Report Title:

Hawaii Energy Commission; Public Utilities Commission

 

Description:

Establishes the Hawaii energy commission to regulate energy utilities; establish energy enterprise zones; and encourage the development of renewable energy resources. Removes the regulation of electricity, gas, and other energy resources from the jurisdiction of the public utilities commission.

 

 

THE SENATE

S.B. NO.

2195

TWENTY-FIRST LEGISLATURE, 2002

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to utilities.

 

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

SECTION 1. The legislature finds that Hawaii is dependent on imported oil for over ninety-two per cent of its energy needs, making it the most vulnerable state in the nation to economic disruption in the event of upheavals in the world oil market. Moreover, during periods of supply curtailment, the State’s need to ensure basic public emergency services to safeguard public health, safety, and welfare, such as police and fire protection, hospital and ambulance services, and utility emergency services, competes with the need to maintain Hawaii’s economy and employment levels, not to mention the continued operations of the State’s transportation, commerce, industry, construction, government, the military, and agriculture. Other factors, including Hawaii’s geographic isolation and lack of overland access to energy sources, make the State unique in its near total reliance on imported oil and vulnerability to supply disruptions. The catastrophic events of September 11, 2001, underline the need for Hawaii to severely reduce its dependence on foreign oil.

State law already requires the State to establish policies designed to increase energy self-sufficiency and energy security, including the use of renewable resources. In particular, section 226-18(a), Hawaii Revised Statutes, of the Hawaii State Planning Act requires planning for the State’s facility systems with regard to energy to include "[i]ncreased energy self-sufficiency where the ratio of indigenous to imported energy use is increased..." and "[g]reater energy security in the face of threats to Hawaii’s energy supplies and systems...". Similarly, section 226-103(f), Hawaii Revised Statutes, establishes priority guidelines for energy use and development to "[e]ncourage the development, demonstration, and commercialization of renewable energy sources...".

The legislature further finds that Hawaii is blessed with an abundance of renewable energy resources, including wind, solar, hydropower, geothermal resources, ocean thermal energy conversion, and wave energy. In particular, Act 272, Session Laws of Hawaii 2001, recognized "the economic, environmental, and fuel diversity benefits of renewable energy resources" and the need to "encourage the establishment of a market for renewable energy in Hawaii using the State’s renewable energy resources...". Act 272 further noted that "while Hawaii is a national leader in the development of renewable energy resources for electricity production, there may be more that the State can do to encourage the development and implementation of renewable energy. These efforts can reduce the amount of imported oil used for the generation of electricity."

Accordingly, the purpose of this Act is to lessen Hawaii’s dependence on imported oil and encourage the greater use of renewable energy by:

(1) Establishing a Hawaii energy commission to develop energy resources, including renewable energy resources, to increase Hawaii’s energy self-sufficiency. To accomplish this objective, the commission will regulate "energy utilities" -- public utilities that generate electricity from any energy source, including nonfossil fuel and renewable sources. In addition, the commission, which is established within the department of budget and finance for administrative purposes, is responsible for establishing "energy enterprise zones" to accommodate wind farms and other indigenous and renewable energy resources with a minimum of red tape, and for encouraging the development of renewable energy resources. The administration of the renewable portfolio standards and net energy metering enacted in Act 272, Session Laws of Hawaii 2001, is transferred from the public utilities commission to the Hawaii energy commission;

(2) Establishing a division of energy consumer advocacy within the department of business, economic development, and tourism to represent, protect, and advance the interests of all consumers, including small businesses, of energy utility services; and

(3) Amending the public utilities commission law to remove the regulation of electricity, gas, and other energy resources from the jurisdiction of the commission.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

hawaii energy commission

§ -1 Definitions. As used in this chapter:

"Commission" means the Hawaii energy commission.

"Energy utility" means 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 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, gas, or oil.

"Enforcement officer" means any person employed and authorized by the commission to investigate any matter on behalf of the commission.

"Nonutility generator" means a person that produces electric power but is not an energy utility, including any person who:

(1) Controls, operates, or manages plants or facilities for the production, transmission, or furnishing of power, whether in whole or in part, from any energy source, including nonfossil fuel or renewable energy sources; and

(2) Provides, sells, or transmits any or all of that power, either directly or indirectly to an energy utility for transmission to the public.

"Renewable energy" means electrical energy produced by wind, solar energy, hydropower, landfill gas, waste to energy, geothermal resources, ocean thermal energy conversion, wave energy, biomass including municipal solid waste, biofuels or fuels derived entirely from organic sources, hydrogen fuels derived entirely from renewable energy, or fuel cells where the fuel is derived entirely from renewable sources. "Renewable energy" also means electrical energy savings brought about by the use of solar and heat pump water heating.

§ -2 Hawaii energy commission; establishment; appointment of commissioners; compensation; persons having interest in energy utilities. (a) The Hawaii energy commission is established within the department of budget and finance for administrative purposes.

(b) The commission shall consist of the following five members, who shall be known as commissioners, to be appointed by the governor as provided in section 26-34:

(1) One member from the private sector;

(2) One member to be appointed from a list of nominees submitted by the mayor of the county of Kauai;

(3) One member to be appointed from a list of nominees submitted by the mayor of the county of Maui;

(4) One member to be appointed from a list of nominees submitted by the mayor of the county of Hawaii; and

(5) One member to be appointed from a list of nominees submitted by the mayor of the city and county of Honolulu.

(c) All members shall be appointed for terms of six years each, except that the terms of the members first appointed shall be for two, three, four, five, and six years, respectively, as designated by the governor at the time of appointment. The governor shall designate a member to be chairperson of the commission. Each member shall hold office until the member’s successor is appointed and qualified. Vacancies occurring in the membership of the commission shall be filled for the unexpired term in the same manner as the original appointment, subject to article V, section 6 of the Hawaii Constitution. Section 26-34 shall not apply insofar as it relates to the number of terms and consecutive number of years a member can serve on the commission; provided that no member shall serve more than twelve consecutive years.

(d) In appointing commissioners, the governor shall select persons who have had experience in accounting, business, engineering, government, finance, law, or other similar fields. The commissioners shall devote full time to their duties as members of the commission and no commissioner shall hold any other public office or other employment during the commissioner’s term of office. No person owning any stock or bonds of any energy utility corporation, or having any interest in, or deriving any remuneration from, any energy utility shall be appointed a commissioner.

(e) The salary of the chairperson of the commission shall be within the range of salaries paid to directors of the departments of the state government, and each of the other commissioners shall be paid a salary equal to ninety-five per cent of the chairperson’s salary. The commissioners shall be exempt from chapters 76 and 89 but shall be members of the state employees retirement system and shall be eligible to receive the benefits of any state or federal employee benefit program generally applicable to officers and employees of the State, including those under chapter 87.

§ -3 Employment of assistants. (a) The chairperson of the commission may appoint and employ such clerks, stenographers, agents, engineers, accountants, and other assistants for the commission as the chairperson finds necessary for the performance of the commission’s functions and define their powers and duties. The chairperson may appoint and at pleasure dismiss a chief administrator, research assistants, economists, legal secretaries, enforcement officers, and such hearings officers as may be necessary. Notwithstanding section 103D-209(b), the chairperson shall appoint one or more attorneys independent of the attorney general who shall act as attorneys for the commission and define their powers and duties and fix their compensation. The chief administrator, research assistants, economists, legal secretaries, enforcement officers, hearings officers, and attorneys shall be exempt from chapter 76. Other employees shall be appointed as may be needed by the chairperson in accordance with chapter 76.

(b) Notwithstanding section 91-13, the commission may consult with its assistants appointed under authority of this section in any contested case or agency hearing concerning any issue of facts. Neither the commission nor any of its assistants shall in that proceeding consult with any other person or party except upon notice and an opportunity for all parties to participate, save to the extent required for the disposition of ex parte matters authorized by law.

§ -4 Annual report and register of orders. (a) The commission shall prepare and present to the governor, through the director of finance, in the month of January in each year a report respecting its actions during the preceding fiscal year. This report shall include:

(1) Summary information and analytical, comparative, and trend data concerning major regulatory issues acted upon and pending before the commission;

(2) Cases processed by the commission, including their dispositions;

(3) Energy utility operations, capital improvements, and rates;

(4) Energy utility performance in terms of efficiency and quality of services rendered;

(5) Environmental matters having a significant impact upon energy utilities;

(6) Actions of the federal government affecting the regulation of energy utilities in Hawaii;

(7) Long and short-range plans and objectives of the commission; and

(8) The commission’s recommendations respecting legislation and other matters requiring executive and legislative consideration.

(b) Copies of the annual reports shall be furnished by the governor to the legislature. In addition, the commission shall establish and maintain a register of all its orders and decisions, which shall be open and readily available for public inspection, and no order or decision of the commission shall take effect until it is filed and recorded in this register.

§ -5 General powers and duties. The commission shall have the general supervision set forth in this chapter over all energy utilities, and shall perform the duties and exercise the powers imposed or conferred upon it by this chapter, including the following:

(1) Assist in the efficient development, production, conveyance, transmission, delivery, and furnishing of indigenous sources of renewable alternate energy that could be used to generate electric energy to meet the State’s electric energy needs and concurrently help to reduce the State’s need for imported fossil fuels;

(2) Work with the energy resources coordinator under chapter 196 to optimize the development of Hawaii’s alternative energy resources to help increase the energy self-sufficiency of the State; and

(3) Adopt rules as may be necessary pursuant to chapter 91 for the purposes of this chapter.

§ -6 Hearings officer. The chairperson of the commission may appoint a hearings officer, who shall not be subject to chapter 76, to hear and recommend decisions in any proceeding before it other than a proceeding involving the rates or any other matters covered in the tariffs filed by the energy utilities. The hearings officer shall have the power to take testimony, make findings of fact and conclusions of law, and recommend a decision; provided that the findings of act, the conclusions of law, and the recommended decision shall be reviewed and may be approved by the commission after notice to the parties and an opportunity to be heard. The hearings officer shall have all of the powers conferred upon the commission under section -13.

§ -7 Investigative powers. (a) The commission and each commissioner shall have the power to examine the condition of each energy utility, the manner in which it is operated with reference to the safety or accommodation of the public, the safety, working hours, and wages of its employees, the fares and rates charged by it, the value of its physical property, the issuance by it of stocks and bonds, and the disposition of the proceeds thereof, the amount and disposition of its income, and all its financial transactions, its business relations with other persons, companies, or corporations, its compliance with all applicable state and federal laws and with the provisions of its franchise, charter, and articles of association, if any, its classifications, rules, practices, and service, and all matters of every nature affecting the relations and transactions between it and the public or persons or corporations.

(b) The commission may investigate any person acting in the capacity of or engaging in the business of an energy utility within the State, without having a certificate of public convenience and necessity or other authority previously obtained under and in compliance with this chapter or the rules adopted under this chapter.

(c) Any investigation may be made by the commission on its own motion, and shall be made when requested by the energy utility to be investigated, or by any person upon a sworn written complaint to the commission, setting forth any prima facie cause of complaint. A majority of the commission shall constitute a quorum.

§ -8 Certificates of public convenience and necessity. (a) No energy utility shall commence its business without first having obtained from the commission a certificate of public convenience and necessity. Applications for certificates shall be made in writing to the commission and shall comply with the requirements prescribed in the commission’s rules. The application shall include:

(1) The type of service to be performed;

(2) The geographical scope of the operation;

(3) The type of equipment to be employed in the service;

(4) The name of competing utilities for the proposed service;

(5) A statement of its financial ability to render the proposed service;

(6) A current financial statement of the applicant; and

(7) The rates or charges proposed to be charged including the rules governing the proposed service.

(b) A certificate shall be issued to any qualified applicant, authorizing the whole or any part of the operations covered by the application, if it is found that the applicant is fit, willing, and able properly to perform the service proposed and to conform to the terms, conditions, and rules adopted by the commission, and that the proposed service is, or will be, required by the present or future public convenience and necessity; otherwise the application shall be denied. Any certificate issued shall specify the service to be rendered and there shall be attached to the exercise of the privileges granted by the certificate at the time of issuance and from time to time thereafter, such reasonable conditions and limitations as a public convenience and necessity may require. The reasonableness of the rates, charges, and tariff rules proposed by the applicant shall be determined by the commission during the same proceeding examining the present and future conveniences and needs of the public and qualifications of the applicant, in accordance with the standards set forth in section -19.

(c) No energy utility that holds a franchise or charter enacted or granted by the legislative or executive authority of the State or its predecessor governments, or which has a bona fide operation as an energy utility heretofore recognized by the commission, shall be required to obtain a certificate of public convenience and necessity under this section.

(d) Any certificate, upon application of the holder and at the discretion of the commission, may be amended, suspended, or revoked, in whole or in part. The commission after notice and hearing may suspend, amend, or revoke any certificate in part or in whole, if the holder is found to be in wilful violation of this chapter or with any lawful order or rule of the commission adopted under this chapter, or with any term, condition, or limitation of the certificate.

§ -9 Energy utilities to furnish information. Every energy utility or other person subject to investigation by the commission, at all times, upon request, shall furnish to the commission all information that it may require respecting any of the matters concerning which it is given the power to investigate, and shall permit the examination of its books, records, contracts, maps, and other documents by the commission, or any of its members, or any person authorized by it in writing to make an examination, and shall furnish the commission with a complete inventory of its property in such form as the commission may direct.

§ -10 Location of records. An energy utility shall keep and maintain within the State such records, books, papers, accounts, and other documents as the commission may determine are necessary to its effective regulation.

§ -11 Annual financial reports. All annual financial reports required to be filed with the commission by energy utilities shall include a certification that the report conforms with the applicable uniform system of accounts adopted by the commission.

§ -12 Report accidents. Every energy utility shall report to the commission all accidents caused by or occurring in connection with its operations and service, and the commission shall investigate the causes of any accident which results in loss of life, and may investigate any other accidents which in its opinion require investigation.

