Bill Text: HI HR173 | 2012 | Regular Session | Introduced

Hawaii House Resolution 173 (Prior Session Legislation)

Introduced

Bill Title: Public Utilities Commission; Renewable Energy Objectives

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2012-03-20 - (H) Referred to EEP, CPC, referral sheet 50 [HR173 Detail]

Download: Hawaii-2012-HR173-Introduced.html

HOUSE OF REPRESENTATIVES	H.R. NO.	173
TWENTY-SIXTH LEGISLATURE, 2012
STATE OF HAWAII

HOUSE RESOLUTION

Requesting the Public Utilities Commission to carry out objectives and actions to encourage and support electric utilities in maximizing renewable energy generation.

WHEREAS, Hawaii�s Renewable Portfolio Standards law mandates that 40 percent of electricity generation in the State come from renewable resources by the year 2030; and

WHEREAS, the maximum penetration of variable electricity generation with respect to Hawaii�s isolated island electricity grids will require significant upgrades to each island�s transmission and distribution systems, along with storage, integrated communication devices at critical interconnection points, and other grid enhancements to manage and balance the system; and

WHEREAS, the cost of fuel is a major component of an electricity customer�s utility bill, and with the high cost of low sulfur fuel oil and diesel, Hawaii�s costs of living and doing business are increasing at an alarming rate; and

WHEREAS, serious consideration must be given to the retirement of some fossil fuel-based electricity generation units and to the conversion of other fossil fuel-based electricity generation units to lower-cost fossil fuels in order to help mitigate significantly rising electricity bills; and

WHEREAS, since 2009, it has been a policy of the State that the Public Utilities Commission determine just and reasonable utility rates by establishing a methodology that either removes or significantly reduces the linkage between fossil fuel prices and nonfossil fuel-generated electricity rates, to potentially enable utility customers to share in the benefits of fuel cost savings resulting from the use of nonfossil fuel-generated electricity; and
WHEREAS, renewable energy power purchase agreements were negotiated more than a decade ago under the Public Utility Regulatory Policy Act utilizing avoided cost, at a time when oil pricing was significantly lower; and

WHEREAS, renewable energy power purchase agreements negotiated based on avoided cost methodology do not enable utility customers to share in the benefits of fuel cost savings resulting from the use of nonfossil fuel-generated electricity, which may result in windfall profits for projects operating under these types of contracts; and

WHEREAS, the Public Utilities Commission must devise the proper incentives and disincentives to transition the electric utilities it regulates to implement Hawaii�s mandated clean energy policies; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-sixth Legislature of the State of Hawaii, Regular Session of 2012, that the Legislature encourages the Public Utilities Commission to consider throughout its proceedings the following objectives and actions in order to accelerate the development and penetration of renewable energy generation and to reduce the use of fossil fuel-based electricity generators in Hawaii:

(1) Encourage electric utilities to focus greater attention on transmission and distribution operations and investments by:

(A) Establishing a higher allowed return on common equity associated with existing transmission and distribution investments made to encourage grid improvements;

(B) Establishing a lower allowed return on common equity associated with existing and new fossil fuel-based electricity generation investments to discourage fossil generation; and

(C) Ensuring that the overall average rate of return on equity is equal to the current authorized return on common equity;

(2) Encourage the early retirement of less efficient fossil fuel-based electricity generation to sufficiently accommodate achieving Hawaii�s Renewable Portfolio Standards mandate of 40 percent renewable energy generation by the year 2030 by:

(A) Allowing electric utilities to recover stranded costs associated with the shutdown of existing fossil fuel-based generators; and

(B) Allowing electric utilities to recover the cost of buying out, or partially buying down the capacity of power purchase agreements covering existing fossil fuel-based generators prior to the contract�s expiration;

(3) Encourage the reduction of fuel costs for the remaining 60 percent of electricity generation from existing fossil fuel-based generating units not affected by Hawaii�s Renewable Portfolio Standards mandates by:

(A) Authorizing electric utilities to earn a higher allowed return on common equity associated with any existing fossil fuel-based electricity generation investment that switches from low sulfur fuel oil or diesel to another less expensive fossil fuel, other than coal, thus incentivizing electric utilities to switch fuel sources so as to share in the annual fuel cost savings; and

(B) Penalizing electric utilities for failing to convert an eligible, existing low sulfur fuel oil or diesel-based generation unit to one using a less-expensive fossil fuel source;

(4) Encourage electric utilities to enter into and accommodate new renewable energy power purchase agreements by:

(A) Authorizing electric utilities to utilize the renewable energy infrastructure program surcharge mechanism to recover all reasonable and prudent costs and to earn a higher allowed return on common equity associated with any transmission or distribution grid investments made to interconnect new utility scale renewable energy facilities or to accommodate the high penetration of variable generation on a circuit through investments in communication devices at critical interconnection points thereof, grid enhancements such as storage systems, demand response, and other technologies to improve grid reliability; and

(B) Allowing electric utilities to assess a renewable energy integration charge for all electricity procured from third-party renewable energy generation units;

(5) Encourage electric utilities and independent power producers to terminate and renegotiate power purchase agreements that use rates based on an avoided cost methodology by:

(A) Reexamining the current avoided cost methodology;

(B) Allowing electric utilities to retain a portion of the cost reduction associated with the termination and renegotiation of a power purchase agreement based on avoided cost;

(C) Authorizing a curtailment compensation mechanism for variable generation independent power producers willing to renegotiate and eliminate avoided cost pricing; and

(D) Precluding electric utilities from recovering the cost of a power purchase agreement from a new renewable energy project developed by an independent power producer who has an existing avoided cost-based power purchase agreement;

(6) Encourage the reduction or elimination of curtailment of existing variable generation projects by:

(A) Requiring electric utilities to secure ancillary services from renewable energy projects that are technically capable and willing to supply such services; and

(B) Ensuring that renewable energy projects that are both technically and functionally capable of supplying ancillary services are not curtailed, and that these projects are adequately compensated for any curtailment that does happen to occur; provided that these ancillary services would emulate the technical characteristics of various fossil fuel-based generation units contemplated for replacement; and

BE IT FURTHER RESOLVED that the Public Utilities Commission is requested to include in its annual reports for 2012 and 2013, prepared pursuant to section 269-5, Hawaii Revised Statutes, actions taken by the Commission to fulfill each of the above stated objectives and any statutory action identified by the Commission to carry out the purposes of this Resolution; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Governor; Lieutenant Governor; Chairperson of the Public Utilities Commission; Hawaii Energy Resources Coordinator; Hawaiian Electric Company, Inc.; Maui Electric Company, Ltd.; Hawaii Electric Light Company, Inc.; Kauai Island Utility Cooperative; Puna Geothermal Venture; Tawhiri Power, LLC; Covanta Honolulu Resource Recovery Venture; and all other independent power producers in the State currently operating under power purchase agreements using rates based on an avoided cost methodology.