THE SENATE

S.B. NO.

1087

TWENTY-SEVENTH LEGISLATURE, 2013

S.D. 1

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO GREEN INFRASTRUCTURE.

 

 

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

 


     SECTION 1.  The legislature finds that building Hawaii's clean energy infrastructure at the lowest possible cost is vital to the State reaching its seventy per cent clean energy goal in 2030.

     The legislature finds that significant investment in infrastructure installations is required to achieve the State's goals of energy self-sufficiency, greater energy security and diversification, and to support the achievement of the renewable portfolio standards and energy efficiency portfolio standards, as established in chapter 269, Hawaii Revised Statutes.  Further, these infrastructure installations will require significant amounts of capital, and it is in the public interest to minimize these costs.  A key component to minimizing cost is reducing the cost of capital required to finance infrastructure installations.

     The legislature further finds that up-front costs of green infrastructure equipment are a barrier preventing many electric utility customers from investing in these infrastructure installations.  Existing programs and incentives do not serve the entire spectrum of the customer market, particularly those customers who lack access to capital or who cannot afford the large upfront costs required—thus creating an underserved market.  It is in the public interest to make cost-effective green infrastructure equipment options accessible and affordable to customers in an equitable way.

     A green infrastructure financing program administered by the State that capitalizes on existing ratepayer contributions for green infrastructure equipment can serve a critical role in ensuring all Hawaii electricity ratepayers receive the greatest opportunity to adopt clean energy.  The legislature further finds the State would be best served by a State-administered green infrastructure financing program that:  (1) focuses on providing an alternative means of low-cost financing for green infrastructure equipment for Hawaii ratepayers, particularly those ratepayers not currently able to obtain such technology on reasonable financing terms; (2) utilizes excess loan program funds as a fund to finance additional green infrastructure installations, subject to regulatory guidelines and approval; and (3) establishes clearly defined program procedures and targets that encourage effective coordination among state agencies, industry, investors, and other critical energy industry stakeholders in order to help the State achieve its clean energy policy mandates.

     The purpose of this Act is to establish a regulatory financing structure that authorizes the public utilities commission and the department of business, economic development, and tourism to acquire and provide alternative low-cost financing, to be deployed through a financing program to enable installations of green infrastructure equipment, achieve measurable cost savings, and achieve Hawaii's clean energy goals.

     SECTION 2.  Chapter 196, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART    .  GREEN INFRASTRUCTURE LOANS

     §196-A  Definitions.  As used in this part:

     "Authority" means the Hawaii green infrastructure authority as described in this section; provided that until the authority is duly constituted the department may exercise all powers reserved to the authority.

     "Department" means the department of business, economic development, and tourism, or any successor by law.

     "Director" means the director of business, economic development, and tourism, or the director's designee.

     "Green infrastructure bond" means any bond issued by the State under part       of chapter 269.

     "Green infrastructure bond fund" means the special fund created pursuant to section 269-J.

     "Green infrastructure charge" means the on-bill charges for the use and services of the green infrastructure loan program, including to repay loans made under the green infrastructure loan program, as authorized by the public utilities commission to be imposed on electric utility customers.

     "Green infrastructure costs" means costs incurred or to be incurred by the electric utility customers to pay for clean energy technology, demand response technology, and energy use reduction and demand side management infrastructure including, without limitation, the purchase or installation of green infrastructure equipment, programs, and services authorized by the green infrastructure loan program.

     "Green infrastructure equipment" means infrastructure improvements, equipment, and personal property to be installed to deploy clean energy technology, demand response technology, and energy use reduction and demand side management infrastructure.

     "Green infrastructure loan program" and "green infrastructure loans" means the program established by this part and loans made to finance the purchase or installation of green infrastructure equipment for clean energy technology, demand response technology, and energy use reduction and demand side management infrastructure, programs, and services as authorized by the public utilities commission using the proceeds of green infrastructure bonds or other proceeds.  This loan program may include loans made to private entities, whether corporations, partnerships, limited liability companies, or other persons, which entities may lease or provide green infrastructure equipment to electric utility customers, as well as direct loans to electric utility customers, on terms approved by the authority.

     "Green infrastructure special fund" means the special fund created pursuant to section 196-J.

     §196-B  Hawaii green infrastructure loan program.  There is established a Hawaii green infrastructure loan program, which shall be a loan program as defined under section 39-51.  The green infrastructure loan program shall be administered by the authority on behalf of the department in a manner consistent with chapter 39, part III.

     §196-C  Hawaii green infrastructure authority.  There is established the Hawaii green infrastructure authority as an instrumentality of the State comprising of five members.  The director, the director of finance, and the energy program administrator shall be members of the authority.  The governor shall appoint the other two members, pursuant to section 26-34.  The director shall be the chairperson of the authority.  The authority shall be placed within the department of business, economic development, and tourism for administrative purposes, pursuant to section 26-35.