§ -13 Commission may compel attendance of witnesses, etc. (a) In all investigations made by the commission, and in all proceedings before it, the commission and each commissioner shall have the same powers respecting administering oaths, compelling the attendance of witnesses and the production of documentary evidence, examining witnesses, and punishing for contempt, as are possessed by circuit courts. In case of disobedience by any person to any order of the commission or of any commissioner, or any subpoena issued by it or the commissioner, or of the refusal of any witness to testify to any matter regarding which the witness may be questioned lawfully, any circuit court, on application by the commission or a commissioner, shall compel obedience as in case of disobedience of the requirements of a subpoena issued from a circuit court or a refusal to testify in that court. No person shall be excused from testifying or from producing any book, waybill, document, paper, or account in any investigation or inquiry by a hearing before the commission or any commissioner, when ordered to do so, upon the ground that the testimony or evidence, book, waybill, document, paper, or account required of the person may tend to incriminate the person or subject the person to penalty or forfeiture; but no person shall be prosecuted for any crime, punished for any crime, or subjected to any criminal penalty or criminal forfeiture for or on account of any act, transaction, matter, or thing concerning which the person shall under oath have testified or produced documentary evidence.

(b) Nothing in this section shall be construed as in any manner giving to any energy utility or any person immunity of any kind. The fees and traveling expenses of witnesses shall be the same as allowed witnesses in the circuit courts and shall be paid by the State out of any appropriation available for the expenses of the commission. All meetings and hearings of the commission shall be public.

§ -14 Notices. (a) Whenever an investigation is undertaken by the commission, reasonable notice in writing of that fact and of the subject or subjects to be investigated shall be given to the energy utility or the person concerned, and when based upon complaints made to it as prescribed in section -7, a copy of the complaint, and a notice in writing of the date and place fixed by the commission for beginning the investigation, shall be served upon the energy utility or the person concerned, or other respondent and the complainant not less than two weeks before the date designated for the hearing.

(b) Any notice provided pursuant to section -19(b) shall plainly state the rate, fare, charge, classification, schedule, rule, or practice proposed to be established, abandoned, modified, or departed from and the proposed effective date thereof and shall be given by filing the notice with the commission and keeping it open for public inspection.

(c) Any public hearing held pursuant to section -19(c) shall be a noticed public hearing or hearings on the island on which the utility is situated. Notice of the hearing, with the purpose thereof and the date, time, and place at which it will open, shall be given not less than once in each of three weeks statewide, the first notice being not less than twenty-one days before the public hearing and the last notice being not more than two days before the scheduled hearing. The applicant or applicants shall notify their consumers or patrons of the proposed change in rates and of the time and place of the public hearing not less than one week before the date set, the manner and the fact of notification to be reported to the commission before the date of hearing.

§ -15 Right to be represented by counsel. At any investigation by or proceeding before the commission the energy utility or the person concerned, or other respondent or party and any complainant or permitted intervenor shall have the right to be present and represented by counsel, to present any evidence desired, and to cross-examine any witness who may be called.

§ -16 Commission may institute proceedings to enforce chapter. (a) If the commission is of the opinion that any energy utility or any person is violating or neglecting to comply with this chapter or of any rule, order, or other requirement of the commission, or of any provisions of its franchise, charter, or articles of association, if any, or that changes, additions, extensions, or repairs are desirable in its plant or service to meet the reasonable convenience or necessity of the public, or to ensure greater safety or security, or that any rates, fares, classifications, charges, or rules are unreasonable or unreasonably discriminatory, or that in any way it is doing what it ought not to do, or not doing what it ought to do, it shall in writing inform the energy utility or the person and may institute such proceedings before it as may be necessary to require the energy utility or the person to correct any such deficiency. In that event, the commission, by order, may direct the director of business, economic development, and tourism to appear in the proceeding to carry out the purposes of this section. The commission may examine into any of the matters referred to in section -7, notwithstanding that the same may be within the jurisdiction of any court or other body; provided that this section shall not be construed as in any manner limiting or otherwise affecting the jurisdiction of any such court or other body.

(b) In addition to any other remedy available, the commission or its enforcement officer may issue citations to any person acting in the capacity of or engaging in the business of an energy utility within the State, without having a certificate of public convenience and necessity or other authority previously obtained under and in compliance with this chapter or the rules adopted under this chapter.

(1) The citation may contain an order of abatement and an assessment of civil penalties as provided in section -32(c). All penalties collected under this subsection shall be deposited in the treasury of the State. Service of a citation issued under this subsection shall be made by personal service whenever possible, or by certified mail, restricted delivery, sent to the last known business or residence address of the person cited.

(2) Any person served with a citation under this subsection may submit a written request to the commission for a hearing, within twenty days from the receipt of the citation, with respect to the violations alleged, the scope of the order of abatement and the amount of civil penalties assessed. If the person cited under this subsection timely notifies the commission of the request for a hearing, the commission shall afford an opportunity for a hearing under chapter 91. The hearing shall be conducted by the commission or the commission may designate a hearings officer to hold the hearing.

(3) If the person cited under this subsection does not submit a written request to the commission for a hearing within twenty days from the receipt of the citation, the citation shall be deemed a final order of the commission. The commission may apply to the appropriate court for a judgment to enforce the provisions of any final order, issued by the commission or designated hearings officer pursuant to this subsection, including the provisions for abatement and civil penalties imposed. In any proceeding to enforce the final order of the commission or designated hearings officer, the commission need only show that the notice was given, a hearing was held or the time granted for requesting the hearing has run without such a request, and a certified copy of the final order of the commission or designated hearings officer.

(4) If any party is aggrieved by the decision of the commission or the designated hearings officer, the party may appeal to the supreme court; provided that the operation of an abatement order will not be stayed on appeal unless specifically ordered by a court of competent jurisdiction after applying the stay criteria enumerated in section 91-14(c). The sanctions and disposition authorized under this subsection shall be separate and in addition to all other remedies either civil or criminal provided in any other applicable statutory provision. The commission may adopt rules under chapter 91 as may be necessary to fully effectuate this subsection.

§ -17 Appeals. An appeal from an order of the commission under this chapter shall lie to the supreme court, subject to chapter 602, in the manner and within the time provided by chapter 602 and the rules of court. Only a person aggrieved in a contested case proceeding provided for in this chapter may appeal from the order, if the order is final, or if preliminary, is of the nature defined by section 91-14(a). The commission may elect to be a party to all matters from which an order of the commission is appealed, and the commission may file appropriate responsive briefs or pleadings in the appeal; except that where there was no adverse party in the case below or in cases where there is no adverse party to the appeal, the commission shall be a party to all matters in which an order of the commission is appealed and shall file the appropriate responsive briefs or pleadings in defending all such orders. The appearance of the commission as a party in appellate proceedings in no way limits the participation of persons otherwise qualified to be parties on appeal. The appeal shall not of itself stay the operation of the order appealed from, but the supreme court may stay the order after a hearing upon a motion therefor and may impose conditions it deems proper, including but not limited to requiring a bond, requiring that accounts be kept, or that other measures be taken as ordered to secure restitution of the excess charges, if any, made during the pendency of the appeal, in case the order appealed from is sustained, reversed, or modified in whole or in part.

§ -18 Alternative dispute resolution. The commission may require the parties in any matter before the commission to participate in nonbinding arbitration, mediation, or other alternative dispute resolution process prior to the hearing.

§ -19 Regulation of utility rates; ratemaking procedures. (a) All rates, fares, charges, classifications, schedules, rules, and practices made, charged, or observed by any energy utility, or by two or more energy utilities jointly, shall be just and reasonable and shall be filed with the commission. The rates, fares, classifications, charges, and rules of every energy utility shall be published by the energy utility in such manner as the commission may require, and copies furnished to any person on request.

To the extent the contested case proceedings referred to in chapter 91 are required in any rate proceeding in order to ensure fairness and to provide due process to parties which may be affected by rates approved by the commission, the evidentiary hearings shall be conducted expeditiously and shall be conducted as a part of the ratemaking proceeding.

(b) No rate, fare, charge, classification, schedule, rule, or practice, other than one established pursuant to an automatic rate adjustment clause previously approved by the commission, shall be established, abandoned, modified, or departed from by any energy utility, except after thirty days’ notice as prescribed in section -14(b) to the commission and prior approval by the commission for any increases in rates, fares, or charges. The commission, in its discretion and for good cause shown, may allow any rate, fare, charge, classification, schedule, rule, or practice to be established, abandoned, modified, or departed from upon notice less than that provided for in section -14(b). A contested case hearing shall be held in connection with any increase in rates, and the hearing shall be preceded by a public hearing as prescribed in section     -14(c) at which the consumers or patrons of the energy utility may present testimony to the commission concerning the increase. The commission, upon notice to the energy utility, may suspend the operation of all or any part of the proposed rate, fare, charge, classification, schedule, rule, or practice or any proposed abandonment or modification thereof or departure therefrom and after a hearing by order regulate, fix, and change all such rates, fares, charges, classifications, schedules, rules, and practices, so that the same shall be just and reasonable and prohibit rebates and unreasonable discrimination between localities, or between users or consumers, under substantially similar conditions, regulate the manner in which the property of every energy utility is operated with reference to the safety and accommodation of the public, prescribe its form and method of keeping accounts, books, and records, and its accounting system, regulate the return upon its energy utility property, the incurring of indebtedness relating to its energy utility business, and its financial transactions and do all things in addition which are necessary and in the exercise of such power and jurisdiction, all of which as so ordered, regulated, fixed, and changed shall be just and reasonable, and such as shall provide a fair return on the property of the utility actually used or useful for energy utility purposes.

(c) The commission may in its discretion and after public hearing, upon showing by an energy utility of probable entitlement and financial need, authorize temporary increases in rates, fares, and charges; provided that the commission shall by order require the energy utility to return in the form of an adjustment to rates, fares, or charges to be billed in the future any amounts, with interest at a rate equal to the rate of return on the energy utility’s rate base found to be reasonable by the commission, received by reason of such continued operation which are in excess of the rates, fares, or charges finally determined to be just and reasonable by the commission. Interest on any such excess shall commence as of the date that any rate, fare, or charge goes into effect which results in any such excess and shall continue to accrue on the balance of any such excess until returned.

(d) The commission shall make every effort to complete its deliberations and issue its decision as expeditiously as possible and before nine months from the date the energy utility filed its completed application; provided that in carrying out this mandate the commission shall require all parties to a proceeding to comply strictly with procedural time schedules which it establishes. If a decision is rendered after the nine-month period, the commission shall in writing report the reasons therefor to the legislature within thirty days after rendering the decision.

Notwithstanding subsection (c), if the commission has not issued its final decision on an energy utility’s rate application within the nine-month period stated in this section, the commission shall within one month after the expiration of the nine-month period render an interim decision allowing the increase in rates, fares and charges, if any, to which the commission, based on the evidentiary record before it, believes the energy utility is probably entitled. The commission may postpone its interim rate decision thirty days if the commission considers the evidentiary hearings incomplete. In the event interim rates are made effective, the commission shall by order require the energy utility to return in the form of an adjustment to rates, fares, or charges to be billed in the future any amounts, with interest at a rate equal to the rate of return on such energy utility’s rate base found to be reasonable by the commission, received under such interim rates which are in excess of the rates, fares or charges finally determined to be just and reasonable by the commission. Interest on any such excess shall commence as of the date that any rate, fare, or charge goes into effect which results in any such excess and shall continue to accrue on the balance of any such excess until returned.

The nine-month period in this subsection shall begin only after a completed application has been filed with the commission and a copy served on the energy consumer advocate. The commission shall establish standards concerning the data required to be set forth in the application in order for it to be deemed a completed application. The energy consumer advocate may within twenty-one days after receipt object to the sufficiency of any application and the commission shall hear and determine any such objection within twenty-one days after the same is filed. If the commission finds that the objections are without merit, the application shall be deemed to have been completed upon original filing. If the commission finds the application to be incomplete, it shall require the applicant to submit an amended application consistent with its findings and the nine-month period shall not commence until the amended application is filed.

(e) In any case of two or more organizations, trades, or businesses (whether or not incorporated, whether or not organized in the State of Hawaii, and whether or not affiliated) owned or controlled directly or indirectly by the same interests, the commission may distribute, apportion, or allocate gross income, deductions, credits or allowances between or among the organizations, trades, or businesses, if it determines that the distribution, apportionment, or allocation is necessary in order to adequately reflect the income of any such organizations, trades, or businesses to carry out the regulatory duties imposed by this section.

(f) For energy utilities having annual gross revenues of less than $2,000,000, the commission may make and amend its rules and procedures which will provide the commission with sufficient facts necessary to determine the reasonableness of the proposed rates without unduly burdening the utility company and its customers.

§ -20 Approval of rules of an energy utility. Any rules, guidelines, or other standards of an energy utility which interpret federal or state laws governing nonutility generators, or which make a nonutility generator monetarily responsible for the energy utility’s costs and profits of doing business as an energy utility, shall be approved by the commission before adoption.

§ -21 Statewide rate increase surcharge assessment on ratepayers in emergency situations. (a) Any utility that sustains damage to its facilities as a result of a state-declared emergency (including disaster relief and civil defense emergencies as defined in chapters 127 and 128) and incurs costs related to the restoration and repair of its facilities which, if assessed only on the utility ratepayers of the affected utility service territory, may result in a rate increase of more than fifteen per cent for the average ratepayer in that utility service territory, may apply to the commission in accordance with this section to recover the costs provided in this section through a monthly surcharge which shall be assessed on a statewide basis and shall be based on the utility’s net restoration and repair costs; provided that the surcharge shall not result in an assessment of more than fifteen per cent for the average ratepayer in each of the other utility service territories and provided further that the commission shall exclude ratepayers in utility service territories with rates that may be substantially higher than other utility service territories in the State.

The commission shall have the authority to initially set, or subsequently revise, the surcharge to reflect the actual net restoration and repair costs incurred after deduction of amounts received from outside sources of recovery. These outside sources of recovery shall include insurance proceeds, government grants, and shareholder contributions.

(b) Any utility meeting the criteria set forth in subsection (a) may file an application with the commission setting forth its estimated restoration and repair costs as well as the estimated amount or amounts that may be received from outside sources of recovery.

