Bill Text: HI SB1310 | 2017 | Regular Session | Introduced

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Bill Title: Relating To The Green Infrastructure Loan Program.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2017-02-13 - The committee on CPH deferred the measure. [SB1310 Detail]

Download: Hawaii-2017-SB1310-Introduced.html

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THE SENATE	S.B. NO.	1310
TWENTY-NINTH LEGISLATURE, 2017
STATE OF HAWAII

A BILL FOR AN ACT

 

 

RELATING TO THE GREEN INFRASTRUCTURE LOAN PROGRAM.

 

 

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

 

     SECTION 1.  The legislature finds that the green infrastructure loan program has not been a success.  The factors contributing to the disappointing performance of the green infrastructure loan program will likely continue to inhibit loans for underserved electric utility customers to purchase and install photovoltaic systems.  These factors include the following:  the termination of the net energy metering program, high availability of competitive commercial loan products, interconnection issues, and a permitting backlog.

     Because the program had issued very few loans, a substantial amount of the green infrastructure bond proceeds remains available for deployment for renewable energy projects.  As of June 30, 2016, the green infrastructure loan program fund balance was $142,800,000.

     Although the green infrastructure loan program is funded by the green infrastructure fee imposed on all electric utility customers of the Hawaiian Electric Companies, the primary beneficiaries are intended to be the electric utility customers who receive green infrastructure loans and "deployment partners", such as solar financiers, financial institutions, solar installers, and other clean energy capital providers.  This seems unfair to ratepayers who pay the green infrastructure fee but are not the primary program beneficiaries.

     The green infrastructure fee is the source of payment for the debt service on the green infrastructure bonds.  The green infrastructure fee is to continue until the debt service is fully paid or defeased.  In practical effect, the green infrastructure bond debt service payments are dependent primarily on the imposition and collection of the green infrastructure fee, and not on the success of issuing green infrastructure loans to realize loan repayments.

     Thus, there is no immediate pressure to deploy green infrastructure loans quickly.  Expediting loans to generate repayments soon to pay the debt service is not absolutely necessary.

     Indeed, the State may make the time to deliberate on the worthiness of loan applications for renewable energy projects that will be necessary to achieve the aggressive goals of Act 97, Session Laws of Hawaii 2015.  Among other things, Act 97 requires each electric utility company to set a renewable portfolio standard under which one hundred per cent of its net electricity sales are to be generated from renewable energy by December 31, 2045.  Substantial capital will obviously be needed to reach that goal.

     To provide some of the necessary capital, a re-direction of green infrastructure loans towards utility-scale renewable energy generation or storage projects seems logical.  Doing so may result in the issuance of larger, but fewer, loans and require less administrative cost for servicing fewer loans.

     Based on these findings, the legislature concludes that a strategy should be established under which green infrastructure loans for utility-scale renewable energy generation or storage projects that promote the public interest are issued at relatively low interest rates, optimally on a competitive basis.  The strategy seeks to deploy the remaining green infrastructure bond proceeds for loans as quickly, but deliberatively, as possible for utility-scale renewable energy generation or storage projects that are cost-effective and result in just and reasonable electricity rates, reduced fossil fuel dependence, and other public benefits.  Loan repayments would then be dedicated to the payment of debt service on the green infrastructure bonds, resulting in a corresponding reduction of the green infrastructure fee imposed on ratepayers.  All ratepayers who pay the green infrastructure fee would benefit from the utility-scale renewable energy generation or storage projects and reduced green infrastructure fee.

     The purpose of this Act is to re-direct the green infrastructure loan program by implementing the following strategy:

     (1)  Expressly designating "all ratepayers" who pay the green infrastructure fee as the primary beneficiaries of the green infrastructure loan program;

     (2)  With respect to future green infrastructure loans:

         (A)  Requiring $          in green infrastructure loans to be issued for financing utility-scale renewable energy generation projects or utility-scale renewable energy storage projects;

         (B)  Authorizing the green infrastructure authority to determine the process for soliciting and issuing green infrastructure loans to utility-scale renewable energy generation or storage projects, preferably on a competitive basis; and

         (C)  Allowing, if unavoidable for the deployment of all green infrastructure bond proceeds, flexible terms and conditions on green infrastructure loans, as long as the principal of the loan is repaid;

     (3)  Requiring, before any expenditure of the green infrastructure loan by the borrower, the public utilities commission to approve the utility-scale renewable energy generation or storage project through a power purchase agreement or capital expenditure order.  The legislature intends that any utility-scale renewable energy generation or storage projects financed with green infrastructure loans:

