REPORT TITLE:
Electrical Cooperatives


DESCRIPTION:
Allows the public utilities commission to regulate electric
cooperatives in Hawaii.  Allows electric cooperatives to opt out
of the commission's regulation by allowing the member-consumers
of the electric cooperative to exempt themselves from regulation
under certain conditions.  Defines "electric cooperative".
(HB2201 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2201
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO ELECTRICAL COOPERATIVES.



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

 1      SECTION 1.  The purpose of this Act is to allow the public
 
 2 utilities commission to regulate electric cooperatives in this
 
 3 State, as well as to allow electric cooperatives to opt out of
 
 4 the commission's regulation by allowing the member-consumers of
 
 5 the electric cooperative to exempt themselves from regulation
 
 6 under certain conditions.
 
 7      SECTION 2.  Chapter 269, Hawaii Revised Statutes, is amended
 
 8 by adding a new section to be appropriately designated and to
 
 9 read as follows:
 
10      "§269-   Electric cooperatives; general supervision by
 
11 commission; rate investigations; notice of proposed rate
 
12 increases; petition by member-consumers; exemption from
 
13 regulation.  (a)  The commission shall have general supervision
 
14 over all electric cooperatives with power to fix and establish
 
15 rates and to adopt rules pursuant to chapter 91 affecting their
 
16 services, operation, and the management and conduct of their
 
17 business.  The commission shall have full visitorial and
 
18 inquisitorial power to examine electric cooperatives and keep
 
19 informed as to their general conditions, their capitalization,
 
20 rates, plants, equipment, apparatus, and other property owned,
 

 
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 1 leased, controlled or operated, their value, the management,
 
 2 conduct, operation, practices and services; not only with respect
 
 3 to the adequacy, security, and accommodation afforded by their
 
 4 service, but also with respect to their compliance with this
 
 5 chapter, orders of the commission, and all other applicable laws
 
 6 of this State.  This section shall not apply to generation and
 
 7 transmission associations or cooperative corporations, or
 
 8 transmission associations or cooperative corporations.
 
 9      (b)  (1)  An electric cooperative shall be subject to rate
 
10           investigations by the commission pursuant to subsection
 
11           (a) unless a proposed increase in rates and charges
 
12           does not exceed three per cent based on the previous
 
13           twelve months revenue generated by the existing rates;
 
14           provided that the electric cooperative shall be subject
 
15           to subsection (a) if:
 
16           (A)  The electric cooperative elects, by action of its
 
17                board of trustees, to be subject to rate
 
18                investigation by the commission;
 
19           (B)  The percentage of members, that according to
 
20                bylaws constitute a quorum not to exceed five per
 
21                cent of the membership for that particular
 
22                electric cooperative have signed a petition
 
23                requesting rate investigation pursuant to
 
24                paragraph (3) or (4); or
 

 
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 1           (C)  The commission declares that the electric
 
 2                cooperative shall be subject to rate
 
 3                investigations by the commission pursuant to
 
 4                paragraph (6).
 
 5      (2)  Each such electric cooperative not subject to rate
 
 6           investigation, at least ninety days before the
 
 7           effective date of any proposed rate increase, shall
 
 8           notify the commission and each of its member-consumers
 
 9           of the proposed rate increase.  Notice to the
 
10           commission shall include a verified statement showing
 
11           the then total number of member-consumers of the
 
12           electric cooperative.  Notice by the electric
 
13           cooperative to its member-consumers shall:
 
14           (A)  Be in a form prescribed by the commission;
 
15           (B)  Be by regular mail and may be included in regular
 
16                member-consumer billings; and
 
17           (C)  Include:
 
18                (i)  A schedule of the proposed rate schedules;
 
19               (ii)  The effective date of the proposed rate
 
20                     increase; and
 
21              (iii)  The procedure necessary for the member-
 
22                     consumers to petition the commission to
 
23                     examine and determine the reasonableness of
 
24                     the proposed rate increase.
 

 
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 1      (3)  The member-consumers of an electric cooperative may
 
 2           petition the commission to examine and determine the
 
 3           reasonableness of the rates and charges proposed by the
 
 4           electric cooperative pursuant to paragraph (1)(B).  The
 
 5           form of such a petition shall be prescribed by the
 
 6           commission.  A petition substantially in compliance
 
 7           with the form shall not be deemed invalid due to minor
 
 8           errors in its form.
 
