Report Title:
Renewables Portfolio Standard; Established; PUC
Description:
Requires qualified electric utility companies to implement a renewables portfolio standard, thereby requiring utilities to possess a minimum percentage of renewable energy resources within their overall resource portfolios. Requires electric utility companies to ensure solar electricity production capacity. Requires the public utilities commission to establish a program to issue renewable credits to renewable energy generators.
HOUSE OF REPRESENTATIVES |
H.B. NO. |
2825 |
TWENTY-SECOND LEGISLATURE, 2004 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO RENEWABLE ENERGY RESOURCES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
PART I. RENEWABLES PORTFOLIO STANDARD
SECTION 1. It is the intent of the legislature to recognize the economic, environmental, and fuel diversity benefits of renewable energy resources; to establish a market for renewable energy in Hawaii using the State's significant renewable energy resources; and to drive down the cost of renewable energy to consumers. The legislature finds that Hawaii has an abundance of clean, renewable energy resources, including solar, wind, wave, and biomass energy, but the amount of electricity produced from renewable energy in the State has decreased significantly over the past forty years. Hawaii currently uses only about seven per cent renewable energy for electricity production, and it is estimated that this percentage will decrease to five per cent by 2010. The legislature also finds that the benefit of electricity from renewable energy resources accrues to the public at large, thus consumers and electric utilities share an obligation to develop a minimum level of these resources in the State's electric supply portfolio.
The legislature finds that one way to achieve this objective is through the implementation of a "renewables portfolio standard", which is a flexible, market-driven policy that seeks to ensure that the public benefits of wind, solar, biomass, geothermal energy, and other renewable energies continue to be recognized as electricity markets become more competitive. This policy ensures that a minimum amount of renewable energy is included in the portfolio of electricity resources serving the State. By increasing the required amount over time, the renewables portfolio standard seeks to increase the sustainability of the electricity industry. Because it is a market standard, the renewables portfolio standard relies almost entirely on the private market for its implementation. Market implementation will result in competition, efficiency, and innovation that will deliver renewable energy at the lowest possible cost.
The renewables portfolio standard works through the establishment of renewable energy credits, which are tradable certificates of proof that one kilowatt-hour of electricity has been generated by a renewable-fueled source. Credits are denominated in kilowatt-hours and are a separate commodity from the power itself. The renewables portfolio standard requires all qualified electric utility companies to demonstrate, through ownership of credits, that they have supported an amount of renewable energy generation equivalent to some percentage of their total annual kilowatt-hour sales. For example, if the renewables portfolio standard is set at five per cent, and a generator sells one hundred thousand kilowatt-hours in a given year, the generator would need to possess five thousand credits at the end of that year.
Investors and generators make all decisions about how to comply with this requirement, including the type of renewable energy to acquire, which technologies to use, what renewable developers to do business with, what price to pay, and which contract terms to agree to. Generators decide for themselves whether to invest in renewable energy projects and generate their own credits, enter into long-term contracts to purchase credits or renewable power along with credits, or simply to purchase credits on the spot market. The credit system provides compliance flexibility and avoids the need to "track electrons". Because the renewables portfolio standard applies equally to all generators, it is competitively neutral.
The purpose of this Act is to require:
(1) Qualified electric utility companies to implement a renewables portfolio standard, thereby requiring utilities to possess a minimum percentage of renewable energy resources within their overall resource portfolios; and
(2) The public utilities commission to establish a program to issue renewable credits to renewable energy generators.
SECTION 2. 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.
"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.]
"Biomass" means organic residues or crops that are grown for energy production.
"Qualified electric utility company" means a distributor, including all subsidiaries of that distributor, of electricity to customers in the State that has sales of more than three hundred fifty thousand kilowatt-hours of electricity per year.
"Renewable energy" means energy from solar; wind; geothermal; biomass, including waste-to-energy and landfill gas recovery; and hydroelectric facilities.
"Renewable energy credit" means a tradable certificate that one kilowatt-hour of electricity from renewable energy was either:
(1) Generated by a qualified electric utility company and sold to Hawaii consumers;
(2) Purchased by a qualified electric utility company from a renewable energy generator in Hawaii and sold to Hawaii consumers; or
(3) Purchased by a qualified electric utility company from one or more Hawaii renewable energy generators.
"Renewable energy generator" means a facility that produces electricity from renewable energy.
"Renewables portfolio standard" means the percentage of electric power consumed in Hawaii that shall be derived from renewable energy."
SECTION 3. 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 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)] implement a renewables portfolio standard with the following percentages by the following dates:
(1) Nine per cent of its net electricity sales by December 31, 2010[.]; and
(2) Twenty per cent of its net electricity sales by December 31, 2020."
SECTION 4. 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."]
PART II. RENEWABLES PORTFOLIO STANDARD FOR SOLAR ENERGY
SECTION 5. The legislature finds that electricity production by the direct use of solar energy will be an important component of a diversified electricity portfolio in Hawaii, but at existing prices solar energy cannot compete with other renewables within a renewables portfolio standard. The legislature finds, however, that it is clearly in the best interest of Hawaii's economy, economic development, and security to encourage a robust market of on-grid solar electric applications. These can be utility scale solar thermal-electric energy production facilities, utility scale solar photovoltaic energy production facilities, and distributed, on-site, or building-integrated applications of solar photovoltaic electric energy production.
The legislature further finds that the particular advantages of on-site and on-grid solar electric production are not reflected in their price, and yet have important value to Hawaii's economy. In addition to the environmental and oil-reduction benefits of the use of indigenous energy resources, the unquantified benefits of solar electric energy production can include enhancing facility reliability, security of important telecommunications, financial data and public health and safety functions, and job creation, and economic development from potential in-state manufacturing or assembly facilities. From the utility standpoint, these unquantified benefits can also include reduction of load on urban distribution and substation components, reduction of urban peak demand, enhanced reliability of feeder systems, voltage support, and an overall general gain in network reliability. Off-grid applications of solar electric energy production are already economically viable in the Hawaii energy economy and do not need to be part of an incentive package.
