Bill Text: HI SB99 | 2011 | Regular Session | Amended

---

Bill Title: Public Utilities Commission; Commissioners; Staff; Appropriation

Spectrum: Partisan Bill (Democrat 14-0)

Status: (Engrossed - Dead) 2011-04-29 - (S) Conference committee meeting to reconvene on 04-29-11 4:00PM in conference room 016. [SB99 Detail]

Download: Hawaii-2011-SB99-Amended.html

---

THE SENATE	S.B. NO.	99
TWENTY-SIXTH LEGISLATURE, 2011		S.D. 2
STATE OF HAWAII		H.D. 1

A BILL FOR AN ACT

 

 

RELATING TO THE PUBLIC UTILITIES COMMISSION.

 

 

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

 

     SECTION 1.  The legislature finds that the public utilities commission, as it is presently composed, has proven to be unable to fulfill its administrative and adjudicative duties under chapter 269, Hawaii Revised Statutes.  The office of the auditor has conducted multiple management audits of the commission over the past thirty-six years and has consistently found serious and pervasive problems with staffing, management, and planning. 

     The initial audit, conducted in 1975 and published in three volumes, found "considerable confusion" within the commission regarding staffing, roles, regulations, and the relevant law.  The next audit, conducted in 1989, found that "numerous and serious problems with organization and personnel management" first identified fourteen years earlier continued within the commission and that the commission "lacked adequate policymaking, enforcement, and administrative capabilities".  Most recently, in 2004, the auditor found that problems first identified more than three decades earlier continued to plague the commission and that both the commission and the division of consumer advocacy of the department of commerce and consumer affairs "are hard pressed to devote time and personnel required to strategically plan for desired results; consequently, program and activity plans are allowed to drift without direction".

     The legislature notes that the regulatory structures and the regulated industries that the commission manages have grown increasingly more complex since the formation of the commission.  The regulatory environment now includes increasing development of the neighbor islands and accompanying new demands for public utilities services.  Despite these new challenges, the structure and composition of the commission and the process for approving new public utilities has changed little since the commission's creation at statehood, even given the findings of the 1975, 1989, and 2004 management audits. 

     The legislature further finds that serious structural changes in the composition of the commission, the provision of experienced professional staff, and greater transparency in the approval process for certain public utilities are necessary to ensure that the commission both accurately responds to the interests of the entire State and holds sufficient expertise in the relevant issue areas.

     The legislature also finds that problems identified in the 2004 audit of the commission have still not been resolved, despite attempts by the legislature to work with the commission towards reform.  In 2007, the legislature enacted Acts 177 and 183, Session Laws of Hawaii 2007, to approve and fund the restructuring of both the public utilities commission and the division of consumer advocacy according to proposals developed by each agency.  The reorganization plans included staff increases, relocation of offices, and redefinition of staff positions to improve workload efficiency. 

     In the four years since legislative approval, the commission's progress in implementing its plans for reform have been stymied by budget reductions and other economic factors beyond the commission's control.  As a result of long-standing fiscal constraints and despite the best efforts of commission staff, the commission has still been unable to overcome long delays and backlogs that stifle economic development. 

     To remedy past financial shortfalls, the legislature passed Act 130, Session Laws of Hawaii 2010, to appropriate additional funds and reauthorize staff positions for the purpose of enabling the commission to become fully functional.  The legislature finds that the creation of a new staff position authorized to function with a large degree of autonomy to coordinate all of the administrative functions of the commission will further the goals of increasing professionalism and enabling efficient functioning of the commission envisioned by the reorganization plan contained in Acts 177 and 183, Session Laws of Hawaii 2007.

     The legislature further finds that the State's water cargo transportation industry is critical to the economic health of its island communities.  As a regulated industry under the oversight of the commission, water carriers are subject to requirements including a determination pursuant to chapter 271G, Hawaii Revised Statutes, that the services offered by water carriers are essential for the public convenience and necessity.  Experience has shown that efficient, reliable, frequent, and universal water carrier service depends on economies of scale and scope, as well as substantial investment of capital and other resources.  A successful regulatory regime must take into account and accommodate these realities.  To this end, the legislature finds that applications for entry into the regulated water carrier market require in-depth analysis of specific issues to ensure that successful applications serve the public interest and protect our island communities from the risk of harm caused by disruptions in service.

