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HOUSE OF REPRESENTATIVES |
H.B. NO. |
558 |
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THIRTY-FIRST LEGISLATURE, 2021 |
H.D. 2 |
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STATE OF HAWAII |
S.D. 1 |
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A BILL FOR AN ACT
RELATING TO CLEAN ENERGY FINANCING.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that significant investment in clean energy technology and infrastructure will be required to achieve the State's goals of energy self-sufficiency, energy security, and energy diversification. Additional investment is also needed to meet the renewable portfolio and energy efficiency portfolio standards in chapter 269, Hawaii Revised Statutes, as well as the Hawaii Clean Energy Initiative's 2030 target of 165,000,000 gallons of petroleum used per year for ground transportation. The current aggregate level of green infrastructure investment is in excess of $15,350,000,000.
The legislature also finds that green
infrastructure investment supports Hawaii's evolving energy market and provides
affordable options for the State's ratepayers. Due to the significant amount of capital
required for green infrastructure investment, the State must leverage private investment with limited public funds. Growth in the clean energy market will reduce
the cost of clean energy for ratepayers, drive job creation, and save billions
of taxpayer dollars currently being spent on importing petroleum oil.
The legislature has made various efforts to invest in green technology. Act 155, Session Laws of Hawaii 2009, established the building energy efficiency revolving loan fund to provide low cost financing to eligible public, private, and nonprofit borrowers to make energy efficiency improvements to buildings. Act 211, Session Laws of Hawaii 2013, established the Hawaii green infrastructure authority to make cost-effective green infrastructure financing options accessible and affordable to customers under the green energy market securitization program.
The legislature further finds that a significant barrier to clean energy adoption has been the unavailability of flexible financing and low-cost capital. Building Hawaii's clean energy infrastructure at the lowest possible cost is vital to reach the State's goal of one hundred per cent clean energy by 2045. Public funds must be used in a sustainable manner to simultaneously spark customer demand for clean energy technology and attract private investment in green technology. It is the State's goal that each public dollar spent will have an investment multiplier effect throughout the green technology industry.
The legislature also finds that a variety of financing options must be available to support Hawaii's clean energy investment. Ratepayer-funded programs, such as energy efficiency rebates and the green energy market securitization loan program, have made progress but do not serve all ratepaying customers or the entire clean energy technology market. The green energy market securitization loan program has facilitated over $110,000,000 in solar photovoltaic and energy efficiency projects, but the program is not able to serve all ratepayers and focuses only on established technology. The green energy market securitization bond was an innovative use of a rate reduction bond, but due to the time lag between the issuance of the bond and expenditures for improvements, using this bond financing was inefficient compared to using revolving loan funds, which are expended annually and in a more expedient manner.
Furthermore, the coronavirus disease 2019 (COVID-19) pandemic has had significant negative impacts on Hawaii's tourist industry and economy, resulting in projections of severe state budgetary shortfalls over the next four years. With only a limited number of financing mechanisms available for state agencies to install solar photovoltaic systems, state agencies have historically lowered their energy costs by entering into energy performance contracts and power purchase agreements with private partners to install and own energy retrofits and solar photovoltaic systems on their behalf. While individual results are dependent on the negotiated terms of the consummated energy performance contract or power purchase agreement, many of these arrangements have successfully reduced the cost of energy for the State.
Additionally, most agreements include an option for state agencies to purchase the installed equipment during the term of the agreement. For example, an actual power purchase agreement executed on September 30, 2016, between a state agency and an investor is estimated to reduce the agency's energy cost by forty-two per cent over the twenty-year term of the agreement. However, if this state agency had access to financing under section 196-62.5, Hawaii Revised Statutes, to exercise its purchase option over the same twenty-year term of the power purchase agreement, it is estimated the agency would reduce its energy cost by sixty-one per cent. This sixty-one per cent, which includes the loan repayment and ongoing equipment maintenance costs, would create a new source of cash flow for the agency.
With the number of energy performance contracts and power purchase agreements in existence throughout the State, there is a tremendous opportunity for additional energy savings -- savings that can be utilized to finance the conversion of the State's retiring internal combustion fleet to short-term leases on electric vehicles and install electric vehicle charging systems, while remaining budget neutral. Using the example above, this agency could install one level 3 charging system and lease seven electric vehicles with its savings.
The purpose of this Act is to strengthen the Hawaii green infrastructure authority's ability to support investment in clean energy technology, including electric vehicles and electric vehicle charging systems and infrastructure, by:
(1) Creating a clean energy and energy efficiency revolving loan fund to finance a broad range of clean energy technologies;
(2) Expanding the objective of the $50,000,000 sub-fund to allow state agencies to finance their purchase options under existing energy performance contracts and power purchase agreements to further reduce and stabilize future energy costs, with the option to utilize savings to finance the installation of electric vehicle charging systems and lease or purchase electric vehicles;
(3) Repealing the building energy efficiency revolving loan fund; and
(4) Appropriating funds out of the clean energy and energy efficiency revolving loan fund to make clean energy investment loans or for other approved uses.