The legislature finds that it is in the interest of the State to capture the unquantified benefits of on-grid solar electric energy production, and not have this emerging technology be subject to market competition against other renewable electric energy production facilities that have already achieved lower production costs.
SECTION 6. As used in this part:
"Solar photovoltaic electric energy production" means the making of electricity through photovoltaic cells, panels, or collectors in various configurations, arrays, or building components.
"Solar thermal electric energy production" means the making of electricity by concentrating solar energy onto devices that convert the concentrated heat to electricity through either steam-electric energy production or heat-engine electric energy production.
SECTION 7. (a) Each qualified electric utility company, which sells electricity for consumption in the State, shall be responsible for ensuring that solar electricity production capacity in the utility's service territory is equivalent to, at a minimum, one per cent of gross Hawaii utility generating capacity by December 31, 2010. Any utility company that is not included in the term "qualified electric utility company" may participate voluntarily.
(b) As an economic inducement to diversify the energy resource portfolio for the State, induce additional technology applications within the State, and improve the economics for utility acquisition and application of in-state produced solar electricity equipment:
(1) Any renewable energy generator that develops utility-scale solar electric energy production shall be entitled to receive twice the kilowatt-hours of electricity in renewable energy credits toward fulfilling the renewables portfolio standard requirements specified in section 3. As used in this paragraph, "utility-scale solar electric energy production" means the generation of one megawatt of electricity or higher by a renewable energy generator, including the use of either solar photovoltaic electric energy production, solar thermal electric energy production, or both; and
(2) Any manufacturer that agrees to build a solar electricity equipment assembly or production plant in the State, where the solar electricity equipment is produced and sold for use in the State, shall be considered to be a renewable energy producer under section 2 of this Act and shall be entitled to receive twice the kilowatt-hours of electricity in renewable energy credits toward fulfilling the renewables portfolio standard requirements specified in section 3.
PART III. IMPLEMENTATION AND ENFORCEMENT
SECTION 8. The public utilities commission shall establish a program to issue renewable energy credits to renewable energy generators by January 1, 2005. The commission, or its duly authorized agent, shall:
(1) Inspect, certify, and audit renewable energy credits;
(2) Impose and collect a fee on renewable energy credit applicants to cover the administrative cost of issuing, recording, certifying, auditing, and monitoring the sale or exchange and tracking of renewable energy credits;
(3) Enforce this Act, including the imposition of administrative penalties; and
(4) Adopt rules pursuant to chapter 91 to carry out the purposes of this Act.
SECTION 9. Before March 31, beginning in 2011 and each year thereafter, each qualified electric utility company shall submit an application to the public utilities commission, which contains evidence of ownership of sufficient renewable energy credits to satisfy the renewables portfolio standard for the previous year. An application fee shall be submitted at the time of filing the application in an amount established by rule to be sufficient to cover the cost to process, monitor, and review the application and subsequent filings. Evidence of sufficient renewable energy credits shall be equal to the product of its total electricity sales to Hawaii electricity customers in the previous calendar year, denominated in kilowatt-hours, and the renewables portfolio standard for the same year. Renewable energy credits may only be granted for renewable energy generators located within the State.
SECTION 10. Renewable energy credits may be accumulated, sold, or exchanged by the person to whom the credits are issued or by any other person who acquires the credits. A sale or exchange of credit shall not be valid unless recorded with the public utilities commission within ninety days after the conclusion of the transaction.
SECTION 11. (a) The public utilities commission shall adopt rules to carry out and enforce sections 3 to 6 of this Act. The rules adopted by the commission may include any enforcement mechanisms that are necessary and reasonable to ensure that each qualified electric utility company complies with its portfolio standard. Enforcement mechanisms may include, without limitation, the imposition of administrative fines.
(b) If a qualified electric utility company does not comply with the portfolio standard for any calendar year, the public utilities commission may impose an administrative fine against the qualified electric utility company or take other administrative action against the qualified electric utility company, or both.
(c) The public utilities commission may impose an administrative fine against a qualified electric utility company based upon:
(1) Each kilowatt-hour of electricity that the qualified electric utility company does not generate or acquire from a renewable energy system or a solar renewable energy system during a calendar year in violation of its portfolio standard; or
(2) Any other reasonable formula adopted by the commission.
In the aggregate, the administrative fines imposed against a qualified electric utility company for all violations of its portfolio standard for a single calendar year must not exceed the amount that is necessary and reasonable to ensure that the qualified electric utility company complies with its portfolio standard, as determined by the public utilities commission.
(d) If the public utilities commission imposes an administrative fine against a qualified electric utility company that is a public utility:
(1) The administrative fine is not a cost of service of the qualified electric utility company;
(2) The qualified electric utility company shall not include any portion of the administrative fine in any application for a rate adjustment or rate increase; and
(3) The public utilities commission shall not allow the provider to recover any portion of the administrative fine from its retail customers.
(e) All administrative fines imposed and collected pursuant to this section shall be deposited in the state general fund.
SECTION 13. The public utilities commission shall annually submit a report to the legislature no later than twenty days before the convening of the regular session that includes the activities of the commission under sections 7 to 10 of this Act, program results, data, and any recommendations to achieve increased use and availability of renewable energy in the State.
PART IV. MISCELLANEOUS
SECTION 14. 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 15. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 16. This Act shall take effect upon approval.
INTRODUCED BY: |
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