustees, to be subject to rate investigation by the commission;

(2) The percentage of members, that according to bylaws constitute a quorum not to exceed five per cent of the membership for that particular electric cooperative have signed a petition requesting rate investigation pursuant to subsection (c) or (d); or

(3) The commission declares that the electric cooperative shall be subject to rate investigations by the commission pursuant to subsection (f).

(b) Each such electric cooperative not subject to rate investigation, at least ninety days before the effective date of any proposed rate increase, shall notify the commission and each of its member-consumers of the proposed rate increase. Notice to the commission shall include a verified statement showing the then total number of member-consumers of the electric cooperative. Notice by the electric cooperative to its member-consumers shall:

(1) Be in a form prescribed by the commission;

(2) Be by regular mail and may be included in regular member-consumer billings; and

(3) Include:

(A) A schedule of the proposed rate schedules;

(B) The effective date of the proposed rate increase; and

(C) The procedure necessary for the member-consumers to petition the commission to examine and determine the reasonableness of the proposed rate increase.

(c) The member-consumers of an electric cooperative may petition the commission to examine and determine the reasonableness of the rates and charges proposed by the electric cooperative pursuant to subsection (a)(2). The form of such a petition shall be prescribed by the commission. A petition substantially in compliance with the form shall not be deemed invalid due to minor errors in its form.

(d) If, by the effective date of this proposed increase in rates and charges, the commission has received petitions from fewer than the number of member-consumers as set out in subsection (a)(2), requesting that the commission examine the proposed increase in rates and charges, the commission shall immediately certify that fact to the electric cooperative. If, on or before the effective date of the proposed increase in rates and charges, the commission has received petitions from the number of member-consumers as set out in subsection (a)(2) or more, the commission shall notify the electric cooperative that it will examine and determine the reasonableness of the proposed increase in rates and charges. Rates and charges established by the commission or by an electric cooperative pursuant to this part shall be in force for not less than one year and no further increases in rates and charges shall be permitted during the one-year period.

(e) No electric cooperative shall have the right to receive more than one rate increase per year for any reason or under any procedures.

(f) In addition to the procedure for petition prior to any proposed increase in rates and charges pursuant to subsections (a) to (d), the member-consumers of an electric cooperative at any time may petition the commission to declare the electric cooperative be subject to full-scale rate investigation. If the commission determines that a majority of the member-consumers of an electric cooperative have properly petitioned that the electric cooperative be subject to full-scale rate regulation, the commission shall certify that fact to the electric cooperative and thereafter the electric cooperative shall be subject to full-scale rate investigation by the commission until at least a majority of the member-consumers of the electric cooperative properly petition that the electric cooperative shall no longer be subject to such full-scale rate investigations by the commission. The form of such a petition shall be prescribed by the commission. A petition substantially in compliance with the form shall not be deemed invalid due to minor errors in its form.

(g) Subsections (a) to (f) shall apply only to the rates and charges and shall have no effect on the commission's jurisdiction over the electric cooperative or the rules governing the operations of electric utilities.

(h) Each electric cooperative, when determining how rates and charges, established under subsection (b), are to be allocated to the different rate classes, shall apportion such rates and charges in a manner that reflects, as closely as practicable, the costs of providing service to that class.

(i) In no event, and under no circumstances, shall the procedures provided in this part be used for the purpose of establishing special competitive rates in any area in which an electric cooperative is in direct competition with another regulated retail electric supplier.

269-C Petition by member consumers. Petitions requesting the commission to examine and determine the reasonableness of a proposed increase in rates and charges, or requesting rate regulation of an electric cooperative, shall be in a form established by the commission by rules adopted pursuant to chapter 91. Petitions may only be signed by the member-consumers of the electric cooperative.

269-D Enforcement. Upon proceedings brought by an interested person or by action of the commission, the commission shall have the jurisdiction to enforce compliance with this part and may impose such penalties for violations of this part as may be appropriate as provided in section 269-28.

269-E Exemption from regulation. (a) Electric cooperatives, that are owned by the member-consumers they serve, are regulated by the member-consumers themselves acting through an elected governing board. It is declared that the regulation by the commission under this part may be duplicative of the self-regulation by the electric cooperative and may be neither necessary nor cost-effective. It is therefore the purpose of this section to determine the necessity of regulation of rates and charges by the commission by allowing the member-consumers of an electric cooperative to exempt themselves from regulation by the commission except as provided in this section.

(b) Except as otherwise provided in subsections (d), (e), (f), and (g), this part shall not apply to electric cooperatives with less than seventeen thousand meters that comply with subsection (c).

(c) To be exempt under subsection (b), an electric cooperative shall poll its members as follows:

(1) An election under this section may be called by the board of trustees or shall be called not less than one hundred eighty days after receipt of a valid petition signed by not less than five per cent of the members of the electric cooperative;

(2) The proposition for deregulation shall be presented to a meeting of the members, the notice of which shall set forth the proposition for deregulation and the time and place of the meeting. Notice to the members shall be written and delivered not less than twenty-one nor more than forty-five days before the date of the meeting;

(3) If the electric cooperative mails information to its members regarding the proposition for deregulation other than notice of the election and the ballot, the electric cooperative shall also include in that mailing any information in opposition to the proposition that is submitted by petition signed by not less than one per cent of the electric cooperative's members;

(4) If the proposition for deregulation is approved by the affirmative vote of not less than a majority of the members voting on the proposition, the electric cooperative shall notify the commission in writing of the results within ten days after the date of the election; and

(5) Voting on the proposition for deregulation shall be by mail ballot; provided that members attending the meeting provided for in paragraph (2) may execute and deliver their ballot to the electric cooperative during or at the conclusion of the meeting.

