Report Title:

Renewable Energy; Renewable Portfolio Standards; PUC Study

Description:

Requires the PUC to establish that the rate for purchase of electricity by a public utility shall not be less than 100% of the cost avoided by the utility when the utility purchases electrical energy. Increases renewable portfolio standards percentages. Amends definition of "renewable energy". (SD1)

THE SENATE

S.B. NO.

1557

TWENTY-THIRD LEGISLATURE, 2005

S.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:

SECTION 1. Act 95, Session Laws of Hawaii 2004, was enacted to decrease the State's need to import large amounts of oil, as well as to increase import substitution, economic efficiency, and productivity, by increasing the use and development of Hawaii's renewable energy resources through a partnership between the State and the private sector. Act 95 was based upon S.B. No. 2474, S.D. 3, H.D. 2, which the senate agreed to and which was based on another similar proposed senate conference draft of this bill, but which differed from Act 95 by:

(1) Clarifying that the public utilities commission shall establish the rate for purchase of electricity by a public utility at not less (rather than more) than one hundred per cent of the cost avoided by the utility when the utility purchases electrical energy rather than producing it;

(2) Amending the definition of "renewable energy";

(3) Deleting the requirement that the public utilities commission determine if an electric utility company is unable to meet the renewable portfolio standards, and if so, requiring that the utility be relieved of responsibility for meeting those standards for the period of time that it is unable to meet the standards;

(4) Deleting the definition of "cost effective"; and

(5) Deleting the codified statutory duties of the public utilities commission relating to a renewable portfolio standards study with an uncodified session law.

The purpose of this Act is to make these statutory amendments in the proposed conference draft by the senate on S.B. No. 2474, regular session of 2004.

SECTION 2. Section 269-27.2, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) The rate payable by the public utility to the producer for the nonfossil fuel generated electricity supplied to the public utility shall be as agreed between the public utility and the supplier and as approved by the public utilities commission; provided that in the event the public utility and the supplier fail to reach an agreement for a rate, the rate shall be as prescribed by the public utilities commission according to the powers and procedures provided in this chapter.

In the exercise of its authority to determine the just and reasonable rate for the nonfossil fuel generated electricity supplied to the public utility by the producer, the commission shall establish that the rate for purchase of electricity by a public utility shall not be [more] less than one hundred per cent of the cost avoided by the utility when the utility purchases the electrical energy rather than producing the electrical energy."

SECTION 3. Section 269-91, Hawaii Revised Statutes, is amended by amending the definition of "renewable energy" to read as follows:

"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 from organic sources, hydrogen fuels derived from renewable energy, or fuel cells where the fuel is derived from renewable sources. Where biofuels, hydrogen, or fuel cell fuels are produced by a combination of renewable and nonrenewable means, the proportion attributable to the renewable means shall be credited as renewable energy. Where fossil and renewable fuels are co-fired in the same generating unit, the unit shall be considered to produce renewable electricity in direct proportion to the percentage of the total heat value represented by the heat value of the renewable fuels. "Renewable energy" also means electrical energy savings brought about by the use of solar [and heat pump] water heating, seawater air-conditioning district cooling systems, and solar air-conditioning [and ice storage, quantifiable energy conservation measures, use of rejected heat from co-generation and combined heat and power systems excluding fossil-fueled qualifying facilities that sell electricity to electric utility companies, and central station power projects]."

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 shall establish a renewable portfolio standard 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;

(3) Ten per cent of its net electricity sales by December 31, 2010;

(4) [Fifteen] Twenty per cent of its net electricity sales by December 31, 2015; and

(5) [Twenty] Thirty per cent of its net electricity sales by December 31, 2020.

The public utilities commission shall determine if an electric utility company is unable to meet the renewable portfolio standards in a cost-effective manner, or as a result of circumstances beyond its control which could not have been reasonably anticipated or ameliorated. An electric utility company is responsible for conducting sufficient advance planning to acquire its per cent of net electricity sales. Events or circumstances that are outside of a party's reasonable control may include weather-related damage, mechanical failure, or failure of the renewable power provider to meet its contractual obligations to an electric utility company, strikes, lockouts, actions of a governmental authority that adversely affect the generation, transmission, or distribution of renewable energy from an eligible source under contract to an electric utility purchaser. [If this determination is made, the electric utility company] If the determination is made that the electric utility company is unable to meet the renewable portfolio standard from building renewable energy power, purchasing renewable energy power from renewable power producers, or purchasing energy credits, the electric utility company shall be relieved of responsibility for meeting the renewable portfolio standard for the period of time that it is unable to meet the standard."

SECTION 5. Section 269-91, Hawaii Revised Statutes, is amended by deleting the definition of "cost-effective".

[""Cost-effective" means the ability to produce or purchase electric energy or firm capacity, or both, from renewable energy resources at or below avoided costs."]

SECTION 6. The public utilities commission shall:

(1) Develop and implement a utility rate structure, which may include but is not limited to performance-based ratemaking, by December 31, 2006, to encourage Hawaii’s electric utilities to use renewable energy resources found in Hawaii to meet the requirements of section 2;

(2) Gather, review, and analyze empirical data to determine the extent to which this proposed utility rate structure would impact electric utility companies' profit margins and to ensure that these profit margins do not decrease for a period of five years following the implementation of this rate structure;

(3) Adopt rules to implement incentives and penalties to assist electric utility companies in meeting the renewable portfolio standards established in section 269-92, Hawaii Revised Statutes, while allowing deviation from the standard in the event of circumstances beyond the control of the utility, which could not have been reasonably anticipated or ameliorated;

(4) Using funds from its special fund, contract with qualified technical experts to conduct independent studies to be reviewed by a panel of experts from among such entities as the U.S. Department of Energy, the National Renewable Energy Laboratory, the Rocky Mountain Institute, the Electric Power Research Institute, the University of Hawaii Natural Energy Institute, or other similar institutions with the required expertise. These studies shall:

(A) Make findings and recommendations to the commission as to the capability of Hawaii’s electric utility companies to increase the percentage of renewable energy established by the standard in a cost-effective manner, or whether circumstances require that the standard be adjusted. Cost effectiveness and capability shall be assessed by factors such as the impact on consumer rates, utility system reliability and stability, costs and availability of appropriate renewable energy resources and technologies, and other such criteria deemed appropriate by the commission; and

(B) Make findings and recommendations to the commission for projected standards to be set five and ten years beyond the then current standard; and

(5) Based on its own studies and those contracted under paragraph (4), the commission shall report its findings and recommendations, including, in particular, recommendations for new standards and goals, adjustments of percentages, and any proposed legislation, to the legislature no later than twenty days before the convening of the regular session of 2009, and every five years thereafter.

SECTION 7. Statutory material to be repealed is bracketed

and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect on July 1, 2005.