Report Title:

Renewable Energy; Renewable Portfolio Standards; PUC Study

Description:

Requires establishment of rate for electricity purchases by public utility at not less than 100% of avoided cost. Increases RPS percentage requirements and requires advance planning by electric utility to meet requirements. Amends definition of "renewable energy". Revises RPS study requirements. (SD2)

THE SENATE

S.B. NO.

1557

TWENTY-THIRD LEGISLATURE, 2005

S.D. 2

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO RENEWABLE ENERGY.

 

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

SECTION 1. Act 95, Session Laws of Hawaii 2004, was enacted to decrease the State's need to import large amounts of oil, as well as to increase import substitution, economic efficiency, and productivity, by increasing the use and development of Hawaii's renewable energy resources through a partnership between the State and the private sector. Act 95 was based upon S.B. No. 2474, S.D. 3, H.D. 2, which the senate agreed to and which was based on another similar proposed senate conference draft of this bill, but which differed from Act 95 by:

(1) Clarifying that the public utilities commission shall establish the rate for purchase of electricity by a public utility at not less (rather than more) than one hundred per cent of the cost avoided by the utility when the utility purchases electrical energy rather than producing it;

(2) Amending the definition of "renewable energy";

(3) Deleting the definition of "cost effective"; and

(4) Amending the duties of the public utilities commission relating to a renewable portfolio standards study.

The purpose of this Act is to make these statutory amendments in the proposed conference draft by the senate on S.B. No. 2474, regular session of 2004.

SECTION 2. Section 269-27.2, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) The rate payable by the public utility to the producer for the nonfossil fuel generated electricity supplied to the public utility shall be as agreed between the public utility and the supplier and as approved by the public utilities commission; provided that in the event the public utility and the supplier fail to reach an agreement for a rate, the rate shall be as prescribed by the public utilities commission according to the powers and procedures provided in this chapter.

In the exercise of its authority to determine the just and reasonable rate for the nonfossil fuel generated electricity supplied to the public utility by the producer, the commission shall establish that the rate for purchase of electricity by a public utility shall not be [more] less than one hundred per cent of the cost avoided by the utility when the utility purchases the electrical energy rather than producing the electrical energy."

SECTION 3. Section 269-91, Hawaii Revised Statutes, is amended by amending the definition of "renewable energy" to read as follows:

""Renewable energy" means electrical energy produced by wind, solar energy, hydropower, landfill gas, waste to energy, geothermal resources, ocean thermal energy conversion, wave energy, biomass, including municipal solid waste, biofuels, or fuels derived from organic sources, hydrogen fuels derived from renewable energy, or fuel cells where the fuel is derived from renewable sources. Where biofuels, hydrogen, or fuel cell fuels are produced by a combination of renewable and nonrenewable means, the proportion attributable to the renewable means shall be credited as renewable energy. Where fossil and renewable fuels are co-fired in the same generating unit, the unit shall be considered to produce renewable electricity in direct proportion to the percentage of the total heat value represented by the heat value of the renewable fuels. "Renewable energy" also means electrical energy savings brought about by the use of solar [and heat pump] water heating, seawater air-conditioning district cooling systems, and solar air-conditioning [and ice storage, quantifiable energy conservation measures, use of rejected heat from co-generation and combined heat and power systems excluding fossil-fueled qualifying facilities that sell electricity to electric utility companies, and central station power projects]."

SECTION 4. Section 269-92, Hawaii Revised Statutes, is amended to read as follows:

"§269-92 Renewable portfolio standards. Each electric utility company that sells electricity for consumption in the State shall establish a renewable portfolio standard of:

(1) Seven per cent of its net electricity sales by December 31, 2003;

(2) Eight per cent of its net electricity sales by December 31, 2005;

(3) Ten per cent of its net electricity sales by December 31, 2010;

(4) [Fifteen] Twenty per cent of its net electricity sales by December 31, 2015; and

(5) [Twenty] Thirty per cent of its net electricity sales by December 31, 2020.