         (A)  Contribute towards achieving the Hawaii renewable energy portfolio; and

         (B)  Comply with applicable requirements of chapter 269, Hawaii Revised Statutes, and relevant orders of the public utilities commission;

     (4)  Requiring, until the green infrastructure bonds are fully paid or defeased, any annual green infrastructure loan repayments to be applied to green infrastructure bond debt service payments, with a corresponding reduction of the green infrastructure fee;

     (5)  Terminating the green infrastructure fee upon the full payment or defeasance of the green infrastructure bonds;

     (6)  Terminating the green infrastructure loan program and Hawaii green infrastructure authority shortly after the full payment or defeasance of the green infrastructure bonds; and

     (7)  Including the following miscellaneous provisions:

         (A)  Prohibiting green infrastructure loans for undersea cable energy transmission projects; and

         (B)  Prohibiting green infrastructure loans for liquified natural gas projects.

     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-     Green infrastructure loans from the effective date of this Act.  (a)  From the effective date of this Act, green infrastructure loans in principal amount of at least $          shall be made to the eligible borrowers for financing the purchase or installation of utility-scale renewable energy generation projects or utility-scale renewable energy storage projects.  The eligible borrowers are private entities, whether corporations, partnerships, limited liability companies, or other persons.

     The green infrastructure authority shall apply for a modification of the green infrastructure loan financing order (Decision and Order No. 32281, Docket No. 2014-0134) and green infrastructure loan program order (Decision and Order No. 32318, Docket No. 2014-0135) to comply with this section.

     (b)  The authority shall not issue a green infrastructure loan for the purchase or installation of any:

     (1)  Undersea cable energy transmission project; or

     (2)  Liquified natural gas generation, storage, or transmission project.

     (c)  The authority may establish one or more processes to solicit applications for green infrastructure loans for utility-scale renewable energy generation projects or utility-scale renewable energy storage projects; provided that competitive solicitation shall be the preferred process.

     (d)  The authority shall establish the:

     (1)  Criteria for determining whether applicants qualify for and should be issued green infrastructure loans for utility-scale renewable energy generation projects or utility-scale renewable energy storage projects; and

     (2)  Terms and conditions of the green infrastructure loans; provided that the terms and conditions shall be in compliance with this chapter, the green infrastructure financing and program orders, and the green infrastructure bond indenture.

     (e)  If the authority deems that incentives are necessary to deploy all green infrastructure bond proceeds, the authority may establish terms and conditions for a green infrastructure loan for a utility-scale renewable energy generation project or utility-scale renewable energy storage project that includes either or both of the following:

     (1)  An interest rate less than the interest rate on the green infrastructure bonds; or

     (2)  A repayment period extending beyond the final maturity date of the bonds.

     If the authority issues a green infrastructure loan with either or both terms specified under paragraphs (1) and (2), the authority shall require the borrower to repay the entire principal of the loan within twenty-five years of execution of the loan.  The authority shall require the repayment to the authority or, if the authority is terminated before the last repayment, to the department.

     Loan repayments collected by the department after the termination of the green infrastructure loan program shall be credited to electric utility ratepayers, as directed by the public utilities commission in the green infrastructure loan program order.  Loan repayments transferred to an electric utility, in order to credit ratepayers, shall not be considered revenue of the electric utility and shall not be subject to state or county taxes.

     (f)  After the authority approves a green infrastructure loan for a utility-scale renewable energy generation project or utility-scale renewable energy storage project, the authority shall transmit the loan proceeds to the borrower, contingent upon the approval of the public utilities commission of a:

     (1)  Power purchase agreement for the project if the borrower is not an electric utility; or

     (2)  Capital expenditure for the project if the borrower is an electric utility.

     The approval of the public utilities commission of the power purchase agreement or capital expenditure for the project shall be required within three hundred sixty-five calendar days of the approval of the loan by the authority.

     Upon the approval of the public utilities commission by the deadline, the authority shall transmit the loan proceeds to the borrower.

     If the public utilities commission rejects or fails to approve the power purchase agreement or capital expenditure for the project by the deadline, the green infrastructure loan shall be deemed invalid on the day after the deadline without necessity of further action by the authority.  If the loan is invalid, the proceeds shall not be transmitted to the borrower."

     SECTION 3.  Section 196-61, Hawaii Revised Statutes, is amended as follows:

     1.  By adding three new definitions to be appropriately inserted and to read:

     ""Green infrastructure loan financing order" or "financing order" means the same as defined in section 269-161.

