Bill Text: HI SB839 | 2024 | Regular Session | Amended
Bill Title: Relating To Renewable Energy.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2023-12-11 - Carried over to 2024 Regular Session. [SB839 Detail]
Download: Hawaii-2024-SB839-Amended.html
THE SENATE |
S.B. NO. |
839 |
THIRTY-SECOND LEGISLATURE, 2023 |
S.D. 2 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO RENEWABLE ENERGY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
(1) Act 97, Session Laws of Hawaii 2015, which established a renewable energy portfolio standards' target of one hundred per cent renewable electric energy by December 31, 2045;
(2) Act 15, Session Laws of Hawaii 2018, which established a statewide zero emissions clean economy target to sequester throughout the State more atmospheric carbon and greenhouse gases than emitted, as quickly as practicable but no later than 2045; and
(3) Act 238, Session Laws of Hawaii 2022, which established a statewide target that includes a greenhouse gas emissions limit of at least fifty per cent below 2005 greenhouse gas emission levels no later than 2030.
The legislature further finds that the timely completion of grid-connected renewable energy projects is also a high priority as it will help the State achieve the targets and limits established through prior legislation. On November 13, 2020, the public utilities commission issued a letter to the parties in docket numbers 2015-0389 (Community Based Renewable Energy), 2017-0352 (Hawaiian Electric Renewable Requests for Proposals), and 2018-0165 (Integrated Grid Planning), stating that it "is markedly concerned that Hawaiian Electric [Company]'s interconnection processes and policies are increasing development costs and extending renewable project timelines".
On December 23, 2020, under docket number 2018-0088 (Performance-Based Regulation), the public utilities commission issued order number 37507, indicating, in part, that it was concerned about interconnection delays and will implement a performance incentive mechanism to encourage Hawaiian Electric Company to accelerate the interconnection process. Order number 37507 also stated that "the scheduled retirement of the AES Power Plant in 2022, as well as [Hawaiian Electric Company, Inc.; Hawaii Electric Light Company, Inc.; and Maui Electric Company, Limited's] proposal to delay interconnecting several renewable energy and storage projects recently approved by the commission, underscores the need for expeditiously securing alternative sources of grid services to ensure that system needs are met".
The legislature notes that during phase 1 and phase 2 of the electric utility's procurement under docket no. 2017-0352, projects have been delayed or terminated, due in part to costs and delays of interconnection. On February 11, 2021, the public utilities commission opened docket number 2021-0024 to review Hawaiian Electric Company's interconnection process and transition plans for retirement of fossil fuel plants.
In
2022, the public utilities commission testified that it had set up a tracker
accounts to quantify and monitor the cost of project delays. As of the monthly update submitted by the
Hawaiian Electric Company on January 21, 2022, the tracked cost totaled over
$10,000,000 across several projects. The
public utilities commission also testified that it issued a request for
information to solicit input from qualified entities to serve under contract as
a Hawaii electric reliability administrator.
On September 9, 2022, instead of procuring a Hawaii electric reliability
administrator, the public utilities commission awarded a procurement contract
that hired an independent engineer to assist the commission in overseeing the
technical aspects of the upcoming phase 3 procurement processes, reviewing
interconnection requirements that had already been established by the Hawaiian
Electric Company and associated costs, resolving technical disputes related to
interconnection of resources, assisting in the implementation of
interconnection-related performance incentive mechanisms, and serving a general
advisory role to the commission on issues related to Hawaiian Electric
Company's interconnection process. These
duties only cover a subset of the duties of a Hawaii electric reliability
administrator, pursuant to part IX of chapter 269, Hawaii Revised Statutes, and
therefore will not result in commission-established reliability standards for interconnection
and the grid, an interconnection dispute resolution process, nor long-term grid
planning for the State.
In
the latter half of 2022, the public utilities commission approved Hawaiian
Electric Company's recommendation to complete the interconnection
requirements study and total estimated interconnection cost for each phase
3 procurement project selected prior to the signing and filing of the power
purchase agreement with the public utilities commission for approval.