 9      (4)  If, by the effective date of this proposed increase in
 
10           rates and charges, the commission has received
 
11           petitions from less than the number of member-consumers
 
12           as set out in paragraph (1)(B), requesting that the
 
13           commission examine the proposed increase in rates and
 
14           charges, the commission shall immediately certify that
 
15           fact to the electric cooperative.  If, on or before the
 
16           effective date of the proposed increase in rates and
 
17           charges, the commission has received petitions from the
 
18           number of member-consumers as set out in paragraph
 
19           (1)(B) or more, the commission shall notify the
 
20           electric cooperative that it will examine and determine
 
21           the reasonableness of the proposed increase in rates
 
22           and charges.  Rates and charges established by the
 
23           commission or by an electric cooperative pursuant to
 

 
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 1           this section shall be in force for not less than one
 
 2           year and no further increases in rates and charges
 
 3           shall be permitted during the one-year period.
 
 4      (5)  No electric cooperative shall have the right to receive
 
 5           more than one rate increase per year for any reason or
 
 6           under any procedures.
 
 7      (6)  In addition to the procedure for petition prior to any
 
 8           proposed increase in rates and charges pursuant to
 
 9           paragraphs (1) to (4), the member-consumers of an
 
10           electric cooperative at any time may petition the
 
11           commission to declare the electric cooperative be
 
12           subject to full-scale rate investigation.  If the
 
13           commission determines that a majority of the member-
 
14           consumers of an electric cooperative have properly
 
15           petitioned that the electric cooperative be subject to
 
16           full- scale rate regulation, the commission shall
 
17           certify that fact to the electric cooperative and
 
18           thereafter the electric cooperative shall be subject to
 
19           full- scale rate investigation by the commission until
 
20           at least a majority of the member-consumers of the
 
21           electric cooperative properly petition that the
 
22           electric cooperative shall no longer be subject to such
 
23           full scale rate investigations by the commission.  The
 

 
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 1           form of such a petition shall be prescribed by the
 
 2           commission.  A petition substantially in compliance
 
 3           with the form shall not be deemed invalid due to minor
 
 4           errors in its form.
 
 5      (7)  Paragraphs (1) to (6) apply only to the rates and
 
 6           charges and shall have no effect on the commission's
 
 7           jurisdiction over the electric cooperative or the rules
 
 8           governing the operations of electric utilities.
 
 9      (8)  Each electric cooperative, when determining how rates
 
10           and charges, established under paragraph (2), are to be
 
11           allocated to the different rate classes, shall
 
12           apportion such rates and charges in a manner that
 
13           reflects, as closely as practicable, the costs of
 
14           providing service to that class.
 
15      (9)  In no event, and under no circumstances, shall the
 
16           procedures provided in this section be used for the
 
17           purpose of establishing special competitive rates in
 
18           any area in which an electric cooperative is in direct
 
19           competition with another regulated retail electric
 
20           supplier.
 
21      (c)  Petitions requesting the commission to examine and
 
22 determine the reasonableness of a proposed increase in rates and
 
23 charges, or requesting rate regulation of an electric
 

 
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 1 cooperative, shall be in a form established by the commission by
 
 2 rules adopted pursuant to chapter 91.  Petitions may only be
 
 3 signed by the member-consumers of the electric cooperative.
 
 4      (d)  Upon proceedings brought by an interested person or by
 
 5 action of the commission, the commission shall have the
 
 6 jurisdiction to enforce compliance with this section and may
 
 7 impose such penalties for violations of this section as may be
 
 8 appropriate as provided in section 269-28.
 
 9      (e)  (1)  Electric cooperatives, that are owned by the
 
10           member-consumers they serve, are regulated by the
 
11           member-consumers themselves acting through an elected
 
12           governing board.  It is declared that the regulation by
 
13           the commission under this section may be duplicative of
 
14           the self-regulation by the electric cooperative and may
 
15           be neither necessary nor cost-effective.  It is
 
16           therefore the purpose of this subsection to determine
 
17           the necessity of regulation of rates and charges by the
 
18           commission by allowing the member-consumers of an
 
19           electric cooperative to exempt themselves from
 
20           regulation by the commission except as provided in this
 
21           subsection.
 
22      (2)  Except as otherwise provided in paragraphs (4), (5),
 
23           (6), and (7), this section shall not apply to electric
 

 
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 1           cooperatives with less than seventeen thousand meters
 
 2           which comply with paragraph (3).
 
