HB3237

SECTION 1. The purpose of this Act is to significantly decrease reliance on fossil fuels and increase Hawaii's energy self‑sufficiency by:

(1) Increasing public participation in the public utility commission process while decreasing the use of paper;

(2) Changing the name of the consumer advocate to the ratepayer advocate under the public utility commission to more accurately reflect the responsibilities of that office;

(3) Adding definitions to chapter 269, Hawaii Revised Statutes, relating to the public utilities commission and to chapter 196, Hawaii Revised Statutes, relating to energy resources;

(4) Amending the renewable portfolio standards to mandate greater renewable energy penetration levels;

(5) Establishing a photovoltaic feed‑in tariff financed by a carbon fee;

(6) Establishing a carbon fee for grid‑based electricity;

(7) Requiring solar water heaters for new and existing buildings under certain conditions;

(8) Increasing renewable energy rebates;

(9) Establishing a carbon tax for vehicles to be collected and expended by the counties for transportation mitigation measures; and

(10) Establishing an ocean energy council to develop ocean energy systems.

SECTION 2. Chapter 196, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§196‑A Solar energy and comparable renewable energy devices; new construction. (a) Any new single‑family residence, condominium, townhouse, commercial building, or state or county building constructed after January 1, 2009, shall include the installation of a solar energy or comparable renewable energy device to heat water, except when:

(1) The rebate period exceeds three years due to area, climate, or water usage; or

(2) The installation is cost prohibitive;

as determined by the county building code authority upon receipt of a letter submitted by the owner or developer from an architect or engineer licensed under chapter 464 stating the reasons that either paragraph (1) or (2) applies.

(b) An owner of five or more buildings that meet the requirements of subsection (a)(1) or (2) shall install at least fifteen per cent of the required installations each year until one hundred per cent of the required installations have been made.

(c) Installation of solar energy or comparable renewable energy devices shall be in accordance with policies established by the energy‑efficiency utility.

(d) The energy‑efficiency utility shall provide a rebate to each owner or developer who installs a solar energy or comparable renewable energy device to heat water pursuant to subsection (a) in an amount to be determined by the energy‑efficiency utility using funds from the existing utility demand side management fee; provided that the solar water heater is installed by a renewable energy company that is:

(1) On the energy‑efficiency utility's approved list of certified solar water heating installers; and

(2) In good standing with the Hawaii solar energy association.

(e) The director of business, economic development, and tourism shall adopt rules pursuant to chapter 91 necessary to implement this section.

§196‑B Solar energy and comparable renewable energy devices; existing buildings. (a) Before January 1, 2019, each owner of a single‑family residence, condominium, townhouse, commercial building, or state and county building shall install a solar energy or comparable renewable energy device to heat water, unless:

(1) The rebate period exceeds three years due to building design, locality, climate, or water usage; or

(2) The installation is cost prohibitive;

as determined by the county building code authority upon receipt of a letter submitted by the owner from an architect or engineer licensed under chapter 464 stating the reasons that either paragraph (1) or (2) applies.

(b) An owner of five or more buildings that meets the requirements of subsection (a) shall install at least fifteen per cent of the required installations each year until one hundred per cent of the required installations have been made.

(c) Installation of solar energy or comparable renewable energy devices shall be in accordance with policies established by the energy‑efficiency utility.

(d) The energy‑efficiency utility shall provide a rebate to each building owner or developer who installs a solar water heater in an amount to be determined by the energy‑efficiency utility using funds from the existing utility demand side management fee; provided that the system is installed by a renewable energy company that is:

(1) On the energy‑efficiency utility's approved list of certified solar water heating installers; and

(2) In good standing with the Hawaii Solar Energy Association.

(e) The director of business, economic development, and tourism shall adopt rules pursuant to chapter 91 necessary to implement this section."

SECTION 3. Chapter 201, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part X. Ocean energy council

§201‑A Definitions. As used in this part:

"Base load renewable energy facilities" means the same as that term is defined under section 269‑B(c).

"Council" means the ocean energy council.

"Horizontal directional drilling" means a trenchless approach to the laying of pipes and cables.

"Hybrid systems" means the same as that term is defined under section 269‑B(c).

"Micro grids" means the same as that term is defined under section 269‑B(c).

"Ocean energy" means energy derived from facilities located in the ocean, including ocean thermal energy conversion, wave energy systems, and tidal energy systems.

"Ocean hub" means a micro grid for multiple types of wave energy devices.

§201‑B Ocean energy council. (a) There shall be an ocean energy council, which shall be administratively attached to the department of business, economic development, and tourism.