(c) Within ninety days after filing of the utility’s application, the commission, upon notice, hearing, and a determination that the application is just, reasonable, and in the public interest, shall:

(1) Decide the extent to which it is just, reasonable, and in the public interest for the damaged utility’s ratepayers or shareholders, or both, to bear part or all of the repair and restoration costs;

(2) Determine whether the estimated amount of any net restoration and repair costs to be borne by the ratepayers of the damaged utility would result in a rate increase of more than fifteen per cent for the average residential ratepayer in that utility’s service territory;

(3) Issue an order allowing the affected utility or another utility acting on behalf of the affected utility to implement a monthly surcharge on all ratepayers statewide for the type of service rendered by the affected utility if the commission determines pursuant to paragraph (2) that a rate increase of more than fifteen per cent would otherwise be assessed;

(4) Exclude from any such order ratepayers in utility service territories with rates that are substantially higher than other utility service territories in the State; and

(5) Periodically review the order to ensure that the amounts collected by, or on behalf of, the utility shall not exceed the amount determined by the commission to be the net restoration and repair costs actually incurred.

The surcharge shall be assessed over a period to be determined by the commission; provided that the period shall not exceed ten years.

(d) Any outside sources of recovery, including grants from federal or state sources, shall be used to offset any repair and restoration costs except where the use of those funds is otherwise limited by the grantor thereof.

(e) For the purposes of this section, the term "restoration and repair costs" means those costs necessary to restore facilities damaged by a state-declared emergency to a functional level substantially the same as that existing immediately before the emergency and does not include the costs of upgrades or enhancements.

(f) Any utility authorized by the commission to assess a surcharge pursuant to this section shall state separately the amount of the assessment on each affected ratepayer’s monthly bill.

§ -22 Issuance of securities. (a) An energy utility corporation, on securing the prior approval of the commission, and not otherwise, may issue stocks and stock certificates, bonds, notes, and other evidences of indebtedness, payable at periods of more than twelve months after the date thereof, for the following purposes and no other, namely: for the acquisition of property or for the construction, completion, extension, or improvement of or addition to its facilities or service, or for the discharge or lawful refunding of its obligations or for the reimbursement of moneys actually expended from income or from any other moneys in its treasury not secured by or obtained from the issue of its stocks or stock certificates, or bonds, notes, or other evidences of indebtedness, for any of the aforesaid purposes except maintenance of service, replacements, and substitutions not constituting capital expenditure in cases where the corporation has kept its accounts for such expenditures in such manner as to enable the commission to ascertain the amount of moneys so expended and the purposes for which the expenditures were made, and the sources of the funds in its treasury applied to the expenditures. As used in this section, "property" and "facilities" mean property and facilities used in all operations of an energy utility corporation whether or not included in its energy utility operations or rate base. An energy utility corporation may not issue securities to acquire property or to construct, complete, extend, improve, or add to its facilities or service if the commission determines that the proposed purpose will have a material adverse effect on its energy utility operations.

(b) All stock and every stock certificate, and every bond, note, or other evidence of indebtedness of an energy utility corporation not payable within twelve months, issued without an order of the commission authorizing the same, then in effect, shall be void.

§ -23 Issuance of voting stock; restrictions. (a) For purposes of this section

"Foreign corporation" means a foreign corporation as defined in section 235-4.5(b) or a corporation in which a majority of the voting stock is held by a single foreign corporation.

"Nonresident alien" means a person not a citizen of the United States who is not defined as a resident alien by the United States Immigration and Naturalization Services.

(b) No more than twenty-five per cent of the issued and outstanding voting stock of a corporation organized under the laws of the State and who owns, controls, operates, or manages any plant or equipment, or any part thereof, as an energy utility shall be held, whether directly or indirectly, by any single foreign corporation or any single nonresident alien, or held by any person, unless prior written approval is obtained from the commission, or unless a transaction is exempt. An exempt transaction is:

(1) Any purchase or sale by an underwriter; or

(2) A transaction to acquire shares of a corporation with less than one hundred shareholders and less than $1,000,000 in assets.

Every assignment, transfer, contract, or agreement for assignment or transfer of any shares in violation of this section shall be void and of no effect; and no such transfer shall be made on the books of the corporation.

§ -24 Acquisition of stock of another energy utility. No energy utility corporation shall purchase or acquire, take or hold, any part of the capital stock of any other energy utility corporation, organized or existing under or by virtue of the laws of the State, without having been first authorized to do so by the order of the commission. Every assignment, transfer, contract, or agreement for assignment or transfer of any stock by or through any person or corporation to any corporation or otherwise in violation of this section shall be void and of no effect; and no such transfer shall be made on the books of any energy utility.

§ -25 Merger and consolidation of energy utility corporations. No energy utility corporation shall sell, lease, assign, mortgage, or otherwise dispose of or encumber the whole or any part of its plant, system, or other property necessary or useful in the performance of its duties to the public, or any franchise or permit, or any right thereunder, nor by any means, directly or indirectly, merge or consolidate with any other energy utility corporation without first having secured from the commission an order authorizing it so to do. Every such sale, lease, assignment, mortgage, disposition, encumbrance, merger, or consolidation, made other than in accordance with the order of the commission shall be void.

§ -26 Relations with an affiliated interest; definition; contracts with affiliates filed and subject to commission action. (a) For the purposes of this section, "affiliated interests" with an energy utility includes the following:

(1) Every person owning or holding, directly or indirectly, ten per cent or more of the voting securities of an energy utility, and every person having ownership of ten per cent or more of voting securities of a person owning ten per cent or more of the voting securities of an energy utility;

(2) Every corporation ten per cent or more of whose voting securities is owned by any person owning ten per cent or more of the voting securities of an energy utility;

(3) Every person who is an officer or director of an energy utility;

(4) Every corporation operating an energy utility, or providing engineering, accounting, legal, or similar service to energy utilities, which has three or more officers or three or more directors in common with an energy utility, and every other corporation which has directors in common with an energy utility where the number of common directors is more than one-third of the total number of the utility’s directors.

(b) The purpose of this section is to encourage companies providing essential energy utility services to Hawaii consumers to obtain their services, supplies, and equipment by relying, to the extent practicable, on competitive procurement practices; provided that when companies obtain their services, supplies, and equipment from affiliated interests, the contracts and agreements between the regulated entity and its affiliates must be shown by clear and convincing evidence to be in furtherance of the interests of the public.

(c) No contract or agreement providing for the furnishing of management, supervisory, construction, engineering, accounting, legal, financial, or similar services, and no contract or agreement for the purchase, sale, lease, furnishing or exchange of any real or personal property rights, including but not limited to real estate, improvements on land, equipment, leasehold interests, easements, rights-of-way, franchises, licenses, permits, trademarks, and copyrights, made or entered into after the effective date of this chapter, between an energy utility and any affiliated interest shall be valid or effective until the contract or agreement has been received by the commission. It shall be the duty of every energy utility to file with the commission a verified copy of any contract or agreement with an affiliate having a face value of at least $300,000, or a verified summary of any unwritten contract or agreement having a face value of at least $300,000 within forty-five days of the effective date of the contract or agreement. Each contract or agreement between an energy utility and an affiliate for capital expenditures other than for real property or an interest therein, shall be accompanied with price quotations provided by at least two nonaffiliated suppliers, providers, or purveyors, or if price quotations cannot be obtained without substantial expense to the utility, that the energy utility verify that fact by affidavit; provided that:

(1) All contracts or agreements effective at the time of a general rate proceeding which were discoverable and subject to review by the commission shall be valid and not subject to subsequent regulatory review and action by the commission; and

(2) Notwithstanding any other provision to the contrary, there shall be no transfer of real property, or interest in real property between an energy utility and an affiliate, without prior approval of the commission, after hearing, wherein the energy utility must show that the transfer is in the best interest of the energy utility and all of its customers.

No affirmative action is required by the commission in regards to the filing of the contract or agreement; provided that if the commission, in its discretion, determines that the terms and conditions of the contract or agreement to be unreasonable or otherwise contrary to the public interest, the commission shall notify the energy utility of its determination, whereupon the energy utility shall have the option to alter, revise, amend, or terminate the contract or agreement, or assume the risk that future payments for performance of the contract or agreement will be deemed unreasonable and excluded by the commission for ratemaking purposes.

(d) In any proceeding, whether upon the commission’s own motion or upon application or complaint, involving the rates or practices of any energy utility, the commission may exclude from the accounts of the energy utility any payment or compensation to an affiliated interest for any services rendered or property or service furnished, as described in this section, under existing contracts or agreements with the affiliated interest unless the energy utility shall establish by clear and convincing evidence the reasonableness of the payment or compensation.

(e) The commission shall have continuing supervisory control over the terms and conditions of the contracts and agreements described in this section so far as necessary to protect and promote the public interest. The commission shall have the same jurisdiction over modifications of or amendments to contracts or agreements as it has over original contracts or agreements. The fact that the energy utility may have entered into contracts or agreements without submittal of documents to the commission shall not preclude disallowance or disapproval of payments made pursuant thereto, for ratemaking purposes, if upon actual experience under the contracts or agreements it appears that the payments provided for or made are or were unreasonable. Every contract or agreement shall be expressly conditioned upon the reserved power of the commission to take appropriate ratemaking actions if, and as necessary, subsequent to submittal of the contract or agreement in order to protect and promote the public interest.

(f) Whenever the commission discovers that any energy utility is giving effect to any contract or agreement without the contract or agreement having been received by the commission for review, as required by this section, the commission may issue an order to the energy utility to show cause why the energy utility should not cease and desist from making any payments or otherwise giving any effect to the terms of the contract or agreement, and the energy utility shall have the opportunity to show with clear and convincing evidence that the contract or agreement is in the best interest of the energy utility and all of its customers.

(g) None of the provisions of this section shall apply to transactions with affiliated interests where the total consideration involved in a transaction is less than $300,000 for any calendar year; provided that:

(1) Multiple payments under any contract or agreement shall be added together for purposes of construing this provision; and

(2) This section shall apply to any contract or agreement structured specifically to avoid regulation under this section.

(h) Transactions between affiliated Hawaii-based energy utilities shall be exempt from this section.

§ -27 Valuations. The commission either upon its own motion or upon application by any utility for any order where the commission deems it advisable and to the best interest of the public and the energy utility, may cause a valuation to be made to ascertain for any purpose specified in this chapter the value of the property of any energy utility and every fact and element of value which in its judgment may or does have any bearing on such value. The commission may make revaluations and ascertain the value of all additions, betterments, extensions, and acquisitions of property of any energy utility.

§ -28 Establishment of geothermal energy rates. (a) The rate payable by an energy utility to the producer of geothermal steam or electricity generated from geothermal steam shall be established by agreement between the energy utility and the supplier, subject to approval by the commission; provided that if the energy utility and the supplier fail to reach an agreement for that rate, or if the agreed upon rate is disapproved by the commission, the commission shall establish a just and reasonable rate for the geothermal steam or electricity generated from geothermal steam supplied to the energy utility by the producer.

(b) The producer of geothermal steam or electricity generated from geothermal steam shall be excluded from coverage of the term "energy utility" as defined in section -1.

§ -29 Utilization of electricity generated from nonfossil fuels. (a) The commission shall investigate and determine the extent to which electricity generated from nonfossil fuel sources is available to energy utilities that supply electricity to the public, which electricity is in excess of that utilized or otherwise needed by the producers for their internal uses and which the producers are willing to make available to the energy utilities.

(b) The commission may direct energy utilities that supply electricity to the public to arrange for the acquisition of and to acquire electricity generated from nonfossil fuel sources as is available from and which the producers of same are willing and able to make available to the energy utilities, and to employ and dispatch the nonfossil fuel generated electricity in a manner consistent with the availability thereof to maximize the reduction in consumption of fossil fuels in the generation of electricity to be provided to the public.

(c) The rate payable by the energy utility to the producer for the nonfossil fuel generated electricity supplied to the energy utility shall be as agreed between the energy utility and the supplier and as approved by the commission; provided that if the energy utility and the supplier fail to reach an agreement for a rate, the rate shall be as prescribed by the commission according to the powers and procedures provided in this chapter.

In the exercise of its authority to determine the just and reasonable rate for the nonfossil fuel generated electricity supplied to the energy utility by the producer, the commission shall establish that the rate for purchase of electricity by an energy utility shall not be less than one hundred per cent of the cost avoided by the utility when the utility purchases the electrical energy rather than producing the electrical energy. In determining the amount of the payment in relation to avoided cost, as that cost is or shall later be defined in the rules of the commission, the commission shall consider, on a generic basis, the minimum floor a utility should pay, giving consideration not only to the near-term adverse consequences to the ultimate consumers of utility provided electricity, but also to the long term desirable goal of encouraging, to the greatest extent practicable, the development of alternative sources of energy.

Nothing in this subsection shall affect existing contracts between energy utilities and suppliers of nonfossil fuel generated electricity.

(d) Upon application of an energy utility that supplies electricity to the public, and notification of its customers, the commission, after an evidentiary hearing, may allow payments made by the energy utility to nonfossil fuel producers for firm capacity and related revenue taxes to be recovered by the energy utility through an interim increase in rates until the effective date of the rate change approved by the commission’s final decision in the energy utility’s next general rate proceeding under section -19, notwithstanding any requirements to the contrary of any other provision in this chapter or in the commission’s rules or practices; provided that the amount recovered by the utility and the amount of increase in rates due to the payments for firm capacity and related revenue taxes to be charged to the consumers of the electricity are found by the commission to be:

(1) Just and reasonable;

(2) Not unduly prejudicial to the customers of the energy utility;

(3) Promotional of Hawaii’s long-term objective of energy self-sufficiency;

(4) Encouraging to the maintenance or development of nonfossil fueled sources of electrical energy; and

(5) In the overall best interest of the general public.

The evidentiary hearing provided for in this subsection shall be conducted expeditiously and shall be limited to evidence related to the above findings. Notwithstanding section -19, no public hearing shall be required, except as the commission in its discretion may require.

§ -30 Construction of high-voltage electric transmission lines; hearing. Whenever an energy utility plans to place, construct, erect, or otherwise build a new forty-six kilovolt or greater high-voltage electric transmission system above the surface of the ground through any residential area, the commission shall conduct a public hearing prior to its issuance of approval thereof. Notice of the hearing shall be given in the manner provided in section -14 for notice of public hearings.

§ -31 Construction of high-voltage electric transmission lines; overhead or underground construction. (a) Notwithstanding any law to the contrary, whenever an energy utility applies to the commission for approval to place, construct, erect, or otherwise build a new forty-six kilovolt or greater high-voltage electric transmission system, either above or below the surface of the ground, the commission shall determine whether the electric transmission system shall be placed, constructed, erected, or built above or below the surface of the ground; provided that in its determination, the commission shall consider:

(1) Whether a benefit exists that outweighs the costs of placing the electric transmission system underground;

(2) Whether there is a governmental public policy requiring the electric transmission system to be placed, constructed, erected, or built underground, and the governmental agency establishing the policy commits funds for the additional costs of undergrounding;

(3) Whether any governmental agency or other parties are willing to pay for the additional costs of undergrounding;

(4) The recommendation of the division of energy consumer advocacy, which shall be based on an evaluation of the factors set forth under this subsection; and

(5) Any other relevant factors.

