Bill Text: HI HB2570 | 2016 | Regular Session | Amended

Hawaii House Bill 2570 (Prior Session Legislation)

Bill Title: Renewable Energy; Microgrids; Public Utilities; Counties

Spectrum: Partisan Bill (Democrat 5-0)

Status: (Engrossed - Dead) 2016-03-10 - Referred to TRE/PSM, CPH. [HB2570 Detail]

Download: Hawaii-2016-HB2570-Amended.html

HOUSE OF REPRESENTATIVES	H.B. NO.	2570
TWENTY-EIGHTH LEGISLATURE, 2016		H.D. 2
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO ENERGY MODERNIZATION.

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

SECTION 1. The legislature finds that the use of renewable energy, advanced distributed energy resources, and energy efficiency in Hawaii provides significant financial, health, environmental, and workforce benefits to the State. While Hawaii is a national leader in developing renewable energy, distributed energy resources, and energy efficiency, barriers remain that inhibit the development of microgrids, which is a rapidly emerging technology that can play a key role in expanding the use of clean energy to serve persons and buildings in the State that have been unable to enjoy its benefits.

The legislature further finds that a microgrid is generally defined as a localized electrical system composed of interconnected loads and distributed energy resources within clearly defined electrical boundaries. Microgrids can facilitate the achievement of Hawaii's clean energy policies by enabling the integration of higher levels of renewable energy and advanced distributed energy resources, including energy storage and demand response. Microgrids provide significant benefits to users and non-users, particularly when deployed on islands. Microgrids:

(1) Can reduce electricity costs and price volatility in Hawaii, which suffers from the highest retail electric rates of any state in the United States, by encouraging energy diversity and energy independence;

(2) Improve grid reliability and grid resilience, while also easing grid congestion;

(3) Mitigate the impacts of centralized grid disturbances, including weather-related outages, and associated economic losses;

(4) Reduce the use of expensive, imported fossil fuels, while also reducing air pollution, including greenhouse gas emissions;

(5) Lead to avoided or deferred investments in transmission and distribution infrastructure, including those necessary to integrate distributed energy resources into a centralized grid; and

(6) Reduce the amount of energy lost during the transmission and distribution of electricity from centralized generators, yielding reductions in overall energy consumption.

The legislature further finds that cumulative investments in microgrids in the United States from 2015 through 2020 are projected to exceed $3,500,000,000, yielding an estimated 2,800 megawatts of total microgrid capacity. As an island state, Hawaii is well positioned to take advantage of this rapidly emerging market and the economic development opportunities associated with it.

The legislature further finds that the development of microgrids in Hawaii faces two key barriers. First, local ordinances could prevent or have the effect of preventing the development of microgrids. Second, any entity developing a microgrid that serves residents in Hawaii could be subject to regulations governing a public utility. It is not the intent of this Act for the public utilities commission to regulate smaller microgrids, especially when such systems could be put to great use in isolated and rural areas.

The purpose of this Act is to encourage and facilitate the deployment of microgrids in the State in such a manner as to expand access to locally generated renewable energy and advanced distributed energy resources and to promote the efficient distribution of electricity to the State's residents and businesses by:

(1) Prohibiting counties from requiring that buildings that are served by a microgrid be connected to otherwise available sources of electrical power; and

(2) Establishing that a microgrid is not a public utility.

SECTION 2. Chapter 196, Hawaii Revised Statutes, is amended by adding a new section to part III to be appropriately designated and to read as follows:

"§196- State support for energy modernization. In no event shall a county or other political subdivision of the State require that a building that is served by a microgrid, as defined in section 269-1, be connected to an otherwise available source of electrical power."

SECTION 3. Section 269-1, Hawaii Revised Statutes, is amended as follows:

1. By inserting a new definition to be appropriately inserted and to read:

""Microgrid" means a localized electrical system powered by a renewable energy system, as defined in this chapter, that may include backup energy storage, backup fossil fuel generation, or both, to serve interconnected loads of one or more persons or buildings within a discrete electrical boundary and can operate either independent of or in parallel with the utility grid."