(b) The council shall consist of fourteen members:

(1) A representative of each county;

(2) The director of business, economic development, and tourism;

(3) The chairperson of the board of land and natural resources;

(4) The administrator of the aquatic resources division of the department of land and natural resources;

(5) A representative of the University of Hawaii's natural energy institute;

(6) A representative of the University of Hawaii, Hilo campus;

(7) A representative of the office of Hawaiian affairs;

(8) A representative of the surfing community;

(9) A representative of the boating community;

(10) A representative of the fishing community; and

(11) A representative of the environmental community.

§201‑C Responsibilities. (a) The council shall:

(1) Coordinate the State's ocean energy policies;

(2) Identify sites that can serve as an ocean hub;

(3) Choose a company or companies to install ocean hubs through a competitive bid process;

(4) Choose, in an open process, the company or companies that will test technologies at ocean hubs; and

(5) Keep up-to-date on the technologies used and companies involved in ocean energy.

(b) Before December 31, 2008, the council shall identify one site in each county that can serve as an ocean energy hub.

§201‑D Environmental impact statement. (a) The department of business, economic development, and tourism shall oversee the creation and publication of an ocean hub environmental impact statement covering the four sites selected by the council pursuant to section 201‑C(b).

(b) The board of land and natural resources shall be the accepting authority for the environmental impact statement.

§201‑E Electric grid interface. The public utilities commission shall have regulatory authority over the introduction of electricity from ocean hubs onto utility grids pursuant to chapter 269."

SECTION 4. Chapter 269, Hawaii Revised Statutes, is amended by adding three new sections to part III to be appropriately designated and to read as follows:

"§269‑A Feed‑in tariff. (a) As used in this section:

"New solar electricity system" means a solar electricity system placed in service after the effective date of this Act.

"Solar electricity" means electricity produced by a solar electricity system from solar radiation energy.

"Solar electricity producer" means any person who owns, controls, operates, manages, or uses a solar electricity system to produce solar electricity.

"Solar electricity purchase agreement" means a contract or tariff under which the electric utility is obliged to purchase solar electricity produced by a new solar electricity system and made available to the electric utility by the solar electricity producer and to compensate the solar electricity producer for the solar electricity provided in accordance with this section.

"Solar electricity system" means any identifiable facility, equipment, or apparatus that converts solar radiation energy to electricity, including photovoltaic systems and concentrating solar electric power systems.

(b) At the request of a solar electricity producer that places a new solar electricity system in service, the electric utility with the closest electric system, shall interconnect the solar electricity system to the electric system of the electric utility; provided that any technical requirements in the rules of the electric utility, relating to interconnection of distributed generating facilities with the electric utility's electric system, that are approved by the commission, shall apply. Costs incurred by the electric utility to meet technical requirements of interconnection shall be allocated so that those costs that benefit a solar electricity system are borne by the solar electricity producer that uses the solar electricity system to produce solar electricity, in conformity with orders of the commission relating to distributed generation. Electric system data and data of the solar electricity system shall be disclosed by the electric utility and the supplier when necessary to plan and execute any interconnection in conformity with any technical requirements.

(c) Each electric utility shall develop a standard solar electricity purchase agreement and shall make the solar electricity purchase agreement available to a solar electricity producer upon request. Each solar electricity purchase agreement shall have a term of twenty years commencing with the date that the new solar electricity system is placed in service.

(d) The difference between the number of kilowatt-hours of solar electricity supplied by the solar electricity producer to the electric utility and the number of kilowatt-hours of electricity supplied by the electric utility to the solar electricity producer shall be measured for each monthly billing period during the term of the solar electricity purchase agreement, using net energy metering as defined in section 269‑101; provided that the term "solar electricity producer" shall be substituted for the term "eligible customer-generator" in the definition. A solar electricity producer that elects to be paid compensation under a solar electricity purchase agreement shall not be an eligible customer-generator for purposes of part VI.

(e) At the end of each monthly billing period, if the number of kilowatt-hours of electricity supplied by the electric utility to the solar electricity producer exceeds the number of kilowatt-hours of solar electricity supplied by the solar electricity producer to the electric utility, the solar electricity producer shall compensate the electric utility for the number of kilowatt-hours of electricity supplied by the electric utility in excess of the number of kilowatt-hours of solar electricity supplied to the electric utility. The compensation shall be calculated at the retail rate for the rate class to which the solar electricity producer would be assigned if the solar electricity producer was not a solar electricity producer.

(f) At the end of each monthly billing period, if the number of kilowatt-hours of solar electricity supplied by the solar electricity producer to the electric utility exceeds the number of kilowatt-hours of electricity supplied by the electric utility to the solar electricity producer, the electric utility shall compensate the solar electricity producer for the number of kilowatt-hours of solar electricity supplied by the solar electricity producer in excess of the number of kilowatt-hours of electricity supplied to the solar electricity provider. The compensation shall be an amount no less than the number of kilowatt-hours of solar electricity supplied by the electric utility in excess of the number of kilowatt-hours of electricity supplied to the solar electricity producer, multiplied by a rate of compensation that is no less than the greater of:

(1) The rate per kilowatt-hour for electricity purchased from the electric utility by the solar electricity producer; or

(2) 45 cents per kilowatt-hour.

