Bill Text: HI SB2161 | 2014 | Regular Session | Introduced

---

Bill Title: Electric companies; Customer choice; Deregulation

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2014-01-17 - Referred to ENE/CPN, WAM. [SB2161 Detail]

Download: Hawaii-2014-SB2161-Introduced.html

---

THE SENATE	S.B. NO.	2161
TWENTY-SEVENTH LEGISLATURE, 2014
STATE OF HAWAII

A BILL FOR AN ACT

 

 

relating to electric utilities.

 

 

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

 

     SECTION 1.  The legislature finds that the production and sale of electricity is not a monopoly warranting regulation of rates, operations, and services and that the public interest in competitive electric markets requires that, except for transmission and distribution services and for the recovery of stranded costs, electric services and their prices should be determined by customer choices and the normal forces of competition.  As a result, this chapter is enacted to protect the public interest during the transition to and in the establishment of a fully competitive electric power industry as a well functioning competitive market will yield the greatest benefit to consumers in terms of price, investment and innovation.

The legislature recognizes that the cost of electricity in the state of Hawaii is disproportionately high when compared to the electric rates on the United States mainland.  Unlike Hawaii's consumers, many mainland consumers have the freedom to choose the company that supplies their electricity.  Deregulation of the electricity industry in the state will open the doors for increased competition while simultaneously encouraging alternative energy sources to enter the Hawaii market, also to the benefit of Hawaii's energy consumers.

The purpose of this Act is modify existing legislation and regulations and to establish standards and procedures in order to create direct access by retail customers to the competitive market while maintaining the safety and reliability of the electric system to all parties.

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

"Part A.  COMPETITIVE RETAIL ELECTRIC MARKET

  §269-A  Definitions.  Unless the context requires otherwise, as used in this part:

"Aggregator" or "market aggregator" means an entity, licensed by the commission, which purchases electric energy and takes title to electric energy as an intermediary for sale to retail customers.

"Bilateral contract" means an agreement, as approved by the commission, reached by two parties, each acting in its own independent self-interest, as a result of negotiations free of undue influence, duress or favoritism, in which the electric energy supplier agrees to sell and the electric distribution company agrees to buy a quantity of electric energy at a specified price for a specified period of time under terms agreed to by both parties, and which follows a standard industry template widely accepted in the industry or variations thereto accepted by the parties. Standard industry templates may include the Edison Electric Institute Master Agreement for physical energy purchases and sales and the International Swaps and Derivatives Association Master Agreement for financial energy purchases and sales.

"Broker" or "marketer" means an entity, licensed by the commission, that acts as an agent or intermediary in the sale and purchase of electric energy but that does not take title to electric energy.

"Competitive transition charge" means a nonbypassable charge applied to the bill of every customer accessing the transmission or distribution network that is designed to recover an electric utility's transition or stranded costs as determined by the commission under sections 269-B, relating to standards for restructuring of electric industry, and 269-F, relating to competitive transition charge.

"Consumer" means a retail electric customer.

"Customer" means a retail electric customer.

"Default service provider" means an electric distribution company within its certified service territory or an alternative supplier approved by the commission that provides generation service to retail electric customers who:

(1) contract for electric power, including energy and capacity, and the chosen electric generation supplier does not supply the service; or

(2) do not choose an alternative electric generation supplier.

"Direct access" means the right of electric generation suppliers and end-use customers to utilize and interconnect with the electric transmission and distribution system on a nondiscriminatory basis at rates, terms and conditions of service comparable to the transmission and distribution companies' own use of the system to transport electricity from any generator of electricity to any end-use customer.

"Electric distribution company" means the public utility providing facilities for the jurisdictional transmission and distribution of electricity to retail customers, except building or facility owners/operators that manage the internal distribution system serving such building or facility and that supply electric power and other related electric power services to occupants of the building or facility.

"Electric generation supplier" or "electricity supplier" means a person or corporation, except to the extent provided prior to the effective date of this part, brokers and marketers, aggregators or any other entities, that sells to end-use customers electricity or related services utilizing the jurisdictional transmission or distribution facilities of an electric distribution company or that purchases, brokers, arranges or markets electricity or related services for sale to end-use customers utilizing the jurisdictional transmission and distribution facilities of an electric distribution company. The term excludes building or facility owner/operators that manage the internal distribution system serving such building or facility and that supply electric power and other related power services to occupants of the building or facility.