 3      (3)  To be exempt under paragraph (2), an electric
 
 4           cooperative shall poll its members as follows:
 
 5           (A)  An election under this subsection may be called by
 
 6                the board of trustees or shall be called not less
 
 7                than one hundred eighty days after receipt of a
 
 8                valid petition signed by not less than five per
 
 9                cent of the members of the electric cooperative;
 
10           (B)  The proposition for deregulation shall be
 
11                presented to a meeting of the members, the notice
 
12                of which shall set forth the proposition for
 
13                deregulation and the time and place of the
 
14                meeting.  Notice to the members shall be written
 
15                and delivered not less than twenty-one nor more
 
16                than forty-five days before the date of the
 
17                meeting;
 
18           (C)  If the electric cooperative mails information to
 
19                its members regarding the proposition for
 
20                deregulation other than notice of the election and
 
21                the ballot, the electric cooperative shall also
 
22                include in that mailing any information in
 
23                opposition to the proposition that is submitted by
 

 
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 1                petition signed by not less than one per cent of
 
 2                the electric cooperative's members;
 
 3           (D)  If the proposition for deregulation is approved by
 
 4                the affirmative vote of not less than a majority
 
 5                of the members voting on the proposition, the
 
 6                electric cooperative shall notify the commission
 
 7                in writing of the results within ten days after
 
 8                the date of the election; and
 
 9           (E)  Voting on the proposition for deregulation shall
 
10                be by mail ballot; provided that members attending
 
11                the meeting provided for in subparagraph (B) may
 
12                execute and deliver their ballot to the electric
 
13                cooperative during or at the conclusion of the
 
14                meeting.
 
15      (4)  In the event the member-consumers have voted, pursuant
 
16           to paragraph (3), to exempt themselves from regulation
 
17           by the commission, any such electric cooperative may
 
18           vote no more than once every twelve months to place the
 
19           electric cooperative under the regulation of the
 
20           commission, as provided in this section.  The question
 
21           shall be submitted to the member-consumers of the
 
22           electric cooperative if at least five per cent of the
 
23           members of the electric cooperative sign a petition
 

 
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 1           requesting such an election.  The petition shall be
 
 2           submitted to the membership in the same manner as
 
 3           provided for in paragraph (3).
 
 4      (5)  Each electric cooperative which has voted to exempt
 
 5           itself from commission regulation under this section,
 
 6           when determining how rates and charges established
 
 7           after that exemption are to be allocated to the
 
 8           different rate classes, shall apportion those rates and
 
 9           charges in a manner that reflects, as closely as
 
10           practicable, the costs of providing service to that
 
11           class.
 
12      (6)  In no event, and under no circumstances, shall rates
 
13           and charges established in this section be used for the
 
14           purpose of establishing special competitive rates in
 
15           any area in which an electric cooperative is in direct
 
16           competition with another regulated retail utility
 
17           supplier.
 
18      (7)  Notwithstanding this section, the commission shall
 
19           retain jurisdiction over all electric cooperatives that
 
20           have voted to exempt themselves from commission
 
21           regulation under this section for proceedings brought
 
22           by a regulated utility relating to alleged
 
23           discriminatory or anti-competitive rates established by
 

 
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 1           an exempt electric cooperative, or relating to actions
 
 2           to acquire existing customers of a regulated utility
 
 3           using those rates."
 
 4      SECTION 3.  Chapter 269-1, Hawaii Revised Statutes, is
 
 5 amended as follows:
 
 6      1.  By adding a new definition to be appropriately inserted
 
 7 and to read:
 
 8      ""Electric cooperative" means any private corporation or
 
 9 association organized for purposes of transmitting or
 
10 distributing electricity exclusively to its stockholders or
 
11 members at cost."
 
12      2.  By amending the definition of "public utility" to read:
 
13      ""Public utility" includes every person who may own,
 
14 control, operate, or manage as owner, lessee, trustee, receiver,
 
15 or otherwise, whether under a franchise, charter, license,
 
16 articles of association, or otherwise, any plant or equipment, or
 
17 any part thereof, directly or indirectly for public use, for the
 
18 transportation of passengers or freight, or the conveyance or
 
19 transmission of telecommunications messages, or the furnishing of
 
20 facilities for the transmission of intelligence by electricity by
 
21 land or water or air within the State, or between points within
 
22 the State, or for the production, conveyance, transmission,
 
23 delivery, or furnishing of light, power, heat, cold, water, gas,
 

 
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 1 or oil, or for the storage or warehousing of goods, or the
 
 2 disposal of sewage; provided that the term:
 
