HOUSE OF REPRESENTATIVES

H.B. NO.

416

TWENTY-EIGHTH LEGISLATURE, 2015

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to retail wheeling.

 

 

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

 


SECTION 1. The legislature finds that the average retail price of electricity to the end-use customer in Hawaii is 268 per cent of the national average. Further, Hawaii County electricity rates are triple the national average, causing some of the most vulnerable populations of the State to pay the absolute highest rates in the nation to keep their lights on at night. The legislature further finds that the unreasonable electricity costs are placing an unbearable burden on the residents of Hawaii that must be alleviated.

The legislature further finds that in general, retail wheeling refers to the process of transmitting electric power from a seller's point of generation across a third-party-owned transmission and distribution system to the seller's retail customer. While over half of the states engage in retail wheeling in some form, Hawaii restricts competition through forcing independent power producers to sell their power to a public utility and prevents direct sale to end users.

The legislature further finds that the State must diversify its renewable portfolio to meet certain clean energy standards under the Clean Energy Initiative and further our island state energy security. Additionally, creating jobs and decreasing the unemployment rate among Hawaii residents, especially in less populated areas, is in the public interest. To this end, the legislature finds that wheeling can provide competition in the energy sector, which will directly and indirectly allow for more renewable and clean energies and expand the market and create jobs.

The legislature also finds that in 2004, the legislature adopted Senate Concurrent Resolution No. 180 requesting the public utility commission to explore how to implement the concept of intra-governmental wheeling to facilitate government wheeling of electricity and other regulatory measures to support the development of renewable energy systems by federal, state, and county agencies. In 2007, the public utilities commission finally opened proceedings in response to this resolution to: (1) investigate the impacts, if any, of wheeling on the state's electric industry;(2) address interconnection matters; (3) identify the costs to utilities of implementing intra-governmental wheeling; (4) consider the financial cost and impact of intra-governmental wheeling on non-wheeling customers of a utility; (5) identify any power back-up issues; and (6) address how rates for intra-governmental wheeling would be set. After eleven years of waiting for the public utilities commission to address wheeling opportunities, the legislature can no longer wait on a public utilities commission docket that has no completion in its forecast.

The legislature further finds that the narrow intra-governmental allowance of wheeling does not go far enough to allow for Hawaii residents to benefit from the limited competition created by intra-governmental wheeling. To date, after undergoing a suspension and numerous delays, the docket remains open, to the detriment of Hawaii residents who would benefit from lower rates wheeling would afford.

The purpose of this Act is to allow retail wheeling in Hawaii to increase competition within Hawaii's electrical markets, expand customer choice, provide incentives for the production of renewable energy, and diversify Hawaii's energy base.

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

"269‑   Retail wheeling; rules and procedures. No later than July 1, 2016, the public utilities commission shall establish necessary policies, and rules pursuant to chapter 91, for the deployment of retail wheeling to enable independent power producers to sell electricity directly to end users.

For purposes of this section, "retail wheeling" means the distribution, over a public utility's transmission and distribution system, of power that is generated by an independent power producer and sold by the independent power producer directly to the end user."

SECTION 3. Section 269-1, Hawaii Revised Statutes, is amended by amending the definition of "public utility" to read as follows:

"[PART I. PUBLIC UTILITIES, GENERALLY]

269-1 Definitions. As used in this chapter:

"Public utility":

(1) Includes every person who may own, control, operate, or manage as owner, lessee, trustee, receiver, or otherwise, whether under a franchise, charter, license, articles of association, or otherwise, any plant or equipment, or any part thereof, directly or indirectly for public use for the transportation of passengers or freight; for the conveyance or transmission of telecommunications messages; for the furnishing of facilities for the transmission of intelligence by electricity within the State or between points within the State by land, water, or air; for the production, conveyance, transmission, delivery, or furnishing of light, power, heat, cold, water, gas, or oil; for the storage or warehousing of goods; or for the disposal of sewage; provided that the term shall include:

(A) An owner or operator of a private sewer company or sewer facility; and

(B) A telecommunications carrier or telecommunications common carrier; and

(2) Shall not include:

(A) An owner or operator of an aerial transportation enterprise;

(B) An owner or operator of a taxicab as defined in this section;

(C) Common carriers that transport only freight on the public highways, unless operating within localities, along routes, or between points that the public utilities commission finds to be inadequately serviced without regulation under this chapter;

(D) Persons engaged in the business of warehousing or storage unless the commission finds that regulation is necessary in the public interest;