"End-use customer" means a retail electric customer.

"Reliability" includes adequacy and security. As used in this definition, "adequacy" means the provision of sufficient generation, transmission and distribution capacity so as to supply the aggregate electric power and energy requirements of consumers, taking into account scheduled and unscheduled outages of system facilities; "security" means designing, maintaining and operating a system so that it can handle emergencies safely while continuing to operate.

"Renewable resource" means technologies such as solar photovoltaic energy, solar thermal energy, wind power, low-head hydropower, geothermal energy, landfill and mine-based methane gas, energy from waste and sustainable biomass energy.

"Retail customer" means a retail electric customer.

"Retail electric customer" means a direct purchaser of electric power. The term excludes an occupant of a building or facility where the owners or operators manage the internal distribution system serving such building or facility and supply electric power and other related power services to occupants of the building or facility; where such owners or operators are direct purchasers of electric power; and where the occupants are not direct purchasers.

"Transition or stranded costs" means an electric utility's known and measurable net electric generation-related costs, determined on a net present value basis over the life of the asset or liability as part of its restructuring plan, which traditionally would be recoverable under a regulated environment but which may not be recoverable in a competitive electric generation market and which the commission determines will remain following mitigation by the electric utility. This term includes:

(1) Regulatory assets and other deferred charges typically recoverable under current regulatory practice;

(2) Prudently incurred costs related to cancellation, buyout, buydown or renegotiation of nonutility generating projects, the recoverability of which shall be determined pursuant to section 269-F(c)(2); and

(3) The following costs, the recoverability of which shall be determined pursuant to section 269-F(c)(3):

(A)  Net plant investments and costs attributable to the utility's existing generation plants and facilities.

(C)  The utility's long-term purchase power commitments other than the costs defined in paragraphs (1) and (2).

(D)  Retirement costs attributable to the utility's existing generating plants other than the costs defined in paragraph (1).

(E)  Other transition costs of the utility, including costs of employee severance, retraining, early retirement, outplacement and related expenses, at reasonable levels, for employees who are affected by changes that occur as a result of the restructuring of the electric industry occasioned by this chapter.

The term includes any costs attributable to physical plants no longer used and useful because of the transition to retail competition. The term excludes any amounts previously disallowed by the commission as imprudently incurred. To the extent that the recoverability of amounts that are sought to be included as transition or stranded costs are subject to appellate review as of the time of the commission determination, any determination to include such costs shall be reversed to the extent required by the results of that appellate review.

"Transmission and distribution costs" means all costs directly or indirectly incurred to provide transmission and distribution services to retail electric customers. This includes the return of and return on facilities and other capital investments necessary to provide transmission and distribution services and associated operating expenses, including applicable taxes.

"Universal service and energy conservation" means policies, protections and services that help low-income customers to maintain electric service. The term includes customer assistance programs, termination of service protection and policies and services that help low-income customers to reduce or manage energy consumption in a cost-effective manner, such as the low-income usage reduction programs, application of renewable resources and consumer education.

      §269-B  Standards for restructuring of electric industry.  (a) The following interdependent standards shall govern the commission's assessment and approval of an electric utility's restructuring plan, oversight of the transition process and regulation of the restructured electric utility industry:

(1)  The commission shall ensure continuation of safe and reliable electric service to all consumers in the State, including:

(A)  The maintenance of adequate reserve margins by electric suppliers in conformity with the standards required by the North American Electric Reliability Council and the regional reliability council appropriate to each supplier, or any successors to those reliability entities, and in conformity with established industry standards and practices.

(B)  The installation and maintenance of transmission and distribution facilities in conformity with established industry standards and practices, including the standards set forth in the National Electric Safety Code.

(2)   Consistent with the time line set forth in section 269-D, relating to implementation, pilot programs and performance-based rates, the commission shall allow customers to choose among electric generation suppliers in a competitive generation market through direct access. Customers should be able to choose among alternatives such as firm and interruptible service, flexible pricing and alternate generation sources, including reasonable and fair opportunities to self-generate and interconnect. These alternatives may be provided by different electric generation suppliers.