(g) A solar electricity producer shall not be subject to any fee, charge, or rate by the electric utility for any unbundled costs associated with providing any standby services, including any unbundled costs associated with providing any backup services, and shall not be subject to any fee, charge, or rate by the electric utility for any capital costs incurred by the electric utility in expectation that usage by the solar electricity producer, or by all the solar electricity producers as a group, of electricity supplied by the electric utility would not decline. Any new or additional demand charge, standby charge, customer charge, minimum monthly charge, interconnection charge, or other charge that would increase a solar electricity provider's costs beyond those of other customers in the rate class to which the solar electricity producer otherwise would be assigned are contrary to the intent of this section and shall not form part of any solar electricity purchase agreement.

(h) By December 31 of the second calendar year following the calendar year that this Act takes effect, and by December 31 of every second calendar year thereafter, the energy resources coordinator shall submit, if necessary, a report to the public utilities commission proposing adjustments to the rates of compensation in subsection (f)(2) to reflect technological progress and market developments with respect to the cost of new solar electricity systems.

(i) This section shall not apply to a solar electricity system with an installed peak nameplate generating capacity in excess of twenty megawatts.

(j) The requirement that an electric utility make available a solar electricity purchase agreement to a solar electricity producer shall not apply to new solar electricity systems that are placed in service after December 31 of the year following the year in which the aggregate peak nameplate generating capacity of solar electricity systems eligible for solar electricity purchase agreements equals five per cent of the electric utility's system peak demand; provided that the public utilities commission may increase, by rule or order, the amount of the aggregate peak nameplate generating capacity above five per cent of the electric utility's system peak demand.

(k) A solar electricity producer shall not be eligible for feed-in tariff compensation under this section for any solar electricity produced by a solar electricity system for which an income tax credit was claimed by any taxpayer pursuant to section 235-12.5.

§269‑B Greenhouse gases; fee. (a) All transmitters of electricity shall pay a carbon fee on greenhouse gases emitted during the production of the electricity, measured in carbon equivalence. The carbon fee shall be $50 per ton beginning in 2008 and shall increase by five per cent each year.

(b) The funds shall be deposited into the public utility commission's total renewable energy special fund and may be used to partially fund:

(1) Energy‑efficiency programs regulated and overseen by an energy‑efficiency utility, including additional rebates for the installation of solar water heaters;

(2) Feed-in tariffs for on-site photovoltaic and micro-wind systems;

(3) Projects utilizing base load renewable energy hybrid systems, renewable energy micro grids, or wave hubs;

(4) Ocean thermal energy conversion installations; and

(5) Sea water air conditioning installations.

"Base load renewable energy facilities" mean systems that are able to operate twenty‑four hours, seven days a week, with minimal outages, such as ocean thermal energy conversion, biomass, and hydroelectric systems.

"Micro grids" means self-contained grids that can be interconnected to larger grids, allowing for the testing of multiple independent generators while providing a uniform interface with a utility electric grid.

"Wave hubs" means micro grids for multiple types of wave energy devices.

"Hybrid systems" means a system using two or more distinct energy sources.

§269‑C Total renewable energy special fund. (a) There is established in the state treasury the total renewable energy special fund, into which shall be deposited:

(1) All carbon fees collected pursuant to subsection 269‑B(a); and

(2) Appropriations made by the legislature into the fund.

(b) Moneys in the total renewable energy special fund shall be used for the purposes described in subsection 269‑B(b)."

SECTION 5. Section 196‑11, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Life cycle assessment" means:

(1) The investigation and valuation of the environmental impacts of a given product or service caused or necessitated by its existence;

(2) An assessment of raw material production, manufacture, distribution, use, and disposal, including all intervening transportation steps that are necessary or caused by a product's existence;

(3) Life cycle analysis;

(4) Ecobalance; and

(5) Cradle‑to‑grave analysis."

SECTION 6. Section 235-12.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) When the requirements of subsection (c) are met, each individual or corporate taxpayer [~~that~~] who files an individual or corporate net income tax return for a taxable year may claim a tax credit under this section against the Hawaii state individual or corporate net income tax. The tax credit may be claimed for every eligible renewable energy technology system that is installed and placed in service in the State by a taxpayer during the taxable year[.], is installed by a company on the energy‑efficiency utility's approved list of certified solar water heating installers, and is installed by a company in good standing with the Hawaii solar energy association. This credit shall be available for systems installed and placed in service in the State after June 30, 2003. The tax credit may be claimed as follows:

(1) Solar thermal energy systems [~~for:~~] installed in:

