THE SENATE

S.C.R. NO.

37

TWENTY-SEVENTH LEGISLATURE, 2013

S.D. 1

STATE OF HAWAII

 

 

 

 

 

SENATE CONCURRENT

RESOLUTION

 

 

REQUESTING THE PUBLIC UTILITIES COMMISSION TO CONSIDER WHETHER STRANDED COSTS ARE A SIGNIFICANT FACTOR IN THE ELECTRIC UTILITIES' FAILURE TO RETIRE OLD, OIL-FIRED GENERATION PLANTS AND ANY APPROPRIATE MEASURES THAT WOULD ENCOURAGE ELECTRIC UTILITIES TO RETIRE OLD, OIL-FIRED GENERATION PLANTS AND THE POTENTIAL IMPACT THIS WOULD HAVE ON RATEPAYERS.

 

 


     WHEREAS, fossil fuel electric generation plants use non-renewable resources that will ultimately be exhausted; and

 

     WHEREAS, oil is probably the most used fossil fuel for electric power generation, but oil prices are constantly rising; and

 

     WHEREAS, it has been reported that the overall efficiency of a modern fossil fuel electric generation plant is about forty percent, meaning that sixty percent of the energy input to the system is wasted; and

 

     WHEREAS, efficiencies may be as low as thirty percent in some older plants; and

 

     WHEREAS, the fossil fuel plant combustion process is notorious for its potential to release unpleasant gases and solids into the atmosphere; and

 

     WHEREAS, fossil fuels may contain uncontrolled amounts of other elements and compounds, which may be left as residues when the fuel is burned.  The combustion process itself can create noxious gases from the fuel or from impurities; and

 

     WHEREAS, another unavoidable consequence of burning fossil fuel is that the process generates greenhouse gases, including carbon dioxide, sulphur dioxide, and methane, all of which contribute to global warming; and

 

     WHEREAS, the State must find alternative ways of generating electricity to eliminate threats to the environment; however, electric utilities may have financial difficulties in retiring these fossil fuel plants due to the fact that shutting down the plant without a plan for cost recovery of investments in that plant means that those costs usually cannot be made up; and

 

     WHEREAS, these utility stranded costs can also occur when customers reduce their purchases of electricity in order to save costs or when a utility is left with plant operating costs that are higher than the charge for utility service but the utility is still obligated as a monopoly to continue to produce electricity and cannot raise its rates without prior approval in a regulated monopoly system, which leaves that utility with a stranded cost; and

 

     WHEREAS, in exchange for monopoly status and assured profits, utilities have historically had an obligation to serve a customer even though such investments would take long periods to amortize; and

 

     WHEREAS, utilities need a means of recovering stranded costs due to early retirement of power plants for the purpose of switching the power source from fossil fuels to renewable fuels; now, therefore,

 

     Be it resolved by the Senate of the Twenty-seventh Legislature of the State of Hawaii, Regular Session of 2013, the House of Representatives concurring, that this body requests the Public Utilities Commission to take into consideration:

 

     (1)  Whether stranded costs are a significant factor in the electric utilities' failure to retire their old, oil-fired generation plants; and

 

     (2)  Any appropriate measures that would encourage the electric utilities to retire old, oil-fired generation plants and the potential impact this would have on ratepayers; and

 

     BE IT FURTHER RESOLVED that a certified copy of this Concurrent Resolution be transmitted to the Public Utilities Commission.

Report Title: 

Stranded Cost Recovery Mechanism; Public Utilities