(3)  The commission shall require the unbundling of electric utility services, tariffs and customer bills to separate the charges for generation, transmission and distribution. The commission may require the unbundling of other services.

(4)  The following caps on electric utility rates shall apply:

(A)  For a period of fifty-four months from the effective date of this part or until an electric distribution utility is no longer recovering its transition or stranded costs through a competitive transition charge or intangible transition charge and all the customers of an electric distribution utility can choose an alternative provider of electric generation, whichever is shorter:

(i)  The total charges of an electric distribution utility for service to any customer who purchases generation from that utility shall not exceed the total charges that have been approved by the commission for such service as of the effective date of this part; and

(ii) For customers who purchase generation from a supplier other than the electric distribution utility, the charges of the utility for non-generation services that are regulated as of the effective date of this chapter, exclusive of the competitive transition charge and intangible transition charge, shall not exceed the non-generation charges that have been approved by the commission for such service as of the effective date of this part.

(B)  In addition to the rate cap set forth in subparagraph (A), for a period of nine years from the effective date of this chapter or until an electric distribution utility is no longer recovering its transition or stranded costs through a competitive transition charge or intangible transition charge and all customers of an electric distribution utility can choose an alternative provider of electric generation, whichever is shorter, the generation component of a utility's charges to customers who purchase generation from the utility, including the competitive transition charge and intangible transition charge, shall not exceed the generation component charged to the customers that has been approved by the commission for such service as of the effective date of this part.

(C)  An electric distribution utility may seek, and the commission may approve, an exception to the limitations set forth in subparagraphs (A) and (B) only in any of the following circumstances:

(i)  Either the electric distribution utility is required to begin payment under contracts with nonutility generation projects that have received commission orders, has been unable to mitigate such costs, such costs are not recoverable in a competitive generation market and such costs were not previously covered in the competitive transition charge or intangible transition charge, or the utility prudently incurs costs related to cancellation, buyout, buydown or renegotiation of nonutility generating project obligations of the utility and such costs were not previously covered in the competitive transition charge or intangible transition charge. Costs related to cancellation, buyout, buydown or renegotiation shall be recovered from ratepayers over a period not to exceed three years, unless the commission determines within its discretion to require a longer recovery period due to the magnitude of such costs, but shall be accounted for by the utility on a levelized basis over the total period in which the generation portion of the utility's rates are capped.

(ii) The electric distribution utility is subject

to significant increases in the rates of Federal or State taxes or other significant changes in law or regulations that would not allow the utility to earn a fair rate of return.

(iii) The electric distribution utility is subject to significant increases in the unit rate of fuel for utility generation or the price of purchased power that are outside of the control of the utility and that would not allow the utility to earn a fair rate of return.

(vi) The electric distribution utility is directed by the commission or an independent system operator or its functional equivalent to make expenditures to repair or upgrade its transmission or distribution system.

(vii)     As permitted by paragraph (16).

(D)  Consistent with the requirements of due process, the commission may expedite proceedings that invoke the provisions of subparagraph (C).

(E)  If an electric distribution utility rolls its energy cost rate into base rates at a combined level that does not exceed its combined level of such rates which have been approved by the commission as of the effective date of this chapter, the utility shall not be required to reduce its capped rates below the capped level upon the complaint of any party if the commission determines that any excess earnings achieved under the cap are being utilized to mitigate transition or stranded costs for the benefit of ratepayers or to offset other known and measurable cost increases that would be recoverable under traditional ratemaking but are not included within the capped rates.

(F)  This paragraph shall not apply to new services offered for the first time after the effective date of this chapter.

(5)  The commission may permit, but shall not require, an electric utility to divest itself of facilities or to reorganize its corporate structure.

(6)  Consistent with the provision of section 269-D, the commission shall require that a public utility that owns or operates jurisdictional transmission and distribution facilities shall provide transmission and distribution service to all retail electric customers in their service territory and to electric cooperative corporations and electric generation suppliers, affiliated or nonaffiliated, on rates, terms of access and conditions that are comparable to the utility's own use of its system.