(b) In making the determination set forth in subsection (a), for new 138 kilovolt or greater high-voltage transmission systems, the commission shall evaluate and make specific findings on all of the following factors:

(1) The amortized cost of construction over the respective usable life of an above-ground versus underground system;

(2) The amortized cost of repair over the respective usable life of an above-ground versus underground system;

(3) The risk of damage or destruction over the respective usable life of an above-ground versus an underground system;

(4) The relative safety and liability risks of an above-ground versus underground system;

(5) The electromagnetic field emission exposure from an above-ground versus underground system;

(6) The proximity and visibility of an above-ground system to:

(A) High density population areas;

(B) Conservation and other valuable natural resource and public recreation areas;

(C) Areas of special importance to the tourism industry; and

(D) Other industries particularly dependent on Hawaii’s natural beauty;

(7) The length of the system;

(8) The breadth and depth of public sentiment with respect to an above-ground versus underground system; and

(9) Any other factors that the commission deems relevant.

(c) An energy utility making an application to the commission under this section shall clearly and fully state and support its evaluation of each factor set forth in subsection (b).

§ -32 Penalty. (a) Any energy utility violating or neglecting or failing in any particular to conform to or comply with this chapter or any lawful order of the commission shall be subject to a civil penalty not to exceed $25,000 for each day the violation, neglect, or failure continues, to be assessed by the commission after a hearing in accordance with chapter 91. The commission may order the energy utility to cease carrying on its business while the violation, neglect, or failure continues.

(b) Notwithstanding subsection (a), any energy utility violating or neglecting or failing in any particular to conform to or comply with any rule or order of the commission setting forth safety requirements applicable to the transmission of gas shall be subject to a civil penalty not to exceed $25,000 for each day that the violation, neglect, or failure continues; provided that the maximum penalty for related violations arising out of the same act, omission, or occurrence shall not exceed $500,000.

(c) Notwithstanding subsection (a), any person acting in the capacity of or engaging in the business of an energy utility in the State without having a certificate of public convenience and necessity or other authority previously obtained under and in compliance with this chapter and the rules adopted under this chapter may be subject to a civil penalty not to exceed $5,000 for each such offense, and, in the case of a continuing violation, $5,000 for each day that uncertified activity continues.

(d) Upon written application filed within fifteen days after service of an order imposing a civil penalty pursuant to this section, the commission may remit or mitigate the penalty upon such terms as it deems proper.

(e) If any civil penalty imposed pursuant to this section is not paid within such period as the commission may direct, the attorney general shall institute a civil action for recovery of same in circuit court.

§ -33 Meter tampering. Any person who, without permission or authorization from a utility, tampers with, damages, destroys, removes, connects, causes to connect, disconnects, or causes to be disconnected or bypassed any wire, cable, conductor, gas pipe, billing or collection equipment, or device on any meter, line, conduit, property, or facilities of an energy utility for the purpose of using unmetered services, in addition to any other penalty authorized by law, shall be liable to the energy utility for treble the amount of the value of the energy utility services used and the damages or loss of any equipment, property, or facilities of an energy utility.

§ -34 Perjury. Any person who wilfully and knowingly makes under oath any false statement in connection with any investigation by or proceeding before the commission shall be guilty of perjury and, upon conviction, shall be subject to the penalty prescribed by law for the offense.

§ -35 Finances; energy utility fee. (a) Sections 607-5 to 607-9 shall apply to the commission and each commissioner, as well as to the supreme and circuit courts, and all costs and fees paid or collected pursuant to this section shall be deposited with the director of finance to the credit of the Hawaii energy commission special fund established under section -38.

(b) There also shall be paid to the commission in each of the months of July and December of each year, by each energy utility subject to investigation by the commission, a fee equal to one-fourth of one per cent of the gross income from the energy utility’s business during the preceding year, or the sum of $30, whichever is greater. This fee shall be deposited with the director of finance to the credit of the Hawaii energy commission special fund.

(c) Each energy utility paying a fee under subsection (b) may impose a surcharge to recover the amount paid above one-eighth of one per cent of gross income. The surcharge imposed shall not be subject to the notice, hearing, and approval requirements of this chapter; provided that the surcharge may be imposed by the utility only after thirty days’ notice to the commission. Unless ordered by the commission, the surcharge shall be imposed only until the conclusion of the energy utility’s next rate case; provided that the surcharge shall be subject to refund with interest at the energy utility’s authorized rate of return on rate base if the utility collects more money from the surcharge than actually paid due to the increase in the fee to one-fourth of one per cent.

§ -36 Application of this chapter. This chapter shall not apply to commerce with foreign nations, or commerce with the several states of the United States, except insofar as the same may be permitted under the Constitution and laws of the United States; nor shall it apply to energy utilities owned and operated by the State, or any county, or other political subdivision.

§ -37 Injury to energy utility property. Any person who injures or destroys, through want of proper care, any necessary or useful facility, equipment or property of any energy utility shall be liable to the energy utility for all damages sustained thereby. The measure of damages to the facility, equipment or property injured or destroyed shall be the cost to repair or replace the property injured or destroyed including direct and allocated costs for labor, materials, supervision, supplies, tools, taxes, transportation, administrative and general expense and other indirect or overhead expenses, less credit, if any, for salvage. The specifying of the measure of damages for the facility, equipment or property shall not preclude the recovery of such other damages occasioned thereby as may be authorized by law.

§ -38 Hawaii energy commission special fund. (a) There is established in the state treasury the Hawaii energy commission special fund to be administered by the Hawaii energy commission. The proceeds of the fund shall be used by the commission and the division of energy consumer advocacy for all expenses incurred in the administration of this chapter; provided that the expenditures of the commission shall be in accordance with legislative appropriations. On a quarterly basis, an amount not exceeding thirty per cent of the proceeds remaining in the fund after the deduction for central service expenses, pursuant to section 36-27, shall be allocated by the commission to the division of consumer advocacy and deposited in the compliance resolution fund established pursuant to section 26-9(o); provided that all moneys allocated by the commission from the fund to the division of energy consumer advocacy shall be in accordance with legislative appropriations.

(b) All moneys appropriated to, received, and collected by the commission that are not otherwise pledged, obligated, or required by law to be placed in any other special fund or expended for any other purpose shall be deposited into the Hawaii energy commission special fund including all moneys received and collected by the commission pursuant to sections 92-21, -32, -35, and 607-5.

(c) The commission shall submit a report to the legislature detailing all funds received and all moneys disbursed out of the fund prior to the convening of each regular session.

(d) All moneys in excess of $1,000,000 remaining on balance in the Hawaii energy commission special fund on June 30 of each year shall lapse to the credit of the state general fund.

PART II. ENERGY CONSUMER ADVOCATE

§ -51 Energy consumer advocate; director of business, economic development, and tourism. The director of business, economic development, and tourism shall be the energy consumer advocate in hearings before the Hawaii energy commission. The energy consumer advocate shall represent, protect, and advance the interests of all consumers, including small businesses, of energy utility services. The energy consumer advocate shall not receive any salary in addition to the salary received as director of business, economic development, and tourism.

The responsibility for advocating the interests of the consumer of energy utility services shall be separate and distinct from the responsibilities of the Hawaii energy commission and those assistants employed by the commission. As energy consumer advocate, the director of business, economic development, and tourism shall have full rights to participate as a party in interest in all proceedings before the Hawaii energy commission.

§ -52 Division of energy consumer advocacy; personnel. There shall be a division of energy consumer advocacy within the department of business, economic development, and tourism to provide administrative support to the director of business, economic development, and tourism acting in the capacity of energy consumer advocate. The director may employ and at pleasure dismiss an executive administrator, who shall be exempt from chapter 76, may define the executive administrator’s powers and duties, and fix the executive administrator’s compensation. The director may employ engineers, accountants, investigators, clerks, and stenographers as may be necessary for the performance of the consumer advocate’s functions, in accordance with chapter 76; provided that:

(1) The director may employ up to four energy utility analysts exempt from chapter 76; and

(2) Each analyst shall possess at least the minimum qualifications required of comparable experts in the relevant industry.

§ -53 Legal counsel. The director may appoint or retain, without regard to chapter 76, attorneys to provide legal services for the division of energy consumer advocacy. Nothing in this section precludes the director of business, economic development, and tourism from requesting and securing legal services from the attorney general and the department of the attorney general.

§ -54 General powers; duties. (a) The energy consumer advocate shall have the authority expressly conferred by or reasonably implied from this part.

(b) The energy consumer advocate may:

(1) Adopt rules pursuant to chapter 91 necessary to effectuate the purposes of this part;

(2) Conduct investigations to secure information useful in lawful administration of any provision of this part;

(3) Assist, advise, and cooperate with federal, state, and local agencies and officials to protect and promote the interests of the consumer in the energy utilities field;

(4) Study the operation of laws affecting all consumers, including small businesses, of energy utility services and recommend to the governor and the legislature new laws and amendments of laws in the consumers’ interest in the energy utilities field;

(5) Organize and hold conferences on problems affecting consumers of energy utility services;

(6) Perform such other acts as may be incidental to the exercise of the functions, powers, and duties set forth in this section; and

(7) Represent the interests of consumers of energy utility services before any state or federal agency or instrumentality having jurisdiction over matters which affect those interests.

(c) Whenever it appears to the energy consumer advocate that:

(1) Any energy utility has violated or failed to comply with any provision of this part or of any state or federal law;

(2) Any energy utility has failed to comply with any rule or other requirement of the Hawaii energy commission or of any other state or federal agency;

(3) Any energy utility has failed to comply with any provision of its charter or franchise;

(4) Changes, additions, extensions, or repairs to the plant or service of any energy utility are necessary to meet the reasonable convenience or necessity of the public; or

(5) The rates, classifications, charges, or rules of any energy utility are unreasonable or unreasonably discriminatory;

the energy consumer advocate may institute proceedings for appropriate relief before the Hawaii energy commission. The energy consumer advocate may appeal any final decision and order in any proceeding to which the energy consumer advocate is a party in the manner provided by law.

(d) The energy consumer advocate may file with the commission and serve on any energy utility a request in writing to furnish any information reasonably relevant to any matter or proceeding before the commission or reasonably required by the energy consumer advocate to perform the duties hereunder. Any such request shall set forth with reasonable specificity the purpose for which the information is requested and shall designate with reasonable specificity the information desired. The energy utility shall comply with such request within the time limit set forth by the energy consumer advocate unless within ten days following service it requests a hearing on the matter before the Hawaii energy commission and states its reasons therefor. If a hearing is requested, the Hawaii energy commission shall proceed to hold the hearing and make its determination on the request within thirty days after the same is filed. The energy consumer advocate or the energy utility may appeal to the supreme court the decision of the commission on any such request. Subject to the foregoing, these requests may ask the energy utility to:

(1) Furnish any information with which the energy consumer advocate may require concerning the condition, operations, practices, or services of the energy utility;

(2) Produce and permit the energy consumer advocate or the energy consumer advocate’s representative to inspect and copy any designated documents (including writings, drawings, graphs, charts, photographs, recordings, and other data compilations from which information can be obtained), or to inspect and copy, test, or sample any designated tangible thing which is in the possession, custody, or control of the energy utility; or

(3) Permit entry upon land or other property in the possession or control of the energy utility for the purpose of inspection and measuring, surveying, photographing, testing, or sampling the property or any designated object thereon.

§ -55 Handling of complaints. The energy consumer advocate shall counsel energy utility customers in the handling of consumer complaints before the Hawaii energy commission. The commission shall provide a central clearing house of information by collecting and compiling all consumer complaints and inquiries concerning energy utilities.

PART III. ENERGY ENTERPRISE ZONES

§ -61 Purpose. The purpose of this part is to reduce the State’s dependence on imported oil and increase the State’s energy self-sufficiency by providing for the establishment of energy enterprise zones.

§ -62 Definitions. As used in this part:

"Energy enterprise zone" means an area nominated by, and within the jurisdiction of, a county government, and subsequently declared by the commission to be eligible for the benefits of this part.

"Establishment" means a single physical location where electric energy is generated. A qualified business may include one or more establishments, any number of which may be in an energy enterprise zone.

"Full-time employee" means any employee for whom the employer is legally required to provide employee fringe benefits.

"Qualified business" means any nonutility generator, as defined in section -1, that is:

(1) Authorized to do business in this State;

(2) Qualified under section -68; and

(3) Is engaged in producing electric power from:

(A) Wind energy;

(B) Solar energy;

(C) Hydropower;

(D) Landfill gas;

(E) Waste to energy;

(F) Geothermal resources;

(G) Ocean thermal energy conversion;

(H) Wave energy;

(I) Biomass, including municipal solid waste;

(J) Biofuels or fuels derived entirely from organic sources;

(K) Hydrogen fuels derived entirely from renewable energy; or

(L) Fuel cells where the fuel is derived entirely from renewable sources;

for sale primarily to an energy utility for resale to the public.

"Taxes due the State" means income taxes due under chapter 235.

§ -63 Administration. The commission shall administer this part and shall have the following powers and duties:

(1) To establish criteria for determining what areas qualify as energy enterprise zones. The criteria shall be the minimum required for implementation of the purpose of this part;

(2) To monitor the implementation and operation of this part;

(3) To conduct a continuing evaluation program of energy enterprise zones;

(4) To assist counties in obtaining the reduction of rules within energy enterprise zones;

(5) To submit annual reports evaluating the effectiveness of the program and any recommendations for legislation to the legislature and the governor;

(6) To administer and enforce the rules adopted by the commission; and

(7) To administer this part in such a manner that the area to be designated as an energy enterprise zone will most benefit the area and the State.

§ -64 Energy enterprise zone designation. (a) The governing body of any county may apply in writing to the commission to have an area declared to be an energy enterprise zone. The application shall include a description of the location of the area or areas in question, and a general statement identifying proposed local incentives to complement the state and any federal incentives.