However,
phase 3 procurement projects are required to assume interconnection costs prior
to the completion of the interconnection requirements study and total estimated
interconnection cost. If these costs are higher than what the project assumed
before or after bid submission to the public utilities commission, the project
is not allowed to adjust its bid price to reflect the higher-than-anticipated
cost. Moreover, under the commission-approved model power purchase agreement,
Hawaiian Electric Company, which performs the interconnection construction, is
further permitted to increase the project's interconnection costs. Thus, the revised process approved by the public
utilities commission does not result in meaningful reform to the interconnection
issues impacting timely and cost-effective renewable energy development, which
affects the ratepayer.
Also
in the latter half of 2022, Hawaiian Electric Company issued four separate
requests to Hawaii island customers to limit their use of electricity to
prevent the possibility of rolling blackouts due to factors including the
unexpected loss of several large generators, lower wind resources, and
lower-than-expected geothermal output.
This further substantiates the urgency to create and implement reliability
standards through a Hawaii electric reliability administrator.
The
legislature also finds that the State does not regulate interconnection costs,
which results in the ratepayer bearing the full financial burden of both
interconnection costs and utility network upgrades in the electricity rates. The Federal Energy Regulatory Commission, an
independent federal agency that regulates the interstate transmission of
natural gas, oil, and electricity and natural gas and hydropower projects, has
developed a simple test for distinguishing interconnection facilities from
network upgrades. In its Order No. 2003,
the Federal Energy Regulatory Commission stated that, "Interconnection Facilities
are found between the Interconnection Customer's Generating Facility and the Transmission
Provider's Transmission System [...]. Network
Upgrades include only facilities at or beyond the point where the Interconnection
Customer's Generating Facility interconnects to the Transmission Provider's Transmission
System." This distinction clarifies
and determines which party has ultimate cost responsibility. Order No. 2003 also generally found that
"it is just and reasonable for the interconnection customer to pay for Interconnection
Facilities but not for Network Upgrades."
Establishing grid reliability standards, regulating the timely and transparent interconnection of utility-scale renewable energy projects, and distinguishing the cost responsibilities between interconnection facilities and utility network upgrades will help to bring utility-scale renewable energy projects online sooner; decrease electricity rates for consumers; provide project developers with added certainty regarding project timelines and transparent costs; encourage lower bid prices; achieve the State's renewable portfolio standard goals; establish long-term institutional knowledge within the public utilities commission; reduce greenhouse gas emissions; and mitigate the effects of climate change.
Accordingly, the purpose of this Act is to:
(1) Establish the Hawaii electricity reliability surcharge special fund and subaccount;
(2) Require the public utilities commission to establish reliability standards and interconnection requirements for all electric utilities and all users, owners, or operators of the Hawaii electric system and determine the responsible party to bear any costs associated with any reliability standards as interconnection requirements;
(3) Require the public utilities commission to:
(A) Distinguish between interconnection facilities and utility network upgrades;
(B) Ensure that the cost of interconnection facilities shall be the responsibility of the interconnection customer; and
(C) Ensure that the cost of utility network upgrades at and beyond the point of interconnection to the utility's transmission system shall be the sole responsibility of the utility transmission provider;
(4) Establish a timeline and requirements for interconnection procedures to be established by the public utilities commission for certain utility-scale renewable energy projects;
(5) Make the public utilities commission's contracting for the Hawaii electric reliability administrator mandatory rather than discretionary; provided that the Hawaii electricity reliability administrator surcharge has been established;
(6) Beginning January 1, 2024, require the Hawaii electricity reliability administrator surcharge to be imposed on the bills of customers of investor-owned electric utility companies to cover the complete cost of the Hawaii electricity reliability administrator and deposited into the Hawaii electricity reliability surcharge special fund; and
(7) Require the public utilities commission to submit an annual report and assessment of the Hawaii electric reliability administrator to the legislature.