(7)  The commission shall require that restructuring of the electric utility industry be implemented in a manner that does not unreasonably discriminate against one customer class to the benefit of another.

(8)  The commission shall establish for each electric utility an appropriate cost-recovery mechanism which is designed to fully recover the electric utility's universal service and energy conservation costs over the life of these programs.

(9)  The commission shall ensure that universal service and energy conservation policies, activities and services are appropriately funded and available in each electric distribution territory. Policies, activities and services under this paragraph shall be funded in each electric distribution territory by nonbypassable, competitively neutral cost-recovery mechanisms that fully recover the costs of universal service and energy conservation services. The commission shall encourage the use of community-based organizations that have the necessary technical and administrative experience to be the direct providers of services or programs which reduce energy consumption or otherwise assist low-income customers to afford electric service. Programs under this paragraph shall be subject to the administrative oversight of the commission which will ensure that the programs are operated in a cost-effective manner.

(10) The commission shall establish rates for jurisdictional transmission and distribution services and shall continue to regulate distribution services for new and existing customers in accordance with this part.

(11) The time line for the transition to and phase-in of direct access to competitive electric generation shall be in accordance with section 269-D.

(12) The commission has the authority to order utility participation in retail access pilot programs as set forth in section 269-D and as further implemented or modified by the commission, with direct access to begin on April 1, 2013. The commission shall conduct milestone reviews of the transition to retail electric generation competition to assure a technically workable and equitable transition period.

(13) Consistent with section 269-F relating to competitive transition charge, the commission has the power and duty to approve a competitive transition charge for the recovery of transition or stranded costs it determines to be just and reasonable to recover from ratepayers.

(14) The transition to a competitive generation market shall be orderly, protect electric system reliability, be fair to ratepayers and provide the investors in Hawaii electric utilities with a fair opportunity to fully recover the amount of transition or stranded costs that the commission determines to be just and reasonable.

(15) At the time each utility files its restructuring plan with the commission, the utility shall submit an initial plan that sets forth how it shall meet its universal service and energy conservation obligations.

(b) The following tax considerations shall apply to an electric utility's restructuring process:

(1)  The commission shall issue regulations that permit the electric distribution company to recover any change in its State tax liability under sections 269-D(h) and 269-G(c), relating to requirements for electric generation suppliers, to the extent that the resulting rate does not exceed the rate cap established in this section except as provided in this part.

(2)  With regard to any portion of the change in an electric distribution company's tax liability under sections 269-D(h) and 269-G(c) which would cause it to exceed the price cap, upon certification to the commission by affidavit that the electric distribution company and the Department of Tax have not collected the taxes due pursuant to the other means set forth in sections 269-D(g)(3)(A) and (B) and 269-G(c) to recover the taxes due and any interest thereon, the electric distribution utility shall be permitted to recover that amount in the State tax adjustment surcharge.

§269-C  Procurement of power. The commission may not order a default service provider to procure power from a specific generation supplier, from a specific generation fuel type, or from new generation only.

     §269-D  Implementation, pilot programs and performance-based rates. (a) The generation of electricity shall no longer be regulated as a public utility service or function except as otherwise provided for in this part at the conclusion of a transition and phase-in period beginning on the effective date of this part and ending, consistent with the commission's discretion under this section, January 1, 2017. As of January 1, 2017, consistent with the commission's discretion under this section, all customers of electric distribution companies in this State shall have the opportunity to purchase electricity from their choice of electric generation suppliers. The ultimate choice of the electric generation supplier is to rest with the consumer.

(b) Recognizing that approximately five per cent of the peak load will have retail access through pilot programs, the following schedule for phased implementation of retail access shall be adhered to unless a determination is made by the commission under subsection (c):

(1)  As of January 1, 2015, a maximum of thirty three per cent of the peak load of each customer class shall have the opportunity for direct access.

(2)  As of January 1, 2016, a maximum of sixty six per cent of the peak load of each customer class shall have the opportunity for direct access.

(3)  As of January 1, 2017, all customers of electric distribution companies in this State shall have the opportunity for direct access.

