Report Title:

Public Utilities; Avoided Costs; Externalities

Description:

Requires the public utilities commission to monetize external costs, e.g. environmental costs, associated with electricity generation. Requires the use of external costs when evaluating resource options and public need and necessity in commission proceedings.

HOUSE OF REPRESENTATIVES

H.B. NO.

1021

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO PUBLIC UTILITIES.

 

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

SECTION 1. The legislature finds that, in addition to other ratepayer protection objectives, a principal goal of electric utilities' resource planning and investment is to minimize the cost to society of reliable energy services (including adverse environmental impact), and encourage the diversity of energy sources through improvements in energy efficiency and the development of renewable energy resources. The public utilities commission's integrated resource planning framework in Docket No. 7257 requires that external costs and benefits, including environmental, cultural, and general economic costs, be considered in the integrated resource planning process. The Hawaiian Electric Company utilities have maintained that it was not feasible to monetize externalities in their first integrated resource planning cycle. While the commission agreed that the quantification of externalities is complex, it noted its expectation that externalities would be quantified in subsequent integrated resource planning cycles. The commission then agreed with Hawaiian Electric Company's proposal to develop Hawaii specific monetized values, develop an integrated resource planning externalities workbook, and subsequently use external costs and benefits in the integration process. To date, consideration of monetized externalities, however, continues to be absent from the calculation of avoided costs in electric utility resource planning and need assessments.

The purpose of this Act is to require and set a timetable for the monetization of externalities, and to ensure the consideration of monetized externalities in the calculation of avoided costs.

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

"§269- Externalities. (a) The commission, to the extent practicable, shall quantify and establish a range of external costs associated with each method of electricity generation, including, but not limited to, environmental costs such as carbon dioxide and other emissions costs, cultural costs, and general economic costs. A utility shall use the values established by the commission in the calculation of avoided costs, and when evaluating and selecting resource options. The commission shall consider externalities values, in addition to other ratepayer protection objectives, in all resource plan, power purchase, and certificate of need proceedings.

(b) The commission shall establish interim external cost values associated with each method of electricity generation by November 30, 2005. These values shall expire on the date the commission establishes external cost values under paragraph (a)."

SECTION 3. The commission shall submit a report to the legislature no later than twenty days prior to the convening of the 2006 regular session on its implementation of interim external cost values as required by section 269-    (b), Hawaii Revised Statutes. The report shall also include a commitment by the commission on when the legislature can expect a final report on the commission's establishment and implementation of final external cost values.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________