Hawaii-2016-HB1823-Amended

SECTION 1. Dependence on imported oil for more than three-quarters of its electricity needs makes Hawaii vulnerable to any disruption in its supply of oil. Hawaii's continued reliance on imported oil for electric power production also harms its environment.

Hawaii's utility-supplied electricity, which is generated predominantly from imported oil, now costs more than commercial forms of renewable electricity generation, such as geothermal, wind, biomass, concentrating solar power, and photovoltaic solar power. Furthermore, the increased use of Hawaii's renewable energy resources for electricity production would reduce Hawaii's energy costs and its vulnerability to oil supply disruptions and would enhance Hawaii's natural environment.

The legislature enacted net energy metering "to lessen Hawaii's dependence on imported oil by encouraging the greater use of renewable energy." Net energy metering has been an effective incentive for the rapid development of renewable electricity self-generation at low cost to the public, but its effectiveness has been restricted by customer capacity and total capacity limits that were established when net energy metering was first enacted.

When the legislature first enacted net energy metering, it also established a customer capacity limit, because distributed generation interconnection procedures to ensure the safety and reliability of the grid had not yet been clearly established. Since that time, the public utilities commission has clearly established such procedures, and the customer capacity limit no longer serves a useful purpose. On the contrary, it reduces the size, slows the speed, and increases the cost to the public of renewable electricity development in Hawaii.

In addition, when the legislature first enacted net energy metering, it also enacted a total capacity limit out of a concern that net energy metering benefits for some ratepayers might someday become costs for all other ratepayers. Since that time, some net energy metering benefits for some ratepayers have indeed become costs of all other ratepayers. That these benefits for some have become costs for others arises from valuing excess energy (delivered by the net energy metering generator to the utility) at the retail rate for electricity that exceeds the value of that electricity to all other ratepayers. This inequitable situation can be remedied by valuing such excess energy at a rate based on its value to the utility, ratepayers, and the public measured in avoided capacity costs, avoided operating and maintenance costs, avoided fuel costs, and avoided environmental costs. As a result, the total capacity limit can be increased, without causing these benefits for some to become costs for others. The aggregate amount of such generating capacity could be interconnected with the utility's electric system without substantial expenditure by the utility for new mitigation facilities to maintain reliability of electric service.

The purpose of this Act is to encourage the development of renewable electricity self-generation in Hawaii, to reduce Hawaii's dependence on imported oil, to secure and reduce the cost of Hawaii's electricity supply, and to protect Hawaii's environment by, among other things:

(1) Increasing the customer capacity limit on net energy metering to one megawatt;

(2) Increasing the total capacity limit on net energy metering to the aggregate amount of such generating capacity that could be interconnected with the electric utility's electric system without substantial expenditure by the utility for new mitigation facilities to maintain reliability of electric service; and

(3) Valuing excess energy at a rate based on its value to the utility, ratepayers, and the public measured in terms of avoided capacity costs, avoided operating and maintenance costs, avoided fuel costs, and avoided environmental costs.

SECTION 2. Section 269-101, Hawaii Revised Statutes, is amended to read as follows:

"§269-101 Definitions. As used in this part:

"Eligible customer-generator" means a metered residential or commercial customer, including a government entity, of an electric utility who owns and operates, leases, or purchases electricity from a solar, wind turbine, biomass, or hydroelectric energy generating facility, or a hybrid system consisting of two or more of these facilities, that is:

(1) Located on the customer's premises;

(2) Operated in parallel and interconnected with the utility's transmission and distribution facilities;

(3) In conformance with the utility's interconnection requirements; and

(4) Intended primarily to offset part or all of the customer's own electrical requirements.

"Net energy metering" means measuring the difference between the electricity supplied through the electric grid and the electricity generated by an eligible customer-generator and fed back to the electric grid [~~over a monthly billing period~~]; provided that:

(1) Net energy metering shall be accomplished using a single meter capable of registering the flow of electricity in two directions;

(2) An additional meter or meters to monitor the flow of electricity in each direction may be installed with the consent of the customer-generator, at the expense of the electric utility, and the additional metering shall be used only to provide the information necessary to accurately bill or credit the customer-generator, or to collect solar, wind turbine, biomass, or hydroelectric energy generating system performance information for research purposes;

(3) If the existing electrical meter of an eligible customer-generator is not capable of measuring the flow of electricity in two directions, the electric utility shall be responsible for all expenses involved in purchasing and installing a meter that is able to measure electricity flow in two directions;

(4) If an additional meter or meters are installed, the net energy metering calculation shall yield a result identical to that of a single meter; [~~and~~]

(5) An eligible customer-generator who already owns an existing solar, wind turbine, biomass, or hydroelectric energy generating facility, or a hybrid system consisting of two or more of these facilities, is eligible to receive net energy metering service in accordance with this part[.]; and

(6) The electric utility shall not unreasonably deny, burden, or delay net energy metering service upon a request for the service by a retail customer of the electric utility."