SECTION 2. Chapter 196, Hawaii Revised Statutes, is amended by adding a new section to part IV to be appropriately designated and to read as follows:
"§196- Clean energy and energy efficiency revolving loan fund. (a) There is created within the Hawaii green infrastructure special fund created in section 196-65 the clean energy and energy efficiency revolving loan fund, which shall be administered by the authority as a revolving line of credit. Funds deposited into the clean energy and energy efficiency revolving loan fund shall not be under the jurisdiction of, nor be subject to approval by, the commission and shall include:
(1) Any amounts, up
to a total amount not to exceed $50,000,000, of moneys borrowed by the authority,
with the approval of the governor, from federal, county, private, or other funding
sources, pursuant to part III of chapter 39;
(2) Funds from
federal, state, county, private, or other funding sources;
(3) Investments
from public or private investors;
(4) Moneys received
as repayment of loans and interest payments; provided that the repayment of loans
and interest payments under this paragraph shall not include repayment of loans
and interest collected as a result of funds advanced from proceeds of green
energy market securitization bonds; and
(5) Any fees
collected by the authority under this section; provided that moneys collected
as a result of the funds advanced from proceeds of green energy market
securitization bonds shall be kept separate from fees collected as a result of
funds advanced from proceeds of the clean energy and energy efficiency revolving
loan fund.
(b) Moneys in the clean
energy and energy efficiency revolving loan fund shall be used to provide low-cost
loans at below-market rates or other authorized financial assistance to
eligible public, private, and nonprofit borrowers for clean energy investments
or other authorized uses, or both, on terms approved by the authority. Moneys from the fund may be used to cover
administrative and legal costs of fund management and management associated
with individual loans, including personnel, services, technical assistance,
data collection and reporting, materials, equipment, and travel for the
purposes of this section.
(c) Appropriations or authorizations from the
clean energy and energy efficiency revolving loan fund shall be expended by the
authority. The authority may contract
with other public or private entities for the provision of all or a portion of
the services necessary for the administration and implementation of the loan
fund program. The authority may set fees
or charges for fund management and technical site assistance provided under
this section. The authority may adopt
rules pursuant to chapter 91 to carry out the purposes of this section.
(d) All interest earned on the loans, deposits, or
investments of the moneys in the clean energy and energy efficiency revolving
loan fund shall become part of the fund.
(e) The authority may establish subaccounts within
the clean energy and energy efficiency revolving loan fund as necessary."
SECTION 3. Section 196-61, Hawaii Revised Statutes, is amended by adding twelve new definitions to be appropriately inserted and to read as follows:
""Clean energy investments" means the purchase or installation,
or both, of clean energy technology, including energy efficiency measures, green
transportation infrastructure, and recycling and renewable energy technology.
"Electric vehicle" has the
same meaning as in section 291‑71.
"Electric vehicle charging
system" has the same meaning as in section 291-71.
"Energy performance contract"
has the same meaning as in section 36-41.
"Green energy money saver
on-bill program"
means the tariff-based on-bill repayment mechanism approved for the exclusive
use of the authority by the commission.
"Green infrastructure
loan program", or
"green energy market securitization loan program" means the loan
program established under section 196-62 and capitalized by the issuance of green
energy market securitization bonds.
"Loan fund program" means the
clean energy and energy efficiency revolving loan fund program.
"Power purchase agreement"
means a contract between two parties, one that generates electricity, or the
seller, and one that seeks to purchase electricity, or the buyer. The power purchase agreement defines all of
the commercial terms for the sale of electricity between the two parties.
"Qualified security" shall have
the same meaning as in section 227D-1.
"Renewable energy" shall have the same meaning
as in section 269-91.
"Renewable energy
technology"
means the equipment and related accessories required to generate or produce
renewable energy.
"Subaccount" means an account under
the clean energy and energy efficiency revolving loan fund that is created within
another separately established fund and that is reserved for a specific
purpose."
SECTION 4. Section 196-62.5, Hawaii Revised Statutes, is amended as follows:
1. By amending its title and subsections (a) and (b) to read:
(b) [An] As may be applicable, an
agency shall consult with the public benefits fee administrator of the [public
utilities] commission prior to planning an energy-efficiency measure subject
to this section. The agency's proposed
energy-efficiency measures shall meet or exceed the public benefits fee
administrator's enhanced efficiency levels and requirements to be eligible for
the Hawaii green infrastructure loan program.
