Report Title:

Renewables Portfolio Standards

Description:

Requires qualified electric utilities to attempt the implementation of renewables portfolio standards.

THE SENATE

S.B. NO.

588

TWENTY-SECOND LEGISLATURE, 2003

 

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. It is the intent of the legislature to recognize the economic, environmental, and fuel diversity benefits of renewable energy resources and 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 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 "renewables portfolio standards" -- 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. The 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 standard seeks to increase the sustainability of the electricity industry. Because it is a market standard, renewables portfolio standards rely almost entirely on the private market for its implementation. Market implementation will result in competition, efficiency, and innovation that seek to deliver renewable energy at the lowest possible cost.

Renewables portfolio standards work 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 (kWh) and are a separate commodity from the power itself.

The legislature finds that the renewables portfolio standards approach avoids the administrative dissemination of funds by government agencies, is market driven, provides certainty and stability through properly-designed renewables portfolio standards, encourages least-cost compliance, and fosters a "competitive dynamic" that is not achieved with policies that involve direct subsidies to renewable generators without involving the rest of the electric industry.

The purpose of this Act is to encourage the implementation of renewables portfolio standards by requiring qualified electric utility companies to attempt the implementation of minimum renewables portfolio standards.

SECTION 2. For the purposes of this Act:

"Biomass" means organic residue or crops that are grown for energy production.

"Qualified electric utility company" means a distributor of electricity to customers in the State regulated by the public utilities commission that has sales of more than five hundred million kilowatt-hours of electricity per year.

"Renewable energy" means energy from wind, solar energy systems, biomass, including waste-to-energy and landfill gas recovery, geothermal resources, hydropower, or organic wastes, including refuse-derived fuel.

"Renewable energy credit" means a tradable certification of proof 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 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 should be derived from renewable energy.

SECTION 3. Each qualified electric utility company that sells electricity for consumption in the State shall implement a 7.5 per cent renewables portfolio standard effective January 1, 2005, and shall attempt to increase this percentage by .25 percentage points each succeeding year to achieve a minimum 9.5 per cent renewables portfolio standard on January 1, 2013. Any utility company that is not included in the term "qualified electric utility company" may participate voluntarily.

SECTION 4. If a qualified electric utility company fails to reach the renewables portfolio standard for the year 2005, 2008, 2013, or the qualified electric utility company shall submit a report to the public utilities commission, the consumer advocate, and the department of business, economic development, and tourism setting forth in detail the reasons why the qualified electric utility company was not able to meet the standard established for the respective year. The department of business, economic development, and tourism shall submit a report to the public utilities commission and the consumer advocate commenting on whether the department believes the qualified electric utility company's reasons for not reaching the renewables portfolio standard are reasonable.

SECTION 5. The public utilities commission may impose an administrative penalty against a qualified electric utility company for not achieving the standards set forth in section 3 of this Act.

SECTION 6. 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 7. This Act shall take effect upon its approval.

INTRODUCED BY:

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