(A) Single-family residential property: [~~thirty-five~~] fifty‑five per cent of the actual cost or $2,250, whichever is less; provided that beginning July 1, 2008, the limit shall be raised to $3,250 and shall apply to single‑family residential property constructed before January 1, 2009;

(B) Multi-family residential property: [~~thirty-five~~] fifty‑five per cent of the actual cost or $350 per unit, whichever is less; [~~and~~] provided that beginning July 1, 2008, the limit shall be raised to $450 per unit and shall apply to multi‑family residential property constructed prior to January 1, 2009; and

(2) Wind-powered energy systems for:

(A) Single-family residential property: [~~twenty~~] forty per cent of the actual cost or $1,500, whichever is less;

(B) Multi-family residential property: [~~twenty~~] forty per cent of the actual cost or $200 per unit, whichever is less; and

(3) Photovoltaic energy systems for:

(A) Single-family residential property: [~~thirty-five~~] fifty‑five per cent of the actual cost or $5,000, whichever is less;

(B) Multi-family residential property: [~~thirty-five~~] fifty‑five per cent of the actual cost or $350 per unit, whichever is less; and

provided that multiple owners of a single system shall be entitled to a single tax credit; and provided further that the tax credit shall be apportioned between the owners in proportion to their contribution to the cost of the system.

In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for every eligible renewable energy technology system that is installed and placed in service in the State by the entity. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to section 235-110.7(a)."

SECTION 7. Section 269‑1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Energy‑efficiency utility" means a utility regulated by the public utility commission that is only in the energy‑efficiency business."

SECTION 8. Section 269-5, Hawaii Revised Statutes, is amended to read as follows:

"§269-5 [~~Annual report~~] Report and register of orders. (a) The public utilities commission shall prepare and present to the governor, through the director of finance, in the month of January in each year [a] an annual report respecting its actions during the preceding fiscal year. This report shall include summary information and analytical, comparative, and trend data concerning major regulatory issues acted upon and pending before the commission; cases processed by the commission, including their dispositions; utility company operations, capital improvements, and rates; utility company performance in terms of efficiency and quality of services rendered; environmental matters having a significant impact upon public utilities; actions of the federal government affecting the regulation of public utilities in Hawaii; long and short-range plans and objectives of the commission; together with the commission's recommendations respecting legislation and other matters requiring executive and legislative consideration. Copies of the annual reports shall be furnished by the governor to the legislature. In addition, the commission shall establish and maintain a register of all its orders and decisions[~~, which~~] that shall be open and readily available for public inspection, and no order or decision of the commission shall take effect until it is filed and recorded in this register.

(b) The commission shall produce and make available:

(1) A registry of new dockets;

(2) A registry of current decisions and orders;

(3) A registry of proposed tariff changes; and

(4) Copies of decisions and orders for the preceding six months.

(1) Update the documents in subsection (b) at least once every two weeks; and

(2) Email copies of the registries required under subsection (b)(1), (2), and (3), in portable document format (PDF) to any person who requests them.

(d) All commission deadlines shall commence on the date that the log is available in the commission's office or the date that the log is emailed to persons who request to be on the email notification system pursuant to subsection (c), whichever is later."

SECTION 9. Section 269-51, Hawaii Revised Statutes, is amended to read as follows:

"§269-51 [~~Consumer~~] Ratepayer advocate; director of commerce and consumer affairs. The director of commerce and consumer affairs shall be the [~~consumer~~] ratepayer advocate in hearings before the public utilities commission. The [~~consumer~~] ratepayer advocate shall represent, protect, and advance the interests of all [~~consumers,~~] ratepayers, including small businesses, of utility services. The [~~consumer~~] ratepayer advocate shall not receive any salary in addition to the salary received as director of commerce and consumer affairs.

The responsibility for advocating the interests of the [~~consumer~~] ratepayer of utility services shall be separate and distinct from the responsibilities of the public utilities commission and those assistants employed by the commission. As [~~consumer~~] ratepayer advocate, the director of commerce and consumer affairs shall have full rights to participate as a party in interest in all proceedings before the public utilities commission."

SECTION 10. Section 269-52, Hawaii Revised Statutes, is amended to read as follows:

"§269-52 Division of [~~consumer~~] ratepayer advocacy; personnel. There shall be a division of [~~consumer~~] ratepayer advocacy within the department of commerce and consumer affairs to provide administrative support to the director of commerce and consumer affairs acting in the capacity of [~~consumer~~] ratepayer advocate. The director may employ and at pleasure dismiss an executive administrator, who shall be exempt from chapter 76, may define the executive administrator's powers and duties, and fix the executive administrator's compensation. The director may employ engineers, accountants, investigators, clerks, and stenographers as may be necessary for the performance of the [~~consumer~~] ratepayer advocate's functions, in accordance with chapter 76; provided that:

(1) The director may employ up to ten utility analysts exempt from chapter 76; and

(2) Each analyst shall possess at least the minimum qualifications required of comparable experts in the relevant industry."

