Honolulu, Hawaii

, 2002

RE: S.B. No. 2243

S.D. 2



Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii


Your Committees on Economic Development and Technology and Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2243, S.D. 1, entitled:


beg leave to report as follows:

The purpose of this measure is to encourage greater use of renewable energy by having the Department of Business, Economic Development, and Tourism develop and administer state green power marketing programs with the support of the Public Utilities Commission.

Your Committees received testimony in favor of this measure from the Department of Business, Economic Development, and Tourism, Hawaiian Electric Company, Kauai Electric, Apollo Energy Corporation, Hawaii Renewable Energy Alliance, PowerLight Hawaii, Inter-Island Solar Supply, the Sierra Club, Life of the Land, and seven individuals. Your Committees received testimony opposing this measure from the Public Utilities Commission and the Department of Commerce and Consumer Affairs.

Your Committees find it vital that the State reduce its dependence on imported fossil fuels. Any prolonged or unanticipated disruption in oil imports, or in our ability to convert oil to electricity, gasoline, natural gas, and propane would be catastrophic. The diversification of our energy supply is not an option; it is an imperative.

Members and testifiers agree that the concept of green energy is laudable but there are major flaws in the measure that make implementation difficult, if not impossible. Your Committees believe the following concerns need to be addressed:

(1) The Department of Business, Economic Development, and Tourism does not have the funds to implement the program in this measure. Additionally, this measure should have been referred to the Senate Committee on Ways and Means because any implementation of green energy policy will undoubtedly require funding;

(2) The current draft appears to be a form of "green tags," in which the environmental attributes of renewable energy are marketed separately from the electricity. Although in other areas "green tag" programs are a means of providing renewable energy projects with a source of additional revenue, it is not usually state government entities that undertake such an effort;

(3) Voluntary green pricing as an incentive for actual development of renewable energy may have more tangible results;

(4) The current draft would interfere with existing contracts. For example, it would be unfair for a utility to not receive any environmental credit for resources it already contracted for;

(5) It is unclear as to how developers would be encouraged to construct new renewable generators, as they still need to enter into contracts with the utilities;

(6) It is important to investigate the complexity and cost of collecting the voluntary payments from customers. Until these details are determined, it is difficult to evaluate the impact on electric companies' systems and processes, the costs they may incur, and ultimately the impact on ratepayers;

(7) All parties, including the Department of Business, Economic Development, and Tourism, Hawaiian Electric Company, energy producers, and energy advocates must work together to craft appropriate, feasible legislation. The Chair of your Committee on Economic Development and Technology shall introduce a resolution to bring all parties together and provide a framework for developing appropriate legislation;

(8) The Public Utilities Commission could not comply with the current draft because the Commission primarily serves as a trier-of-fact, and does not have marketing staff and customers, nor does it currently collect from ratepayers;

(9) As the parties come together, they must be cognizant of each other's role, particularly for the government agencies. The Department of Business, Economic Development, and Tourism, and the Public Utilities Commission, must sort out their respective responsibilities and capacities so as not to unnecessarily duplicate or reinvent their roles;

(10) The projection of the State's energy policy should include all types of energy; and

(11) Legislation shall be deemed appropriate when current and future energy players agree on how alternative energy can be economically beneficial to Hawaii's consumers.

Rather than deferring or holding this measure, your Committees have amended it by making the effective date July 1, 2050, to promote further discussion and development of this concept between the energy players and the State of Hawaii in order for them to resolve the eleven concerns stated above.

As affirmed by the records of votes of the members of your Committees on Economic Development and Technology and Commerce, Consumer Protection and Housing that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2243, S.D. 1, as amended herein, and recommend that it pass Third Reading in the form attached hereto as S.B. No. 2243, S.D. 2.


Respectfully submitted on behalf of the members of the Committees on Economic Development and Technology and Commerce, Consumer Protection and Housing,




ROD TAM, Chair