STAND. COM. REP. NO.1389-02

Honolulu, Hawaii

April 19, 2002

RE: S.C.R. No. 98

S.D. 2

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committees on Energy and Environmental Protection and Consumer Protection and Commerce, to which was referred S.C.R. No. 98, S.D. 2, entitled:

"SENATE CONCURRENT RESOLUTION REQUESTING A CONSIDERATION OF THE FEASIBILITY OF OPENING A PUBLIC UTILITIES COMMISSION DOCKET RELATING TO STANDBY CHARGES AND CUSTOMER RETENTION DISCOUNTS,"

beg leave to report as follows:

The purpose of this concurrent resolution is to request the Public Utilities Commission (PUC) to consider the feasibility of opening a docket to:

(1) Examine and revise as appropriate:

(A) Any public utility rule, standard, rate, and guideline that establishes a standby charge applicable to a non-utility distributed energy resource (DER); and

(B) Any customer retention discounts offered by a public utility; and

(2) Consider equitable ratemaking design and policies for standby charges and customer retention discounts that:

(A) Provide for fair cost allocation among customers;

(B) Allow the utility adequate cost recovery while minimizing costs to customers;

(C) Facilitate customer DERs deployment; and

(D) Send proper price signals to prospective purchasers of DERs.

The Consumer Advocate, Hess Microgen LLC, Life of the Land, Hawaii Renewable Energy Alliance, The Department of Commerce and Consumer Affairs, PUC, and one individual testified in support of this measure. The Department of Business, Economic Development, and Tourism supported the intent of the measure. Hawaiian Electric Company, Inc., Hawaiian Electric Light Company, and Maui Electric Company opposed the measure. Kauai Electric and The Gas Company submitted comments.

Concern was expressed by certain committee members that the waiver of standby charges could result in distributed systems being unfairly subsidized by other rate payers, who may inadvertently shoulder the cost of standby generation equipment as additional distributed systems are placed into service. These committee members, however, agree that renewable energy sources are the most viable options to reduce Hawaii's dependence on fossil fuel, and that appropriate incentives to reduce this dependency are necessary.

Your Committees strongly recommend that a docket be opened to address standby charges imposed on DERs by the public utilities. An appropriate balance needs to be created between encouraging the use of DER systems to increase efficiency and cost savings and the need for an equitable rate structure incorporating DER systems so that an undue burden is not placed on other electric utilities ratepayers.

As affirmed by the records of votes of the members of your Committees on Energy and Environmental Protection and Consumer Protection and Commerce that are attached to this report, your Committees concur with the intent and purpose of S.C.R. No. 98, S.D. 2, and recommend its adoption.

 

Respectfully submitted on behalf of the members of the Committees on Energy and Environmental Protection and Consumer Protection and Commerce,

 

____________________________

KENNETH T. HIRAKI, Chair

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HERMINA M. MORITA, Chair