2. By amending the definition of "public utility" to read:

""Public utility":

(1) Includes every person who may own, control, operate, or manage as owner, lessee, trustee, receiver, or otherwise, whether under a franchise, charter, license, articles of association, or otherwise, any plant or equipment, or any part thereof, directly or indirectly for public use for the transportation of passengers or freight; for the conveyance or transmission of telecommunications messages; for the furnishing of facilities for the transmission of intelligence by electricity within the State or between points within the State by land, water, or air; for the production, conveyance, transmission, delivery, or furnishing of light, power, heat, cold, water, gas, or oil; for the storage or warehousing of goods; or for the disposal of sewage; provided that the term shall include:

(A) An owner or operator of a private sewer company or sewer facility; and

(B) A telecommunications carrier or telecommunications common carrier; and

(2) Shall not include:

(A) An owner or operator of an aerial transportation enterprise;

(B) An owner or operator of a taxicab as defined in this section;

(C) Common carriers that transport only freight on the public highways, unless operating within localities, along routes, or between points that the public utilities commission finds to be inadequately serviced without regulation under this chapter;

(D) Persons engaged in the business of warehousing or storage unless the commission finds that regulation is necessary in the public interest;

(E) A carrier by water to the extent that the carrier enters into private contracts for towage, salvage, hauling, or carriage between points within the State; provided that the towing, salvage, hauling, or carriage is not pursuant to either an established schedule or an undertaking to perform carriage services on behalf of the public generally;

(F) A carrier by water, substantially engaged in interstate or foreign commerce, that transports passengers on luxury cruises between points within the State or on luxury round-trip cruises returning to the point of departure;

(G) Any user, owner, or operator of the Hawaii electric system as defined under section 269-141;

(H) A telecommunications provider only to the extent determined by the public utilities commission pursuant to section 269-16.9;

(I) Any person who controls, operates, or manages plants or facilities developed pursuant to chapter 167 for conveying, distributing, and transmitting water for irrigation and other purposes for public use and purpose;

(J) Any person who owns, controls, operates, or manages plants or facilities for the reclamation of wastewater; provided that:

(i) The services of the facility are provided pursuant to a service contract between the person and a state or county agency and at least ten per cent of the wastewater processed is used directly by the state or county agency that entered into the service contract;

(ii) The primary function of the facility is the processing of secondary treated wastewater that has been produced by a municipal wastewater treatment facility owned by a state or county agency;

(iii) The facility does not make sales of water to residential customers;

(iv) The facility may distribute and sell recycled or reclaimed water to entities not covered by a state or county service contract; provided that, in the absence of regulatory oversight and direct competition, the distribution and sale of recycled or reclaimed water shall be voluntary and its pricing fair and reasonable. For purposes of this subparagraph, "recycled water" and "reclaimed water" means treated wastewater that by design is intended or used for a beneficial purpose; and

(v) The facility is not engaged, either directly or indirectly, in the processing of food wastes;

(K) Any person who owns, controls, operates, or manages any seawater air conditioning district cooling project; provided that at least fifty per cent of the energy required for the seawater air conditioning district cooling system is provided by a renewable energy resource, such as cold, deep seawater;

(L) Any person who owns, controls, operates, or manages plants or facilities primarily used to charge or discharge a vehicle battery that provides power for vehicle propulsion;

(M) Any person who:

(i) Owns, controls, operates, or manages a renewable energy system that is located on a customer's property; and

(ii) Provides, sells, or transmits the power generated from that renewable energy system to an electric utility or to the customer on whose property the renewable energy system is located; provided that, for purposes of this subparagraph, a customer's property shall include all contiguous property owned or leased by the customer without regard to interruptions in contiguity caused by easements, public thoroughfares, transportation rights-of-way, and utility rights-of-way; [~~and~~]

(N) Any person who owns, controls, operates, or manages a renewable energy system that is located on such person's property and provides, sells, or transmits the power generated from that renewable energy system to an electric utility or to lessees or tenants on the person's property where the renewable energy system is located; provided that:

(i) An interconnection, as defined in section 269-141, is maintained with an electric public utility to preserve the lessees' or tenants' ability to be served by an electric utility;

