HOUSE OF REPRESENTATIVES             H.R. NO.              H.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                     HOUSE RESOLUTION

 1       WHEREAS, in the Public Utilities Commission (PUC) Docket
 2   94-0226, Renewable Energy Resource Investigation, one of the
 3   barriers to the use of renewable energy is unresolved avoided
 4   cost issues; and
 6       WHEREAS, unresolved avoided cost issues are also a factor
 7   in protracted contract negotiations for power purchase
 8   agreements between electric utilities and qualifying
 9   facilities; and
11       WHEREAS, these unresolved issues increase the cost of doing
12   business and the cost of living in Hawaii and contribute to
13   Hawaii's negative image as a place to do business; and
15       WHEREAS, utilities are required to purchase power from
16   qualifying facilities at or below their avoided costs unless a
17   different price is negotiated pursuant to the Public Utility
18   Regulatory Policies Act of 1978 (PURPA), as amended, and the
19   Commission's Standards for Small Power Production and
20   Cogeneration found in the Hawaii Administrative Rules (HAR)
21   title 6, chapter 74, or the PUC's Avoided Cost Rules, which
22   implement PURPA and section 269-27.2, Hawaii Revised Statutes;
23   and
25       WHEREAS, as defined in the PUC's Avoided Cost Rules,
26   avoided costs mean the incremental or additional costs to an
27   electric utility of electric energy, firm capacity, or both,
28   which costs the utility would avoid by purchase from the
29   qualifying facility, section 6-74-1, HAR; and
31       WHEREAS, avoided costs comprise two components:  avoided
32   capacity costs and avoided energy costs; and
34       WHEREAS, avoided capacity costs include avoided capital
35   costs and avoided fixed operation and maintenance costs; and
37       WHEREAS, examples of costs that may be included in the
38   avoided capacity cost component are firm generating capacity
39   costs, transmission and distribution capital costs, fixed
40   operation and maintenance costs, and transmission and
41   distribution demand losses; now, therefore,

Page 2                                                     156
                                  H.R. NO.              H.D. 1

 1       BE IT RESOLVED by the House of Representatives of the
 2   Twentieth Legislature of the State of Hawaii, Regular Session
 3   of 2000, that the PUC complete Docket No. 7310, short-run
 4   avoided energy costs for as-available resources; and
 6       BE IT FURTHER RESOLVED that PUC implement a plan to
 7   calculate avoided cost within 120 days from the filing of a
 8   petition by a qualifying facility; and
10       BE IT FURTHER RESOLVED that the Chairperson of the PUC
11   report on the decision, order, and implementation plan to the
12   Legislature no later than 20 calendar days prior to the
13   convening of the Regular Session of 2001; and
15       BE IT FURTHER RESOLVED that a certified copy of this
16   Resolution be transmitted to the Chairperson of the PUC.