(b) The commission shall approve the designation of up to six areas in each county as energy enterprise zones for a period of twenty years. The commission shall adopt rules setting forth appropriate standards for the designation of energy enterprise zones.

§ -65 Application review. (a) The commission shall review each application upon receipt and shall secure any additional information that the commission deems necessary for the purpose of determining whether the area described in the application qualifies to be declared an energy enterprise zone.

(b) The commission shall complete review of the application within sixty days of the last date designated for receipt of an application. After review of the applications, the commission shall approve in writing those applications having the greatest potential for accomplishing the purposes of this part. If an application is denied, the commission shall inform the governing body in writing of that fact together with the reasons for the denial.

§ -66 Government assistance; prohibition. There shall be no duplication of existing state tax incentives to qualified businesses that locate in an energy enterprise zone.

§ -67 Rules. The commission, in consultation with the department of taxation, shall adopt rules pursuant to chapter 91 to implement this part, including rules relating to health, safety, building, planning, zoning, and land use which shall supersede all other inconsistent ordinances and rules relating to the use, zoning, planning, and development of land and construction in an energy enterprise zone. Rules adopted under this section shall follow existing law, rules, and ordinances as closely as is consistent with standards meeting minimum requirements of energy efficiency, health, and safety. The commission may provide by rule that lands within an energy enterprise zone shall not be developed beyond existing uses or that improvements thereon shall not be demolished or substantially reconstructed, or provide other restrictions on the use of the zone.

§ -68 Eligibility; qualified business; sale of property or services. (a) Any nonutility generator may be eligible to be designated a qualified business for purposes of this part if the nonutility generator:

(1) Begins the operation of a nonutility generator within an energy enterprise zone;

(2) During each taxable year has at least per cent of its energy enterprise zone establishment’s gross receipts attributable to the active production of electric power within the energy enterprise zone;

(3) Increases its average annual number of full-time employees by at least per cent by the end of its first tax year of participation; and

(4) During each subsequent taxable year at least maintains that higher level of employment.

(b) A nonutility generator also may be eligible to be designated a qualified business for purposes of this part if the nonutility generator:

(1) Is actively engaged in producing electric power in an area immediately prior to an area being designated an energy enterprise zone;

(2) Meets the requirements of subsection (a)(2); and

(3) Increases its average annual number of full-time employees employed at the nonutility generator’s establishment or establishments located within the energy enterprise zone by at least per cent annually.

(c) After designation as an energy enterprise zone, each qualified business in the zone shall submit annually to the commission an approved form supplied by the commission that provides the information necessary for the commission to determine if the nonutility generator qualifies as a qualified business. The approved form shall be submitted by each business to the governing body of the county in which the energy enterprise zone is located, then forwarded to the commission by the governing body of the county.

(d) The form referred to in subsection (c) shall be prima facie evidence of the eligibility of a nonutility generator for the purposes of this section.

(e) Any electric power produced by a nonutility generator outside of an energy enterprise zone shall not be included in the determination of gross receipts attributable to the active production of electric power under subsection (a)(2).

§ -69 State business tax credit. (a) The commission shall certify annually to the department of taxation the applicability of the tax credit provided in this part for a qualified business against any taxes due the State. Except for the general excise tax, the credit shall be:

(1) Eighty per cent of the tax due for the first tax year;

(2) Seventy per cent of the tax due for the second tax year;

(3) Sixty per cent of the tax due for the third year;

(4) Fifty per cent of the tax due the fourth year;

(5) Forty per cent of the tax due the fifth year;

(6) Thirty per cent of the tax due the sixth year; and

(7) Twenty per cent of the tax due the seventh year.

Any tax credit not usable shall not be applied to future tax years.

(b) When a partnership is eligible for a tax credit under this section, each partner shall be eligible for the tax credit provided for in this section on the partner’s income tax return in proportion to the amount of income received by the partner from the partnership. Any qualified business having taxable income from the production of electric power, both within and without the energy enterprise zone, shall allocate and apportion its taxable income attributable to that production. Tax credits provided for in this section shall only apply to taxable income of a qualified business attributable to the production of electric power within the energy enterprise zone.

(c) In addition to any tax credit authorized under this section, any qualified business shall be entitled to a tax credit against any taxes due the State in an amount equal to a percentage of unemployment taxes paid. The amount of the credit shall be equal to:

(1) Eighty per cent of the unemployment taxes paid during the first year;

(2) Seventy per cent of the taxes paid during the second year;

(3) Sixty per cent of the taxes paid during the third year;

(4) Fifty per cent of the taxes paid during the fourth year;

(5) Forty per cent of the taxes paid during the fifth year;

(6) Thirty per cent of the taxes paid during the sixth year; and

(7) Twenty per cent of the taxes paid during the seventh year.

(d) Tax credits provided for in subsection (c) shall only apply to the unemployment tax paid on employees employed at the qualified business’ establishment or establishments located within the energy enterprise zone. Any tax credit not usable shall not be applied to future tax years.

§ -70 State general excise and use tax exemptions. The commission shall certify annually to the department of taxation that any qualified business is exempt from the payment of general excise taxes on the gross proceeds from the sale of electric power to an energy utility for resale to the public. The commission shall also certify annually to the department of taxation that any qualified business is exempt from the use tax for purchases by the qualified business. The gross proceeds received by a contractor licensed under chapter 444 shall be exempt from the general excise tax for construction within an energy enterprise zone performed for a qualified business within an energy enterprise zone. The exemption shall extend for a period not to exceed seven years.

§ -71 Local incentives. (a) In applying for designation as an energy enterprise zone, the applying county may propose local incentives, including:

(1) Reduction of permit fees;

(2) Reduction of user fees; and

(3) Reduction of real property taxes.

(b) The application also may contain proposals for regulatory flexibility, including, but not limited to:

(1) Special zoning districts;

(2) Permit process reform;

(3) Exemptions from local ordinances; and

(4) Other public incentives proposed in the locality’s application, which shall be binding upon the locality upon designation of the energy enterprise zone.

§ -72 Termination of energy enterprise zone. Upon designation of an area as an energy enterprise zone, the proposals for regulatory flexibility, tax incentives, and other public incentives specified in this part shall be binding upon the county governing body to the extent and for the period of time specified in the application for zone designation. If the county governing body is unable or unwilling to provide any of the incentives set forth in section -71 or other incentives acceptable to the commission, and the commission has not adopted rules pursuant to section -67 that supersede inconsistent ordinances and rules relating to the use, zoning, planning, and development of land and construction in an energy enterprise zone, then the energy enterprise zone shall terminate. Qualified businesses located in the energy enterprise zone shall be eligible to receive the state tax incentives provided by this part even though the zone designation has terminated. No nonutility generator may become a qualified business after the date of zone termination. The county governing body may amend its application with the approval of the commission; provided that the county governing body proposes an incentive equal to or superior to the unamended application.

PART IV. GAS PIPELINE SYSTEMS

§ -81 Definitions. As used in this part, unless the context otherwise requires:

"Gas" means manufactured gas, hydrocarbon gas, mixture of manufactured and hydrocarbon gas, flammable gas, or gas that is toxic or corrosive or both.

"Master meter system" means a pipeline system, not owned or operated by an energy utility, for distributing gas within a definable area, including a mobile home park, a housing project, and an apartment complex, where the operator of the system purchases gas from an outside source for resale through the pipeline system to an ultimate consumer or ultimate consumers at a metered or flat rate or at a price determined in any other manner.

"Pipeline" or "pipeline system" means all parts of those physical facilities through which gas moves in transmission, including pipes, valves and other appurtenances attached to pipes, compressor units, metering stations, regulator stations, delivery stations, holders, and fabricated assemblies.

"Operator" means a person who engages in the transmission of gas.

§ -82 Master meter system; operators; compliance. (a) The commission, by rule, shall establish safety standards consistent with the regulations adopted by the United States Office of Pipeline Safety for pipelines and master meter systems. Standards may be established for, among other things: the design, installation, construction, inspection, testing, extension, operation, replacement, and maintenance of pipeline facilities; emergency plans and procedures; and reporting requirements. The standards affecting the design, installation, construction, initial inspection, and initial testing of pipeline facilities shall not apply to those master meter systems in existence on the date the standards are adopted.

(b) All operators of master meter systems shall comply with the commission’s rules adopted pursuant to subsection (a). Any person violating the rules shall be subject to the penalties provided in section -32.

§ -83 Inspection. Officers, employees, or agents authorized by the commission, upon presenting appropriate credentials, may enter upon, inspect, and examine at reasonable times or in times of an emergency the records and properties of any operator to determine compliance by the operator with the commission’s rules governing pipelines and master meter systems.

§ -84 Enforcement. In addition to the penalties that may be imposed under section -32, the commission, if in its judgment there is a hazardous condition in a pipeline or master meter system and a likelihood of serious harm to life or property, may request the attorney general to bring an action in an appropriate court for necessary or appropriate relief, including mandatory or prohibitory injunctive relief.

PART V. RENEWABLE PORTFOLIO STANDARDS

§ -91 Definitions. For the purposes of this part:

"Renewable portfolio standard" means the percentage of electrical energy sales that is represented by renewable energy.

§ -92 Renewable portfolio standards. Each energy utility that sells electricity for consumption in the State shall establish a renewables portfolio standard goal of:

(1) Seven per cent of its net electricity sales by December 31, 2003;

(2) Eight per cent of its net electricity sales by December 31, 2005; and

(3) Nine per cent of its net electricity sales by December 31, 2010.

§ -93 Achieving portfolio standard. An energy utility and its affiliates may aggregate their renewable portfolios in order to achieve the renewable portfolio standard.

§ -94 Waivers, extensions, and incentives. Any energy utility not meeting the renewable portfolio standard shall report to the Hawaii energy commission within ninety days following the goal dates established in section -92, and provide an explanation for not meeting the renewable portfolio standard. The commission shall have the option to either grant a waiver from the renewable portfolio standard or an extension for meeting the prescribed standard.

The commission may provide incentives to encourage energy utilities to exceed their renewable portfolio standards or to meet their renewable portfolio standards ahead of time, or both.

PART VI. NET ENERGY METERING

§ -101 Definitions. As used in this part:

"Eligible customer-generator" means a metered residential or commercial customer of an energy utility who owns and operates a solar, wind turbine, biomass, or hydroelectric energy generating facility, or a hybrid system consisting of two or more of these facilities, with a capacity of not more than ten kilowatts, that is:

(1) Located on the customer’s premises;

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

(3) In conformance with the energy utility’s interconnection requirements; and

(4) Intended primarily to offset part or all of the customer’s own electrical requirements.

"Net energy metering" means measuring the difference between the electricity supplied through the electric grid and the electricity generated by an eligible customer-generator and fed back to the electric grid over a monthly billing period; provided that:

(1) Net energy metering shall be accomplished using a single meter capable of registering the flow of electricity in two directions;

(2) An additional meter or meters to monitor the flow of electricity in each direction may be installed with the consent of the customer-generator, at the expense of the energy utility, and the additional metering shall be used only to provide the information necessary to accurately bill or credit the customer-generator, or to collect solar, wind turbine, biomass, or hydroelectric energy generating system performance information for research purposes;

(3) If the existing electrical meter of an eligible customer-generator is not capable of measuring the flow of electricity in two directions, the energy utility shall be responsible for all expenses involved in purchasing and installing a meter that is able to measure electricity flow in two directions;

(4) If an additional meter or meters are installed, the net energy metering calculation shall yield a result identical to that of a single meter; and

(5) An eligible customer-generator who already owns an existing solar, wind turbine, biomass, or hydroelectric energy generating facility, or a hybrid system consisting of two or more of these facilities, is eligible to receive net energy metering service in accordance with this part.

§ -102 Standard contract or tariff; rate structure. (a) Every energy utility shall develop a standard contract or tariff providing for net energy metering, and shall make this contract available to eligible customer-generators, upon request, on a first-come-first-served basis until the time that the total rated generating capacity produced by eligible customer-generators equals 0.5 per cent of the energy utility’s system peak demand.

(b) Each net energy metering contract or tariff shall be identical, with respect to rate structure, to the contract or tariff to which the same customer would be assigned if the customer was not an eligible customer-generator. The charges for all retail rate components for eligible customer-generators shall be based exclusively on the eligible customer-generator’s net kilowatt-hour consumption over a monthly billing period. Any new or additional demand charge, standby charge, customer charge, minimum monthly charge, interconnection charge, or other charge that would increase an eligible customer-generator’s costs beyond those of other customers in the rate class to which the eligible customer-generator would otherwise be assigned are contrary to the intent of this section, and shall not form a part of net energy metering contracts or tariffs.

§ -103 Generating capacity. On an annual basis, beginning in 2003, every energy utility shall make available to the Hawaii energy commission information on the total rated generating capacity produced by eligible customer-generators that are customers of that utility in the utility’s service area. The commission shall develop a process for making the information required by this section available to energy utilities, and for using that information to determine when, pursuant to section -104, an energy utility is not obligated to provide net energy metering to additional customer-generators in its service area.

§ -104 Additional customer-generators. Notwithstanding section -102, an energy utility is not obligated to provide net energy metering to additional customer-generators in its service area when the combined total peak generating capacity of all eligible customer-generators served by all the energy utilities in that service area furnishing net energy metering to eligible customer-generators equals 0.5 per cent of the system peak demand of those energy utilities.

§ -105 Calculation. The net energy metering calculation shall be made by measuring the difference between the electricity supplied to the eligible customer-generator and the electricity generated by the eligible customer-generator and fed back to the electric grid over a monthly billing period.

§ -106 Billing periods. Billing of net metering customers shall be only on a monthly basis.

§ -107 Net electricity consumers. At the end of each monthly billing period, where the electricity supplied during the period by the energy utility exceeds the electricity generated by the eligible customer-generator during that same period, the eligible customer-generator is a net electricity consumer and the energy utility shall be owed compensation for the eligible customer-generator’s net kilowatt-hour consumption over that same period. The compensation owed for the eligible customer-generator’s net monthly kilowatt-hour consumption shall be calculated at the retail rate of the rate class the customer is normally assigned to.

§ -108 Net electricity producers. At the end of each monthly billing period, where the electricity generated by the eligible customer-generator during the month exceeds the electricity supplied by the energy utility during that same period, the eligible customer-generator is a net electricity producer and the energy utility shall retain any excess kilowatt-hours generated during the prior monthly billing period. The eligible customer-generator shall not be owed any compensation for those excess kilowatt-hours unless the energy utility enters into a purchase agreement with the eligible customer-generator for those excess kilowatt-hours.