     Accordingly, the purpose of this Act is to improve the structure and functioning of the public utilities commission by ensuring that commissioners fairly represent the interests of the entire State and hold the highest possible levels of experience and expertise, commission staff is highly qualified and adequately provided for to support the commission in the performance of its statutory duties, and the approval process for important public utilities remains transparent and responsive to the needs of the people of the State.

     SECTION 2.  Chapter 271G, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§271G-     Notice of hearing required.  (a)  Whenever the commission conducts a public hearing on an application for a certificate pursuant to section 271G-10, the commission shall provide reasonable notice in writing to the applicant for a certificate and to the public on each island that will be affected by the proposed service of the fact of the public hearing and the matter to be considered.  Notice pursuant to this section shall be provided at least thirty days before the date fixed by the commission for the public hearing.

     (b)  Notice provided pursuant to this section shall plainly state the proposed operations, routes, and services of the applicant and their proposed effective date.  Notice under this section shall be effective upon compliance with subsection (c); provided that the commission shall retain and make available for public inspection copies of all notices and related documents issued pursuant to this section.

     (c)  Any public hearing held pursuant to section 271G-10(c) shall be a noticed public hearing or hearings on the island or islands to which the water carrier proposes to provide services or which will be affected by the proposed service.  Notice of the hearing, its purpose, and the date, time, and place at which it will open shall be given not less than once in each of three weeks on each island in the county or counties to which the water carrier proposes to provide services or which will be affected by the proposed service.  The first notice shall be given not less than twenty-one days before the public hearing and the last notice shall be given not more than two days before the public hearing."

     SECTION 3.  Section 269-2, Hawaii Revised Statutes, is amended to read as follows:

     "§269-2  Public utilities commission; number, appointment of commissioners, qualifications; compensation; establishment and composition of panels; persons having interest in public utilities.  (a)  There shall be a public utilities commission composed of [three] five members, to be called commissioners, [and] who shall be appointed in the manner prescribed in section 26-34, except as otherwise provided in this section.  All members shall be appointed for terms of six years each, except that the terms of the members first appointed shall be for two, four, and six years, respectively, as designated by the governor at the time of appointment.  [The governor shall designate a member to be chairperson of the commission.] The commission shall elect its chairperson from one of its members.  Each member shall hold office until the member's successor is appointed and qualified.  Section 26-34 shall not apply insofar as it relates to the number of terms and consecutive number of years a member can serve on the commission; provided that no member shall serve more than twelve consecutive years.

     In appointing commissioners, the governor shall select persons who have had experience in accounting, business, engineering, government, finance, law, or other similar fields[.]; provided that no more than two commissioners shall represent the same professional or occupational field; provided further that the composition of the commission shall reflect a diversity of professional knowledge and range of expertise.  At all times, the commission shall include at least two commissioners representing the counties of Hawaii, Kauai, and Maui; provided that these two commissioners shall not represent the same county.  The governor shall preserve geographic and professional diversity in making appointments to the commission.  The commissioners shall devote full time to their duties as members of the commission and no commissioner shall hold any other public office or other employment during the commissioner's term of office.  No person owning any stock or bonds of any public utility corporation, or having any interest in, or deriving any remuneration from, any public utility shall be appointed a commissioner.

     (b)  The commission shall establish two panels with membership consisting of two commissioners and the chairperson.  One panel shall has jurisdiction over issues relating to energy and the private water and sewage utilities and the other panel shall have jurisdiction over issues relating to motor and water carrier transportation services, telecommunications, and warehousing of goods.  Each panel shall meet, confer, and take action pursuant to the requirements of this chapter on each matter under its subject matter jurisdiction; provided that an action by a panel shall constitute an action of the commission.  Proceedings of the panels shall be conducted pursuant to this chapter and rules adopted by the commission pursuant to chapter 91; provided that all proceedings of the panels shall be public meetings subject to the requirements of chapter 92.