SECTION 3. Section 269-101.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§269-101.5[]] Maximum capacity of eligible customer-generator. The eligible customer-generator shall have a rated AC generating capacity of not more than [fifty kilowatts; provided that the public utilities commission may increase the maximum allowable capacity that eligible customer-generators may have to an amount greater than fifty kilowatts by rule or order.] one megawatt."

SECTION 4. Section 269-102, Hawaii Revised Statutes, is amended to read as follows:

"§269-102 Standard contract or tariff; rate structure. (a) Every electric utility shall develop a [~~standard contract or tariff~~] set of standard contracts or tariffs providing for net energy metering and shall make [~~this contract~~] these contracts or tariffs available to eligible customer-generators, upon request, on a first-come-first-served basis [~~until the time that the total rated generating capacity produced by eligible customer-generators equals .5 per cent of the electric utility's system peak demand; provided that the~~]. The public utilities commission may [~~modify,~~] specify, by rule or order, the total rated generating capacity [~~produced~~] that may be interconnected with the electric utility's system by eligible customer-generators; provided that, as may be determined by the commission, the total rated generating capacity shall be equal to the aggregate amount of the generating capacity that could be interconnected with the utility's electric system without substantial expenditure by the utility for new mitigation facilities to maintain reliability of electric service; provided further that the public utilities commission [~~shall~~] may ensure that a percentage of the total rated generating capacity produced by eligible customer-generators shall be reserved for electricity produced by eligible residential or small commercial customer-generators. The public utilities commission may define, by rule or order, the maximum allowable rated AC generating capacity for eligible residential or small commercial customer-generators. Notwithstanding [~~the~~] any total generating capacity requirements of this subsection, the public utilities commission may evaluate, on an island-by-island basis, the applicability of the generating capacity requirements of this subsection and, in its discretion, may exempt an island or a utility grid system from the generating capacity requirements.

(b) [~~Each~~] For an eligible customer-generator whose generating facility or hybrid system is interconnected with the utility's transmission and distribution facilities on or before June 30, 2016, each net energy metering contract or tariff shall be identical, with respect to rate structure, to the contract or tariff to which the same customer would be assigned if the customer was not an eligible customer-generator. The charges for all retail rate components for eligible customer-generators shall be based exclusively on the eligible customer-generator's net kilowatt-hour consumption over a monthly billing period.

(c) For an eligible customer-generator whose generating facility or hybrid system is first interconnected with the utility's transmission and distribution facilities after June 30, 2016, each net energy metering contract or tariff shall:

(1) Value the electricity supplied by the electric utility to the eligible customer-generator at the retail rate of the rate class that the customer is normally assigned to; and

(2) Value the electricity generated by the eligible customer-generator and fed back to the electric grid at a rate, to be determined for each calendar year by the public utilities commission, that reflects the value of such electricity to the utility, ratepayers, and the public as measured by avoided capacity costs, avoided operating and maintenance costs, avoided fuel costs, and avoided environmental costs.

(d) Any new or additional demand charge, standby charge, customer charge, minimum monthly charge, interconnection charge, interconnection requirements study charge, supplemental review charge, or other charge that would increase an eligible customer-generator's costs beyond those of other customers in the rate class to which the eligible customer-generator would otherwise be assigned are contrary to the intent of this section, and shall not form a part of net energy metering contracts or tariffs.

[~~(c)~~] (e) The public utilities commission may amend the rate structure or standard contract or tariff by rule or order."

SECTION 5. Section 269-104, Hawaii Revised Statutes, is amended to read as follows:

"§269-104 Additional customer-generators. Notwithstanding section 269-102, an electric utility is not obligated to provide net energy metering to additional customer-generators in its service area when the combined total peak generating capacity of all eligible customer-generators served by all the electric utilities in that service area furnishing net energy metering to eligible customer-generators equals [~~.5 per cent of the system peak demand of those electric utilities;~~] or exceeds the total rated generating capacity of such customer-generators that the public utilities commission, by rule or order, specifies may be interconnected with the electric utility's system; provided that the public utilities commission may increase, by rule or order, the allowable [~~percentage of the electric utility's system peak demand produced from eligible customer-generators in the electric utility's service area,~~] total rated generating capacity of all such customer-generators, whereupon the electric utility will be obligated to provide net energy metering to additional eligible customer-generators in that electric utility's service area up to the increased [~~percentage amount.~~] allowable total rated generating capacity of all such customer-generators."