§ -109 Net electricity consumption or production information. The energy utility shall provide every eligible customer-generator with net electricity consumption or production information with each regular monthly bill, which shall include the current monetary balance owed the energy utility for net electricity consumed or net electricity produced since the end of the last monthly billing period.

§ -110 Termination by eligible customer-generators. If an eligible customer-generator terminates the customer relationship with the energy utility, the energy utility shall reconcile the eligible customer-generator’s consumption and production of electricity during any part of a monthly billing period following the last reconciliation, according to the requirements set forth in this part.

§ -111 Safety and performance standards. A solar, wind turbine, biomass, or hydroelectric energy generating system, or a hybrid system consisting of two or more of these facilities, used by an eligible customer-generator shall meet all applicable safety and performance standards established by the National Electrical Code, the Institute of Electrical and Electronics Engineers, and accredited testing laboratories such as the Underwriters Laboratories and, where applicable, rules of the Hawaii energy commission regarding safety and reliability. An eligible customer-generator whose solar, wind turbine, biomass, or hydroelectric energy generating system, or whose hybrid system consisting of two or more of these facilities, meets those standards and rules shall not be required to install additional controls, perform or pay for additional tests, or purchase additional liability insurance."

SECTION 3. Section 28-8.3, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) No department of the State other than the attorney general may employ or retain any attorney, by contract or otherwise, for the purpose of representing the State or the department in any litigation, rendering legal counsel to the department, or drafting legal documents for the department; provided that the foregoing provision shall not apply to the employment or retention of attorneys:

(1) By the public utilities commission, the Hawaii energy commission, the labor and industrial relations appeals board, and the Hawaii labor relations board;

(2) By any court or judicial or legislative office of the State;

(3) By the legislative reference bureau;

(4) By any compilation commission that may be constituted from time to time;

(5) By the real estate commission for any action involving the real estate recovery fund;

(6) By the contractors license board for any action involving the contractors recovery fund;

(7) By the trustees for any action involving the travel agency recovery fund;

(8) By the office of Hawaiian affairs;

(9) By the department of commerce and consumer affairs for the enforcement of violations of chapters 480 and 485;

(10) As grand jury counsel;

(11) By the Hawaiian home lands trust individual claims review panel;

(12) By the Hawaii health systems corporation or any of its facilities;

(13) By the auditor;

(14) By the office of ombudsman;

(15) By the insurance division;

(16) By the University of Hawaii;

(17) By the Kahoolawe island reserve commission;

(18) By the division of consumer advocacy; or

(19) By a department, in the event the attorney general, for reasons deemed by the attorney general good and sufficient, declines, to employ or retain an attorney for a department; provided that the governor thereupon waives the provision of this section."

2. By amending subsection (c) to read:

"(c) Every attorney employed by any department on a full-time basis, except an attorney employed by the public utilities commission, the Hawaii energy commission, the labor and industrial relations appeals board, the Hawaii labor relations board, the office of Hawaiian affairs, the Hawaii health systems corporation, the department of commerce and consumer affairs in prosecution of consumer complaints, insurance division, the division of consumer advocacy, the University of Hawaii, the Hawaiian home lands trust individual claims review panel, or as grand jury counsel, shall be a deputy attorney general."

SECTION 4. Chapter 39A, Hawaii Revised Statutes, is amended as follows:

1. By amending the definition of "energy project" in section 39A-191 to read:

"(2) "Energy project" means any facilities for each single project or multiproject program of a project party which is certified by the [public utilities] Hawaii energy commission as being for the local furnishing of electric energy or gas; provided that any new generating unit for the production or generation of electric energy from fossil fuels shall not be considered an energy project for purposes of this part unless specifically authorized in any act providing for the authorization of the issuance of bonds pursuant to this part."

2. By amending the definition of "project party" in section 39A-191 to read:

"(5) "Project party" means an [electric or gas] energy utility serving the general public and which is regulated by the [public utilities] Hawaii energy commission under chapter [269.] ."

3. By amending section 39A-208 to read:

"§39A-208 Treatment of special purpose revenue bonds in regulatory proceedings. (a) In the setting of rates to be paid by the consumers of energy utility services, the [public utilities] Hawaii energy commission shall provide such consumers the maximum benefits derived by the utility from the use of such bonds.

(b) For the purpose of public disclosure, the [public utilities] Hawaii energy commission, in every rate proceeding involving [a public] an energy utility which has utilized special purpose revenue bonds, shall make estimates of [(A) the]:

(1) The probable amounts which would have been incurred by the utility as capital costs if financing by means other than special purpose revenue bonds were utilized[, (B) the];

(2) The amount the utility pays for such bonds, including the principal and sinking fund requirements, the interest, and other expenses appropriately attributable to special purpose revenue bond financing[,]; and [(C) the]

(3) The difference between (A) and (B), or the estimated savings realized by the consumers of the utility services."

SECTION 5. Chapter 46, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) of section 46-15 to read:

"(a) The mayor of each county, after holding a public hearing on the matter and receiving the approval of the respective council, shall be empowered to designate areas of land for experimental and demonstration housing projects, the purposes of which are to research and develop ideas that would reduce the cost of housing in the State. Except as hereinafter provided, the experimental and demonstration housing projects shall be exempt from all statutes, ordinances, charter provisions, and rules [or regulations] of any governmental agency [or], public utility, or energy utility relating to planning, zoning, construction standards for subdivisions, development and improvement of land, and the construction and sale of homes thereon; provided that the experimental and demonstration housing projects shall not affect the safety standards or tariffs approved by the public utility commissions for [such] public [utility.] utilities, or by the Hawaii energy commission for energy utilities.

The mayor of each county with the approval of the respective council may designate a county agency or official who shall have the power to review all plans and specifications for the subdivisions, development and improvement of the land involved, and the construction and sale of homes thereon. The county agency or official shall have the power to approve or disapprove or to make modifications to all or any portion of the plans and specifications.

The county agency or official shall submit preliminary plans and specifications to the legislative body of the respective county for its approval or disapproval. The final plans and specifications for the project shall be deemed approved by the legislative body if the final plans and specifications do not substantially deviate from the approved preliminary plans and specifications. The final plans and specifications shall constitute the standards for the particular project.

No action shall be prosecuted or maintained against any county, its officials or employees, on account of actions taken in reviewing, approving, or disapproving such plans and specifications.

Any experimental or demonstration housing project for the purposes hereinabove mentioned may be sponsored by any state or county agency or any person as defined in section 1-19.

The county agency or official shall apply to the state land use commission for an appropriate land use district classification change, except where a proposed project is located on land within an urban district established by the state land use commission. Notwithstanding any law[, rule, or regulation] to the contrary, the state land use commission may approve the application at any time after a public hearing held in the county where the land is located upon notice of the time and place of the hearing being published in the same manner as the notice required for a public hearing by the planning commission of the appropriate county."

2. By amending section 46-19 to read:

"[[]§46-19[]] Development of alternative energy resources. Each of the counties may participate in the development of alternative energy resources defined as geothermal, solar, wind, ocean power, biomass and solid wastes in joint venture with an end user or [public] energy utility pursuant to a plan for the direct utilization of the energy sources by an end user or [public] energy utility; provided that should a joint-venture partner not be available the counties may proceed with the development of alternate energy resources for their own consumption or for the furtherance of a plan for direct utilization by an end user or [public] energy utility."

3. By amending section 46-47 to read:

"§46-47 Franchise fees, disposition of. All moneys received by any county from any public or energy utility corporation under the provisions of the franchise granted to the corporation shall be kept in the highway fund created by section 249-18 and expended on the construction, maintenance, improvement, and repair of public roads and highways of the county in which the same are received, including for the purposes of this section, the installation, maintenance, and repair of street lights and power, and other charges for street lighting purposes as well as the replacement of old street lights, and footpaths or sidewalks; provided that in the city and county of Honolulu the city council may provide for the maintenance of the traffic department, for other purposes and functions connected with the prevention of automobile accidents and preservation of safety upon the highways and streets in the city and county of Honolulu, and for the establishment and maintenance, under the direction of the police department, of one or more vehicle testing stations, from the moneys."

4. By amending section 46-77 to read:

"[[]§46-77 Underground utility facilities in improvement districts.[]] Notwithstanding the provision of any statute or ordinance or any regulation made under authority thereof, whenever the legislative body of a county shall determine that the whole or a portion of public or energy utility facilities that are privately owned shall be located underground within an improvement district established pursuant to improvement by assessment statutes or ordinances, the utility engineering, placing of cables and splicing work shall be performed by the public or energy utility concerned notwithstanding that a portion of the cost of the installation of such utility facilities underground may be borne by the county within which such improvement district is situated or the properties specially benefited within such improvement district or both."

5. By amending section 46-86 as follows:

"[[]§46-86[]] Transactions for utility services. Any other law to the contrary notwithstanding, the disposal of solid waste by a county or project party is a utility service, but shall not place the county or project party in any way under the jurisdiction of the public utilities commission[;] or the Hawaii energy commission; provided that in the case of a project party, the project party shall not provide any utility services other than the disposal of solid waste or the sales of goods or commodities, including electric energy, produced by the operation of the pollution control project where such sales are made only to registered public utilities, industrial or commercial concerns, or counties or county agencies and not to the general public. If the project party is also a registered [public] energy utility, nothing contained in this section shall prohibit the sale of electric energy to the general public."

SECTION 6. Section 53-8, Hawaii Revised Statutes, is amended to read as follows:

"§53-8 Acquisition of lands in redevelopment project. (a) After the redevelopment plan is officially approved by the council, or after the thirty-day period has expired or, after the final dismissal or determination of any action, suit or proceeding, if filed (unless the determination holds that the proceedings with reference to the redevelopment plan or the plan are invalid), the redevelopment agency may proceed to acquire land in the redevelopment project.

(b) Private real property in an area, needed for a redevelopment project, which is to be acquired pursuant to this part, may be acquired by the agency by condemnation or otherwise, including any property devoted to a public use, whether or not held in trust, notwithstanding that the property may have been previously acquired by condemnation or is owned by a public or energy utility, it being hereby expressly determined that the public use in conformity with this part shall be deemed a superior public use; provided that real property belonging to a public or energy utility may not be acquired without the approval of the public utilities commission, Hawaii energy commission, or other appropriate tribunal having regulatory power over the public or energy utility.

(c) The council may consent to the condemnation of property owned by the county, whether or not the property is held in trust, or may sell or lease to an agency any such property necessary or convenient for a redevelopment project, with or without right to assign or sublease and without public bidding, provided published notice of a meeting to consider the sale or lease is given and a public hearing is held by the council before the action. The term of any such lease shall not be limited by any provision of any other law limiting the period of time during which a lease or any renewal thereof may run.

(d) An award of compensation shall not be increased by reason of any increase in the value of the real property caused by the assembly, clearance, or reconstruction, or proposed assembly, clearance or reconstruction for the purposes of this part of the real property in a redevelopment area.

(e) A council, upon payment therefor or upon exchange for other lands, or without consideration, may convey to an agency land owned by the county in any street or public place which is duly closed or discontinued pursuant to the plan of a redevelopment project.

(f) Public lands or lands owned by any other agency or instrumentality of the government, may, with the approval of the governor, be transferred to an agency by the officer, agency, or instrumentality authorized to convey the same upon payment therefor or upon exchange for other lands, or without consideration, notwithstanding any other law to the contrary.

(g) The procedure upon condemnation by an agency shall be the same as that prescribed by the laws of the State for condemnation by a county except that the members of the agency shall be substituted for the council whenever mentioned in the laws, and that the proceeding shall be brought and title shall be acquired in the name of the agency.

[In the event] (h) If the improvements on any private real property located in any proposed redevelopment area:

(1) [are] Are destroyed by seismic wave, flood, fire, hurricane, earthquake, storm, volcanic activity, explosion, or other catastrophe, natural or of human origin[, or];

(2) [are] Are declared by an appropriate state or local authority to be unsafe or unfit for human use or habitation[,]; or

(3) [the] The owner or owners thereof are unable or unwilling to improve the property in accordance with the land uses in the proposed redevelopment plan and are willing to sell the property to the agency[,];

the agency [may], any [provision of] law to the contrary notwithstanding and in addition to any authority granted to it, may acquire the private real property in the proposed redevelopment area by negotiated purchase from the owner or owners and undertake work thereon as provided in section 53-9, upon authorization from the council, by resolution of one reading to purchase the real property, regardless of the stage of development of the redevelopment plan therefor, whether or not the plan has been officially approved by the council or the period of thirty days following the approval has expired. The agency shall not sell, transfer, convey, or otherwise dispose of the real property, except in connection with first mortgages or other prior liens upon the real property to the federal government for the purpose of securing loans or advances of money made available to the agency, until the redevelopment plan is approved by the council, but if the plan is not approved by the council or is amended to exclude the acquired real property from the redevelopment area or the redevelopment plan is abandoned for any reason, the agency shall dispose of the real property, subject, however, to any first mortgage or other prior lien of the federal government upon the real property, by first offering the same to the former owner or owners for repurchase at the same price paid by the agency for the purchase thereof and if the owner or owners refuse or fail within a reasonable time to exercise the right of repurchase, then the same may be sold at public auction or in the manner provided by law.

(i) Pursuant to section 101-5, the agency may take and acquire any right, interest, or estate less than a fee simple estate, which are necessary for the undertaking and execution of an urban redevelopment or renewal project and related activities under this chapter, including the acquisition of air space rights and the imposition of restrictions, covenants, and controls to assure the development of a continued use of project property in accordance with the redevelopment or renewal plan."

SECTION 7. Section 101-4, Hawaii Revised Statutes, is amended to read as follows:

"§101-4 Right of eminent domain granted to public utilities and others. The right and power of eminent domain is hereby granted to every person, operating a public utility[,] as defined in section 269-1 or an energy utility as defined in section -1, and engaged in the transportation of passengers or freight or any commodity by rail or bus, or by any other means, or the conveyance or transmission of telephone messages, or the production, conveyance, transmission, delivery, or furnishing of electricity, power, water, gas, or oil, within the State, as well as to corporations designated in section 101-41. The right and power shall be exercised only in compliance with, and under, the conditions and procedures set forth in this part."