     [(b)] (c)  Effective July 1, 2005, the chairperson of the commission shall be paid a salary set at eighty-seven per cent of the salary of the director of human resources development[,] and each of the other commissioners shall be paid a salary equal to ninety-five per cent of the chairperson's salary.  The commissioners shall be exempt from chapters 76 and 89 but shall be members of the state employees retirement system and shall be eligible to receive the benefits of any state or federal employee benefit program generally applicable to officers and employees of the State, including those under chapter 87A.

     The commission is placed within the department of budget and finance for administrative purposes."

     SECTION 4.  Section 269-3, Hawaii Revised Statutes, is amended to read as follows:

     "§269-3  [Employment] Executive officer; appointment of assistants.  (a)  The commission shall employ a staff, which shall include an executive officer, administrative personnel, and other personnel as specified in this section and as otherwise necessary to carry out the duties of the commission.  The executive officer shall have sufficient administrative, managerial, and supervisory experience to carry out the duties established by this section.

     [(a)  The chairperson of the public utilities commission may] (b)  Subject to the supervision of the commission, the executive officer shall appoint [and], employ, and define the powers and duties of clerks, stenographers, agents, engineers, accountants, and other assistants for the public utilities commission as the [chairperson] executive officer finds necessary for the performance of the commission's functions [and define their powers and duties].  The [chairperson] commission may appoint and, at pleasure, dismiss [a chief administrator and] hearings officers as may be necessary.  Notwithstanding section 103D-209[, the chairperson] and subject to the supervision of the commission, the executive officer shall appoint one or more attorneys independent of the attorney general who shall act as attorneys for the commission [and], define their powers and duties, and fix their compensation.  The [chief administrator,] executive officer, chief of policy and research, chief of administrative support, chief of consumer affairs and compliance, utility analysts, and attorneys shall be exempt from chapter 76.  Research assistants, economists, legal secretaries, legal assistants, and enforcement officers may be appointed by the executive officer with or without regard to chapter 76.  Other employees shall be appointed as may be needed by the [chairperson] executive officer in accordance with chapter 76 and subject to the supervision of the commission.

     [(b)] (c)  Notwithstanding section 91-13, the commission may consult with [its assistants] personnel appointed [under authority of] pursuant to this section in any contested case or agency hearing concerning any issue of facts[.  Neither]; provided that neither the commission nor any of its [assistants] personnel shall [in such proceeding] consult with any other person or party except upon notice and an opportunity for all parties to participate, save to the extent required for the disposition of ex parte matters authorized by law."

     SECTION 5.  Section 269-7.5, Hawaii Revised Statutes, is amended to read as follows:

     "§269-7.5  Certificates of public convenience and necessity.  (a)  No public utility, as defined in section 269‑1, shall commence its business without first having obtained from the commission a certificate of public convenience and necessity.  Applications for certificates shall be made in writing to the commission and shall comply with the requirements prescribed in the commission's rules.  The application shall include the type of service to be performed, the geographical scope of the operation, the type of equipment to be employed in the service, the name of competing utilities for the proposed service, a statement of [its] the applicant's financial ability to render the proposed service, a current financial statement of the applicant, and the rates or charges proposed to be charged including the rules governing the proposed service.

     (b)  If the applicant for a certificate of public convenience and necessity has any known consumers or patrons at the time of the filing of the application, the applicant shall notify these consumers or patrons of the rates and charges proposed to be established by the application; provided that:

     (1)  The notice shall be mailed to the last known address of the consumer or patron on file with the applicant or the applicant's affiliates; and

     (2)  The manner and the fact of the notification shall be reported to the commission,

within seven days from the filing of the application.