SECTION 2. Chapter 269, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§269- Hawaii
electricity reliability surcharge special fund; subaccount. (a)
There is established a Hawaii electricity reliability surcharge special
fund into which shall be deposited:
(1) The funds collected by the Hawaii electricity reliability administrator surcharge pursuant to section 269-149; and
(2) Appropriations
made by the legislature for deposit into the fund.
(b)
The moneys collected in the Hawaii electricity reliability surcharge
special fund shall be expended by the public utilities commission for any and
all expenses related to ensuring the reliable operation of the Hawaii electric
system and overseeing grid access on the Hawaii electric system.
(c) There is established the Hawaii electricity reliability surcharge special fund subaccount into which shall deposited surcharge transfers from investor-owned electric utility companies. Subject to approval by the public utilities commission, the Hawaii electricity reliability administrator may draw on the subaccount pursuant to section 269-149."
SECTION 3. Section 269-142, Hawaii Revised Statutes, is amended to read as follows:
"[[]§269-142[]] Reliability standards; interconnection
requirements; adoption and development; force and effect. (a)
The commission [may] shall adopt, by rule or order,
reliability standards and interconnection requirements. Reliability standards and 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] shall
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.
The commission shall determine the responsible party to bear any
costs associated with any reliability standards or interconnection
requirements. 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:
(1) Distinguish
between interconnection facilities and utility network upgrades;
(2) Ensure
that the cost of interconnection facilities shall be the responsibility of the
interconnection customer; and
(3) Ensure
that the cost of utility network upgrades at and beyond the point of
interconnection to the utility's transmission system shall be the sole
responsibility of the utility transmission provider.
[(c)]
(d) 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.
(e) For purposes of this section:
"Generating
facility" means the specific device for which the interconnection customer
has requested interconnection.
"Interconnection
customer" means the owner of the generating facility that is
interconnecting at the utility point of interconnection at the transmission
provider's transmission system.
"Interconnection
facilities" means facilities that are found between the interconnection
customer's generating facility and the utility transmission provider's transmission
system.
"Transmission
provider" means the entity or entities with which the generating facility
is interconnecting.
"Utility network upgrades" means facilities at or beyond the point where the interconnection customer's generating facility interconnects to the utility transmission provider's transmission system."
SECTION 4. Section 269-145, Hawaii Revised Statutes, is amended to read as follows:
"[[]§269-145[]] Grid access; procedures for interconnection;
dispute resolution. (a) Each user, owner, or operator of the Hawaii
electric system, or any other person, business, or entity seeking to make an
interconnection on the Hawaii electric system shall do so in accordance with procedures
to be established by the commission by rule or order.
(b)
The commission shall establish interconnection procedures as follows:
(1) The commission shall include in any
interconnection procedures established pursuant to this section requirements
that the electric public utility:
(A) Complete the interconnection design;
(B) Reach agreement with the renewable
energy project developer;
(C) File a request with the commission
for interconnection or line extension approval, if required;
(D) Meet the requirements under
subparagraphs (A) through (C) as soon as practicable;
(E) Meet timelines and deadlines as
determined by the commission; and
(F) Submit interim reports to the
commission on the status of the electric public utility's efforts to comply
with the requirements of this subsection ninety days and one hundred eighty
days after the renewable energy project power purchase agreement is filed with
the commission for review and approval;
(2) If the electric public utility is
unable to comply with the requirements of this subsection, the electric public
utility shall report, in writing, the reasons for noncompliance to the
commission within ten calendar days after the failure to meet timelines and
deadlines established by the commission;
(3) If the electric public utility fails
to meet the requirements established by the commission pursuant to this
subsection, the electric public utility shall forfeit and return all moneys or
other financial incentives that the electric public utility has received as
part of any performance incentive mechanism program or similar incentive-based
award recognized by the commission in connection with the renewable energy
project; and
(4) The commission shall submit a report
to the governor and legislature regarding any failure to meet the timing under
this subsection by any electric public utility within thirty days of the
commission receiving notice of this failure;
provided that this subsection shall
only apply to utility-scale renewable energy projects that are five megawatts
in total output capacity or larger, and to any community-based renewable
energy projects that the commission has determined to be responsible for
interconnection costs.