(ii) Such person does not use an electric public utility's transmission or distribution lines to provide, sell, or transmit electricity to lessees or tenants;

(iii) At the time that the lease agreement is signed, the rate charged to the lessee or tenant for the power generated by the renewable energy system shall be no greater than the effective rate charged per kilowatt hour from the applicable electric utility schedule filed with the public utilities commission;

(iv) The rate schedule or formula shall be established for the duration of the lease, and the lease agreement entered into by the lessee or tenant shall reflect such rate schedule or formula;

(v) The lease agreement shall not abrogate any terms or conditions of applicable tariffs for termination of services for nonpayment of electric utility services or rules regarding health, safety, and welfare;

(vi) The lease agreement shall disclose: (1) the rate schedule or formula for the duration of the lease agreement; (2) that, at the time that the lease agreement is signed, the rate charged to the lessee or tenant for the power generated by the renewable energy system shall be no greater than the effective rate charged per kilowatt hour from the applicable electric utility schedule filed with the public utilities commission; (3) that the lease agreement shall not abrogate any terms or conditions of applicable tariffs for termination of services for nonpayment of electric utility services or rules regarding health, safety, and welfare; and (4) whether the lease is contingent upon the purchase of electricity from the renewable energy system; provided further that any disputes concerning the requirements of this provision shall be resolved pursuant to the provisions of the lease agreement or chapter 521, if applicable; and

(vii) Nothing in this section shall be construed to permit wheeling[.]; and

(O) Any person who owns, controls, operates, or manages a microgrid under twenty-five kilowatts that is located on the person's property and provides, sells, or transmits the power generated from that microgrid to an electric utility or to the property owner, or the property owner's lessees or tenants, whether metered or master-metered, on the person's property where the microgrid is located; provided that:

(i) A person's property shall include all contiguous property, owned or leased by the person without regard to interruptions in contiguity caused by easements, public thoroughfares, transportation rights-of-way, and utility rights-of-way;

(ii) The person does not use an electric public utility's transmission or distribution lines to provide, sell, or transmit electricity;

(iii) At the time that any related lease agreement is signed, the rate charged to any person, lessee, or tenant for the power generated and transmitted by the microgrid shall be no greater than the effective rate charged per kilowatt hour from the applicable electric utility schedule filed with the public utilities commission;

(iv) The rate schedule or formula shall be established for the duration of any related lease, and the lease agreement entered into by the applicable lessee or tenant shall reflect the rate schedule or formula;

(v) Any related lease agreement shall not abrogate any terms or conditions of applicable tariffs for the termination of services for non-payment of electric utility services or rules regarding health, safety, and welfare;

(vi) Any related lease agreement shall disclose the rate schedule or formula for the duration of the lease agreement that, at the time that the lease agreement is signed, the rate charged to the lessee or tenant for the power generated and transmitted by the microgrid shall be no greater than the effective rate charged per kilowatt hour from the applicable electric utility schedule filed with the public utilities commission. The lease agreement shall not abrogate any terms or conditions of applicable tariffs for termination of services for non-payment of electric utility services or rules regarding health, safety, and welfare. The lease agreement shall also disclose whether the lease is contingent upon the purchase of electricity from the microgrid; provided further that any disputes concerning the requirements of this provision shall be resolved pursuant to the provisions of the lease agreement or chapter 521, if applicable; and

(vii) Nothing in this subparagraph shall be construed to permit wheeling.

If the application of this chapter is ordered by the commission in any case provided in paragraph (2)(C), (D), (H), and (I), the business of any public utility that presents evidence of bona fide operation on the date of the commencement of the proceedings resulting in the order shall be presumed to be necessary to the public convenience and necessity, but any certificate issued under this proviso shall nevertheless be subject to terms and conditions as the public utilities commission may prescribe, as provided in sections 269-16.9 and 269-20."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2030.

Report Title:

Renewable Energy; Microgrids; Public Utilities; Counties

Description:

Prohibits counties from requiring buildings served by a microgrid to be connected to an otherwise available source of electrical power. Excludes microgrids from being regulated as public utilities. (HB2570 HD2)

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