 3      (1)  Shall include any person insofar as that person owns or
 
 4           operates a private sewer company or sewer facility;
 
 5      (2)  Shall include telecommunications carrier or
 
 6           telecommunications common carrier;
 
 7      (3)  Shall not include any person insofar as that person
 
 8           owns or operates an aerial transportation enterprise;
 
 9      (4)  Shall not include persons owning or operating taxicabs,
 
10           as defined in this section;
 
11      (5)  Shall not include common carriers transporting only
 
12           freight on the public highways, unless operating within
 
13           localities or along routes or between points that the
 
14           public utilities commission finds to be inadequately
 
15           serviced without regulation under this chapter;
 
16      (6)  Shall not include persons engaged in the business of
 
17           warehousing or storage unless the commission finds that
 
18           regulation thereof is necessary in the public interest;
 
19      (7)  Shall not include:
 
20           (A)  The business of any carrier by water to the extent
 
21                that the carrier enters into private contracts for
 
22                towage, salvage, hauling, or carriage between
 
23                points within the State and the carriage is not
 

 
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 1                pursuant to either an established schedule or an
 
 2                undertaking to perform carriage services on behalf
 
 3                of the public generally; and
 
 4           (B)  The business of any carrier by water,
 
 5                substantially engaged in interstate or foreign
 
 6                commerce, transporting passengers on luxury
 
 7                cruises between points within the State or on
 
 8                luxury round-trip cruises returning to the point
 
 9                of departure;
 
10      (8)  Shall not include any person who:
 
11           (A)  Controls, operates, or manages plants or
 
12                facilities for the production, transmission, or
 
13                furnishing of power primarily or entirely from
 
14                nonfossil fuel sources; and
 
15           (B)  Provides, sells, or transmits all of that power,
 
16                except such power as is used in its own internal
 
17                operations, directly to a public utility for
 
18                transmission to the public;
 
19      (9)  Shall not include a telecommunications provider only to
 
20           the extent determined by the commission pursuant to
 
21           section 269-16.9;
 
22     (10)  Shall not include any person who controls, operates, or
 
23           manages plants or facilities developed pursuant to
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        


 1           chapter 167 for conveying, distributing, and
 
 2           transmitting water for irrigation and such other
 
 3           purposes that shall be held for public use and purpose;
 
 4           [and]
 
 5     (11)  Shall not include any person who owns, controls,
 
 6           operates, or manages plants or facilities for the
 
 7           reclamation of wastewater; provided that:
 
 8           (A)  The services of the facility shall be provided
 
 9                pursuant to a service contract between the person
 
10                and a state or county agency and at least ten per
 
11                cent of the wastewater processed is used directly
 
12                by the State or county which has entered into the
 
13                service contract;
 
14           (B)  The primary function of the facility shall be the
 
15                processing of secondary treated wastewater that
 
16                has been produced by a municipal wastewater
 
17                treatment facility that is owned by a state or
 
18                county agency;
 
19           (C)  The facility shall not make sales of water to
 
20                residential customers;
 
21           (D)  The facility may distribute and sell recycled or
 
22                reclaimed water to entities not covered by a state
 
23                or county service contract; provided that, in the
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        


 1                absence of regulatory oversight and direct
 
 2                competition, the distribution and sale of recycled
 
 3                or reclaimed water shall be voluntary and its
 
 4                pricing fair and reasonable.  For purposes of this
 
 5                [[]subparagraph[]], "recycled water" and
 
 6                "reclaimed water" mean treated wastewater that by
 
 7                design is intended or used for a beneficial
 
 8                purpose; and
 
 9           (E)  The facility shall not be engaged, either directly
 
10                or indirectly, in the processing of food
 
11                wastes[.];
 
12           and
 
13     (12)  Shall include electric cooperatives in accordance with
 
14           section 269-   .
 
15      In the event the application of this chapter is ordered by
 
16 the commission in any case provided in paragraphs (5), (6), (9),
 
17 and (10), the business of any public utility that presents
 
18 evidence of bona fide operation on the date of the commencement
 
19 of the proceedings resulting in the order shall be presumed to be
 
20 necessary to public convenience and necessity, but any
 
21 certificate issued under this proviso shall nevertheless be
 
22 subject to such terms and conditions as the commission may
 
23 prescribe, as provided in sections 269-16.9 and 269-20."
 

 
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 1      SECTION 4.  Statutory material to be repealed is bracketed.
 
 2 New statutory material is underscored.
 
 3      SECTION 5.  This Act shall take effect upon its approval.