(4)  The commission shall establish regulations specifying that, within each customer class, the customers that are eligible for direct access prior to full direct access shall be determined on a first-come-first-served basis unless otherwise determined by the commission through regulation, in the context of restructuring plans, or in other appropriate administrative proceedings, to prevent competitive disadvantages among similarly situated customers within a customer class.

(c) The following additional time is authorized by this part:

(1)  The commission may determine that an additional six-month transition period is necessary prior to the January 1, 2015, implementation date. A determination under this subsection must be made at least forty five days in advance of the scheduled date for implementation and must be based on one or more of the following considerations:

(A)  Implementation would materially affect the reliability of the electric system;

(B)  Federal approvals necessary for the implementation of the provisions of this chapter have not been granted;

(C)  Communications and information systems necessary for the implementation of retail access have not been installed for reasons beyond the utility's control, as measured by appropriate industry standards;

(D)  Hawaii generators would be disadvantaged due to lack of regional reciprocity with respect to direct access;

(E)  The interests of Hawaii consumers and the competitive position of Hawaii business and industry would be materially affected;

(F)  Such other consideration as would materially affect the orderly implementation of the legislative purpose of this part.

(2)  Consistent with the considerations listed in paragraph (1), the commission may determine that an additional six-month transition period is necessary. This determination must be made by the commission by May 15, 2014.

(d) All electric utilities in this State shall submit to the commission, pursuant to a schedule to be determined by the commission in consultation with the electric utilities, beginning on April 1, 2013, but in no event later than September 30, 2013, a restructuring plan to implement direct access to a competitive market for the generation of electricity.

(e) A restructuring plan under subsection (d) must include, consistent with the determinations of the commission, unbundled prices or rates for generation, transmission, distribution and other services; a proposed competitive transition charge; a proposed universal service and energy conservation cost-recovery mechanism; procedures for ensuring direct access to all licensed electric generation suppliers; a discussion of the impacts of the proposed plan on the utility's employees; and revised rate schedules implementing the above.

(f)  The commission shall review the restructuring plan filed by each electric utility and shall, after open evidentiary hearings with proper notice and opportunity for all parties to cross-examine witnesses, issue an order accepting, modifying or rejecting such plan at the earliest date possible, but no later than nine months from the filing of such restructuring plan. If the commission rejects a restructuring plan, it shall state the specific reasons  in writing for rejection and direct the electric utility to file an alternative plan addressing these objections within thirty days of the entry date of the commission order rejecting the plan. The commission shall review the alternative plan, solicit comments from interested parties and issue a final order within forty-five days of the filing of the revised plan.

(g)  As of the effective date of this part, the commission has authority to order electric utilities to submit proposals for retail access pilot programs to begin April 1, 2013. The commission shall provide guidelines for retail access pilot programs by order.

(1)  In order to determine whether all customers classes can benefit from competitive markets, utilities shall tailor proposed retail access pilot programs to accommodate the specific geographic, demographic and socioeconomic characteristics of their customer base. Retail access pilot programs must include an equal opportunity for the broadest practical direct access by all customer classes to electric generation suppliers.

(2)  The minimum period of time for a retail access pilot program shall be one year and shall include an evaluation process as directed by the commission.

(3)  In order to ensure the safety and reliability of the generation of electricity in this State, participation in the retail access pilot programs shall be limited to electricity suppliers subject to commission licensure or certification.

(A)  Each participating electricity supplier shall do all of the following:

(i)  Certify to the commission that it will pay and in subsequent years has paid the full amount of taxes imposed law and this part.

(ii) Provide the commission with the address of the participant's principal office in this State or the address of the participant's registered agent in this State, the latter being the address at which the participant may be served process.

(iii)Agree that it shall be subject to all taxes

imposed by law and any tax imposed by this part.

(B)  Failure of an electricity supplier to pay a tax referred to in subparagraph (A) or to otherwise comply with the provisions of this paragraph shall be cause for the commission to revoke the license of the electricity supplier.

