[Part XI.]  STEP-IN AGREEMENTS COVERING POWER PURCHASE COSTS

     [§269-191]  Definitions.  As used in this part:

     "Covered power purchase agreement" means a power purchase agreement that is subject to a step-in agreement.

     "Default" means the failure by an electric utility to pay power purchase costs as and when due to an obligee under a covered power purchase agreement after the expiration of any applicable grace or cure periods and extensions thereto.  "Default" does not mean a bankruptcy filing by an electric utility.

     "Department" means the department of budget and finance, or any successor by law.

     "Electric utility" means a public utility that produces, conveys, transmits, delivers, or furnishes electric power.

     "Energy cost recovery clause" means the provision, or other equivalent, in an electric utility's rate schedules that allows the electric utility to recover its costs of fuel, expenses, and related taxes for energy costs of power purchased under a power purchase agreement.

     "Fund" means the power purchase costs trust fund established pursuant to section 269-194.

     "Hawaii electric system" has the same meaning as defined in section 269-141.

     "Independent power producer" has the same meaning as user, owner, or operator of the Hawaii electric system.

     "Investment grade status" means a credit rating for the electric utility's senior unsecured long-term debt obligations or an issuer credit rating for the electric utility, in each case, without regard for third-party credit enhancements, from at least two out of three of the following:

     (1)  BBB- or higher for S&P Global Ratings, or any successor by law;

     (2)  BAA3 or higher by Moody's Investor Services, Inc., or any successor by law; or

     (3)  BBB- or higher by Fitch Ratings, Inc., or any successor by law.

     "Obligee" means any user, owner, or operator of the Hawaii electric system that does not claim a tax credit for a project system under section 235-12.5, and that is owed payment of power purchase costs by the electric utility under a power purchase agreement.

     "Power purchase agreement" means a contract between an electric utility and a user, owner, or operator of the Hawaii electric system, pursuant to which the electric utility agrees to purchase, and the user, owner, or operator of the Hawaii electric system agrees to sell, electric energy and related products produced by plants or facilities that have not provided, sold, or transmitted electricity to the electric utility before July 1, 2025.

     "Power purchase charges" means the on-bill charges, excluding reserve fees, authorized by the public utilities commission to be imposed on and collected from all existing and future customers of an electric utility or any successor for power purchase costs, including but not limited to the energy cost recovery clause and the purchased power adjustment clause.

     "Power purchase costs" means costs incurred by an electric utility pursuant to the terms of a power purchase agreement, including but not limited to costs such as termination payments payable by an electric utility in connection with the termination of a power purchase agreement as a result of a default by the electric utility.  "Power purchase costs" includes but is not limited to all categories of costs recoverable under the energy cost recovery clause and the purchased power adjustment clause under their respective tariffs in effect on July 1, 2025.

     "Purchased power adjustment clause" means the provision, or other equivalent, in an electric utility's rate schedules that allows the electric utility to recover expenses and related taxes for non-energy costs of power purchased under a power purchase agreement.

     "Reserve account" refers to the account for deposit and accounting of revenues from reserve fees within the fund established pursuant to section 269-194(a).

     "Reserve fees" means the surcharge described in section 269-195(a).

     "Revenue" means moneys from power purchase charges and reserve fees net of any applicable taxes or government fees, including but not limited to the franchise tax, public service company tax, and public utilities commission fee.

     "Step-in agreement" means a contract by which the department undertakes the obligation of payment for power purchase costs owed to an obligee as and when due by an electric utility under a power purchase agreement following a default by the electric utility as described in section 269-192(a); provided that the department's payment obligation under the step-in agreement is limited to the revenues from power purchase charges collected in connection with covered power purchase agreements and reserve fees that are on deposit in the fund.

     "User, owner, or operator of the Hawaii electric system" has the same meaning as defined in section 269-141. [L 2025, c 191, pt of §2]