The agency shall coordinate with the public benefits fee administrator
throughout the entire project cycle to ensure that energy efficiency is
maximized. All supporting documentation
required by the public benefits fee administrator shall be provided by the
agency to ensure compliance with the State's energy-efficiency portfolio
standard under section 269-96."
2. By amending subsection (d) to read:
"(d)
Beginning with fiscal year [2018-2019,] 2021-2022,
and annually thereafter, an agency shall repay a loan issued pursuant to subsection
(a) using general revenue savings that result from reduced [utility] energy
costs due to [implementation of] financing the purchase of solar photovoltaic
systems or other clean energy equipment, implementing energy-efficient
lighting and other energy-efficiency measures[.], and achieving operational
and fuel cost savings due to the conversion of internal combustion vehicles to electric
vehicles."
SECTION 5. Section 196-64, Hawaii Revised Statutes, is amended to read as follows:
"[[]§196-64[]]
Functions, powers, and duties of the authority. (a) In
the performance of, and with respect to the functions, powers, and duties vested
in the authority by this part, the authority, as directed by the director and
in accordance with a green infrastructure loan program order or orders under
section 269-171 or an annual plan submitted by the authority pursuant to this
section, as approved by the [public utilities] commission, for the green
energy market securitization loan program, may:
(1) Make loans and expend funds to finance the
purchase or installation of green infrastructure equipment for clean energy
technology, demand response technology, and energy use reduction and demand side
management infrastructure, programs, and services;
(2) Hold and invest moneys in the green infrastructure special fund in
investments as permitted by law and in accordance with approved investment
guidelines established in one or more orders issued by the [public utilities]
commission pursuant to section 269‑171;
(3) Hire employees necessary to perform its
duties, including an executive director.
The executive director shall be appointed by the authority, and the employees'
positions, including the executive director's position, shall be exempt from chapter
76;
(4) Enter into contracts for the service of
consultants for rendering professional and technical assistance and advice, and
any other contracts that are necessary and proper for the implementation of the
loan program;
(5) Enter into contracts for the administration of
the loan program, without the necessity of complying with chapter 103D;
(6) Establish loan program guidelines to be approved in one or more
orders issued by the [public utilities] commission pursuant to section 269-171
to carry out the purposes of this part;
(7) Be
audited at least annually by a firm of independent certified public accountants
selected by the authority, and provide the results of this audit to the department
and the [public utilities]
commission; and
(8) Perform
all functions necessary to effectuate the purposes of this part.
(b)
The authority shall submit to the [public utilities] commission an
annual plan for the green energy market securitization loan program for
review and approval no later than ninety days prior to the start of each fiscal
year. The annual plan submitted by the
authority shall include the authority's projected operational budget for the
succeeding fiscal year.
(c) In the performance of, and with respect to the
functions, powers, and duties vested in the authority by this part, the
authority shall administer the clean energy and energy efficiency revolving
loan fund pursuant to section 196- , and shall:
(1) Make loans and
expend funds to finance the purchase or installation of clean energy technology
and services;
(2) Implement and
administer loan programs on behalf of another state department or agency
through a memorandum of agreement and expend funds appropriated to the
department or agency for purposes authorized by the legislature;
(3) Utilize all repayment
mechanisms, including the green energy money saver on-bill program, financing
tools, servicing and other arrangements, and sources of capital available to
the authority;
(4) Exercise powers
to organize limited liability companies under chapter 428 to serve as special purpose
entities to fulfill specific, temporary objectives as established by the authority;
(5) Acquire, hold,
and sell qualified securities;
(6) Pledge unencumbered net assets, loans
receivable, assigned agreements, and security interests over equipment financed,
as collateral for the authority's borrowings from federal,
county, or private lenders or agencies;
(7) Utilize the
employees of the authority, including the executive director;
(8) Enter into
contracts for professional and technical services and advice and any other contracts
deemed necessary for the implementation of the loan fund program;
(9) Enter into
contracts that are exempt from chapter 103D for the administration of the loan fund
program;
(10) Establish loan fund
program guidelines;
(11) Be audited at
least annually by a firm of independent certified public accountants selected
by the authority and provide the results of the audit to the department and the
legislature; and
(12) Perform all
functions necessary to effectuate the purposes of this part.
(d) The authority shall submit to the legislature,
no later than twenty days prior to the convening of each regular session, an
annual report for the clean energy and energy efficiency revolving loan fund describing
the projects funded and the projected energy impacts."
