H.B. NO.



















SECTION 1. The legislature finds that Hawaii's electricity customers continue to endure the highest electricity prices in the country, and the high cost of electricity imposes substantial burdens on Hawaii's households and businesses. Although some states in the 1990s opted to fully or partially unbundle their electricity sectors to allow for competitive generation segments, separate transmission and distribution segments, and independent system operators, Hawaii has yet to unbundle its electricity sector, with each island's utility still operating as a vertically-integrated regulated monopoly.

The legislature also finds that retail wheeling refers to the distribution of electricity owned by an independent power supplier and sold to a retail consumer over transmission and distribution lines of a public utility that is not itself producing the electricity. Fifteen states have actively restructured their energy markets and adopted retail wheeling in some form. However, in Hawaii, independent power producers must sell power to a public utility rather than allowing for direct sale to end users.

The legislature believes that given Hawaii's environment and electricity market, wheeling can provide a vehicle for increased competition in energy markets and improved service and customer choice without requiring the utility to divest its own generation assets or lose control over the operation of transmission and distribution.

The legislature finds that retail wheeling can be an effective means of fostering innovation and greater renewable energy production, as independent power producers can take advantage of end user preferences for cleaner power to secure higher prices for their output than may be possible under a given utility's avoided cost formula. Retail wheeling would provide an alternative option for independent power producers that is not available under the feed-in-tariff schedule being established by the public utilities commission and the consumer advocate.

The legislature believes that expanding independent power producers' off-take options will help to attract additional renewable energy investment, thus contributing to local economic development, job creation, and greater energy security for the State.

The purpose of this Act is to require the public utilities commission to establish policies and rules to implement retail wheeling 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 part I to be appropriately designated and to read as follows:

"269-    Retail wheeling; rules and procedures. The public utilities commission shall establish necessary policies and rules, pursuant to chapter 91, and the requirements for electric utility company tariffs and rules, as may be necessary, for the implementation of retail wheeling to enable independent power producers to sell electricity directly to end users."

SECTION 3. Section 269-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Retail wheeling" means the process of transmitting electric power from a seller's point of generation across a third-party-owned transmission and distribution system and facility, including but not limited to transmission and distribution systems and facilities of electric utility companies, to the seller's retail customer."

SECTION 4. The public utilities commission shall explore, including the opening of an investigatory docket as may be necessary, the feasibility of implementing retail wheeling in Hawaii. The public utilities commission shall report on the status of this investigation, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2018. Thereafter, the public utilities commission shall submit an annual report on the status of the implementation of retail wheeling in the State, if any, until the implementation is complete.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2017.








Report Title:

Electricity; Retail Wheeling



Requires the Public Utilities Commission to establish policies and rules for the implementation of retail wheeling. Requires the Commission to report on the status of the implementation of retail wheeling annually until the implementation is complete.




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