Report Title:

Renewable Energy

Description:

Directs DBEDT, with the cooperation of DLNR, to update or conduct a new geothermal resource assessment study. Establishes a temporary solar water heating loan program. Creates a solar water heating loan revolving fund. Expands the definition of a qualified business under the enterprise zone requirements to include businesses engaged in producing electric power from renewable energy. (HB1392 HD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

1392

TWENTY-SECOND LEGISLATURE, 2003

H.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to RENEWABLE energy.

 

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

PART I

SECTION 1. The legislature finds that Hawaii is over ninety percent dependent on imported oil. Because Hawaii is physically isolated from the rest of the country, it is more vulnerable to economic disruptions in the world oil market. Any type of disruption to Hawaii's oil supply will have a detrimental effect on the State's transportation, construction, agricultural, and tourism industries. In addition, the government and the military would also be affected. Therefore, the use of renewable energy resources must be encouraged to lessen our dependence on imported oil.

The indispensability of renewable energy is recognized in the Hawaii State Planning Act, chapter 226, Hawaii Revised Statutes, that includes the following objectives and policies for the State's facility systems—energy:

(1) Dependable, efficient, and economical statewide energy systems capable of supporting the needs of the people;

(2) Increased energy self-sufficiency where the ratio of indigenous to imported energy use is increased;

(3) Greater energy security in the face of threats to Hawaii's energy supplies and systems; and

(4) Support research and development as well as promote the use of renewable energy sources.

Accordingly, the purpose of this Act is to:

(1) Require the department of business, economic development, and tourism, with the cooperation of the department of land and natural resources, to update or conduct a new geothermal resource assessment study;

(2) Encourage homeowners to use solar energy by making affordable loans available for the purchase and installation of solar water heating systems for their homes; and

(3) Allow renewable energy development in exclusive enterprise zones.

PART II

SECTION 2. Hawaii remains heavily dependent on petroleum fuel as its main source of energy. While oil accounts for forty per cent of the energy needs of the United States, it accounts for ninety per cent of Hawaii's energy needs.

As a result, the need to reduce our vulnerability to disruptions in oil supplies is an urgent one. One way to reduce this dependency on petroleum is by encouraging the use of indigenous resources as our sources of energy. There are few resources more unique to Hawaii than the geothermal energy offered by its volcanoes.

Geothermal energy represents a substantial and long-term source of renewable alternate energy that could be used to generate firm electric energy to meet the State's needs and concurrently help to reduce the Hawaii's dependence on imported fossil fuels.

Currently, Puna Geothermal Ventures has a permit to operate a sixty megawatt facility. When fully functional and operating at capacity, this geothermal facility has the potential to generate over $1,000,000 annually in royalties to the State of Hawaii. However, from past studies, the geothermal potential could be as great as two thousand megawatts of production. Therefore, it would behoove the State of Hawaii to use and promote a resource that can potentially increase royalty revenues, create economic opportunity, as well as provide for energy self-sufficiency and security.

The purpose of this part is to:

    1. Require the department of business, economic development, and tourism, with the cooperation of the department of land and natural resources, to update or conduct a new geothermal resource assessment study;

(2) Require the department of land and natural resources to provide an analysis of the duties, workload, and functions of each staff member responsible for managing geothermal resources as part of the resource assessment study; and

(3) Appropriate $75,000 from the special land and development fund to fund the geothermal resource assessment study.

SECTION 3. The department of business, economic

development, and tourism, with the cooperation of the department

of land and natural resources, shall update or conduct a new

resource assessment study of the development potential for

geothermal energy in the State. The geothermal resource

assessment study shall include:

(1) A review and assessment of the potential for geothermal energy development in this State;

(2) Recommendations on how the State can use and promote geothermal energy to increase royalty revenues, economic opportunity, and energy self-sufficiency;

(3) Recommendations on possible legislation to assist geothermal energy development;

(4) A detailed analysis of the duties, workload, and job description of each staff member of the department of land and natural resources who is responsible for managing geothermal resources;

(5) A detailed assessment of how the department of land and natural resources is using the State's portion of royalties derived from geothermal resources; and

(6) A detailed assessment of the adequacy of the present department of land and natural resources' process of allocating funding for geothermal energy development.

SECTION 4. The department of business, economic

development, and tourism, with the assistance of the department

of land and natural resources shall submit the geothermal

resource assessment study to the legislature no later than

thirty days prior to the convening of the regular session of

2004.

SECTION 5. There is appropriated out of the special land

and development fund the sum of $75,000 for fiscal year 2003-

2004 for the department of business, economic development, and

tourism to update or conduct a new geothermal resource

assessment study.

The sum appropriated shall be expended by the department of

land and natural resources for the purposes of this part.