(E) A carrier by water to the extent that the carrier enters into private contracts for towage, salvage, hauling, or carriage between points within the State; provided that the towing, salvage, hauling, or carriage is not pursuant to either an established schedule or an undertaking to perform carriage services on behalf of the public generally;

(F) A carrier by water, substantially engaged in interstate or foreign commerce, that transports passengers on luxury cruises between points within the State or on luxury round-trip cruises returning to the point of departure;

(G) Any user, owner, or operator of the Hawaii electric system as defined under section 269-141;

(H) A telecommunications provider only to the extent determined by the public utilities commission pursuant to section 269-16.9;

(I) Any person who controls, operates, or manages plants or facilities developed pursuant to chapter 167 for conveying, distributing, and transmitting water for irrigation and other purposes for public use and purpose;

(J) Any person who owns, controls, operates, or manages plants or facilities for the reclamation of wastewater; provided that:

(i) The services of the facility are provided pursuant to a service contract between the person and a state or county agency and at least ten per cent of the wastewater processed is used directly by the state or county agency that entered into the service contract;

(ii) The primary function of the facility is the processing of secondary treated wastewater that has been produced by a municipal wastewater treatment facility owned by a state or county agency;

(iii) The facility does not make sales of water to residential customers;

(iv) The facility may distribute and sell recycled or reclaimed water to entities not covered by a state or county service contract; provided that, in the absence of regulatory oversight and direct competition, the distribution and sale of recycled or reclaimed water shall be voluntary and its pricing fair and reasonable. For purposes of this subparagraph, "recycled water" and "reclaimed water" means treated wastewater that by design is intended or used for a beneficial purpose; and

(v) The facility is not engaged, either directly or indirectly, in the processing of food wastes;

(K) Any person who owns, controls, operates, or manages any seawater air conditioning district cooling project; provided that at least fifty per cent of the energy required for the seawater air conditioning district cooling system is provided by a renewable energy resource, such as cold, deep seawater;

(L) Any person who owns, controls, operates, or manages plants or facilities primarily used to charge or discharge a vehicle battery that provides power for vehicle propulsion;

(M) Any person who:

(i) Owns, controls, operates, or manages a renewable energy system that is located on a customer's property; and

(ii) Provides, sells, or transmits the power generated from that renewable energy system to an electric utility or to the customer on whose property the renewable energy system is located; provided that, for purposes of this subparagraph, a customer's property shall include all contiguous property owned or leased by the customer without regard to interruptions in contiguity caused by easements, public thoroughfares, transportation rights-of-way, and utility rights-of-way; and

(N) Any person who owns, controls, operates, or manages a renewable energy system that is located on such person's property and provides, sells, or transmits the power generated from that renewable energy system to an electric utility or to lessees or tenants on the person's property where the renewable energy system is located; provided that:

(i) An interconnection, as defined in section 269-141, is maintained with an electric public utility to preserve the lessees' or tenants' ability to be served by an electric utility;

(ii) Such person does not use an electric public utility's transmission or distribution lines to provide, sell, or transmit electricity to lessees or tenants;

(iii) At the time that the lease agreement is signed, the rate charged to the lessee or tenant for the power generated by the renewable energy system shall be no greater than the effective rate charged per kilowatt hour from the applicable electric utility schedule filed with the public utilities commission;

(iv) The rate schedule or formula shall be established for the duration of the lease, and the lease agreement entered into by the lessee or tenant shall reflect such rate schedule or formula;

(v) The lease agreement shall not abrogate any terms or conditions of applicable tariffs for termination of services for nonpayment of electric utility services or rules regarding health, safety, and welfare;

(vi) The lease agreement shall disclose: (1) the rate schedule or formula for the duration of the lease agreement; (2) that, at the time that the lease agreement is signed, the rate charged to the lessee or tenant for the power generated by the renewable energy system shall be no greater than the effective rate charged per kilowatt hour from the applicable electric utility schedule filed with the public utilities commission; (3) that the lease agreement shall not abrogate any terms or conditions of applicable tariffs for termination of services for nonpayment of electric utility services or rules regarding health, safety, and welfare; and (4) whether the lease is contingent upon the purchase of electricity from the renewable energy system; provided further that any disputes concerning the requirements of this provision shall be resolved pursuant to the provisions of the lease agreement or chapter 521, if applicable; and

(vii) [Nothing in this section shall be construed to permit wheeling.]

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

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

 

INTRODUCED BY:

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Report Title:

Retail Wheeling; Public Utilities

 

Description:

Requires the public utilities commission to establish policies and procedures related to retail wheeling to enable independent power producers to sell electricity directly to end users.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.