SECTION 11. Section 269-53, Hawaii Revised Statutes, is amended to read as follows:

"§269-53 Legal counsel. The director may appoint or retain, without regard to chapter 76, attorneys to provide legal services for the division of [~~consumer~~] ratepayer advocacy. Nothing in this section precludes the director of commerce and consumer affairs from requesting and securing legal services from the attorney general and the department of the attorney general."

SECTION 12. Section 269-54, Hawaii Revised Statutes, is amended to read as follows:

"§269-54 General powers; duties. (a) The [~~consumer~~] ratepayer advocate shall have the authority expressly conferred by or reasonably implied from the provisions of this part.

(b) The [~~consumer~~] ratepayer advocate [~~may:~~] shall:

(1) Adopt rules pursuant to chapter 91 necessary to effectuate the purposes of this part[.];

(2) Conduct investigations to secure information useful in the lawful administration of any provision of this part[.];

(3) Assist, advise, and cooperate with federal, state, and local agencies and officials to protect and promote the interests of the [~~consumer~~] ratepayer in the public utilities field[.];

(4) Study the operation of laws affecting all [~~consumers,~~ ~~including small businesses,~~] ratepayers of utility services, including small businesses, and recommend to the governor and the legislature new laws and amendments of laws in the [~~consumers'~~] ratepayers' interest in the public utilities field[.];

(5) Organize and hold conferences on problems affecting [~~consumers~~] ratepayers of utility services[.];

(6) Perform [~~such~~] other acts as may be incidental to the exercise of the functions, powers, and duties set forth in this section[.]; and

(7) Represent the interests of [~~consumers~~] ratepayers of utility services before any state or federal agency or instrumentality having jurisdiction over matters [~~which~~] that affect those interests.

(c) The [~~consumer~~] ratepayer advocate shall consider the long-term benefits of renewable resources in the [~~consumer~~] ratepayer advocate's role as [~~consumer~~] ratepayer advocate.

(d) [~~Whenever~~] The ratepayer advocate may institute proceedings for appropriate relief before the public utilities commission whenever it appears to the [~~consumer~~] ratepayer advocate that:

(1) [~~any~~] Any public utility has violated or failed to comply with any provision of this part or of any state or federal law;

(2) [~~any~~] Any public utility has failed to comply with any rule, regulation, or other requirement of the public utilities commission or of any other state or federal agency;

(3) [~~any~~] Any public utility has failed to comply with any provision of its charter or franchise;

(4) [~~changes,~~] Changes, additions, extensions, or repairs to the plant or service of any public utility are necessary to meet the reasonable convenience or necessity of the public; or

(5) [~~the~~] The rates, fares, classifications, charges, or rules of any public utility are unreasonable or unreasonably discriminatory[~~, the consumer advocate may institute proceedings for appropriate relief before the public utilities commission.~~].

(e) The [~~consumer~~] ratepayer advocate may appeal any final decision and order in any proceeding to which the [~~consumer~~] ratepayer advocate is a party in the manner provided by law.

[~~(e)~~] (f) The [~~consumer~~] ratepayer advocate may file with the commission and serve on any public utility a request in writing to furnish any information reasonably relevant to any matter or proceeding before the commission or reasonably required by the [~~consumer~~] ratepayer advocate to perform the duties hereunder. Any [~~such~~] request shall set forth with reasonable specificity the purpose [~~for which~~] that the information is requested for and shall designate with reasonable specificity the information desired. The public utility shall comply with [~~such~~] a request within the time limit set [~~forth~~] by the [~~consumer~~] ratepayer advocate unless within ten days following service [it] the public utility requests a hearing on the matter before the public utilities commission and states [~~its~~] the reasons therefore. If a hearing is requested, the public utilities commission shall [~~proceed to~~] hold the hearing and make its determination on the request within thirty days after the [~~same~~] request is filed. The [~~consumer~~] ratepayer advocate or the public utility may appeal the decision of the commission on any [~~such~~] request, subject to chapter 602, in the manner provided for civil appeals from the circuit courts. Subject to the foregoing, [~~such~~] requests may ask the public utility to:

(1) Furnish any information [~~with which~~] that the [~~consumer~~] ratepayer advocate may require concerning the condition, operations, practices, or services of the public utility;

(2) Produce and permit the [~~consumer~~] ratepayer advocate or the [~~consumer~~] ratepayer advocate's representative to inspect and copy any designated documents [(], including writings, drawings, graphs, charts, photographs, recordings, and other data compilations from which information can be obtained[),] or to inspect and copy, test, or sample any designated tangible thing [~~which~~] that is in the possession, custody, or control of the public utility; or

(3) Permit entry upon land or other property in the possession or control of the public utility for the purpose of inspection and measuring, surveying, photographing, testing, or sampling the property or any designated object thereon."