(C)  If an electricity supplier, other than an electric distribution company, does not pay the tax imposed upon gross receipts law or this part, the electric distribution company to whose retail customer the electricity supplier provided generation service shall remit the unpaid tax, as a tax on the use of electricity in this State, to the Department of Tax and may collect or seek reimbursement of the tax so paid from the electricity provider or any other appropriate party that used the electricity in this State. Failure of the electric distribution company to pay the amount within thirty days after notice provided by the department shall cause interest to be imposed on the electric distribution company in accordance as provided by law. Interest shall be calculated from the thirty first day after the department gives the notice required in this subparagraph. An electric distribution company or other appropriate person may challenge the imposition of the tax and interest by filing a petition with the department not later than thirty days after the date on which the tax became due.

(4)  The percentage of utility load committed to a retail access pilot program must be approximately five per cent of utility's peak load for each customer class. Waivers of this condition may be considered by the commission for economic development purposes or special circumstances.

(h)  In addition to the implicit authority of the commission under Chapter 269, the commission has the authority to approve flexible pricing and flexible rates, including negotiated, contract-based tariffs designed to meet the specific needs of a utility customer and to address competitive alternatives.

      (i) The commission has authority to use performance-based rates as an alternative to existing rate base/rate of return ratemaking, subject to the restrictions pertaining to rate caps in section 269-B(a)(4), relating to standards for restructuring of electric industry.

§269-E  Duties of electric distribution companies. (a) Each electric distribution company shall maintain the integrity of the distribution system at least in conformity with the National Electric Safety Code and such other standards practiced by the industry in a manner sufficient to provide safe and reliable service to all customers connected to the system consistent with this title and the commission's regulations. In performing such duties, the electric distribution company shall implement procedures to require all electric generation suppliers to deliver energy to the electric distribution company at locations and in amounts which are adequate to meet the energy supplier's obligations to its customers. Subject to commission approval, the electric distribution company may require that the customer install, at the customer's expense, enhanced metering capability sufficient to match the energy delivered by the electric generation suppliers with consumption by the customer.

(b)  There shall be a rebuttable presumption that the electric distribution company has the ability to receive energy at all points on its system sufficient to meet the needs of all electric generation suppliers' customers on its system. The electric distribution company shall not have an obligation to install nonstandard facilities, either as to type or location, for the purpose of receiving energy from the energy supplier unless the energy supplier or its customer pays the full cost of these facilities. Nothing in this chapter shall prevent the electric distribution company from upgrading its system to meet changing customer requirements, and the commission may establish incentive programs to encourage such system upgrades. Disputes concerning facilities shall be subject to the jurisdiction of the commission and may be initiated by the filing of a complaint by the electric generation supplier or the customer.

(c)  Subject to the right of an end-use customer to choose to receive separate bills from its electric generation supplier, the electric distribution company may be responsible for billing customers for all electric services, consistent with the regulations of the commission, regardless of the identity of the provider of those services.

(1)  Customer bills shall contain unbundled charges sufficient to enable the customer to determine the basis for those charges.

(2)  If services are provided by an entity other than the electric distribution company, the entity that provides those services shall furnish to the electric distribution company billing data sufficient to enable the electric distribution company to bill customers.

(3)  The electric distribution company shall not be required to forward payment to entities providing services to customers, and on whose behalf the electric distribution company is billing those customers, before the electric distribution company has received payment for those services from customers.

(d)  The electric distribution company shall continue to provide customer service functions consistent with the regulations of the commission, including meter reading, complaint resolution and collections. Customer services shall, at a minimum, be maintained at the same level of quality under retail competition.

(1)  The commission shall establish regulations to ensure that an electric distribution company does not change a customer's electricity supplier without direct oral confirmation from the customer of record or written evidence of the customer's consent to a change of supplier.

(2)  The commission shall establish regulations to require each electric distribution company, electricity supplier, marketer, aggregator and broker to provide adequate and accurate customer information to enable customers to make informed choices regarding the purchase of all electricity services offered by that provider. Information shall be provided to consumers in an understandable format that enables consumers to compare prices and services on a uniform basis.

(3)  Prior to the implementation of any restructuring plan under section 269-D, relating to implementation, pilot programs and performance-based rates, each electric distribution company, in conjunction with the commission, shall implement a consumer education program informing customers of the changes in the electric utility industry. The program shall provide consumers with information necessary to help them make appropriate choices as to their electric service. The education program shall be subject to approval by the commission.