     §196‑D  Functions, powers, and duties of the authority.  In the performance of, and with respect to the functions, powers, and duties vested in the authority by this part, the authority may, as directed by the director and in accordance with an approved order or orders by the public utilities commission:

     (1)  Make loans and expend funds to finance the purchase or installation of green infrastructure equipment for clean energy technology, demand response technology, and energy use reduction and demand side management infrastructure, programs, and services;

     (2)  Hold and invest moneys in the green infrastructure special fund in such investments as permitted by law and in accordance with approved investment guidelines established in one or more orders issued by the public utilities commission pursuant to section 196-F;

     (3)  Hire employees necessary to perform its duties, including an executive director.  The executive director shall be appointed by the authority, and the employees' positions, including the executive director's position shall be exempt from chapter 76;

     (4)  Enter into contracts for the service of consultants for rendering professional and technical assistance and advice, and any other contracts that are necessary and proper for the implementation of the program;

     (5)  Enter into contracts for the administration of the green infrastructure loan program, without the necessity of complying with chapter 103D;

     (6Establish loan program guidelines to be approved in one or more orders issued by the public utilities commission pursuant to section 196-F;

     (7)  Be audited at least annually by a firm of independent certified public accountants selected by the authority, and provide the results of this audit to the department; and

     (8)  Perform all functions necessary to effectuate the purposes of this chapter.

     §196‑E  Hawaii green infrastructure special fund.  (a)  There is established the Hawaii green infrastructure special fund into which shall be deposited:

     (1)  The proceeds of green infrastructure bonds net of issuance costs and reserves or overcollateralization amounts;

     (2)  Proceeds of green infrastructure bonds net of issuance costs and reserves or overcollateralization amounts;

     (3All other funds received by the department or the authority and legally available for the purposes of the special fund; and

     (4Interest earnings on all amounts in the special fund; and

     (5)  Such other moneys as shall be permitted by an order of the public utilities commission.

     The Hawaii green infrastructure special fund shall not be subject to section 37-53.

     (b)  Moneys in the Hawaii green infrastructure special fund may be used for:

     (1)  Making green infrastructure loans;

     (2)  Paying administrative costs of the Hawaii green infrastructure loan program;

     (3)  Paying any other costs related to the Hawaii green infrastructure loan program; or

     (4)  Paying financing costs, as defined in section 269-A, to the extent permitted by the public utilities commission financing order pursuant to section 269-C.

     (c)  The authority may invest funds held in the Hawaii green infrastructure special fund in such investments as permitted by law, and in accordance with approved investment guidelines established in one or more orders issued by the public utilities commission pursuant to section 196-F.  All amounts in the Hawaii green infrastructure special fund shall be exempt from all taxes and similar surcharges imposed by the State.  Nothing in this section shall prohibit the authority from using moneys in the Hawaii green infrastructure special fund to credit funds back to electric utility customers at the direction of the public utilities commission.  If such funds are transferred back to the electric utility in order to credit electric utility customers, the transfer back to such electric utility shall not be considered revenue of the electric utility and shall not be subject to state or county taxes.

     §196‑F  Processes and procedures.  (a)  The authority shall apply to the public utilities commission for one or more orders to effectuate the Hawaii green infrastructure loan program, pursuant to sections 296-125 and 269-C.  In the application, the authority shall identify terms and conditions for the uses of the Hawaii green infrastructure special fund consistent with section 169-E, including but not limited to the:

     (1)  Lending criteria;

     (2)  Equipment, products, and services to be financed;

     (3)  Qualifications and criteria of parties providing equipment, products, and services;

     (4)  Terms and conditions of the on-bill repayment mechanisms; and

     (5)  Calculation of the green infrastructure charge.

     Nothing herein shall preclude the department from applying for a financing order, pursuant to section 269-B, prior to the issuance of an order or orders to effectuate the Hawaii green infrastructure loan program, nor from consolidating the proceeding for a financing order with such a loan program implementation order.

     (b)  The public utilities commission shall issue a final order or orders for the Hawaii green infrastructure loan program as expeditiously as possible.

     (c)  In accordance with an approved order or orders for the Hawaii green infrastructure loan program, the authority shall utilize the proceeds of green infrastructure bonds and other amounts deposited in the green infrastructure special fund pursuant to 196-E, or to the extent permitted by a financing order, to pay financing costs, as defined in section 269-A.

     (d)  Within the order or orders, the authority shall obtain approval from the public utilities commission requiring the electric utilities to serve as agents to bill and collect the green infrastructure charge imposed to repay green infrastructure costs and transfer all green infrastructure charges collected to the authority on behalf of the department.  Notwithstanding anything to the contrary, the utility shall not be obligated to bill, collect, or remit green infrastructure charges from non-utility customers.

     (e)  The order shall specify the following, including but not limited to:

     (1)  The procedures to be followed by the electric utilities in the event of non-payment or partial payment of the green infrastructure charge by the electric utilities' customers, which procedures shall be consistent with the public utilities commission approved procedures for non-payment and partial payment of rates, charges, and fees under the electric utilities' tariffs; and

     (2)  The distribution of the total amounts collected by the electric utilities for amounts billed to customers for the electric utilities' rates, fees, and charges, for the green infrastructure charge, for other public utilities commission approved fees and charges, and for associated taxes, in the event of partial payments of the billed amounts.