SECTION 13. Section 269-55, Hawaii Revised Statutes, is amended to read as follows:

"§269-55 Handling of complaints. The [~~consumer~~] ratepayer advocate shall counsel utility [~~customers~~] ratepayers in the handling of [~~consumer~~] ratepayer complaints before the public utilities commission. The public utilities commission shall provide a central clearinghouse of information by collecting and compiling all [~~consumer~~] ratepayer complaints and inquiries concerning public utilities."

SECTION 14. Section 269-91, Hawaii Revised Statutes, is amended to read as follows:

"§269-91 [[]Definitions.[]] For the purposes of this [[]part[]]:

"Agrofuels" means growing bioenergy crops to produce biofuels through processes that have at least four of the following characteristics:

(1) Crop grown on rainforests cleared after 1980;

(2) Crop grown on land in which endangered species were displaced after 1980;

(3) Crop grown on land where indigenous communities were forced off the property;

(4) Crop grown on land with disputed or unclear title;

(5) Crop grown on land cleared through forced relocations by the military after 1980;

(6) Crop grown by monocropping practices;

(7) Crop grown in unsustainable ways;

(8) Where the resulting biofuel is shipped more than two thousand miles for consumption;

(9) Where the agricultural practices result in excessive loss of top soil;

(10) Where slash and burn agricultural techniques are used; or

(11) When lifecycle greenhouse gas emissions are difficult to quantify or are excessive.

"Banned fuels" means fuels that are prohibited in generators built or expanded on or after 2007, including palm oil, coal, and other any other fuels deemed banned fuels by the commission.

"Biofuels" means liquid or gaseous fuels produced from organic sources such as biomass crops, agricultural residues, and oil crops, such as [~~palm oil,~~] canola oil, soybean oil, waste cooking oil, grease, and food wastes, animal residues and wastes, and sewage and landfill wastes.

"Cost-effective" means the ability to produce or purchase electric energy or firm capacity, or both, from renewable energy resources at or below avoided costs consistent with the methodology set by the public utilities commission in accordance with section 269-27.2.

"Electric utility company" means a public utility as defined under section 269-1, for the production, conveyance, transmission, delivery, or furnishing of power.

"Energy conservation" means using less energy by reducing services.

"Energy displacement" means using renewable energy to displace the need for grid‑based electricity, including solar water heaters and ocean thermal energy conversion systems.

"Energy efficiency" means using less energy to provide the same level of energy service.

"Externality" means an impact, positive or negative, on a third‑party not involved in a given economic transaction, often, although not necessarily, from the use of a public good.

"Fossil fuels" means the direct, indirect, or secondary use of feedstock or products made from petroleum, coal, or natural gas.

"Life cycle" means the summation of a fair, holistic assessment of raw material production, manufacture, distribution, use, and disposal, including all intervening transportation steps that are necessary or caused by a product's existence.

"Life cycle assessment" means the same as that term is defined in section 196‑11.

"Renewable electrical energy" means[:

~~(1)~~ ~~Electrical energy generated using renewable energy as the source;~~

~~(2)~~ Electrical energy savings brought about by the use of renewable displacement or off-set technologies, including solar water heating, seawater air-conditioning district cooling systems, solar air-conditioning, and customer-sited, grid-connected renewable energy systems; or

~~[(3)]~~ Electrical energy savings brought about by the use of energy efficiency technologies, including heat pump water heating, ice storage, ratepayer- funded energy efficiency programs, and use of rejected heat from co-generation and combined heat and power systems, excluding fossil-fueled qualifying facilities that sell electricity to electric utility companies and central station power projects.] the total electrical energy that is generated by or displaced from the use of renewable energy systems.

"Renewable energy" means energy [~~generated or~~] produced [~~utilizing the following sources:~~

~~(1)~~ ~~Wind;~~

~~(2)~~ ~~The sun;~~

~~(3)~~ ~~Falling water;~~

~~(4)~~ ~~Biogas, including landfill and sewage-based digester gas;~~

~~(5)~~ ~~Geothermal;~~

~~(6)~~ ~~Ocean water, currents and waves;~~

~~(7)~~ ~~Biomass, including biomass crops, agricultural and animal residues and wastes, and municipal solid waste;~~

~~(8)~~ ~~Biofuels; and~~

~~(9)~~ ~~Hydrogen produced from renewable energy sources.~~] using a technology that relies on a resource that is being consumed at a harvest rate at or below its natural regeneration rate, including wind, photovoltaic, ocean thermal, wave, tidal, biomass, and other renewable fuels; provided that where life cycle assessment is available, renewable energy means the energy content of the final product minus the energy content of the fossil fuel, at each step of the life cycle, used to create the fuel and to dispose of the waste products.