SECTION 8. Section 163D-6, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) If the corporation acquires the assets of a private or other corporation, then, notwithstanding any law to the contrary:

(1) Neither the corporation nor any subsidiary corporation vested with the assets shall be subject to chapter 91 with respect to the assets;

(2) Employees retained to operate the assets shall not be subject to chapters 76 and 77;

(3) Assets constituting real property interest shall not be subject to chapter 171;

(4) No investment, loan, or use of funds by the corporation or a subsidiary corporation vested with the assets shall be subject to chapter 42D, 42F, 103, or 103D; and

(5) Neither the corporation nor a subsidiary corporation vested with the assets shall constitute a public or energy utility or be subject to the jurisdiction of the public utilities commission under chapter 269[.] or the Hawaii energy commission under chapter ."

SECTION 9. Section 166-4, Hawaii Revised Statutes, is amended to read as follows:

"§166-4 Park development. Except as [herein] provided[,] in this section, the department [may develop], on behalf of the State or in partnership with a federal agency, a county, or a private party, may develop agricultural parks which, at the option of the board, shall be exempt from all statutes, ordinances, charter provisions, and rules of any governmental agency relating to planning, zoning, construction standards for subdivisions, development and improvement of land, and the construction of buildings thereon; provided that:

(1) The board finds the agricultural park is consistent with the purpose and intent of this chapter, and meets minimum requirements of health and safety;

(2) The development of the proposed agricultural park does not contravene any safety standards or tariffs approved by the public utilities commission for public utilities[;], or by the Hawaii energy commission for energy utilities;

(3) The legislative body of the county in which the agricultural park is to be situated shall have approved the agricultural park.

(A) The legislative body shall approve or disapprove the agricultural park within forty-five days after the department has submitted the preliminary plans and specifications for the agricultural park to the legislative body. If after the forty-fifth day an agricultural park is not disapproved, it shall be deemed approved by the legislative body.

(B) No action shall be prosecuted or maintained against any county, its officials, or employees, on account of actions taken by them in reviewing, approving, or disapproving the plans and specifications.

(C) The final plans and specifications for the agricultural park shall be deemed approved by the legislative body if the final plans and specifications do not substantially deviate from the preliminary plans and specifications. The final plans and specifications for the project shall constitute the planning, zoning, building, construction, and subdivision standards for that agricultural park. For purposes of sections 501-85 and 502-17, the chairperson of the board of agriculture or the responsible county official may certify maps and plans of lands connected with the agricultural park as having complied with applicable laws and ordinances relating to consolidation and subdivision of lands, and such maps and plans shall be accepted for registration or recordation by the land court and registrar; and

(4) The State shall assume the responsibility of maintaining all roads within the agricultural park if the roads are developed exempt from applicable county ordinances, charter provisions, and rules regarding roads."

SECTION 10. Chapter 171, Hawaii Revised Statutes, is amended as follows:

1. By amending section 171-95 to read:

"§171-95 Disposition to governments, governmental agencies, and public and energy utilities. (a) Notwithstanding any limitations to the contrary, the board of land and natural resources [may], without public auction[:], may:

(1) Sell public lands at such price and on such other terms and conditions as the board may deem proper to governments, including the United States, city and county, counties, other governmental agencies authorized to hold lands in fee simple, and public and energy utilities;

(2) Lease to the governments, agencies, and public and energy utilities, public lands for terms up to, but not in excess of, sixty-five years at such rental and on such other terms and conditions as the board may determine;

(3) Grant licenses and easements to the governments, agencies, and public and energy utilities on such terms and conditions as the board may determine for road, pipeline, utility, communication cable, and other rights-of-way;

(4) Exchange public lands with the governments and agencies;

(5) Execute quitclaim deeds to the governments and agencies, with or without consideration, releasing any claim to the property involved made upon disputed legal or equitable grounds, whenever the board in its discretion deems it beneficial to the State;

(6) Waive or modify building and other requirements and conditions contained in deeds, patents, sales agreements, or leases held by the governments and agencies whenever such waiver or modification is beneficial to the State.

(b) In any disposition to public and energy utilities under this section:

(1) The sale price or lease rental shall be no less than the value determined in accordance with section 171-17(b); provided, however, that such sale price or lease rental may be on a nominal basis, if the board finds that such easement is required in connection with a government project[.];

(2) The board shall provide that in case the land ceases to be used at any future time for the use for which the disposition was made, the board shall have the right to repurchase the land at the original sale price or fair market value, whichever is lower, and to purchase improvements thereon at the depreciated value or fair market value, whichever is lower[.];

(3) Disposition shall not be made to any public or energy utility if the utility has suitable lands of its own[.]; and

(4) The disposition to public and energy utilities shall be subject to disapproval by the legislature by two-thirds vote of either the senate or the house of representatives or by majority vote of both, in any regular or special session next following the date of the disposition.

[(5)] (c) For the purposes of this section[, the definition of "public]:

"Energy utility has the same meaning as defined in section    -1.

"Public utility" [as established] has the same meaning as defined in section 269-1 [is hereby incorporated herein by reference]."

2. By amending subsection (b) of section 171-134 to read:

"(b) At the option of the board, the development of an industrial park shall be exempt from all statutes, ordinances, charter provisions, and rules of any governmental agency relating to planning, zoning, construction standards for subdivision development and improvement of land, and the construction of buildings thereon; provided that:

(1) The board finds that the industrial park meets the minimum requirements of health and safety;

(2) The development of the industrial park does not contravene any safety standards or tariffs approved by the public utilities commission for public utilities[;], or by the Hawaii energy commission for energy utilities;

(3) The legislative body of the county in which the industrial park is proposed to be situated approves the industrial park.

(A) The legislative body shall approve or disapprove the industrial park within forty-five days after the department has submitted preliminary plans and specifications for the industrial park to the legislative body. If after the forty-fifth day, an industrial park is not disapproved, it shall be deemed approved by the legislative body.

(B) No action shall be prosecuted or maintained against any county, its officials, or employees, on account of actions taken by them in reviewing, approving, or disapproving the plans and specifications.

(C) The final plans and specifications for the industrial park shall be deemed approved by the legislative body if the final plans and specifications for the industrial park do not substantially deviate from the preliminary plans and specifications. The determination that the final plans and specifications do not substantially deviate from the preliminary plans and specifications of the industrial park shall rest with the board. The final plans and specifications for the park shall constitute the planning, zoning, building, improvement, construction, and subdivision standards for that industrial park. For the purposes of sections 501-85 and 502-17, the chairperson of the board or the responsible county official may certify maps and plans of land connected with the industrial park as having complied with applicable laws and ordinances relating to consolidation and subdivision of lands, and such maps and plans shall be accepted for registration or recordation by the land court and registrar; and

(4) The board shall assume the responsibility of all infrastructure within the industrial park, if the infrastructure developed is exempt from applicable county ordinances, charter provisions, and rules."

SECTION 11. Chapter 201G, Hawaii Revised Statutes, is amended as follows:

1. By amending section 201G-16 to read:

"[[]§201G-16[]] Eminent domain, exchange or use of public property. (a) The corporation may acquire any real property, including fixtures and improvements, or interest therein, through voluntary negotiation; through exchange of land in accordance with section 171-50, provided that the public land to be exchanged need not be of like use to that of the private land; or by the exercise of the power of eminent domain which it deems necessary by the adoption of a resolution declaring that the acquisition of the property described therein is in the public interest and required for public use. The corporation shall exercise the power of eminent domain granted by this section in the same manner and procedure as is provided by chapter 101, and otherwise in accordance with all applicable provisions of the general laws of the State; provided that condemnation of parcels greater than fifteen acres shall be subject to legislative disapproval expressed in a concurrent resolution adopted by majority vote of the senate and the house of representatives in the first regular or special session following the date of condemnation.

(b) The corporation may acquire by the exercise of the power of eminent domain property already devoted to a public use, provided that no property belonging to any government may be acquired without its consent, and that no property belonging to a public or energy utility corporation may be acquired without the approval of the public utilities commission[,] or the Hawaii energy commission, as appropriate, and subject to legislative disapproval expressed in a concurrent resolution adopted by majority vote of the senate and the house of representatives in the first regular or special session following the date of condemnation."

2. By amending subsection (a) of section 201G-118 to read:

"(a) The corporation may develop, on behalf of the State or with an eligible developer, or may assist under a government assistance program in the development of, housing projects which shall be exempt from all statutes, ordinances, charter provisions, and rules of any governmental agency relating to planning, zoning, construction standards for subdivisions, development and improvement of land, and the construction of units thereon; provided that:

(1) The corporation finds the project is consistent with the purpose and intent of this chapter, and meets minimum requirements of health and safety;

(2) The development of the proposed project does not contravene any safety standards, tariffs, or rates and fees approved by the public utilities commission for public utilities, or by the Hawaii energy commission for energy utilities, or the various boards of water supply authorized under chapter 54; and

(3) The legislative body of the county in which the project is to be situated shall have approved the project.

(A) The legislative body shall approve or disapprove the project by resolution within forty-five days after the corporation has submitted the preliminary plans and specifications for the project to the legislative body. If on the forty- sixth day a project is not disapproved, it shall be deemed approved by the legislative body;

(B) No action shall be prosecuted or maintained against any county, its officials, or employees on account of actions taken by them in reviewing, approving, or disapproving the plans and specifications; and

(C) The final plans and specifications for the project shall be deemed approved by the legislative body if the final plans and specifications do not substantially deviate from the preliminary plans and specifications. The final plans and specifications for the project shall constitute the zoning, building, construction, and subdivision standards for that project. For purposes of sections 501-85 and 502-17, the executive director of the corporation, or the responsible county official may certify maps and plans of lands connected with the project as having complied with applicable laws and ordinances relating to consolidation and subdivision of lands, and the maps and plans shall be accepted for registration or recordation by the land court and registrar; and

(4) The land use commission shall approve or disapprove a boundary change within forty-five days after the corporation has submitted a petition to the commission as provided in section 205-4. If on the forty-sixth day the petition is not disapproved, it shall be deemed approved by the commission."

SECTION 12. Section 206E-6, Hawaii Revised Statutes, is amended by amending subsection (i) to read as follows:

"(i) Notwithstanding any law to the contrary, whenever as part of a district-wide improvement program it becomes necessary to remove, relocate, replace, or reconstruct public or energy utility facilities, the authority shall establish by rule the allocation of cost between the authority, the affected public or energy utilities, and properties that may specially benefit from such improvement, if any. In determining the allocation of cost, the authority shall consider the cost allocation policies for improvement districts established by the county in which the removal, relocation, replacement, or reconstruction is to take place."

SECTION 13. Section 209E-2, Hawaii Revised Statutes, is amended by amending the definition of "qualified business" to read:

""Qualified business" means any corporation, partnership, or sole proprietorship authorized to do business in the State that is qualified under section 209E-9, subject to the state corporate or individual income tax under chapter 235, and [[]is[]]:

(1) Engaged in manufacturing, the wholesale sale of tangible personal property as defined in section 237-4, or a service business as defined in this chapter;

(2) Engaged in producing agricultural products where the business is a producer as defined in section 237-5;

(3) Engaged in research, development, sale, or production of all types of genetically-engineered medical, agricultural, or maritime biotechnology products; or

(4) Engaged in producing electric power from wind energy for sale primarily to [a public] an energy utility [company] as defined in section -1 for resale to the public."

SECTION 14. Section 235-21, Hawaii Revised Statutes, is amended by amending the definition of "public utility" to read:

"Public utility" has the meaning given that term in section 269-1[.], and includes an energy utility as defined in section    -1."

SECTION 15. Section 237-13.5, Hawaii Revised Statutes, is amended to read as follows:

"§237-13.5 Assessment on generated electricity. Any other [provision of the] law to the contrary notwithstanding, the levy and assessment of the general excise tax on the gross proceeds from the sale of electric power to [a public] an energy utility [company] as defined in section -1 for resale to the public, shall be made only as a tax on the business of a producer, at the rate assessed producers, under section 237-13(2)(A)."

SECTION 16. Section 240-1, Hawaii Revised Statutes, is amended to read as follows:

"§240-1 Electric light and power companies, tax on. Every person operating in the State an electric light or power business as [a public] an energy utility[,] as defined in section -1 whose franchise does not provide for the payment to the county in which the [public] energy utility operates of a tax, or a tax of less than two and one-half per cent, based upon the gross receipts of such person from all electric light or power furnished to consumers during each calendar year, shall file with the director of finance of the county in which the [public] energy utility operates, within one month after the expiration of each calendar year, a detailed statement showing all gross receipts from all electric light or power furnished to consumers during the preceding calendar year. Such person shall, at the same time pay to the director of finance, for and on behalf of such county, in addition to any and all other payments required to be made by law, two and one-half per cent of the gross receipts; or, if such person’s franchise provides for a tax of less than two and one-half per cent of the gross proceeds, the difference between the tax required under such franchise and two and one-half per cent of the gross receipts, of such person from all electric light or power furnished to consumers during the preceding calendar year."

SECTION 17. Section 264-32, Hawaii Revised Statutes, is amended to read as follows:

"§264-32 Utility facility defined. The term "utility facility" wherever used in section 264-33 means and includes any of the following: any surface, underground, or overhead water mains, fire hydrants, gas mains, sewer mains, pipes (including fuel oil lines), conduits, utility holes, poles, wires, cables, lines, street lighting structures, or other structures or equipment, and the appurtenances thereto, owned by any privately owned public utility as defined in section 269-1 or energy utility as defined in section -1, or by any county or by any police department or board of water supply of a county and used in connection with the producing or the furnishing of water, gas, light, electric power, communications, transportation, or other public or energy utility services."

SECTION 18. Section 239-2, Hawaii Revised Statutes, is amended by amending the definition of "public utility" to read as follows:

""Public utility" has the meaning given that term in section 269-1[.], and includes an energy utility as defined in section -1."

SECTION 19. Chapter 269, Hawaii Revised Statutes, is amended as follows:

1. By amending the definition of "public utility" in section 269-1 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;] 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, gas, or oil;

(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.

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."

2. By repealing section 269-16.2.

["[§269-16.2] Approval of rules of a public utility. Any rules, guidelines, or other standards of a public utility which interpret federal or state laws governing nonutility generators, or which make a nonutility generator monetarily responsible for the public utility’s costs and profits of doing business as a public utility, shall be approved by the public utilities commission before adoption. As used in this section, a "nonutility generator" means a person that produces electric power but is not a public utility."]