     The electric utilities serving as billing and collecting agents shall be parties to the proceedings in which the order or orders are issued.

     (f)  The green infrastructure charge shall not be considered revenue of the electric utilities and accordingly, shall not be subject to state or county taxes, including but not limited to the general excise tax under chapter 237, public service company tax under chapter 239, public utility fee under section 269-30, and public utility franchise tax under chapter 240.

     (g)  The public utilities commission shall ensure that all reasonable costs incurred by electric utilities to start up and implement the green infrastructure loan program may be recovered as part of the electric utility's revenue requirement, including necessary billing system adjustments, costs arising out of the billing and collection of green infrastructure charges, and any costs for green infrastructure charges that are not recovered via participating customers' green infrastructure bill payments or otherwise.

     (h)  The green infrastructure loan program or the act of serving as an agent to bill and to collect the green infrastructure charge shall not expose any electric utility to financial institution, escrow depository, or collection agency laws.  An electric utility shall not be responsible for lending, underwriting, and credit determinations.

     §196-G  Reporting; annual report.  The authority shall submit a report to the legislature on the authority's activities in administering the green infrastructure loan program under this part, no later than twenty days prior to the convening of each regular session beginning with the regular session of 2015.  The report shall include but not be limited to the green infrastructure loan program description and uses; summary information and analytical data concerning the green infrastructure loan program implementation; summary information and analytical data concerning deployment of clean energy technology, demand response technology, and energy use reduction and demand side management infrastructure; and repayments made or credits provided to electric utility customers under section 196-E(c) and this part.

     §196‑H  Severability.  If any provision of this part is held to be invalid or is superseded, replaced, repealed, or expires for any reason, that occurrence shall not affect any action allowed under this part that is taken prior to that occurrence by the public utilities commission, an electric utility, the department, or the authority.  Any such action shall remain in full force and effect."

     SECTION 3.  Chapter 269, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART    .  GREEN INFRASTRUCTURE BONDS

     §269-A  Definitions.  As used in this part:

     "Ancillary agreement" means any bond insurance policy, letter of credit, reserve account, surety bond, swap arrangement, hedging arrangement, liquidity or credit support arrangement, or other related bond document or other similar agreement or arrangement entered into in connection with the issuance of green infrastructure bonds that is designed to promote the credit quality and marketability of the bonds or to mitigate the risk of an increase in interest rates.

     "Authority" means the Hawaii green infrastructure authority established under chapter 196-C.

     "Bond" or "green infrastructure bond" means any bond, note or other evidence of indebtedness that is issued by the State, acting through the department, under a financing order, the proceeds of which are used directly or indirectly to recover, finance, or refinance financing costs of clean energy technology, demand response technology, and energy use reduction and demand side management infrastructure, programs, and services, and that are secured by or payable from green infrastructure property.  Green infrastructure bonds are revenue bonds issued under article VII, section 12 of the state constitution, and chapter 39, part III, as modified by this part, and the department shall ensure that any bonds issued under this part are excluded from the calculation of the State's debt limit pursuant to article VII, section 13 of the state constitution.

     "Bondholder" means any holder or owner of a bond.

     "Department" means the department of business, economic development, and tourism, or any successor by law.

     "Electric utilities" means all electric utilities subject to billing, collecting, and remitting the public benefits fee, or the green infrastructure fee, pursuant to section 269-121, at the time the financing order becomes final, and any other electric utility designated in the financing order.

     "Financing costs" means any of the following:

     (1)  Principal and interest payable on green infrastructure bonds;

     (2)  Any payment required under an ancillary agreement;

     (3)  Any amount required to fund or replenish a reserve account or another account established under any indenture, ancillary agreement, or other financing document relating to the issuance of green infrastructure bonds;

     (4)  Any redemption or call premium or cost of redeeming or refunding any existing debt of the department in connection with either the issuance of, or the use of proceeds from, green infrastructure bonds;

     (5)  Any costs incurred by the department to modify or amend any indenture, financing agreement, security agreement, or similar agreement or instrument securing any bond or any ancillary agreement;

     (6)  Any costs incurred by the department to obtain any consent, release, waiver, or approval from any bondholder or of any party to an ancillary agreement that are necessary to be incurred for the department to issue green infrastructure bonds;

     (7)  Any costs related to issuing or servicing green infrastructure bonds or related to obtaining a financing order, including servicing fees and expenses, trustee fees and expenses, legal, accounting, or other professional fees and expenses, administrative fees, placement fees, underwriting fees and discounts, capitalized interest and equity, and rating-agency fees; or

     (8)  Any other similar costs incident to the issuance, administration, or servicing of the green infrastructure bonds that the department finds appropriate.