"Renewable portfolio standard" means the percentage of electrical energy sales that is represented by renewable electrical energy.

"Total energy" means:

(1) The combined total British thermal units (BTUs) generated from fossil fuels, renewable energy; and

(2) The British thermal units (BTUs) saved from the use of installed energy displacement systems; or

(3) The sum of two non‑overlapping components, total renewable energy and total fossil fuel energy.

"Total electrical energy" means:

(1) The total energy, as measured in British thermal units (BTUs), used for electricity, heating, cooling, and lighting; and

(2) The sum of two non‑overlapping components, total renewable electrical energy and total fossil fuel electrical energy.

"Total fossil fuel electrical energy" means the fossil fuels, as measured in British thermal units (BTUs), used for electricity, heating, cooling, and lighting.

"Total fossil fuel energy" means the sum of total fossil fuel electrical energy and total fossil fuels, as measured in British thermal units (BTUs), used in transportation.

"Total renewable electrical energy" means the renewable energy used, or fossil fuels, as measured in BTUs, displaced for electricity, heating, cooling, and lighting.

"Total renewable energy" means the sum of the total renewable electrical energy and the total renewable energy, as measured in British thermal units (BTUs), used in transportation."

SECTION 15. Section 269-92, Hawaii Revised Statutes, is amended to read as follows:

"§269-92 Renewable portfolio standards. (a) Each electric utility company that sells electricity for consumption in the State shall establish a renewable portfolio standard of:

(1) Ten per cent of its net electricity sales by December 31, 2010;

(2) [~~Fifteen~~] Thirty per cent of its net electricity sales by December 31, 2015; and

(3) [~~Twenty~~] Fifty per cent of its net electricity sales by December 31, 2020.

(b) The public utilities commission may establish standards for each utility that prescribe what portion of the renewable portfolio standards shall be met by specific types of renewable electrical energy resources[~~; provided that:~~

~~(1)~~ ~~At least fifty per cent of the renewable portfolio standards shall be met by electrical energy generated using renewable energy as the source;~~

~~(2)~~ ~~Where electrical energy is generated or displaced by a combination of renewable and nonrenewable means, the proportion attributable to the renewable means shall be credited as renewable energy; and~~

~~(3)~~ Where fossil and renewable fuels are co-fired in the same generating unit, the unit shall be considered to generate renewable electrical energy (electricity) in direct proportion to the percentage of the total heat value represented by the heat value of the renewable fuels].

(c) If the public utilities commission determines that an electric utility company failed to meet the renewable portfolio standard, after a hearing in accordance with chapter 91, the utility shall be subject to penalties to be established by the public utilities commission[; provided that if the commission determines that the electric utility company is unable to meet the renewable portfolio standards due to reasons beyond the reasonable control of an electric utility, as set forth in subsection (d), the commission, in its discretion, may waive in whole or in part any otherwise applicable penalties.

(d) Events or circumstances that are outside of an electric utility company's reasonable control may include, to the extent the event or circumstance could not be reasonably foreseen and ameliorated:

~~(1)~~ ~~Weather-related damage;~~

~~(2)~~ ~~Natural disasters;~~

~~(3)~~ ~~Mechanical or resource failure;~~

~~(4)~~ ~~Failure of renewable electrical energy producers to meet contractual obligations to the electric utility company;~~

~~(5)~~ ~~Labor strikes or lockouts;~~

~~(6)~~ ~~Actions of governmental authorities that adversely affect the generation, transmission, or distribution of renewable electrical energy under contract to an electric utility company;~~

~~(7)~~ ~~Inability to acquire sufficient renewable electrical energy due to lapsing of tax credits related to renewable energy development;~~

~~(8)~~ ~~Inability to obtain permits or land use approvals for renewable electrical energy projects;~~

~~(9)~~ ~~Inability to acquire sufficient cost-effective renewable electrical energy;~~

~~(10)~~ ~~Substantial limitations, restrictions, or prohibitions on utility renewable electrical energy projects; and~~

~~(11)~~ ~~Other events and circumstances of a similar nature~~]."

SECTION 16. Section 269-95, Hawaii Revised Statutes, is amended to read as follows:

"§269‑95 Renewable portfolio standards study. The public utilities commission shall:

(1) By December 31, 2007, develop and implement a utility ratemaking structure, which may include performance-based ratemaking, to provide incentives that encourage Hawaii's electric utility companies to use cost-effective renewable energy resources found in Hawaii to meet the renewable portfolio standards established in section 269-92[, while allowing for deviation from the standards in the event that the standards cannot be met in a cost-effective manner or as a result of events or circumstances, such as described in section 269‑92(d), beyond the control of the utility that could not have been reasonably anticipated or ameliorated];