3. By repealing sections 269-27.1, 269-27.2, 269-27.5, and 269-27.6.

["[§269-27.1] Establishment of geothermal energy rates. (a) The rate payable by a public utility to the producer of geothermal steam or electricity generated from geothermal steam shall be established by agreement between the public utility and the supplier, subject to approval by the public utilities commission; provided that if the public utility and the supplier fail to reach an agreement for such rate, or if the agreed upon rate is disapproved by the commission, the public utilities commission shall establish a just and reasonable rate for the geothermal steam or electricity generated from geothermal steam supplied to the public utility by the producer.

(b) The producer of geothermal steam or electricity generated from geothermal steam shall be excluded from coverage of the term "public utility" as defined in section 269-1.

§269-27.2 Utilization of electricity generated from nonfossil fuels. (a) The public utilities commission shall investigate and determine the extent to which electricity generated from nonfossil fuel sources is available to public utilities that supply electricity to the public, which electricity is in excess of that utilized or otherwise needed by the producers for their internal uses and which the producers are willing to make available to the electric public utilities.

(b) The public utilities commission may direct public utilities that supply electricity to the public to arrange for the acquisition of and to acquire electricity generated from nonfossil fuel sources as is available from and which the producers of same are willing and able to make available to the public utilities, and to employ and dispatch the nonfossil fuel generated electricity in a manner consistent with the availability thereof to maximize the reduction in consumption of fossil fuels in the generation of electricity to be provided to the public.

(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.

In the exercise of its authority to determine the just and reasonable rate for the nonfossil fuel generated electricity supplied to the public utility by the producer, the commission shall establish that the rate for purchase of electricity by a public utility shall not be less than one hundred per cent of the cost avoided by the utility when the utility purchases the electrical energy rather than producing the electrical energy. In determining the amount of the payment in relation to avoided cost, as that cost is or shall later be defined in the rules of the commission, the commission shall consider, on a generic basis, the minimum floor a utility should pay, giving consideration not only to the near-term adverse consequences to the ultimate consumers of utility provided electricity, but also to the long term desirable goal of encouraging, to the greatest extent practicable, the development of alternative sources of energy.

Nothing in this subsection shall affect existing contracts between public utilities and suppliers of nonfossil fuel generated electricity.

(d) Upon application of a public utility that supplies electricity to the public, and notification of its customers, the commission, after an evidentiary hearing, may allow payments made by the public utility to nonfossil fuel producers for firm capacity and related revenue taxes to be recovered by the public utility through an interim increase in rates until the effective date of the rate change approved by the commission’s final decision in the public utility’s next general rate proceeding under section 269-16, notwithstanding any requirements to the contrary of any other provision in this chapter or in the commission’s rules or practices; provided the amount recovered by the utility and the amount of increase in rates due to the payments for firm capacity and related revenue taxes to be charged to the consumers of the electricity are found by the commission to be:

(1) Just and reasonable;

(2) Not unduly prejudicial to the customers of the public utility;

(3) Promotional of Hawaii’s long-term objective of energy self-sufficiency;

(4) Encouraging to the maintenance or development of nonfossil fueled sources of electrical energy; and

(5) In the overall best interest of the general public.

The evidentiary hearing provided for in this subsection shall be conducted expeditiously and shall be limited to evidence related to the above findings. Notwithstanding section 269-16, no public hearing shall be required, except as the commission in its discretion may require.

[§269-27.5] Construction of high-voltage electric transmission lines; hearing. Whenever a public utility plans to place, construct, erect, or otherwise build a new 46 kilovolt or greater high-voltage electric transmission system above the surface of the ground through any residential area, the public utilities commission shall conduct a public hearing prior to its issuance of approval thereof. Notice of the hearing shall be given in the manner provided in section 269-16 for notice of public hearings.

§269-27.6 Construction of high-voltage electric transmission lines; overhead or underground construction. (a) Notwithstanding any law to the contrary, whenever a public utility applies to the public utilities commission for approval to place, construct, erect, or otherwise build a new forty-six kilovolt or greater high-voltage electric transmission system, either above or below the surface of the ground, the public utilities commission shall determine whether the electric transmission system shall be placed, constructed, erected, or built above or below the surface of the ground; provided that in its determination, the public utilities commission shall consider:

(1) Whether a benefit exists that outweighs the costs of placing the electric transmission system underground;

(2) Whether there is a governmental public policy requiring the electric transmission system to be placed, constructed, erected, or built underground, and the governmental agency establishing the policy commits funds for the additional costs of undergrounding;

(3) Whether any governmental agency or other parties are willing to pay for the additional costs of undergrounding;

(4) The recommendation of the division of consumer advocacy of the department of commerce and consumer affairs, which shall be based on an evaluation of the factors set forth under this subsection; and

(5) Any other relevant factors.

(b) In making the determination set forth in subsection (a), for new 138 kilovolt or greater high-voltage transmission systems, the public utilities commission shall evaluate and make specific findings on all of the following factors:

(1) The amortized cost of construction over the respective usable life of an above-ground versus underground system;

(2) The amortized cost of repair over the respective usable life of an above-ground versus underground system;

(3) The risk of damage or destruction over the respective usable life of an above-ground versus an underground system;

(4) The relative safety and liability risks of an above-ground versus underground system;

(5) The electromagnetic field emission exposure from an above-ground versus underground system;

(6) The proximity and visibility of an above-ground system to:

(A) High density population areas;

(B) Conservation and other valuable natural resource and public recreation areas;

(C) Areas of special importance to the tourism industry; and

(D) Other industries particularly dependent on Hawaii’s natural beauty;

(7) The length of the system;

(8) The breadth and depth of public sentiment with respect to an above-ground versus underground system; and

(9) Any other factors that the public utilities commission deems relevant.

(c) A public utility making an application to the public utilities commission under this section shall clearly and fully state and support its evaluation of each factor set forth in subsection (b)."]

4. By amending section 269-28 to read:

"§269-28 Penalty. (a) Any public utility violating or neglecting or failing in any particular to conform to or comply with this chapter or any lawful order of the public utilities commission shall be subject to a civil penalty not to exceed $25,000 for each day such violation, neglect, or failure continues, to be assessed by the commission after a hearing in accordance with chapter 91. The commission may order the public utility to cease carrying on its business while the violation, neglect, or failure continues.

[(b) Notwithstanding the provisions of subsection (a), any public utility violating or neglecting or failing in any particular to conform to or comply with any rule or order of the commission setting forth safety requirements applicable to the transmission of gas shall be subject to a civil penalty not to exceed $25,000 for each day that the violation, neglect, or failure continues; provided that the maximum penalty for related violations arising out of the same act, omission, or occurrence shall not exceed $500,000.

(c)] (b) Notwithstanding [the provisions of] subsection (a), any person acting in the capacity of or engaging in the business of a public utility in the State without having a certificate of public convenience and necessity or other authority previously obtained under and in compliance with this chapter and the rules promulgated thereunder may be subject to a civil penalty not to exceed $5,000 for each such offense, and, in the case of a continuing violation, $5,000 for each day that uncertified activity continues.

[(d)] (c) Upon written application filed within fifteen days after service of an order imposing a civil penalty pursuant to this section, the commission may remit or mitigate such penalty upon such terms as it deems proper.

[(e)] (d) If any civil penalty imposed pursuant to this section is not paid within such period as the commission may direct, the attorney general shall institute a civil action for recovery of same in circuit court."

5. By amending section 269-71 to read:

"[[]§269-71[]] Meter tampering. Any person who, without permission or authorization from a utility tampers with, damages, destroys, removes, connects, causes to connect, disconnects, or causes to be disconnected or bypassed any wire, cable, conductor, [gas pipe,] billing or collection equipment, or device on any meter, line, conduit, property, or facilities of a utility for the purpose of using unmetered services, in addition to any other penalty authorized by law, shall be liable to the utility for treble the amount of the value of the utility services used and the damages or loss of any equipment, property, or facilities of a utility."

6. By repealing parts IV, V, and VI.

SECTION 20. Section 381-1, Hawaii Revised Statutes, is amended by amending the definition of "public utility" to read:

"Public utility" has the meaning given that term in section 269-1, excluding, however, the State or any county or any commission or board of the State or of any county, and any person subject to the Federal Railway Labor Act, as amended from time to time. "Public utility" includes an energy utility as defined in section -1."

SECTION 21. Section 481-1, Hawaii Revised Statutes, is amended to read as follows:

"§481-1 Unlawful practices. (a) It shall be unlawful for any person, firm, or corporation, doing business in the State and engaged in the production, manufacture, distribution, or sale of any commodity, or product, or service, or output of a service trade, of general use or consumption, or the product or service of any public or energy utility, with the intent to destroy the competition of any regular established dealer in the commodity, product, or service, or to prevent the competition of any person, firm, private corporation, or municipal or other public corporation, who or which in good faith, intends and attempts to become such dealer, to discriminate between different sections, communities, or cities or portions thereof, or between different locations in such sections, communities, cities, or portions thereof in this State, by selling or furnishing the commodity, product, or services at a lower rate in one section, community, or city, or any portion thereof, or in one location in such section, community, or city or any portion thereof, than in another after making allowance for difference, if any, in the grade or quality, quantity and in the actual cost of transportation from the point of production, if a raw product or a commodity, or from the point of manufacture if a manufactured product or commodity, and in the overhead cost.

(b) Motion picture films when delivered under a lease to motion picture houses shall not be deemed to be a commodity or product of general use, or consumption, under this part. This part shall not be construed to prohibit the meeting in good faith of the rates of a competitor as herein defined, selling the same article or product, or service or output of a service trade in the same locality or trade area, or to prevent a reasonable classification of service by public or energy utilities for the purpose of establishing rates.

(c) The inhibition hereof against locality discrimination embraces any scheme of special rebates, collateral contracts, or any device of any nature whereby such discrimination is, in substance or fact, effected in violation of the spirit and intent of this part."

SECTION 22. Section 481X-1, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) This chapter shall not apply to:

(1) Express or implied warranties;

(2) Maintenance agreements; and

(3) Warranties, service contracts, and maintenance agreements offered by public utilities under chapter 269 or energy utilities under chapter , on their transmission devices to the extent they are regulated by the public utilities commission or the department of commerce and consumer affairs."

SECTION 23. Section 486J-11, Hawaii Revised Statutes, is amended to read as follows:

"[[]§486J-11[]] Powers of the public utilities commission[.] and Hawaii energy commission. The public utilities commission and Hawaii energy commission shall have the authority and power to take any action or make any determination under this chapter, including [but not limited to] actions or determinations that affect persons not regulated under chapters 269, , 271, and 271G, as [the] either commission deems necessary to carry out its responsibilities or otherwise effectuate chapter 269, , 271, or 271G."

SECTION 24. Section 708-800, Hawaii Revised Statutes, is amended by amending the definition of "property" to read:

""Property" means any money, personal property, real property, thing in action, evidence of debt or contract, or article of value of any kind. Commodities in the nature of a public utility [nature] as defined in section 269-1 or an energy utility as defined in section -1, such as gas, electricity, steam, and water constitute property, but the supplying of such a commodity to premises from an outside source by means of wires, pipes, conduits, or other equipment shall be deemed a rendition of a service rather than a sale or delivery of property."

SECTION 25. Section 708-839.5, Hawaii Revised Statutes, is amended by amending the definition of "utility" in subsection (1) to read:

""Utility" means any public utility as defined in section 269-1, or energy utility as defined in section -1, that provides electricity, gas, or water services."

SECTION 26. All rights, powers, functions, and duties of the public utilities commission relating to energy are transferred to the Hawaii energy commission created by this Act.

All officers and employees whose functions are transferred by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

No officer or employee of the State having tenure shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this Act, and such officer or employee may be transferred or appointed to a civil service position without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed; and provided that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

An officer or employee of the State who does not have tenure and who may be transferred or appointed to a civil service position as a consequence of this Act shall become a civil service employee without the loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefits or privileges and without the necessity of examination; provided that such officer or employee possesses the minimum qualifications for the position to which transferred or appointed.

If an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the State with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the State as determined by the head of the department or the governor.

SECTION 27. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the public utilities commission relating to the functions transferred to the Hawaii energy commission shall be transferred with the functions to which they relate.

SECTION 28. All rights, powers, functions, and duties of the division of consumer advocacy within the department of commerce and consumer affairs relating to energy are transferred to the division of energy consumer advocacy within the department of business, economic development, and tourism.

All officers and employees whose functions are transferred by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

No officer or employee of the State having tenure shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this Act, and such officer or employee may be transferred or appointed to a civil service position without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed; and provided that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

An officer or employee of the State who does not have tenure and who may be transferred or appointed to a civil service position as a consequence of this Act shall become a civil service employee without the loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefits or privileges and without the necessity of examination; provided that such officer or employee possesses the minimum qualifications for the position to which transferred or appointed.

If an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the State with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the State as determined by the head of the department or the governor.

SECTION 29. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the division of consumer advocacy within the department of commerce and consumer affairs relating to the functions transferred to the division of energy consumer advocacy within the department of business, economic development, and tourism shall be transferred with the functions to which they relate.

SECTION 30. The legislature recognizes that there are a number of conforming amendments to the Hawaii Revised Statutes that need to be made to implement this Act. Accordingly, the Hawaii energy commission, with the assistance of the legislative reference bureau, shall review the statutory framework of the commission and propose amendatory legislation as may be necessary to achieve the intent of this Act. The legislative reference bureau shall further provide such assistance to the Hawaii energy commission as may be necessary in drafting appropriate legislation. The commission shall submit its findings and recommendations, including any proposed legislation, to the legislature no later than twenty days before the convening of the regular session of 2004.

SECTION 31. It is the intent of this Act not to jeopardize the receipt of any federal aid nor to impair the obligation of the State or any agency thereof to the holders of any bond issued by the State or by any such agency, and to the extent, and only to the extent, necessary to effectuate this intent, the governor may modify the strict provisions of this Act, but shall promptly report any such modification with reasons therefor to the legislature at its next session thereafter for review by the legislature.

SECTION 32. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 33. 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, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 34. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 35. This Act shall take effect on January 1, 2003.

INTRODUCED BY:

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