     "Financing order" means an order issued at the request of the department by the public utilities commission under this part that has become final as provided by law, and that authorizes the issuance of green infrastructure bonds and the imposition, adjustment from time to time, and collection of green infrastructure fees.  The financing order shall include, without limitation, a procedure to require the public utilities commission in accordance with a formula set out in the financing order and approved by the department to review and approve expeditiously periodic adjustments to green infrastructure fees to ensure the payment of the green infrastructure bonds and related financing costs on a timely basis.

     "Financing party" means either of the following:

     (1)  Any trustee, collateral agent, or other person acting for the benefit of a bondholder; or

     (2)  Any party to an ancillary agreement, the rights and obligations of which relate to or depend upon the existence of green infrastructure property and green infrastructure fees, the enforcement and priority of a security interest in green infrastructure property, the timely collection and payment of green infrastructure fees, or a combination of these factors.

     "Green infrastructure bond fund" means the special fund created pursuant to section 269-J.

     "Green infrastructure fee" means the nonbypassable fees and charges authorized by section 269-121 and in a financing order authorized under this part to be imposed on and collected from all existing and future customers of electric utilities or any successor.  The green infrastructure fee may be a usage based surcharge, a flat user fee, or a charge based upon customer revenues as determined by the public utilities commission for each customer class in any financing order.

     "Green infrastructure property" means the property, rights, and interests created by the public utilities commission under a financing order, including the right to impose, charge, and collect from electric utility customers the green infrastructure fee that shall be used to pay and secure the payment of green infrastructure bonds and financing costs, including the right to obtain adjustments to the green infrastructure fees, and any revenues, receipts, collections, rights to payment, payments, moneys, claims, or other proceeds arising from the rights and interests created by the public utilities commission under any financing order.

     "Green infrastructure special fund" means the special fund created pursuant to section 196-E.

     "Successor" means, with respect to any electric utility, another electric utility, or other entity that succeeds voluntarily or by operation of law to the rights and obligations of the first electric utility, or other entity pursuant to any bankruptcy, reorganization, restructuring, or other insolvency proceedings, any merger, acquisition, or consolidation, or any sale or transfer of assets, regardless of how any of these actions occurred.

     "Trustee" means any trustee or fiscal agent appointed under an indenture or certificate of the director executed in connection with the issuance of green infrastructure bonds pursuant to section 39-68.

     §269‑B  Applications to issue green infrastructure bonds and authorize green infrastructure fee.  (a)  In connection with the issuance of green infrastructure bonds, the department may apply to the public utilities commission for one or more financing orders, each of which financing orders authorizes the following:

     (1)  The imposition, charging, and collection on behalf of the department of the green infrastructure fee, to become effective upon the issuance of the green infrastructure bonds, and the adjustment of such green infrastructure fee on behalf of the department in accordance with an adjustment mechanism requested by the department under this part in amounts sufficient to pay the principal of and interest on green infrastructure bonds and all related financing costs on a timely basis;

     (2)  The creation of green infrastructure property under the financing order; and

     (3)  The deposit of the net proceeds of the green infrastructure bonds into the green infrastructure special fund.

     (b)  The application shall include all of the following:

     (1)  The principal amount of the green infrastructure bonds proposed to be issued;

     (2)  An estimate of the date each series of green infrastructure bonds is expected to be issued;

     (3)  The expected term, not to exceed thirty years, during which term the green infrastructure fee associated with the issuance of each series of green infrastructure bonds is expected to be imposed and collected;

     (4)  An estimate of the financing costs associated with the issuance of each series of green infrastructure bonds;

     (5)  An estimate of the amount of the green infrastructure fee revenues necessary to pay principal and interest on the green infrastructure bonds and related financing costs as set forth in the application and the calculation for that estimate, which calculation shall take into account the estimated date or dates of issuance and the estimated principal amount of each series of green infrastructure bonds;

     (6)  A proposed methodology for allocating the green infrastructure fee among electric utilities and customer classes within each electric utility;

     (7)  A description of a proposed formulaic adjustment mechanism for the adjustment of the green infrastructure fee to assure the timely payment of principal and interest on the green infrastructure bonds and related financing costs; and

     (8)  Any other information required by the public utilities commission.

     §269‑C  Green infrastructure financing order.  (a)  The public utilities commission shall issue its financing order as final or in the event that the finding in subsection (b) cannot be made, its denial of a financing order, as expeditiously as possible and in any event within ninety days from the date the completed application is submitted.

     (b)  The public utilities commission may issue a financing order if the public utilities commission finds that the creation of the green infrastructure property to secure the payment of the green infrastructure bonds, including the imposition of the green infrastructure fee, will facilitate the acquisition of low-cost financing, pursuant to an application under section 269-B.