     (c)  A certificate shall be issued to any qualified applicant[,] authorizing the whole or any part of the operations covered by the application[,] if it is found that the applicant is fit, willing, and able [properly] to properly perform the service proposed and to conform to the terms, conditions, and rules adopted by the commission, and that the proposed service is[,] or will be[,] required by the present or future public convenience and necessity[; otherwise].  If the application does not meet the criteria established by this subsection, it shall be denied.  Any certificate issued shall specify the service to be rendered and [there shall be attached to the exercise of the privileges granted by the certificate at the time of issuance and from time to time thereafter, such] any reasonable conditions and limitations to the exercise of the privileges granted by the certificate as [a] the public convenience and necessity may require[.] at the time of issuance of the certificate or at any later time as determined by the commission.  The reasonableness of the rates, charges, and tariff rules proposed by the applicant shall be determined by the commission during the same proceeding examining the present and future conveniences and needs of the public and qualifications of the applicant, in accordance with the standards set forth in section 269‑16.

     (d)  No public utility that holds a franchise or charter enacted or granted by the legislative or executive authority of the State or its predecessor governments, or that has a bona fide operation as a public utility heretofore recognized by the commission, shall be required to obtain a certificate of public convenience and necessity under this section.

     (e)  Any certificate, upon application of the holder and at the discretion of the public utilities commission, may be amended, suspended, or revoked, in whole or in part.  The commission after notice and hearing may suspend, amend, or revoke any certificate, in part or in whole, if the holder is found to be in wilful violation of any of the provisions of this chapter [or with], any lawful order or rule of the commission [adopted thereunder], or with any term, condition, or limitation of the certificate.

     (f)  The commission shall post a link on the front page of the commission's website to a publicly accessible electronic version of each application for a certificate pursuant to this section and to each order of the commission regarding posted applications, including the commission's final decision and order.  Links posted pursuant to this subsection shall include a short description of the document to which the link refers, shall be active within twenty-four hours of filing of an application or issuance of an order, and shall remain active for at least thirty days from the filing of the application or the issuance of the order or decision and order."

     SECTION 6.  Section 271G-10, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§271G-10[]]  Applications for certificates of public convenience and necessity.  (a)  Except as otherwise provided in this section and in sections 271G-6 and 271G-12, no water carrier shall engage in operations between points within the State[,] unless [such] the carrier holds a certificate of public convenience and necessity issued by the public utilities commission authorizing [such] the operation[,]; provided that no new application shall be required for any common carrier by water who is the holder of a certificate of public convenience and necessity issued by the public utilities commission.

     (b)  Applications for certificates shall be made in writing to the commission, be verified under oath, and [shall] be presented in [such] a form [and], contain [such] the information, and be accompanied by proof of service upon interested parties as the commission shall, by rule or regulation, require.

     (c)  The commission shall not approve an application for a certificate or otherwise grant authorization pursuant to an application to operate as a water carrier under this chapter until the commission has given notice and held public hearings conducted in accordance with the procedures outlined in section 271G-  .

     [(c)  A certificate shall be issued] (d)  The commission shall issue a certificate to any qualified applicant [therefor,] authorizing the whole or any part of the operations [covered by] proposed in the application [if it is found that the] only if the commission finds that:

     (1)  The applicant is fit, willing, and able properly to perform the service proposed and to conform to this chapter and the requirements, rules, and regulations of the commission [thereunder,]; and [that the]

     (2)  The proposed service, to the extent to be authorized by the certificate, is or will be required by the present or future public convenience and necessity[; otherwise the application shall be denied].

     (e)  The commission shall not make a finding of public convenience and necessity or issue an authorization, whether interim, permanent, or otherwise, to operate as a water carrier without the following specific findings supported by evidence in the record:

     (1)  Existing water carrier services are inadequate to presently service the public or meet demonstrated and quantifiable future demands for service;

     (2)  The proposed service is designed for and necessary to meet demonstrated and quantifiable unmet public needs for present water carrier service or demonstrated and quantifiable future demands for service;

     (3)  The proposed service will provide demonstrated and quantifiable benefits to the general public, business community, and the economy of all islands that are entitled to notice under section 271G-   , including demonstrated and quantifiable benefits with respect to reliability, affordability, and security of the service line;

     (4)  The specific, identified benefits of the proposed service outweigh its detrimental impact to the public's interest in maintaining services, including but not limited to:

         (A)  Economies of scale and scope of current water carriers;

         (B)  Future capital costs of existing water carriers;

         (C)  Ability of existing water carriers to make necessary capital and resource investments;

         (D)  The financial health, stability, and revenue stream of existing water carriers; and

         (E)  The likelihood that existing levels of service will be maintained after the enactment of the proposed service;

         and

     (5)  If the commission's finding of public convenience and necessity differs from the recommendation of the consumer advocate, specific findings to address each grounds for objection articulated by the consumer advocate.