SECTION 6. Section 269-105, Hawaii Revised Statutes, is amended to read as follows:

"§269-105 Calculation. [~~The~~] For an eligible customer-generator whose generating facility or hybrid system is interconnected with the utility's transmission and distribution facilities on or before June 30, 2016, the net energy metering calculation shall be made by measuring the difference between the electricity supplied to the eligible customer-generator and:

(1) The electricity generated by the eligible customer-generator and fed back to the electric grid over a monthly billing period; and

(2) Any unused credits for excess electricity from the eligible customer-generator carried over from previous months since the last twelve-month reconciliation period."

SECTION 7. Section 269-106, Hawaii Revised Statutes, is amended to read as follows:

"§269-106 Billing periods; twelve-month reconciliation. (a) [~~Billing~~] For an eligible customer-generator whose generating facility or hybrid system is interconnected with the utility's transmission and distribution facilities on or before June 30, 2016, billing of net energy metering customers shall be on a monthly basis; provided that the last monthly bill for each twelve-month period shall reconcile for that twelve-month period the net electricity provided by the electric utility with:

(1) The electricity generated by the eligible customer-generator and fed back to the electric grid over the monthly billing period; and

(2) Any unused credits for excess electricity from the eligible customer-generator carried over from prior months since the last twelve-month reconciliation period.

(b) Credits for excess electricity from the eligible customer-generator that remain unused after each twelve-month reconciliation period may not be carried over to the next twelve-month period."

SECTION 8. Section 269-107, Hawaii Revised Statutes, is amended to read as follows:

"§269-107 Net electricity consumers. [At] For an eligible customer-generator whose generating facility or hybrid system is interconnected with the utility�s transmission and distribution facilities on or before June 30, 2016, at the end of each monthly billing period, where the electricity supplied during the period by the electric utility exceeds:

(1) The electricity generated by the eligible customer-generator during that same period; and

(2) Any unused credits for excess electricity from the eligible customer-generator carried over from prior months since the last twelve-month reconciliation period,

the eligible customer-generator is a net electricity consumer and the electric utility shall be owed compensation for the eligible customer-generator's net kilowatt-hour consumption over that same period. The compensation owed for the eligible customer-generator's net monthly kilowatt-hour consumption shall be calculated at the retail rate of the rate class the customer is normally assigned to."

SECTION 9. Section 269-108, Hawaii Revised Statutes, is amended to read as follows:

"§269-108 Net electricity producers; excess electricity credits and credit carry over. [At] For an eligible customer-generator whose generating facility or hybrid system is interconnected with the utility's transmission and distribution facilities on or before June 30, 2016, at the end of each monthly billing period, where the electricity generated by the eligible customer-generator during the month exceeds the electricity supplied by the electric utility during that same period, the eligible customer-generator is a net electricity producer and the electric utility shall retain any excess kilowatt-hours generated during the prior monthly billing period; provided that the excess electricity generated by the customer-generator, if any, in each monthly billing period shall be carried over to the next month as a monetary value to the credit of the eligible customer-generator, which credit may accumulate and be used to offset the compensation owed the electric utility for the eligible customer-generator's net kilowatt-hour consumption for succeeding months within each twelve-month period; provided further that the electric utility shall reconcile the eligible customer-generator's electricity production and consumption for each twelve-month period as set forth in section 269-106[~~. The~~]; and provided further that the eligible customer-generator shall not be owed any compensation for excess kilowatt-hours unless the electric utility enters into a purchase agreement with the eligible customer-generator for those excess kilowatt-hours."

SECTION 10. Section 269-109, Hawaii Revised Statutes, is amended to read as follows:

"§269-109 Net electricity consumption or production information. [~~The~~] For an eligible customer-generator whose generating facility or hybrid system is interconnected with the utility's transmission and distribution facilities on or before June 30, 2016, the electric utility shall provide [~~every~~] such eligible customer-generator with net electricity consumption or production information with each regular monthly bill, which shall include:

(1) The current monetary balance owed the electric utility for net electricity consumed;

(2) The net electricity produced since the end of the last monthly billing period; and

(3) An accounting of the credits for excess electricity produced by the eligible customer-generator since the last twelve-month reconciliation period that shows credits applied to the monthly billing period and the balance of unused credits, if any."

SECTION 11. Section 269-110, Hawaii Revised Statutes, is amended to read as follows:

"§269-110 Termination by eligible customer-generators. [If] For an eligible customer-generator whose generating facility or hybrid system is interconnected with the utility's transmission and distribution facilities on or before June 30, 2016, if an eligible customer-generator terminates the customer relationship with the electric utility, the electric utility shall reconcile the eligible customer-generator's consumption and production of electricity, including any unused credits for excess electricity from the eligible customer-generator carried over from prior months, for the period following the last twelve-month reconciliation period to the date of termination of the relationship, according to the requirements set forth in this part."

SECTION 12. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 13. This Act shall take effect on July 1, 2045.

HOUSE OF REPRESENTATIVES	H.B. NO.	1823
TWENTY-EIGHTH LEGISLATURE, 2016		H.D. 1
STATE OF HAWAII