     (c)  The public utilities commission shall include all of the following in a financing order:

     (1)  The maximum amount of green infrastructure bonds that the department requested to be issued under the financing order;

     (2)  A description of the green infrastructure property, the creation of which property is authorized by the financing order;

     (3)  A description of the financing costs that the department is requesting and which will be recoverable through green infrastructure fees, including any reserves or overcollateralization amounts required by the department to secure payment of the green infrastructure bonds;

     (4)  A description of the methodology to be applied by the public utilities commission, on behalf of the department, for calculating the green infrastructure fee, including the allocation of financing costs among electric utilities and customer classes;

     (5)  A description of the formulaic adjustment mechanism to be used by the public utilities commission, on behalf of the department, to adjust the green infrastructure fee in order to ensure that the amount of green infrastructure fees projected to be collected shall be sufficient to pay the principal and interest on the green infrastructure bonds, and all related financing costs on a timely basis, including the funding or maintenance of any reserves required to be maintained by the department;

     (6)  The term of the green infrastructure bonds, as proposed by the department, during which term the green infrastructure fee shall continue to be collected and pledged to pay the green infrastructure bonds, which term shall automatically be extended by the term of any refunding green infrastructure bonds issued in such principal amounts as the department may determine to be necessary to refund the green infrastructure bonds that are the subject of the original financing order;

     (7)  A requirement that the electric utilities, including any successors, serve as agents to collect the green infrastructure fees and transfer those surcharges to the trustee or other financing party as required by the financing order and any agreements with the department;

(8)  The procedures to be followed by the electric utilities in the event of non-payment or partial payment of the green infrastructure fees by the electric utilities' customers, which procedures shall be consistent with the public utilities commission approved procedures for non-payment and partial payment of rates, charges and fees under the electric utilities' tariffs;

     (9)  The distribution of the total amounts collected by the electric utilities for amounts billed to customers for the electric utilities' rates, fees and charges, for the green infrastructure fees, for other public utilities commission approved fees and charges, and for associated taxes, in the event of partial payments of the billed amounts;

    (10)  Terms satisfactory to the public utilities commission to ensure that the green infrastructure fee shall be nonbypassable and will be paid by all existing and future customers of an electric utility or any successor; and

    (11)  Any other provision the public utilities commission considers appropriate to ensure the full and timely imposition, charging, collection, and adjustment, pursuant to an approved adjustment mechanism, of the green infrastructure fee described in this subsection.

     The electric utilities serving as billing and collecting agents shall be parties to the proceedings in which the order or orders are issued.

     (d)  The public utilities commission shall, in a financing order, permit the department flexibility in establishing the terms and conditions for the green infrastructure bonds to accommodate changes in market conditions, including repayment schedules, interest rates, financing costs, collateral requirements, required debt service and other reserves, and the ability of the department, at its option, to effect a series of issuances of green infrastructure bonds and correlated assignments, sales, pledges, or other transfers of green infrastructure property.  Any changes made under this section to terms and conditions for the green infrastructure bonds shall be in conformance with the financing order.

     (e)  At the request of the department, the public utilities commission shall determine, in accordance with the adjustment mechanism set forth in the financing order, the initial green infrastructure fee after the determination of the final terms of each series of green infrastructure bonds, so that the green infrastructure fee shall be final and effective upon issuance of the green infrastructure bonds.

     (f)  An appeal from a financing order issued by the public utilities commission shall be taken pursuant to section 26915.5.

     (g)  Any adjustment to the green infrastructure fee made by the public utilities commission pursuant to the adjustment mechanism approved in the financing order shall be a ministerial act of the public utilities commission, and shall not require any prior public notice or hearing.

     §269‑D  Green infrastructure property.  (a)  The green infrastructure property shall be created simultaneously with the issuance of the green infrastructure bonds and shall immediately vest in the department, which shall pledge and create a lien on such property, together with all other money in the green infrastructure bond fund, solely and exclusively in favor of bondholders and financing parties, to secure the payment of green infrastructure bonds, amounts payable to financing parties and bondholders, amounts payable under any ancillary agreement, and other financing costs as provided in the financing documents executed by the department.  Subject to the foregoing, the lien and charge on green infrastructure property and all other moneys in the green infrastructure bond fund for the benefit of any financing party shall be governed by section 39-63.

     (b)  The electric utilities shall have no ownership or beneficial interest in nor any claim or right to the green infrastructure fee, green infrastructure property, green infrastructure equipment, or green infrastructure charge other than the obligation to bill and collect the green infrastructure fee and green infrastructure charge as agent for the department or any financing party and remit the collected revenue to the department or such financing party entitled to receive such surcharges in accordance with the financing order.  The public utilities commission shall ensure that all reasonable costs incurred by electric utilities to implement the green infrastructure fees may be recovered as part of the electric utility's revenue requirement, including necessary billing system adjustments, costs arising out of the billing and collection of green infrastructure fees, and any costs for green infrastructure fee that are not recovered otherwise.  The green infrastructure fee or green infrastructure property shall not be considered revenue of any electric utility.

     (c)  The obligation of any electric utility customer to pay the green infrastructure fee or green infrastructure charge and, notwithstanding subsection (b), the obligation of the electric utility to collect and remit the green infrastructure fee or green infrastructure charge shall not be subject to any setoff, counterclaim, surcharge, or defense by the electric utility or by any electric utility customer, or in connection with a bankruptcy of any electric utility or any electric utility customer.