The public utilities commission shall determine if an electric utility company is unable to meet the renewable portfolio standards in a cost-effective manner, or as a result of circumstances beyond its control which could not have been reasonably anticipated or ameliorated. [If this determination is made, the electric utility company] An electric utility company is responsible for conducting sufficient advance planning to acquire its per cent of net electricity sales. Events or circumstances that are outside of a party's reasonable control may include weather-related damage, mechanical failure, or failure of the renewable power provider to meet its contractual obligations to an electric utility company, strikes, lockouts, actions of a governmental authority that adversely affect the generation, transmission, or distribution of renewable energy from an eligible source under contract to an electric utility purchaser. If the determination is made that the electric utility company is unable to meet the renewable portfolio standard from building renewable energy power, purchasing renewable energy power from renewable power producers, or purchasing energy credits, the electric utility company shall be relieved of responsibility for meeting the renewable portfolio standard for the period of time that it is unable to meet the standard."

SECTION 5. Section 269-91, Hawaii Revised Statutes, is amended by deleting the definition of "cost-effective".

[""Cost-effective" means the ability to produce or purchase electric energy or firm capacity, or both, from renewable energy resources at or below avoided costs."]

SECTION 6. Section 269-95, Hawaii Revised Statutes, is amended to read as follows:

"[[]§269-95[]] Renewable portfolio standards study. The public utilities commission shall:

(1) By December 31, 2006, develop and implement a utility ratemaking structure [which] that may include but is not limited to performance-based ratemaking, to [provide incentives that encourage Hawaii's electric utility companies to use cost-effective renewable energy resources found in Hawaii to meet the renewable portfolio standards established in section 269-92, while allowing for deviation from the standards in the event that the standards cannot be met in a cost-effective manner, or as a result of circumstances beyond the control of the utility which could not have been reasonably anticipated or ameliorated;] encourage Hawaii's electric utilities to use renewable energy resources found in the State to meet the requirements of section 269-27.2;

(2) Gather, review, and analyze empirical data to determine the extent to which [any] this proposed utility ratemaking structure would impact electric utility companies' profit margins[,] and to ensure that these profit margins do not decrease [as a result of the implementation of the proposed ratemaking] for a period of five years following the implementation of this rate structure;

(3) Adopt rules to implement incentives and penalties to assist electric utility companies in meeting the renewable portfolio standards established in section 269-92 while allowing deviation from the standard in the event of circumstances beyond the control of the utility that could not have been reasonably anticipated or ameliorated;

[(3)] (4) Using funds from the public utilities special fund, contract with [the Hawaii natural energy institute of the University of Hawaii] qualified technical experts to conduct independent studies to be reviewed by a panel of experts from entities such as the United States Department of Energy, National Renewable Energy Laboratory, Rocky Mountain Institute, Electric Power Research Institute, [Hawaii electric utility companies,] the University of Hawaii Natural Energy Institute, and other similar institutions with the required expertise. These studies shall [include findings and recommendations regarding]:

(A) [The] Make findings and recommendations to the commission as to: the capability of Hawaii's electric utility companies to [achieve renewable portfolio standards in a cost-effective manner, and shall assess factors such as the impact on consumer rates, utility system reliability and stability, costs and availability of appropriate renewable energy resources and technologies, permitting approvals, impacts on the economy, culture, community, environment, land and water, demographics, and other factors deemed appropriate by the commission;] increase the percentage of renewable energy established by the standard in a cost-effective manner; or whether circumstances require that the standard be adjusted. Cost effectiveness and capability shall be assessed by factors such as the impact on consumer rates, utility system reliability and stability, costs and availability of appropriate renewable energy resources and technologies, and other criteria deemed appropriate by the commission; and

(B) [Projected renewable portfolio] Make findings and recommendations to the commission for projected standards to be set five and ten years beyond the then current [standards;] standard; and

[(4) Revise the standards based on the best information available at the time if the results of the studies conflict with the renewable portfolio standards established by section 269-92; and]

(5) [Report its findings and revisions to the renewable portfolio standards based on its own studies and those contracted under paragraph (3),] Based on its own studies and those contracted under subsection (4), the commission shall report its findings and recommendations, including, in particular, recommendations for new standards and goals, adjustments of percentages, and any proposed legislation to the legislature no later than twenty days before the convening of the regular session of 2009, and every five years thereafter."

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect on July 1, 2050.