PART III

SECTION 6. Chapter 201G, Hawaii Revised Statutes, is amended by adding a new subpart to part III to be appropriately designated and to read as follows:

" . Solar Water Heating Loan Program

§201G- Purpose. The legislature finds that Hawaii is a leader in the use of renewable energy; however, there is a need to increase the use of renewable energy to reduce Hawaii’s use of fossil fuel and to protect Hawaii’s special environment. The legislature further finds that given Hawaii’s prevailing sunny climate, solar energy is a logical renewable resource and public policy and programs should promote and aid consumers in the use of solar energy.

It is the purpose of this subpart to encourage the use of solar energy by making affordable loans available to homeowners for the purchase and installation of solar water heating systems for their homes, particularly, for homes developed under the jurisdiction of the corporation.

§201G- Solar water heating loan program. (a) There is established the solar water heating loan program to be administered by the corporation. The purpose of the program is to enable the corporation to make direct solar water heating loans to eligible homeowners as determined by the corporation. In administering the solar water heating loan program, the corporation shall establish the terms and conditions, maturities, interest rates, collateral, and other requirements for the loans; provided that:

    1. The amount of the loan shall not exceed the cost of purchasing and installing the solar water heating system, less any applicable rebate and less the Hawaii energy conservation tax credit established under section 235-12, that is provided as a result of the purchase and installation of the solar system, as calculated at the time of installation;
    2. The interest rate on the loans may range from zero per cent to a maximum rate that shall be less than market rate; and
    3. Notwithstanding standard underwriting criteria and practice, the corporation may allow a loan repayment schedule based on the electrical usage savings expected to be realized by the eligible homeowner.

(b) The corporation shall establish the qualifications of the eligible homeowner, and may consider the household income of the eligible homeowner and give priority to low- and moderate- income homeowners.

(c) The corporation shall establish requirements for the solar water heating systems eligible for financing by the solar water heating loan.

(d) All solar water heating loans made shall comply with applicable state and federal laws.

(e) The corporation may take all necessary action to collect any delinquent amount in the event of a default in the payment of any installment of principal or interest on any loan made from the solar water heating loan revolving fund and to otherwise secure the loans in a manner which affords reasonable protection of the State’s resources. The corporation may purchase services required for the purposes of this subpart from any state or national bank authorized to accept or hold deposits in the State.

(f) The corporation may purchase services from the electric utilities to have the loan repayment amounts billed and paid through the electric utility.

§201G- Solar water heating loan revolving fund. (a) There is created a solar water heating loan revolving fund to be administered by the corporation, which shall be used to carry out the purposes of this subpart.

(b) Any funds appropriated for the purpose of the solar water heating loan revolving fund and all moneys received or collected by the corporation for the purpose of the revolving fund shall be used for loans under this subpart; provided that interest earned on funds appropriated for the solar water heating loan revolving fund may be used by the corporation for the administration of the solar water heating loan program established under this subpart.

§201G- Additional powers. The powers conferred upon the corporation by this subpart shall be in addition and supplemental to the powers conferred upon it by any other law, and nothing herein shall be construed as limiting any powers, rights, privileges, or immunities so conferred upon it."

SECTION 7. There is appropriated out of the general revenues of the State of Hawaii the sum of $1,000,000 or so much thereof as may be necessary for fiscal year 2003-2004 to be paid into the solar water heating loan revolving fund created in this part.

The sum appropriated shall be expended by the housing and community development corporation of Hawaii for the purposes of this part.

PART IV

SECTION 8. The legislature finds that renewable energy development in Hawaii is primarily driven by efforts to reduce the state's oil dependency, improve energy security, and protect the environment.

Renewable energy development poses significant challenges to electric utilities because implementation issues, such as high cost and technical immaturity, integration of intermittent resources with the existing electric system, limited site and resource availability, and controversial environmental and social issues, can conflict with the ability to maintain reliable and cost-effective electric energy generation and delivery.

The legislature finds that the State should do more to support efforts to develop renewable energy in Hawaii. The legislature recognizes the challenges of renewable energy development in Hawaii.

Accordingly, the purpose of this part is to expand the definition of enterprise zone qualified businesses to include businesses that produce electricity from renewable energy for sale primarily to public utilities for resale to the public.

SECTION 9. Section 209E-2, Hawaii Revised Statutes, is amended by amending the definition of "qualified business" to read as follows:

""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] renewable energy, as defined in section 269-91, for sale primarily to a public utility company for resale to the public."

PART V

SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 11. This Act shall take effect upon its approval; provided that:

(1) Sections 5 and 7 shall take effect on July 1, 2003; and

(2) Part III of this Act shall take effect on July 1, 2003, and shall be repealed on June 30, 2006.