     The commission shall not make a finding of public convenience and necessity nor issue a certificate if the evidence in the record indicates that the issuance of the certificate will diminish an existing water carrier's ability to realize its allowed rate of return or if the certificate would allow an applicant to serve only high-margin or high-profit ports or lines of service that are currently served by an existing carrier.

     [(d)] (f)  Any water carrier transporting passengers under [any such] a certificate issued pursuant to this chapter may occasionally deviate from the route over which it is authorized to operate under the certificate [under such] pursuant to the rules and regulations [as the] of the commission [may prescribe].

     (g)  The commission shall not issue any certificate that is designated as interim or temporary or that otherwise does not conform to the requirements of this chapter except in response to an emergency situation; provided that an emergency situation shall mean a state-declared emergency including disaster relief pursuant to chapter 127 or a civil defense emergency pursuant to chapter 128.  Any certificate issued pursuant to this subsection shall expire upon the expiration of the state-declared emergency or an earlier date determined by the commission in response to prevailing conditions.  An extension of a certificate granted pursuant to this subsection beyond the expiration of the state declared emergency or date determined by the commission shall be granted only subject to the notice, hearing, and findings requirements of this chapter.

     (h)  The commission shall post a link on the front page of the commission's website to a publicly accessible electronic version of each application for a certificate pursuant to this section and to each order of the commission regarding posted applications, including the commission's final decision and order.  Links posted pursuant to this subsection shall include a short description of the document to which the link refers, shall be active within twenty-four hours of the filing of an application or issuance of an order, and shall remain active for at least thirty days from the filing of the application or the issuance of the order or decision and order."

     SECTION 7.  By July 1, 2012, the public utilities commission shall comprise five commissioners who reflect the requisite geographical and professional diversity as provided by section 269-2, Hawaii Revised Statutes; provided that to transition to the five‑commissioner public utilities commission, the governor shall nominate new commissioners as needed to meet the requirements of section 269-2, Hawaii Revised Statutes.  The governor may reduce the term of any commissioner as necessary to provide, as nearly as is feasible, for the expiration of terms on a staggered basis.

     SECTION 8.  Beginning with an initial report to the 2012 legislature, the public utilities commission shall submit a report to the legislature annually, no later than sixty days before the commencement of each regular session, detailing the implementation and operation of the subject-matter panels established by section 269-2(b), Hawaii Revised Statutes.  Reports submitted pursuant to this section shall include recommendations for the continuance or abandonment of the panel structure considering the development of subject-matter expertise among the members of the panels and the efficiency of operations of the commission as a whole.

     SECTION 9.  There is appropriated out of the public utilities commission special fund created pursuant to section 269-33, Hawaii Revised Statutes, the sum of $           or so much thereof as may be necessary for fiscal year 2011-2012 and the same sum or so much thereof as may be necessary for fiscal year 2012-2013 for the salaries of the two additional commissioners added to the public utilities commission by section 3 of this Act and the executive officer required by section 4 of this Act.

     The sums appropriated shall be expended by the public utilities commission for the purposes of this Act.

     SECTION 10.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 11.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 12.  This Act shall take effect on July 1, 2030; provided that the amendment adding a new subsection (b) to section 269-2, Hawaii Revised Statutes, in section 3 of this Act and section 8 of this Act, shall be repealed on July 1, 2011.

 

Report Title:

Public Utilities Commission; Commissioners; Staff; Appropriation

 

Description:

Improves the structure and functioning of the Public Utilities Commission.  Effective July 1, 2030.  (SB99 HD1)

 

 

 

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