     §269‑E  Green infrastructure bonds financing order.  (a)  A financing order shall remain in effect until the green infrastructure bonds issued under the financing order and all financing costs related to the bonds have been paid in full or defeased by their terms.  A financing order shall remain in effect and unabated notwithstanding the bankruptcy, reorganization, or insolvency of any electric utility or any affiliate of the electric utility or the commencement of any judicial or nonjudicial proceeding on the financing order.

     (b)  Once a financing order has become final as provided by law, the financing order shall become irrevocable.  The public utilities commission may not directly or indirectly, except as provided in the adjustment mechanism approved in the financing order, reduce, impair, postpone, rescind, alter, or terminate the green infrastructure fee authorized in the financing order or impair the green infrastructure property or the collection of the green infrastructure fee so long as any green infrastructure bonds are outstanding or any financing costs remain unpaid.

     (c)  Under a final financing order, the department shall retain sole discretion to cause green infrastructure bonds to be issued, including the right to defer or postpone such issuance, assignment, sale, or transfer.

     §269-F  Green infrastructure fee nonbypassable.  (a)  So long as any green infrastructure bonds are outstanding and any financing costs have not been paid in full, the green infrastructure fees authorized under any financing order shall be nonbypassable.  Subject to any exceptions provided in a financing order, the green infrastructure fee shall be paid by all existing and future customers of electric utilities or any successors.

     (b)  The green infrastructure fee shall be collected by the electric utilities or their successors, as collection agents for the department or the financing parties, in full through a surcharge, fee, or charge that is separate and apart from the electric utilities' rates.  The green infrastructure fee may be included with the public benefits fee as one line item on the electric utility bill when the bill contains a public benefits fee pursuant to section 269-121, but such inclusion shall not adversely affect the pledge of the green infrastructure fee or the right to adjust the green infrastructure fee as authorized by this section.

     §269-G  Electric utility successor requirements; default of electric utility.  (a)  Any successor to an electric utility subject to a financing order shall be bound by the requirements of this part.  The successor shall perform and satisfy all obligations of the electric utility under the financing order, in the same manner and to the same extent as the electric utility, including the obligation to collect and pay the green infrastructure fee to the department or to any financing party as required by a financing order.

     (bThe public utilities commission may require, in the financing order creating the green infrastructure fee and green infrastructure property, that, in the event of a default by the electric utility in remittance of the green infrastructure fee collected arising with respect to green infrastructure property, the public utilities commission, upon the application by the department, and without limiting any other remedies available to the department or any financing party by reason of the default, shall order the sequestration and payment to the beneficiaries of the green infrastructure fee collected arising with respect to the green infrastructure property.  Any order shall remain in full force and effect notwithstanding any bankruptcy, reorganization, or other insolvency proceedings with respect to the electric utility.

     §269-H  Treatment of green infrastructure bonds, fees, and property.  (a)  In the furtherance of section 39-65, the ownership, transfer, and pledge of the green infrastructure fee and green infrastructure property and the imposition, charging, collection, and receipt of the green infrastructure fee and green infrastructure charge are exempt from all taxes and similar surcharges imposed by the State and counties, including but not limited to the general excise tax under chapter 237, public service company tax under chapter 239, public utility fee under section 269-30, and public utility franchise tax under chapter 240.

     (b)  Green infrastructure bonds issued under a financing order shall not be an obligation of any electric utility.  The issuance of green infrastructure bonds does not directly, indirectly, or contingently obligate the electric utility for payment of the principal of or interest on the bonds.

     §269-I  Green infrastructure property non-impairment.  (a)  In furtherance of section 39-61, the State pledges to and agrees with the bondholders and any financing parties under a financing order that the State will not take or permit any action that impairs the value of green infrastructure property under the financing order, or reduce, alter, or impair green infrastructure fees that are imposed, charged, collected, or remitted for the benefit of the bondholders and any financing parties, until any principal, interest, and redemption premium in respect of green infrastructure bonds, all financing costs, and all amounts to be paid to a financing party under an ancillary agreement are paid or performed in full or unless adequate provision has been made by law for the protection of bondholders and other financing parties.

     (b)  The department in issuing the green infrastructure bonds is permitted to include the pledge specified in subsection (a) of this section in the green infrastructure bonds, ancillary agreements, and documentation related to the issuance and marketing of the green infrastructure bonds.

     §269‑J  Hawaii green infrastructure bond fund.  There is established the Hawaii green infrastructure bond fund as a special fund into which all proceeds of green infrastructure fees and any other proceeds of green infrastructure property shall be paid.  The green infrastructure bond fund may also receive such other moneys as the department may determine and as provided in the financing order, including, without limitation, green infrastructure charges.

     (b)  Moneys in the green infrastructure bond fund shall be impressed with the lien created by, and shall be used solely for purposes set forth in section 269-D.  Upon payment or defeasance of all green infrastructure bonds and financing costs, moneys in such fund, at the direction of the department, may be transferred into the green infrastructure special fund or for such other purpose as the department shall specify.

     (c)  The green infrastructure bond fund shall be audited at least annually by a firm of independent certified public accountants selected by the department, and the results of this audit shall be provided to the department.

     (d)  Pursuant to section 39-68, the department shall appoint a trustee to receive, hold and disburse all amounts required to be held in the green infrastructure bond fund upon such terms and conditions as set forth in a certificate, indenture or trust agreement.

     The Hawaii green infrastructure bond fund shall not be subject to section 37-53.

     §269‑K  Compliance with revenue bond law.  For purposes of assuring conformity of and compliance with part III of chapter 39, it is determined as follows:

     (1)  For purposes of section 39-51, revenues shall include the green infrastructure fee and the proceeds of green infrastructure property; the loan program shall include the loan program authorized under section 196‑B; and undertaking shall include financing of the Hawaii green infrastructure loan program through the issuance of green infrastructure revenue bonds;

     (2)  In addition and supplemental to the powers conferred by section 39-60, any resolution, certificate or indenture approved by the department may have such additional or alternative covenants as may be consistent with this chapter, and the department may enter into a trust indenture, servicing agreement or other financing documents having terms and conditions consistent with the financing order issued under section 269-C;

     (3)  In addition and supplemental to the powers conferred by section 39-61, the green infrastructure fee shall be imposed, adjusted and collected as provided in section 269-F and the financing order issued pursuant thereto; and

     (4)  In addition and supplemental to the powers conferred by section 39-62, the green infrastructure fee shall be applied as provided in this chapter, the financing order, the certificate issued by the department, and any financing documents executed by the department in connection with the green infrastructure bonds.

     §269-L  Severability.  If any provision of this part is held to be invalid or is superseded, replaced, repealed, or expires for any reason, that occurrence shall not affect any action allowed under this part that is taken prior to that occurrence by the public utilities commission, an electric utility, the department, a collection agent, a financing party, a bondholder, or a party to an ancillary agreement.  Any such action shall remain in full force and effect.

     §269-M  Miscellaneous.  Neither the department nor a financing party shall be considered an electric utility or person providing electric service by virtue of engaging in the transactions described in this part.

     §269-N  Annual report and register of orders.  The public utilities commission shall prepare and present to the governor, through the director of finance, in the month of January in each year a report respecting its actions during the preceding fiscal year.  This report shall include summary information and analytical, comparative, and trend data concerning major regulatory issues acted upon and pending before the commission; cases processed by the commission, including their dispositions; utility company operations, capital improvements, and rates; utility company performance in terms of efficiency and quality of services rendered; financing orders issued, adjustments made to the public benefits fee, and repayments or credits provided to electric utility customers pursuant to the issuance of green infrastructure bonds under section 196-E(b) and part      , chapter 269; environmental matters having a significant impact upon public utilities; actions of the federal government affecting the regulation of public utilities in Hawaii; long and short-range plans and objectives of the commission; together with the commission's recommendations respecting legislation and other matters requiring executive and legislative consideration.  Copies of the annual reports shall be furnished by the governor to the legislature.  In addition, the commission shall establish and maintain a register of all its orders and decisions, which shall be open and readily available for public inspection, and no order or decision of the commission shall take effect until it is filed and recorded in this register."

     SECTION 4.  Section 269-121, Hawaii Revised Statutes, is amended to read as follows:

     "§269-121  Public benefits fee authorization[.]; green infrastructure fee.  (a)  The public utilities commission, by order or rule, may require that all or a portion of the moneys collected by Hawaii's electric utilities from its ratepayers through a demand-side management surcharge be transferred to a third-party administrator contracted by the public utilities commission.  The moneys transferred shall be known as the public benefits fee.

     (b)  The public benefits fee shall be used to support [energy efficiency] clean energy technology, demand response technology, and energy use reduction and demand-side management infrastructure, programs, and services, subject to the review and approval of the public utilities commission.  These moneys shall not be available to meet any current or past general obligations of the State; provided that the State may participate in any [energy efficiency or] clean energy technology, demand response technology, or energy use reduction and demand-side management infrastructure, programs, and services on the same basis as any other electric consumer.

     (c)  The public utilities commission is further authorized to create, pursuant to a financing order approved pursuant to part      , a utility-wide nonbypassable surcharge, referred to as the green infrastructure fee, which shall be deposited in the green infrastructure bond fund and pledged and applied to the repayment of green infrastructure bonds and related financing costs as described in part      .

     (d)  The green infrastructure fee may be included with the public benefits fee as one line item on the electric utility bill when the bill contains a public benefits fee if so provided in the financing order authorized in part      .  The green infrastructure fee may be applied to reduce the public benefits fee to be transferred pursuant to subsection (a) if so provided in a financing order.  Nothing in this section shall affect the right to impose, collect, and adjust from time to time, the green infrastructure fee as provided in the financing order and chapter 269.

     [(c)] (e)  Nothing in this section shall create or be construed to cause the public benefits fee to be considered state or public moneys subject to appropriation by the legislature or be required to be deposited into the state treasury."

     SECTION 5.  Section 269-125, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(a)  The public utilities commission shall investigate an on-bill financing program that would allow an electric utility company customer to purchase or otherwise acquire a [renewable energy system or energy efficient] clean energy technology, demand response technology, and energy use reduction and demand side management device, as determined by the public utilities commission, by providing for billing and payment of such a system or device through an assessment on the electric utility company customer's electricity bill.”

     2.  By amending subsection (c) to read:

     "(c)  If on-bill financing is determined by the public utilities commission to be viable, the public utilities commission may implement an on-bill financing program by decision and order or by rules pursuant to chapter 91[.]; provided that any on-bill financing program implemented by the public utilities commission shall allow participating electric utility company customers to purchase, finance for the installation or purchase of, or otherwise acquire clean energy technology, demand response technology, or energy use reduction and demand side management systems or devices by providing for billing and payment of such systems or devices through an assessment on the electric utility company customer's electricity bill.  Any on-bill financing program implemented by the public utilities commission may utilize funds administered through the green infrastructure loan program authorized under section 196-B for purposes established therein."

     SECTION 6.  (a)  The legislature finds and declares that the issuance of revenue bonds under this Act is in the public interest and for the public health, safety, and general welfare.

     (b)  The department of business, economic development, and tourism is authorized to issue revenue bonds pursuant to part III of chapter 39, Hawaii Revised Statutes, as amended and supplemented by this part, in a principal amount not to exceed $200,000,000 to establish and administer the Hawaii green infrastructure loan program pursuant to section 196-B, Hawaii Revised Statutes.

     (c)  The department of business, economic development, and tourism is authorized to issue from time to time refunding green infrastructure bonds in such principal amounts as the department shall determine to be necessary to refund the green infrastructure bonds authorized under this Act, to the extent permitted by the financing documents.

     (d)  To the extent there is any conflict between this Act and part III of chapter 39, Hawaii Revised Statutes, this Act shall prevail.

     SECTION 7.  There is appropriated out of the general revenues of the State of Hawaii the sum of $100,000,000 or so much thereof as may be necessary for fiscal year 2013-2014 and the same sum or so much thereof as may be necessary for fiscal year 2014-2015 for deposit into the Hawaii green infrastructure special fund established pursuant to section 196-E, Hawaii Revised Statutes.

     The sums appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

     SECTION 8.  There is appropriated out of the Hawaii green infrastructure special fund established pursuant to section 196-E, Hawaii Revised Statutes, the sum of $100,000,000 or so much thereof as may be necessary for fiscal year 2013-2014 and the same sum or so much thereof as may be necessary for fiscal year 2014-2015 for the issuance of Hawaii green infrastructure loans.

     The sums appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

     SECTION 9.  There is appropriated out of the general revenues of the State of Hawaii the sum of $10,000,000 or so much thereof as may be necessary for fiscal year 2013-2014 and the same sum or so much thereof as may be necessary for fiscal year 2014-2015 for deposit into the Hawaii green infrastructure bond fund established pursuant to section 296-J, Hawaii Revised Statutes.

     The sums appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

     SECTION 10.  There is appropriated out of the Hawaii green infrastructure bond fund established pursuant to section 296-J, Hawaii Revised Statutes, the sum of $10,000,000 or so much thereof as may be necessary for fiscal year 2013-2014 and the same sum or so much thereof as may be necessary for fiscal year 2014-2015 for the issuance of Hawaii green infrastructure bonds.

     The sums appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

     SECTION 11.  The department of business, economic development, and tourism, with the assistance of the Hawaii green infrastructure authority, shall submit a report on the status of the Hawaii green infrastructure authority's activities, including approved loan program description and uses; summary information and analytical data concerning loan program implementation; summary information and analytical data concerning the deployment of clean energy technology, demand response technology, and energy use reduction and demand side management infrastructure; and repayments made or credits provided to electric utility customers under section 196-E and part       of chapter 269, no later than twenty days prior to the convening of the regular session of 2014.

     SECTION 12.  In codifying the new part added to chapter 196, Hawaii Revised Statutes, by section 2 of this Act and the new part added to chapter 269, Hawaii Revised Statutes, by section 3 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating and referring to the new sections in this Act.

     SECTION 13.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 14.  This Act shall take effect upon its approval; provided that sections 7, 8, 9, and 10 shall take effect on July 1, 2013.

 


 


 

Report Title:

Green Infrastructure Loan Program; Public Benefits Fee; Appropriation

 

Description:

Establishes a regulatory financing structure that authorizes the public utilities commission and the department of business, economic development, and tourism to provide low-cost loans for green infrastructure equipment to achieve measurable cost savings and achieve Hawaii's clean energy goals.  Requries a report to the legislature.  Appropriates funds.  (SD1)

 

 

 

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