STAND. COM. REP. NO. 3186

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.C.R. No. 179
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which
was referred S.C.R. No. 179 entitled:

     "SENATE CONCURRENT RESOLUTION REQUIRING THE PUBLIC UTILITIES
     COMMISSION TO RESOLVE AVOIDED COST ISSUES,"

begs leave to report as follows:

     The purpose of this measure is to require the Public
Utilities Commission to complete Docket No. 7310, short-run
avoided energy costs for as-available resources and Docket No.
94-0079, long-run avoided cost for firm capacity resources and
issue a decision and order.

     The measure also requires the Public Utilities Commission to
implement a plan to calculate avoided cost within 120 days from
the filing of a petition by a qualifying facility.

     Your Committee received testimony from the Public Utilities
Commission, the Consumer Advocate, Hawaii Renewable Energy
Alliance, Life of the Land, Malama o Manoa, and Hawaiian Electric
Company.

     Your Committee finds that in the Public Utilities Commission
Docket 94-0226, Renewable Energy Resource Investigation, one of
the barriers to the use of renewable energy is unresolved avoided
cost issues.  These unresolved avoided cost issues are also a
factor in protracted contract negotiations for power purchase
agreements between electric utilities and qualifying facility.
These unresolved issues increase the cost of doing business and

 
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cost of living in Hawaii and contribute to Hawaii's negative
image as a place to do business.

     Your Committee also finds that utilities are required to
purchase power from qualifying facilities at or below their
avoided costs unless a different price is negotiated.  As stated
in Section 6-74-1, Hawaii Administrative Rules, the Public
Utilities Commission defines "avoided costs" to mean the
incremental or additional costs to an electric utility of
electric energy or firm capacity or both which costs the utility
would avoid by purchase from the qualifying facility.

     Your Committee believes that this measure will encourage the
implementation of procedures that will facilitate and expedite
the ability for all parties to arrive at reasonably determined
avoided cost estimates for the purpose of determining fair
estimates of generating capacity costs.

     Your Committee has amended the measure by:

     (1)  Deleting the reference to Docket No. 94-0079, long-run
          avoided cost for firm capacity resources, since that
          docket has been resolved and closed by the Public
          Utilities Commission; and

     (2)  Making technical amendments to clarify references to
          the Hawaii Administrative Rules, and to clarify in the
          title that the Legislature is requesting rather than
          requiring the PUC to resolve avoided cost issues.

     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to
this report, your Committee concurs with the intent and purpose
of S.C.R. No. 179, as amended herein, and recommends that it be
referred to the Committee on Ways and Means, in the form attached
hereto as S.C.R. No. 179, S.D. 1.


 
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                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Commerce and
                                   Consumer Protection,



                                   ______________________________
                                   BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Co-Chair

 
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