SB3326 HD1

SECTION 1. The legislature finds that Hawaii faces the highest cost of living in the nation, with energy prices playing a significant role in driving that burden for residents and businesses alike. The State's continued reliance on imported fuels leaves it acutely exposed to sudden and significant price fluctuations driven by forces beyond its control, including global conflicts, shifting international political dynamics, and natural disasters. These external pressures can rapidly increase the cost of fuel imports, placing immediate and substantial financial strain on Hawaii's households and economy.

The legislature further finds that at the same time, the development of local renewable energy resources has already demonstrated a pathway toward greater affordability and stability. Renewable projects are now among the lowest-cost sources of electricity on the grid, and the cost of technologies such as solar generation and battery storage has declined dramatically over the past decade while continuing to improve in performance, duration, and scalability. Advances in long-duration energy storage, including those using more abundant and cost-effective materials, further expand the potential for reliable, scalable, locally sourced energy.

The legislature additionally finds that other jurisdictions, including California, have shown that large-scale deployment of renewable energy and advanced storage can improve grid reliability while reducing exposure to volatile fuel markets. Hawaii's laws and policies similarly direct state energy planning to increase energy security and self-sufficiency by reducing and ultimately eliminating dependence on imported fuels for electrical generation.

Act 97, Session Laws of Hawaii 2015, established a requirement of one hundred per cent renewable energy by 2045 in recognition that Hawaii's dependence on imported fuel drains billions of dollars annually from the State's economy and that transitioning to local renewable resources is essential to long-term affordability and economic stability. In addition, prior decisions of the public utilities commission and the courts have emphasized the State's obligation to protect ratepayers from imprudent costs and to pursue least-cost, least-risk energy strategies.

Despite this direction, the legislature finds that recent analyses of future energy pathways have raised substantial concerns regarding the assumptions, methodologies, and treatment of costs. Questions have emerged as to whether certain analyses have omitted key cost components, made unsupportable assumptions, or failed to meaningfully evaluate renewable alternatives. Some studies have narrowly focused on fuel substitution rather than undertaking a comprehensive assessment of all viable pathways, potentially overlooking options that could deliver greater cost savings and reduced financial risk.

Hawaii's ongoing dependence on imported fuels continues to expose residents to price volatility, increasing costs for families and businesses while exporting billions of dollars annually from the State's economy. In light of these challenges and opportunities, the legislature finds that a thorough and independent evaluation of the full range of available energy pathways is a necessary undertaking.

Accordingly, the purpose of this Act is to require the public utilities commission to conduct a comprehensive, independent analysis to identify the energy pathways that will best reduce costs and minimize financial risk for Hawaii residents while meeting the State's established energy goals.

SECTION 2. (a) The public utilities commission shall open a docketed proceeding no later than September 1, 2026, to conduct a comprehensive, objective, and independent analysis of the State's energy pathways.

(b) The analysis shall identify the best potential paths for Hawaii to maximize cost reduction and minimize financial risk to residents for energy services while meeting established state energy goals and maintaining reliability for the period from July 1, 2026, through 2055, including consideration of costs and savings extending beyond 2045.

(1) Evaluates multiple energy pathways, including but not limited to renewable energy, energy storage, energy efficiency, and imported fuel scenarios;

(2) Accounts for total system costs, including capital costs, fuel costs, operating costs, and long-term ratepayer impacts;

(3) Assesses exposure to fuel price volatility and other financial risks;

(4) Evaluates the risk of stranded assets associated with major infrastructure investments;

(5) Incorporates consideration of reliability and resilience, including performance during extreme events and natural disasters; and

(6) Is designed to avoid undue limitations or assumptions that could artificially constrain the scope of potential solutions.

(d) The analysis shall, at a minimum, consider the latest strategies, technologies, and innovations being developed or deployed in Hawaii and in other jurisdictions that may improve affordability, reduce financial risk, and enhance system performance, including long-duration energy storage and other emerging solutions.

(e) The public utilities commission shall release draft assumptions and preliminary modeling results for public comment within one hundred eighty days of opening the proceeding.

(f) The public utilities commission shall contract with and engage independent experts as necessary to carry out the purposes of this Act.

(g) The public utilities commission shall ensure that the methodologies, assumptions, data inputs, and results of each analysis are transparent and made publicly available to the extent practicable.

(h) The public utilities commission shall submit a report of its findings and recommendations, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2028.

SECTION 3. This Act shall take effect on July 1, 2026.

THE SENATE	S.B. NO.	3326
THIRTY-THIRD LEGISLATURE, 2026		S.D. 2
STATE OF HAWAII		H.D. 1