[(b)]
(c) The commission shall have the
authority to make final determinations regarding any dispute between any user,
owner, or operator of the Hawaii electric system, or any other person,
business, or entity connecting to the Hawaii electric system, concerning either
an existing interconnection on the Hawaii electric system or an interconnection
to the Hawaii electric system created under the processes established by the
commission under this section."
SECTION 5. Section 269-146, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) The commission may require, by rule or order,
that [all] any utilities, persons, businesses, or entities
connecting to the Hawaii electric system, or any other user, owner, or operator
of any electric element that is a part of an interconnection on the Hawaii
electric system [shall] pay a surcharge that shall be collected by
Hawaii's electric utilities.
The commission shall not contract or otherwise delegate the ability to
create the Hawaii electricity reliability surcharge under this section to any
other entity. This surcharge amount
shall be known as the Hawaii electricity reliability surcharge."
SECTION 6. Section 269-147, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a)
The commission [may] shall contract for the performance of
its functions under this part with a person, business, or organization, except
for a public utility as defined under this chapter, that will serve as the
Hawaii electricity reliability administrator provided for under this part; provided
that the Hawaii electricity reliability administrator surcharge has been
established pursuant to section 269-146; provided further that the
commission shall not contract for the performance of its functions under
sections 269-142(a) and (b) and 269-146."
SECTION 7. 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.
Beginning January 1, 2024, a Hawaii electricity reliability
administrator surcharge shall be imposed on the bills of customers of investor-owned
electric utility companies to cover the complete cost of the Hawaii electricity
reliability administrator and deposited according to section 269- .
(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) Within thirty days of receipt of the Hawaii electric reliability administrator's report submitted to the commission pursuant to this section, the commission shall submit to the legislature the report and the commission's assessment of the status and progress of the Hawaii electric reliability administrator in achieving and accomplishing the objectives of this part."
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 2023-2024 to be deposited into the Hawaii electricity reliability surcharge special fund.
The sum appropriated shall be expended by the public utilities commission for the purposes of this Act.
SECTION 9. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 10. This Act shall take effect on July 1, 2050.
Report Title:
Public Utility Commission; Renewable Energy; Hawaii Electricity Reliability Surcharge Special Fund; Reliability Standards; Interconnection Requirements; Interconnection Facilities; Utility Network Upgrades; Hawaii Electricity Reliability Administrator; Appropriation
Description:
Establishes the Hawaii Electricity Reliability Surcharge Special Fund. Requires the Public Utilities Commission to establish reliability standards and interconnection requirements for all users, owners, or operators of the Hawaii electric system and determine the responsibility of costs associated with any reliability standards or inter-connection requirements. Requires the Public Utilities Commission to establish: (1) the distinction between interconnection facilities and utility network upgrades; (2) that the cost of interconnection facilities shall be the responsibility of the interconnection customer; and (3) that the cost of utility network upgrades shall be the sole responsibility of the transmission provider. Establishes a timeline and requirements for interconnection procedures to be established by the Public Utilities Commission for certain utility-scale renewable energy projects. Requires implementation of the Hawaii Electricity Reliability Administrator Law upon establishment of the Hawaii Electricity Reliability Administrator Surcharge. Beginning 1/1/2024, requires the surcharge to be imposed on certain customers to cover the costs of the Administrator to be deposited into the Hawaii Electricity Reliability Surcharge Special Fund Subaccount. Requires the Public Utilities Commission to submit a report and assessment of the Hawaii Electric Reliability Administrator to the Legislature. Appropriates funds. Effective 7/1/2050. (SD2)
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not legislation or evidence of legislative intent.