     "Utility-scale renewable energy generation project" means a project with the capacity to generate at least ten megawatts of electricity using renewable energy, including a component that interconnects the project to the electricity grid or stores energy generated by the project.

     "Utility-scale renewable energy storage project" means a project that:

     (1)  Has the capacity to store at one time at least ten megawatts of electricity generated from renewable energy;

     (2)  Is capable of dispatching the stored electricity; and

     (3)  Is not a component of a utility-scale renewable energy generation project."

     2.  By amending the definitions of "green infrastructure costs", "green infrastructure equipment", "green infrastructure loan program order", and "loan program" and "green infrastructure loans" to read:

     ""Green infrastructure costs" means costs incurred or to be incurred by [the electric]:

     (1)  Electric utility customers to pay for clean energy technology, demand response technology, and energy use reduction and demand side management infrastructure including, without limitation, the purchase or installation of green infrastructure equipment, programs, and services authorized by the loan program[.]; and

     (2)  Eligible borrowers of green infrastructure loans to pay for the purchase or installation of utility-scale renewable energy generation projects or utility-scale renewable energy storage projects.

     "Green infrastructure equipment" means infrastructure improvements, equipment, and personal property to be installed to deploy clean energy technology, demand response technology, and energy use reduction and demand side management infrastructure.  The term also means infrastructure improvements, equipment, and personal property for the purchase or installation of utility-scale renewable energy generation projects or utility-scale renewable energy storage projects.

     "Green infrastructure loan program order" or "program order" means the same as defined in section 269-161.

     "Loan program" and "green infrastructure loans" means the program established by this part and loans made to finance the purchase or installation of [green]:

     (1)  Green infrastructure equipment for clean energy technology, demand response technology, and energy use reduction and demand side management infrastructure, programs, and services as authorized by the public utilities commission using the proceeds of bonds or other proceeds[.]; and

     (2)  Utility-scale renewable energy generation projects or utility-scale renewable energy storage projects."

     3.  By deleting the definitions of "financing order" and "green infrastructure charge".

     [""Financing order" means the same as defined in section 269-161.

     "Green infrastructure charge" means the on-bill charges for the use and services of the loan program, including the repayment of loans made under the loan program, as authorized by the public utilities commission to be imposed on electric utility customers."]

     SECTION 4.  Section 196-62, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§196-62[]]  Hawaii green infrastructure loan program[.]; loans, primary beneficiaries, termination of program.  (a)  There is established a Hawaii green infrastructure loan program, which shall be a loan program as defined under section 39-51.  The program shall be administered by the authority on behalf of the department in a manner consistent with chapter 39, part III.  [This]

     (b)  Prior to the effective date of this Act, the green infrastructure loan program may include loans made to private entities, whether corporations, partnerships, limited liability companies, or other persons, which entities may lease or provide green infrastructure equipment to electric utility customers, as well as direct loans to electric utility customers, on terms approved by the authority[.]; provided that this Act shall not affect the validity or terms and conditions of any loan executed before the effective date of this Act.

     From the effective date of this Act, green infrastructure loans shall be made only as specified under section 196-   .

     (c)  The primary beneficiaries of the green infrastructure loan program shall be the electric utility ratepayers who pay the green infrastructure fee.

     (d)  The green infrastructure loan program shall terminate thirty days after the green infrastructure bonds issued for the program have been fully paid or defeased.

     After the termination of the green infrastructure loan program, the right to all moneys due and owing for green infrastructure loan repayments shall be transferred to and collected by the department."

     SECTION 5.  This Act shall not be applied so as to impair any contract existing as of the effective date of this Act in a manner violative of either the Hawaii State Constitution or Article I, section 10, of the United States Constitution.

     SECTION 6.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

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

     SECTION 8.  This Act shall take effect upon its approval.

 

INTRODUCED BY:	_____________________________

 

 

Report Title:

Green Infrastructure Loan Program; Re-direction

 

Description:

Re-directs the Green Infrastructure Loan Program.  Designates "all ratepayers" who pay the green infrastructure fee as the primary beneficiaries of the program.  Requires $          of green infrastructure loans to be issued for utility-scale renewable energy generation or storage projects.  Requires proceeds of the loan repayments, as well as the green infrastructure fee, to be applied to green infrastructure bond debt service payments.  Terminates the green infrastructure fee upon the full payment or defeasance of the green infrastructure bonds.  Terminates the Green Infrastructure Loan Program and Green Infrastructure Authority shortly thereafter.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.