SECTION 6. Section 196-65, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b) Moneys in the Hawaii
green infrastructure special fund may be used, subject to the approval of the [public
utilities] commission, for the purposes of:
(1) Making
green infrastructure loans, including for installation costs for
energy-efficient lighting and other energy-efficiency measures[;], to
finance the option to purchase solar photovoltaic systems and other clean energy equipment
under existing power purchase agreements and energy performance contracts, finance
the purchase or lease of electric vehicles, or install electric vehicle charging
systems; provided that any option to purchase offers the buyer the option, but
not the obligation, to purchase the solar photovoltaic system or other
installed equipment at an agreed upon price, prior to the maturity date of the
power purchase agreement or energy performance contract;
(2) Creating
a $50,000,000 sub-fund, as a revolving line of credit within the Hawaii green
infrastructure special fund, for any state agency to obtain financing to
implement cost-effective energy-efficiency measures[;], finance the option
to purchase solar photovoltaic systems and other clean energy equipment under existing power purchase
agreements and energy performance contracts, finance the purchase or lease of electric
vehicles, and install electric vehicle charging systems;
(3) Paying
administrative costs of the Hawaii green infrastructure loan program;
(4) Paying
any other costs related to the Hawaii green infrastructure loan program; or
(5) Paying
financing costs, as defined in section 269-161, to the extent permitted by the [public
utilities] commission in a financing order issued pursuant to section
269-163."
SECTION 7. Section 201-12.8, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b) Subject to legislative appropriation, moneys
from the fund may be expended by the Hawaii state energy office for the
following purposes and used for no other purposes, except for those set forth
in this section:
(1) To support the Hawaii clean energy initiative
program and projects that promote and advance dependable and affordable energy,
renewable energy, energy efficiency, energy self-sufficiency, and greater
energy security and resiliency for the State and public facilities;
(2) To fund, to the extent possible, the climate
change mitigation and adaptation commission and the greenhouse gas sequestration
task force;
(3) To support achieving the zero emissions clean
economy target set forth in section 225P-5;
[(4) To fund the building energy efficiency
revolving loan fund established in section 201-20;
(5)] (4) To fund projects and incentives to promote the
adoption of clean transportation technologies, develop clean vehicle charging
infrastructure, and upgrade infrastructure to support the development of clean
vehicle charging infrastructure; and
[(6)] (5) To fund, to the extent possible, the duties of
the state building code council in section 107-24, as they relate to the development
of energy conservation codes."
SECTION 8. Section 201-20, Hawaii Revised Statutes, is repealed.
["[§201-20] Building energy
efficiency revolving loan fund.
(a) There is established in the
state treasury the building energy efficiency revolving loan fund which shall
be administered by the department, and into which shall be deposited:
(1) Funds from federal,
state, county, private, or other funding sources;
(2) Moneys received
as repayment of loans and interest payments; and
(3) Any fees
collected by the department under this section.
(b) Moneys in the building energy efficiency revolving
loan fund shall be used to provide low or no interest loans or other authorized
financial assistance to eligible public, private, and nonprofit borrowers to
make energy efficiency improvements in buildings. Moneys from the fund may be used to cover
administrative and legal costs of fund management and management associated with
individual loans, to include personnel, services, technical assistance, data
collection and reporting, materials, equipment, and travel for the purposes of
this section.
(c) Appropriations or authorizations from the
fund shall be expended by the department.
The department may contract with other public or private entities for
the provision of all or a portion of the services necessary for the
administration and implementation of the loan fund program. The department may set fees or charges for fund
management and technical site assistance provided under this section. The department may adopt rules pursuant to
chapter 91 to carry out the purposes of this section.
(d) All interest earned on the deposit or
investment of the moneys in the fund shall become a part of the fund.
(e) The department may establish subaccounts within
the fund as necessary."]
SECTION 9. Any unencumbered balance in the building energy efficiency revolving loan fund repealed by section 8 of this Act shall be transferred to the credit of the clean energy and energy efficiency revolving loan fund.
SECTION 10. There is appropriated out of the clean
energy and energy efficiency revolving loan fund the sum of $
or so much thereof as may be necessary for fiscal year 2021-2022 and the same sum
or so much thereof as may be necessary for fiscal year 2022-2023 to provide loans
or other financial assistance to eligible borrowers for clean energy investments
or other authorized uses.
The sums appropriated shall be expended by
the Hawaii green infrastructure authority for the purposes of this Act.
SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 12. This Act shall take effect on July 1, 2050.
Report Title:
Clean Energy and Energy Efficiency Revolving Loan Fund; Building Energy Efficiency Revolving Loan Fund; Energy Financing; State Agencies; Hawaii Green Infrastructure Authority; Appropriation
Description:
Creates the clean energy and energy efficiency revolving loan fund in the Hawaii green infrastructure special fund to be administered by the Hawaii Green Infrastructure Authority. Amends the purpose of the revolving sub-fund to expand financing for state agencies and also includes the electrification of fleet vehicles. Repeals the building energy efficiency revolving loan fund. Appropriates funds from the clean energy and energy efficiency revolving loan fund to make loans for clean energy investments or other authorized uses. Effective 7/1/2050. (SD1)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.