Hawaii-2016-HB2081-Amended

SECTION 1. The legislature finds that the current public utility regulatory structure for electricity and fuel resource procurement practices may hinder the development of essential public purpose projects that require utility cooperation and procurement of electricity or fuel. Currently, a public utility is not obligated or incentivized to look beyond its own interests, direct costs to its ratepayers, and regulatory requirements in the procurement of electricity or fuel. As a result, public purpose projects may be stalled unnecessarily, and the public, including the public utilities' ratepayers, may also be negatively impacted.

The legislature believes that a simplified regulatory process would allow the State and counties to develop and present public purpose projects that involve a public utility's participation in the procurement of electricity or fuel without the prior approval of the affected public utility. A simplified regulatory process would encourage and facilitate the development of projects with important public purpose objectives. The role of the public utility in these cases would be limited to system integration. Public purpose projects may include management of waste and waste water, potable water, law enforcement, public health, and other essential public services.

The legislature notes that in some circumstances, direct and indirect public benefits may warrant higher rates for electricity or fuel in relation to utility procurement contracts.

The purpose of this Act is to create a simplified regulatory process and procurement mechanism for the public utility commission's review and approval of projects and to direct public utilities to procure electricity or fuel from those projects at a rate authorized by the commission.

SECTION 2. Chapter 269, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part . PUBLIC PURPOSE PROJECTS

§269-A Definitions. For the purposes of this part:

"Agency" means each state or county board, commission, department, or officer authorized by law to make rules or to adjudicate contested cases, except those in the legislative or judicial branches.

"Commission" means the public utilities commission.

"Public purpose project" means a project that is in the public interest as determined by an agency.

§269-B Public purpose project determination by agency. An agency shall comply with the following process in determining whether a proposed public purpose project is in the public interest:

(1) The agency shall confer with the public utility that is the intended buyer of the electricity or fuel to be produced by the public purpose project and shall provide the public utility with written notice that the agency intends to propose a public purpose project. The public utility, within ninety days of notice from the agency, shall prepare and provide the agency with a feasibility report describing and analyzing the feasibility of the proposed public purpose project in interconnecting and providing electrical energy, or in supplying fuel to the public utility for electricity generation. The feasibility report shall be prepared at the cost of the public utility; provided that the commission shall allow the public utility to recover reasonable costs in preparing the feasibility studies from its ratepayers pursuant to a methodology approved by the commission. If the agency disagrees with the public utility, the agency may appoint an independent engineer or consultant at its own cost to validate or contest the public utility's findings;

(2) The agency shall formulate a proposal for a public purpose project. The proposal shall include, at a minimum, the following:

(A) The location of the facility;

(B) A brief description of the facility, including a statement and agency determination that the plan is for a public purpose project as defined in this part;

(D) The power production capacity of the facility;

(E) The public benefit created by the project;

(F) The proposed rates for the public purpose project; and

(G) The feasibility of the proposed public purpose project in interconnecting and providing renewable electricity or in supplying renewable fuel to the public utility; and

(3) The agency shall determine whether the planned public purpose project is in the public interest pursuant to its authority under all governing and applicable laws. The determination shall be supported by written findings of the agency.

§269-C Commission review of public purpose project. The commission shall, by January 1, 2017, establish a simplified regulatory process and procurement mechanism for the commission's review and approval of public purpose projects proposed by public agencies and to direct public utilities to procure electricity or fuel from approved projects at a rate authorized by the commission.

§269-D Public purpose project implementation. Following approval of the public purpose project, the agency and public utility shall implement the project as provided in this part. §269-E Limitations of part. Nothing in this part shall prohibit an agency from directly approaching a public utility to discuss or negotiate an agreement for the purchase and sale of renewable electrical energy or renewable fuel from a public purpose project.

§269-F Role of consumer advocate. The consumer advocate, in addition to other considerations within its authority and responsibilities, shall consider the benefits of the public purpose project, as determined by an agency in this part."

SECTION 3. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 4. This Act shall take effect on January 1, 2112.

HOUSE OF REPRESENTATIVES	H.B. NO.	2081
TWENTY-EIGHTH LEGISLATURE, 2016		H.D. 2
STATE OF HAWAII