Report Title:

Renewable Energy Resources

Description:

Establishes requirements for electric utility companies to increase the percentage of renewable energy resources within an overall resource portfolio. Provides incentives and penalties to encourage compliance with the standard.

HOUSE OF REPRESENTATIVES

H.B. NO.

2389

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO RENEWABLE ENERGY RESOURCES.

 

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

SECTION 1. Renewable energy resources offer Hawaii important economic, environmental, and energy security benefits. This bill establishes a goal of twenty per cent of electricity sold to utility customers to be produced by renewable energy by the year 2020. To stem recent declines in the percentage of electricity from renewable energy in Hawaii and to encourage the further development of those resources, the legislature finds that the State must do more to encourage the development and use of renewable energy. These efforts can reduce the amount of imported oil used for electricity generation and will contribute to the ultimate success of the State's efforts to develop the infrastructure for a future hydrogen energy economy based upon hydrogen produced primarily from renewable energy.

This legislation will also help meet the State's energy objectives, codified in section 226-18, Hawaii Revised Statutes, which require that, "Planning for the State's facility systems with regard to energy shall be directed toward the achievement of the following objectives, giving due consideration to all:

(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) Reduction, avoidance, or sequestration of greenhouse gas emissions from energy supply and use."

Accordingly, the legislature finds that it should establish a mandate for electric utilities to direct them in incorporating renewable resources into their resource portfolios to achieve these objectives. A requirement for twenty per cent of total electricity sold to utility customers to be produced by renewable energy by 2020 is hereby established.

The purpose of this Act is to ensure that Hawaii benefits from the greater use of renewable energy by:

(1) Establishing requirements for electric utility companies to increase the percentage of renewable energy resources within an overall resource portfolio; and

(2) Providing for incentives and penalties to encourage compliance with the standard.

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

"269- Reporting, compliance, incentives, and penalties. The public utilities commission shall establish rules, deadlines, and procedures for electric utility companies to annually report the percentage of electrical energy sales represented by renewable energy and for the public utilities commission to determine if the electric utility companies are in compliance.

To encourage electric utility companies to meet or exceed their renewable portfolio standard and in recognition of the fact that electric utility companies do not earn revenues from electricity produced by non-utility generation, the public utilities commission shall establish an incentive of one-half of one cent ($0.005) per kilowatt-hour produced by non-utility renewable energy generation installed after January 1, 2003, payable to the electric utility companies. The public utilities commission shall establish an added return on capital for utility-owned renewable generation systems.

The public utilities commission shall also develop significant financial penalties to be assessed in the event an electric utility company fails to meet its renewable portfolio standard."

SECTION 3. Section 269-91, Hawaii Revised Statutes, is amended to read as follows:

"[[]269-91 Definitions.[]] For the purposes of this [[]part[]]:

"Electric utility company," means a public utility as defined under section 269-1, for the production, conveyance, transmission, delivery, or furnishing of power[.] that sold more than 500,000,000 kilowatt-hours of electricity in this State in 2002.

"Incentive" means a financial reward established by the public utilities commission for meeting or exceeding the renewable portfolio standard in a particular year. The incentive may be paid on a per kilowatt-hour basis for renewable energy purchased from a non-utility generator for sale to utility customers, or an added return on capital for utility-owned renewable generation systems. Incentives shall be provided only in those years where the utility meets or exceeds the renewable portfolio standard for that particular year.

"Penalty" means a financial disincentive established by the public utilities commission for failing to meet the renewable portfolio standard in a particular year. Any penalty shall be paid from utility profits and shall not be passed on to the ratepayers.

"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.

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

SECTION 4. Section 269-92, Hawaii Revised Statutes, is amended to read as follows:

"[[]269-92[]] Renewable portfolio standards. Each electric utility company that [sells electricity for consumption in the State] sold more than 500,000,000 kilowatt-hours of electricity in this State in 2002 shall [establish] meet or exceed 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.]

(1) Eight per cent of its net electricity sales by
January 1, 2006;

(2) Nine per cent of its net electricity sales by
January 1, 2008;

(3) Ten per cent of its net electricity sales by
January 1, 2010;

(4) Twelve per cent of its net electricity sales by
January 1, 2012;

(5) Fourteen per cent of its net electricity sales by January 1, 2014;

(6) Sixteen per cent of its net electricity sales by
January 1, 2016;

(7) Eighteen per cent of its net electricity sales by January 1, 2018; and

(8) Twenty per cent of its net electricity sales by
January 1, 2020."

SECTION 5. Section 269-94, Hawaii Revised Statutes, is repealed.

["[269-94 waivers, extensions, and incentives.] Any electric utility company not meeting the renewable portfolio standard shall report to the public utilities commission within ninety days following the goal dates established in section [269-92], and provide an explanation for not meeting the renewable portfolio standard. The public utilities commission shall have the option to either grant a waiver from the renewable portfolio standard or an extension for meeting the prescribed standard.

The public utilities commission may provide incentives to encourage electric utility companies to exceed their renewable portfolio standards or to meet their renewable portfolio standards ahead of time, or both."]

SECTION 6. The public utilities commission shall establish the necessary rules, deadlines, and procedures under this Act and provide a report of such rules, deadlines, and procedures; any findings and recommendations; and any proposed additional legislation the commission finds necessary to fully effectuate the provisions of this Act, to the legislature at least twenty days prior to the convening of the regular session of 2006.

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

BY REQUEST