(2) Gather, review, and analyze empirical data to determine the extent to which any proposed utility ratemaking structure would impact electric utility companies' profit margins and to ensure that the electric utility companies' opportunity to earn a fair rate of return is not diminished;

(3) Using funds from the public utilities special fund, contract with the Hawaii natural energy institute of the University of Hawaii to conduct independent studies to be reviewed by a panel of experts from entities such as the United States Department of Energy, National Renewable Energy Laboratory, Electric Power Research Institute, Hawaii electric utility companies, environmental groups, and other similar institutions with the required expertise. These studies shall include findings and recommendations regarding:

(A) The capability of Hawaii's electric utility companies to achieve renewable portfolio standards in a cost-effective manner and shall assess factors such as the impact on consumer rates, utility system reliability and stability, costs and availability of appropriate renewable energy resources and technologies, permitting approvals, effects on the economy, balance of trade, culture, community, environment, land and water, climate change policies, demographics, and other factors deemed appropriate by the commission; and

(B) Projected renewable portfolio standards to be set five and ten years beyond the then current standards;

(4) Revise the standards based on the best information available at the time if the results of the studies conflict with the renewable portfolio standards established by section 269‑92; and

(5) Report its findings and revisions to the renewable portfolio standards, based on its own studies and those contracted under paragraph (3), to the legislature no later than twenty days before the convening of the regular session of 2009, and every five years thereafter."

SECTION 17. Section 286-51, Hawaii Revised Statutes, is amended to read as follows:

"§286-51 Registration, expense. (a) Every certificate of registration issued under this part shall expire at midnight on December 31 of each year and shall be renewed annually before April 1 of each year upon application by the registered owner by presentation of the last issued certificate of registration or the last issued application for renewal, such renewal to take effect as of January 1 of each year; provided that the certificate of registration for each motor vehicle in the counties of the State may be renewed on a staggered basis, if a county elects to do so. The director of finance of each county may adopt rules to carry out the purposes stated in this section and shall expend the necessary funds from the director's operating funds as may be necessary for these purposes; provided that the director of finance, if the director has ascertained as of the date of the application that the registered owner has not deposited or paid bail with respect to any summons or citation issued to the registered owner for stopping, standing, or parking in violation of traffic ordinances within the county, may require, as a condition precedent to the renewal, that the registered owner deposit or pay bail with respect to all such summons or citations. The certificates of registration issued hereunder shall show, in addition to all information required under section 286-47, the serial number of the tag or emblem and shall be valid during the registration year only for which they are issued. The certificates of ownership need not be renewed annually but shall remain valid as to any interest shown therein until canceled by the director of finance as provided by law or replaced by new certificates of ownership as hereinafter provided.

(b) This part shall be administered by the director of finance in conjunction with the requirements of sections 249-1 to 249-13 and shall entail no additional expense or charge to the person registering the ownership of a motor vehicle other than as provided by this section or by other laws; provided that for each new certificate of ownership issued by the director of finance under section 286-52, the director of finance may charge a fee which shall be deposited in the general fund. The fees charged to issue a new certificate of ownership shall be established by the county's legislative body.

Notwithstanding any other law to the contrary, an additional fee of not more than $1 for each certificate of registration for a U-drive motor vehicle and $2 for each certificate of registration for all other motor vehicles may be established by ordinance and collected annually by the director of finance of each county, to be used and administered by each county:

(1) For the purpose of beautification and other related activities of highways under the ownership, control, and jurisdiction of each county; and

(2) To defray the additional cost in the disposition and other related activities of abandoned or derelict vehicles as prescribed in chapter 290. For the purposes of this paragraph, other related activities shall include but need not be limited to any and all storage fees that are negotiated between each county and a towing company contracted by the county to remove and dispose of abandoned or derelict vehicles.

The $2 fee established pursuant to this subsection for certificates of registration for motor vehicles other than U-drive motor vehicles may be increased by ordinance up to a maximum of $10; provided that all amounts received from any fee increase over $2 shall be expended only for the purposes of paragraph (2). The moneys so assessed and collected shall be placed in a revolving fund entitled, "the highway beautification and disposal of abandoned or derelict vehicles revolving fund".

(c) Notwithstanding any law to the contrary, an additional fee of $50 per year shall be established by ordinance and collected annually by the director of finance of each county, to be used and administered by each county to fund:

(1) The purchase of vehicles powered by electricity;

(2) The purchase of vehicles powered by biodiesel from waste material;

(3) Mass transit;

(4) Solar lighting at bus stops; and

(5) Other energy‑efficient or renewable energy transportation projects."

SECTION 18. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 19. This Act shall take effect upon its approval; provided that the amendments made to section 269‑54, Hawaii Revised Statutes, by section 12 of this Act shall not be

repealed on June 30, 2010, pursuant to section 1 of Act 94, Session Laws of Hawaii 2006.

INTRODUCED BY:

_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	3237
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII