Hawaii-2016-SB2738-Amended

SECTION 1. Chapter 196, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§196- Energy storage system rebate program. (a) There is established a Hawaii energy storage system rebate program that shall be administered by the department in a manner consistent with this chapter.

The department:

(1) Shall prepare any forms that may be necessary for a person to claim a rebate from the energy storage system fund;

(2) May also require a person claiming a rebate under this section to furnish reasonable information to ascertain the validity of the claim, including but not limited to, documentation necessary to demonstrate that the system for which the rebate is claimed is an eligible energy storage system;

(3) Shall make best efforts to post on its website, within regular and reasonable periods of time, the current amounts remaining in the energy storage system fund;

(4) Shall adopt, pursuant to chapter 91, any rules necessary to effectuate the purposes of this section. The department's rules shall include rules to allow a person to secure the applicable level of rebate after the purchase of the system, but prior to the system's installation, so long as the system is installed and placed into service within a reasonable timeframe established by the department; and

(5) May contract with a third party for services to assist with administering the energy storage system rebate program. Such procurement of services shall be exempt from the requirements of chapter 103D.

(b) Each person that purchases and installs in this State an eligible energy storage system may apply to the department, within twelve months of the eligible energy storage system being first placed into service, to claim a one-time rebate from the energy storage system fund, as follows:

(1) When the funds remaining in the energy storage system fund are greater than $35,000,000, each eligible energy storage system shall receive the lesser of 25 cents per watt-hour of the system's capacity of useable stored energy or the cap amount determined in subsection (c), if applicable;

(2) When the funds remaining in the energy storage system fund are greater than $20,000,000 but less than or equal to $35,000,000, each eligible energy storage system shall receive the lesser of 20 cents per watt-hour of the system's capacity of useable stored energy or the cap amount determined in subsection (c), if applicable; and

(3) When the funds remaining in the energy storage system fund are less than or equal to $20,000,000, each eligible energy storage system shall receive the lesser of 15 cents per watt-hour of the system's capacity of useable stored energy or the cap amount determined in subsection (c), if applicable.

(c) The amount of rebate allowed for each eligible energy storage system for which the primary purpose is to store and discharge energy collected from a renewable energy system electrically connected on-site to the eligible energy storage system shall not exceed the applicable cap amount, which shall be:

(1) $5,000 per system for single-family residential property; and

(2) $100,000 per system for commercial and multi-family residential properties.

(d) This section shall apply to eligible energy storage systems that are installed and first placed in service after December 31, 2016.

(e) Nothing in this section shall alter taxes due on the original purchase price of an eligible energy storage system prior to the application of this rebate. Any rebate received pursuant to the energy storage system rebate program shall not be considered income for the purposes of state or county taxes."

SECTION 2. Chapter 196, Hawaii Revised Statutes, is amended by amending the title of part IV to read as follows:

"[[]PART IV.[]] GREEN INFRASTRUCTURE LOANS AND ENERGY STORAGE SYSTEM REBATE PROGRAM"

SECTION 3. Section 196-61, Hawaii Revised Statutes, is amended by adding six new definitions to be appropriately inserted and to read as follows:

""Eligible energy storage system" means any identifiable facility, equipment, or apparatus that:

(1) Receives electricity generated from another source or other sources, stores that electricity within a battery and delivers the energy back at a later time to the energy storage system user, an electric utility, or the Hawaii electric system;

(2) Is fixed to a residential or commercial property and electrically connected to an energy storage system user's load or generation;

(3) Is sized and designed such that all of the eligible energy storage system's output is intended to offset all or part of the energy storage system user's load;

(4) Has capacity of at least 2.5 kilowatts of continuous battery charge and discharge power and at least five kilowatt-hours of useable stored energy at time of purchase;

(5) Is protected by a manufacturer's warranty of at least ten years or a minimum of three thousand cycles;

(6) Is not owned by an electric utility; and

(7) Is connected to an electric utility grid, unless:

(A) The electric utility does not offer, at the time of purchase of the energy storage system, electric service to the property that would be served by the energy storage system;

(B) The customer-generator applied for interconnection with the electric utility but has not received interconnection approval from the electric utility within forty-five days of the electric utility receiving the application for interconnection that has not been denied for lack of completeness; or

(C) The electric utility has proposed interconnection fees of ten per cent or greater of the purchase price of the energy storage system.

"Energy storage system fund" means the moneys from the Hawaii green infrastructure special fund authorized by this part for the purpose of providing rebates for eligible energy storage systems through the energy storage system rebate program.

"Energy storage system rebate program" means the program established by section 196- to fund rebates for eligible energy storage systems from the energy storage system fund.

