Hawaii-2015-SB1323-Introduced

SECTION 1. The legislature finds that Hawaii's dependency on imported fuel drains our economy of billions of dollars each year. A stronger local economy depends on a transition away from imported fuels and toward renewable local resources that provide a secure source of affordable energy.

The legislature further finds that progress toward renewable energy resources needs to go beyond the electrical sector. Biogas systems have the potential to capture methane that would escape into the atmosphere and utilize it to create energy.

The purpose of this Act is to:

(1) Require the public utilities commission to direct public utilities that supply gas to the public to acquire biogas generated from nonfossil fuel sources; and

(2) Establish renewable gas portfolio standards for public utilities that sell biogas in the State.

SECTION 2. Chapter 269, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . RENEWABLE GAS PORTFOLIO STANDARDS

§269- Definitions. For the purposes of this part:

"Biogas" means 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.

"Commission" means the public utilities commission.

"Cost-effective" means the ability to produce or purchase biogas at or below a price that the commission determines to be just and reasonably consistent with the methodology set by the commission.

"Local biogas" means biogas grown or captured and then processed all within one thousand miles of where it is sold.

"Renewable gas portfolio standard" means a regulation that requires the increased reliance on local biogas.

"Renewable natural gas" means biogas processed to a higher purity standard so that it can be used in motor vehicles.

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

§269- Utilization of gas generated from nonfossil fuels. (a) The commission may investigate and determine the extent to which biogas generated from nonfossil fuel sources is cost-effective and available to public utilities that supply gas to the public.

(b) The commission shall direct public utilities that supply gas to the public to arrange for the acquisition of and to acquire gas generated from nonfossil fuel sources.

(c) The rate payable by the public utility to the producer for the nonfossil fuel generated gas supplied by the public utility shall be as agreed between the public utility and the supplier and as approved by the commission; provided that in the event the public utility and the supplier fail to reach an agreement for a rate, the rate shall be as prescribed by the commission.

The commission's determination of the just and reasonable rate shall be accomplished by establishing a methodology that removes or significantly reduces any linkage between the price of fossil fuels and the rate for the nonfossil fuel generated gas to potentially enable utility customers to share in the benefits of fuel cost savings resulting from the use of nonfossil fuel generated gas. As the commission deems appropriate, the just and reasonable rate for nonfossil fuel generated gas supplied to the public utility by the producer may include mechanisms for reasonable and appropriate incremental adjustments, such as adjustments linked to consumer price indices for inflation or other acceptable adjustment mechanisms.

§269- Renewable gas portfolio standards. (a) Each utility company that sells gas or renewable natural gas for consumption in the State shall establish a renewable gas portfolio standard of:

(1) 15 per cent of its net gas sales by December 31, 2015;

(2) 25 per cent of its net gas sales by December 31, 2020;

(3) 50 per cent of its net gas sales by December 31, 2025; and

(4) 100 per cent of its net gas sales by December 31, 2030.

(b) Where fossil and renewable fuels are co-fired in the same generating unit, the unit shall be considered to generate renewable gas in direct proportion to the percentage of the total heat input value represented by the heat input valve of the renewable fuels.

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

SECTION 3. This Act shall take effect on July 1, 2015.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	1323
TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII