Hawaii-2022-SB3315-Introduced

PART I

SECTION 1. The legislature finds that although the accelerated development of renewable energy is necessary to mitigate the effects of climate change, it is equally important to maintain the reliability of the electrical grid for the health, safety, and economic well-being of the people of the State.

On December 31, 2021, Hawaiian Electric Company, Inc. (HECO) issued a statement that asked its customers on Oahu to conserve power because several of its utility generators were offline or operating at reduced capacity. At or about this time, other independent power producers were also experiencing interruptions or reduced energy generation, due in part to record-setting weather-related events or a low supply of resources.

At a status conference convened by the public utilities commission (PUC) on January 21, 2022, HECO reported:

(1) A projection of a sixty per cent energy reserve margin (ERM) for December 2021;

(2) That it had asked customers on Oahu to conserve power because it had scheduled four other HECO generators with a total capacity of 282 megawatts to be out of operation for planned maintenance at or about December 30, 2021; and

(3) That on 4:30 p.m. on December 31, 2021, various HECO generators were derated by 256 megawatts and HECO's 142-megawatt Kahe Unit 6 generator experienced a forced outage.

During the status conference, the PUC quoted a letter it received from HECO on January 14, 2022, which stated that HECO "currently does not project generation for shortfalls through the near term", just two weeks after Oahu experienced an energy shortfall, and expressed concern with the disconnect between the projections reported and outages occurring on Oahu. The legislature is also concerned about the electric reliability in the State, especially since the energy shortfall occurred at a time when HECO projected a sixty per cent ERM and at a time of year when energy demand is historically lower.

The legislature finds that greater oversight on the standards and best practices of electric public utilities to operate and maintain the electrical grid is reasonable and necessary to assure continued electric reliability as the State strives to achieve its renewable energy goals. Accordingly, the purpose of this Act is to:

(1) Require the PUC to:

(A) Develop and adopt effective and robust reliability standards and best practices for electric public utilities to operate and maintain the electrical grid, while considering the future effects of climate change;

(B) Ensure compliance of the adopted reliability standards and best practices; provided that electric public utilities in counties with a population of less than one hundred thousand persons are exempt; and

(2) Require all state agencies to consider and use the reliability standards and best practices that the PUC develops and adopts when planning the State's facility systems; and

(3) Appropriate funds to the office of planning and sustainable development for any revisions necessary to the state energy functional plan that result from the PUC's development and adoption of reliability standards and best practices.

PART II

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

"§269- Reliability standards; best practices; development and adoption. (a) The commission shall develop and adopt, by rule or order, effective and robust reliability standards and best practices for electric public utilities to operate and maintain the electrical grid in accordance with section 226-18. The commission shall consider the effects of climate change on the State when developing these standards and best practices. Reliability standards and best practices adopted by the commission shall apply to any electric utility and any user, owner, or operator of the Hawaii electric system; provided that these reliability standards and best practices shall not apply to electric public utilities in counties with a population of less than one hundred thousand persons. The commission shall not contract for the performance of the functions under this subsection to any other entity as provided under section 269-147.

(b) The commission may develop additional reliability standards as it determines necessary or upon recommendation from any entity, including an entity contracted by the commission to serve as the Hawaii electricity reliability administrator provided for under this part, for the continuing reliable design and operation of the Hawaii electric system. The commission shall not contract for the performance of the functions under this subsection to any other entity as provided under section 269-147."

SECTION 3. Section 269-142, Hawaii Revised Statutes, is amended to read as follows:

"[[]§269-142[~~] Reliability standards; interconnection~~] Interconnection requirements; adoption and development; force and effect. (a) The commission may adopt, by rule or order, [~~reliability standards and~~] interconnection requirements. [~~Reliability standards and interconnection~~] Interconnection requirements adopted by the commission shall apply to any electric utility and any user, owner, or operator of the Hawaii electric system. The commission shall not contract for the performance of the functions under this subsection to any other entity as provided under section 269-147.

(b) The commission may develop [~~reliability standards and~~] interconnection requirements as it determines necessary or upon recommendation from any entity, including an entity contracted by the commission to serve as the Hawaii electricity reliability administrator provided for under this part, for the continuing reliable design and operation of the Hawaii electric system. Any [~~reliability standard or~~] interconnection requirement developed by the commission shall be adopted by the commission in accordance with subsection (a) in order to be effective. The commission shall not contract for the performance of the functions under this subsection to any other entity as provided under section 269-147.

(c) The commission shall have jurisdiction over matters concerning interconnection requirements and interconnections located in the State between electric utilities, any user, owner, or operator of the Hawaii electric system, or any other person, business, or entity connecting to the Hawaii electric system or otherwise applying to connect generation or equipment providing ancillary services to, or operate generation and equipment providing ancillary services in parallel with the Hawaii electric system under processes established in accordance with section 269-145. Nothing in this subsection is intended to give the commission general supervision authority over any user, owner, or operator of the Hawaii electric system or any other person, business, or entity that is not a public utility as defined in section 269-1."

SECTION 4. Section 269-144, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The commission shall take all necessary steps, including audits, spot checks, data requests, report requests, and internal monitoring procedures, to ensure that any electric utility, any user, owner, or operator of the Hawaii electric system, or any other person, business, or entity connecting to the Hawaii electric system is in compliance with all adopted reliability standards and interconnection requirements, as appropriate[.]; provided that this section shall not apply to electric public utilities in counties with a population of less than one hundred thousand persons."

SECTION 5. Section 269-149, Hawaii Revised Statutes, is amended to read as follows:

"[[]§269-149[]] Funding; reporting. (a) The Hawaii electricity reliability administrator shall use funds collected through the Hawaii electricity reliability surcharge provided for under section 269-146 to carry out its operations, including administrative, technological, or other related requirements for effectively ensuring the reliability of the Hawaii electric system.

(b) The Hawaii electricity reliability administrator shall report to the commission each year on the date of agreement under section 269-147 following the original contracting between the Hawaii electricity reliability administrator and the commission on the status of its operations, financial position, and a projected operational budget for the fiscal year following the date of the report.

(c) The Hawaii electricity reliability administrator shall be subject to regulation by the commission under any provision applicable to a public utility in sections 269-7, 269-8, 269‑8.2, 269-8.5, 269-9, 269-10, 269-13, 269-15, 269-19.5, and 269-28. Notwithstanding any other provision of law to the contrary, the Hawaii electricity reliability administrator shall not be an electric public utility or an electric public utility affiliate.

(d) The commission shall submit an annual report of its findings and recommendations, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session. The report shall include detailed information regarding the commission's efforts to implement section 269- ."

PART III

SECTION 6. Section 226-18, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Planning for the State's facility systems with regard to energy shall be directed toward the achievement of the following objectives, giving due consideration to all:

(1) Dependable, efficient, and economical statewide energy systems capable of supporting the needs of the people;

(2) Increased energy security and self-sufficiency through the reduction and ultimate elimination of Hawaii's dependence on imported fuels for electrical generation and ground transportation;

(3) Greater diversification of energy generation in the face of threats to Hawaii's energy supplies and systems;

(4) Reduction, avoidance, or sequestration of greenhouse gas emissions from energy supply and use; [~~and~~]

(5) Utility models that make the social and financial interests of Hawaii's utility customers a priority[.]; and

(6) Reliability standards and best practices adopted by the public utilities commission pursuant to section 269- ."

SECTION 7. Section 226-109, Hawaii Revised Statutes, is amended to read as follows:

"[[]§226-109[]] Climate change adaptation priority guidelines. Priority guidelines to prepare the State to address the impacts of climate change, including impacts to the areas of agriculture; conservation lands; coastal and nearshore marine areas; natural and cultural resources; education; energy; higher education; health; historic preservation; water resources; the built environment, such as housing[,]; recreation[,]; transportation; and the economy, shall:

(1) Ensure that Hawaii's people are educated, informed, and aware of the impacts climate change may have on their communities;

(2) Encourage community stewardship groups and local stakeholders to participate in planning and implementation of climate change policies;

(3) Invest in continued monitoring and research of Hawaii's climate and the impacts of climate change on the State;

(4) Consider native Hawaiian traditional knowledge and practices in planning for the impacts of climate change;

(5) Encourage the preservation and restoration of natural landscape features, such as coral reefs, beaches and dunes, forests, streams, floodplains, and wetlands, that have the inherent capacity to avoid, minimize, or mitigate the impacts of climate change;

(6) Explore adaptation strategies that moderate harm or exploit beneficial opportunities in response to actual or expected climate change impacts to the natural and built environments;

(7) Promote sector resilience in areas such as water, roads, airports, and public health, by encouraging the identification of climate change threats, assessment of potential consequences, and evaluation of adaptation options;

(8) Foster cross-jurisdictional collaboration between county, state, and federal agencies and partnerships between government and private entities and other nongovernmental entities, including nonprofit entities;

(9) Use management and implementation approaches that encourage the continual collection, evaluation, and integration of new information and strategies into new and existing practices, policies, and plans; [~~and~~]

(10) Encourage planning and management of the natural and built environments that effectively integrate climate change policy[.]; and

(11) Use the reliability standards and best practices adopted by the public utilities commission pursuant to section 269- ."

SECTION 8. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2022-2023 to revise the state energy functional plan as required by part III of this Act.

The sum appropriated shall be expended by the office of planning and sustainable development for the purposes of this Act.

PART IV

SECTION 9. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 10. This Act shall take effect its upon approval, provided that section 8 of this Act take effect on July 1, 2022.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3315
THIRTY-FIRST LEGISLATURE, 2022
STATE OF HAWAII