"Energy storage system user" means the property owner, or the property owner's lessees or tenants, that use the energy discharged by the eligible energy storage system on the property where the eligible energy storage system is located or on contiguous property owned or leased by the property owner without regard to interruptions in contiguity caused by easements, public thoroughfares, transportation rights-of-way, and utility rights-of-way.

"First placed in service" has the same meaning as title 26 Code of Federal Regulations sections 1.167(a)-11(e)(1).

"Renewable energy system" has the same meaning as that in section 269-1."

SECTION 3. 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 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 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) Notwithstanding subsections (a) and (b), the authority shall make available from the Hawaii green infrastructure special fund the amount designated in section 196-65(c) for the energy storage system rebate program."

SECTION 4. Section 196-65, Hawaii Revised Statutes, is amended to read as follows:

"[[]§196-65[]] Hawaii green infrastructure special fund. (a) There is established the Hawaii green infrastructure special fund into which shall be deposited:

(1) The proceeds of bonds net of issuance costs and reserves or overcollateralization amounts;

(2) Green infrastructure charges received for the use and services of the loan program, including the repayment of loans made under the loan program;

(3) All other funds received by the department or the authority and legally available for the purposes of the green infrastructure special fund;

(4) Interest earnings on all amounts in the green infrastructure special fund; and

(5) Such other moneys as shall be permitted by an order of the public utilities commission.

The Hawaii green infrastructure special fund shall not be subject to section 37-53. Any amounts received from green infrastructure charges or any other net proceeds earned from the allocation, use, expenditure, or other disposition of amounts approved by the public utilities commission and deposited or held in the Hawaii green infrastructure special fund in excess of amounts necessary for the purposes of [~~subsection~~] subsections (b) and (c) shall be credited to electric utility customers as provided in a green infrastructure loan program order or orders. Funds that are transferred back to the electric utility in order to credit electric utility customers under this subsection shall not be considered revenue of the electric utility and shall not be subject to state or county taxes.

(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;

(2) Paying administrative costs of the Hawaii green infrastructure loan program;

(3) Paying any other costs related to the Hawaii green infrastructure loan program; or

(4) 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.

(c) $50,000,000 from the Hawaii green infrastructure special fund shall be transferred on a one-time, lump-sum basis to create the energy storage system fund, which shall provide moneys for the energy storage system rebate program. The energy storage system fund shall be used only for the purposes of:

(1) Making energy storage system rebate program payments pursuant to section 196- ; and

(2) Paying the department's administrative costs for operating the energy storage system rebate program.

[~~(c)~~] (d) The authority may invest funds held in the Hawaii 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. All amounts in the Hawaii green infrastructure special fund shall be exempt from all taxes and surcharges imposed by the State or the counties."

SECTION 6. Section 269-170, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The authority shall submit an application to the public utilities commission for the use or other disposition of amounts deposited or held in the green infrastructure special fund pursuant to section 196-65 prior to the allocation, use, expenditure, or other disposition of any such amounts; provided that this subsection shall not apply to the following:

(1) The expenditure of amounts deposited or held in the green infrastructure special fund that have been reviewed and approved by the public utilities commission for operational or administrative expenses of the authority pursuant to section 196-64[.]; and

(2) The expenditure of amounts deposited or held in the Hawaii green infrastructure special fund for the purpose of funding the energy storage system fund, pursuant to section 196-65(c)."

SECTION 7. (a) The legislature finds and declares that the issuance of rebates under this Act is in the public interest and for the public health, safety, and welfare.

(b) The department of business, economic development, and tourism, and the green infrastructure authority embedded within the department, shall use $50,000,000 from the Hawaii green infrastructure special as specified in section 196-65(c), Hawaii Revised Statutes, to fund the energy storage system fund that is created by this Act, and develop any forms and rules necessary for the implementation of the program, no later than December 31, 2016.

(c) To the extent there is any conflict between this Act and part III of chapter 39, Hawaii Revised Statutes, this Act shall prevail.

SECTION 8. There is appropriated out of the Hawaii green infrastructure special fund established pursuant to section 196-65, Hawaii Revised Statutes, the sum of $50,000,000, or so much thereof as may be necessary for fiscal year 2016-2017 to be deposited into the energy storage system fund.

SECTION 9. There is appropriated out of the energy storage system fund the sum of $50,000,000 or so much thereof as may be necessary for fiscal year 2016-2017 for the energy storage system rebate program.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 10. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 11. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

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

SECTION 13. This Act shall take effect upon its approval.

THE SENATE	S.B. NO.	2738
TWENTY-EIGHTH LEGISLATURE, 2016		S.D. 2
STATE OF HAWAII		H.D. 1