(d) In the event the member-consumers have voted, pursuant to subsection (c), to exempt themselves from regulation by the commission, any such electric cooperative may vote no more than once every twelve months to place the electric cooperative under the regulation of the commission, as provided in this part. The question shall be submitted to the member-consumers of the electric cooperative if at least five per cent of the members of the electric cooperative sign a petition requesting such an election. The petition shall be submitted to the membership in the same manner as provided for in subsection (c).

(e) Each electric cooperative that has voted to exempt itself from commission regulation under this part, when determining how rates and charges established after that exemption are to be allocated to the different rate classes, shall apportion those rates and charges in a manner that reflects, as closely as practicable, the costs of providing service to that class.

(f) In no event, and under no circumstances, shall rates and charges established in this part be used for the purpose of establishing special competitive rates in any area in which an electric cooperative is in direct competition with another regulated retail utility supplier.

(g) Notwithstanding this part, the commission shall retain jurisdiction over all electric cooperatives that have voted to exempt themselves from commission regulation under this part for proceedings brought by a regulated utility relating to alleged discriminatory or anti-competitive rates established by an exempt electric cooperative, or relating to actions to acquire existing customers of a regulated utility using those rates."

SECTION 3. Chapter 269-1, Hawaii Revised Statutes, is amended as follows:

1. By adding a new definition to be appropriately inserted and to read:

""Electric cooperative" means any private corporation or association organized for purposes of transmitting or distributing electricity exclusively to its stockholders or members at cost."

2. By amending the definition of "public utility" to read:

""Public utility" 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 transportation of passengers or freight, or the conveyance or transmission of telecommunications messages, or the furnishing of facilities for the transmission of intelligence by electricity by land or water or air within the State, or between points within the State, or for the production, conveyance, transmission, delivery, or furnishing of light, power, heat, cold, water, gas, or oil, or for the storage or warehousing of goods, or the disposal of sewage; provided that the term:

(1) Shall include any person insofar as that person owns or operates a private sewer company or sewer facility;

(2) Shall include telecommunications carrier or telecommunications common carrier;

(3) Shall not include any person insofar as that person owns or operates an aerial transportation enterprise;

(4) Shall not include persons owning or operating taxicabs, as defined in this section;

(5) Shall not include common carriers transporting only freight on the public highways, unless operating within localities or along routes or between points that the public utilities commission finds to be inadequately serviced without regulation under this chapter;

(6) Shall not include persons engaged in the business of warehousing or storage unless the commission finds that regulation thereof is necessary in the public interest;

(7) Shall not include:

(A) The business of any carrier by water to the extent that the carrier enters into private contracts for towage, salvage, hauling, or carriage between points within the State and the carriage is not pursuant to either an established schedule or an undertaking to perform carriage services on behalf of the public generally; and

(B) The business of any carrier by water, substantially engaged in interstate or foreign commerce, transporting passengers on luxury cruises between points within the State or on luxury round-trip cruises returning to the point of departure;

(8) Shall not include any person who:

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

(B) 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;

(9) Shall not include a telecommunications provider only to the extent determined by the commission pursuant to section 269-16.9;

(10) Shall not include any person who controls, operates, or manages plants or facilities developed pursuant to chapter 167 for conveying, distributing, and transmitting water for irrigation and such other purposes that shall be held for public use and purpose; [and]

(11) Shall not include any person who owns, controls, operates, or manages plants or facilities for the reclamation of wastewater; provided that:

(A) The services of the facility shall be provided pursuant to a service contract between the person and a state or county agency and at least ten per cent of the wastewater processed is used directly by the State or county which has entered into the service contract;

(B) The primary function of the facility shall be the processing of secondary treated wastewater that has been produced by a municipal wastewater treatment facility that is owned by a state or county agency;

(C) The facility shall not make sales of water to residential customers;

(D) The facility may distribute and sell recycled or reclaimed water to entities not covered by a state or county service contract; provided that, in the absence of regulatory oversight and direct competition, the distribution and sale of recycled or reclaimed water shall be voluntary and its pricing fair and reasonable. For purposes of this [[]subparagraph[]], "recycled water" and "reclaimed water" mean treated wastewater that by design is intended or used for a beneficial purpose; and

(E) The facility shall not be engaged, either directly or indirectly, in the processing of food wastes[.];

and

(12) Shall include electric cooperatives in accordance with part .

In the event the application of this chapter is ordered by the commission in any case provided in paragraphs (5), (6), (9), and (10), the business of any public utility that presents evidence of bona fide operation on the date of the commencement of the proceedings resulting in the order shall be presumed to be necessary to public convenience and necessity, but any certificate issued under this proviso shall nevertheless be subject to such terms and conditions as the commission may prescribe, as provided in sections 269-16.9 and 269-20."

SECTION 4. In codifying the new sections added by section 2, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.

INTRODUCED BY:

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