(e) A default service provider's obligation to provide electric generation supply service following the expiration of a generation rate cap specified under section 269-B(a)(4), relating to standards for restructuring of electric industry, or a restructuring plan under section 269-D(f) is revised as follows:

(1)  While an electric distribution company collects either a competitive transition charge or an intangible transition charge or until one-hundred per cent of its customers have choice, whichever is longer, the electric distribution company shall continue to have the full obligation to serve, including the connection of customers, the delivery of electric energy and the production or acquisition of electric energy for customers.

(2)  Following the expiration of an electric distribution company's obligation to provide electric generation supply service to retail customers at capped rates, if a customer contracts for electric generation supply service and the chosen electric generation supplier does not provide the service or if a customer does not choose an alternative electric generation supplier, the default service provider shall provide electric generation supply service to that customer pursuant to a commission-approved competitive procurement plan. The electric power acquired shall be procured through competitive procurement processes and shall include one or more of the following:

(A)  Auctions;

(B)  Requests for proposal; or

(C)  Bilateral agreements entered into at the sole discretion of the default service provider which shall be at prices which are:

(i)  No greater than the cost of obtaining generation under comparable terms in the wholesale market, as determined by the commission at the time of execution of the contract; or

(ii) Consistent with a commission-approved competition procurement process. Any agreement between affiliated parties shall be subject to review and approval of the commission. In no case shall the cost of obtaining generation from any affiliated interest be greater than the cost of obtaining generation under comparable terms in the wholesale market at the time of execution of the contract.

(3)  The electric power procured pursuant to paragraph (2) shall include a prudent mix of the following:

(A)  Spot market purchases;

(B)  Short-term contracts; and

(C)  Long-term purchase contracts, entered into as a result of an auction, request for proposal or bilateral contract that is free of undue influence, duress or favoritism, of more than four and not more than twenty years. The default service provider shall have sole discretion to determine the source and fuel type. Long-term purchase contracts under this subparagraph may not constitute more than twenty five per cent of the default service provider's projected default service load unless the commission, after a hearing, determines for good cause that a greater portion of load is necessary to achieve least cost procurement. This subparagraph shall not apply to contracts executed under paragraph (12).

(4)  The commission may determine that a contract is required to be extended for a longer term of up to twenty years, if the extension is necessary to ensure adequate and reliable service at least cost to customers over time.

(5)  The prudent mix of contracts entered into pursuant to paragraphs (3) and (4) shall be designed to ensure:

(A)  Adequate and reliable service;

(B)  The least cost to customers over time; and

(C)  Compliance with the requirements of paragraph (2).

(6)  Except as set forth in paragraph (12)(B), the provisions of this section shall apply to any type of energy purchased by a default service provider to provide electric generation supply service.

(7)  The default service provider shall file a plan for competitive procurement with the commission and obtain commission approval of the plan considering the standards in paragraphs (2), (3), (4) and (5) before the competitive process is implemented. The commission shall hold hearings as necessary on the proposed plan. If the commission fails to issue a final order on the plan within nine months of the date that the plan is filed, the plan shall be deemed to be approved and the default service provider may implement the plan as filed. Costs incurred through an approved competitive procurement plan shall be deemed to be the least cost over time as required under paragraph (5)(B).

(8)  At the time the commission evaluates the plan and prior to approval, in determining if the default electric service provider's plan obtains generation supply at the least cost, the commission shall consider the default service provider's obligation to provide adequate and reliable service to customers and that the default service provider has obtained a prudent mix of contracts to obtain least cost on a long-term, short-term and spot market basis and shall make specific findings which shall include the following:

(A)  The default service provider's plan includes prudent steps necessary to negotiate favorable generation supply contracts;

(B)  The default service provider's plan includes prudent steps necessary to obtain least cost generation supply contracts on a long-term, short-term and spot market basis and

(C)  Neither the default service provider nor its affiliated interest has withheld from the market any generation supply in a manner that violates Federal law.

(9)  The commission may modify contracts or disallow costs only when the party seeking recovery of the costs of a procurement plan is, after hearing, found to be at fault for the following:

(A)  Not complying with the commission-approved procurement plan; or

(B)  The commission of fraud, collusion or market manipulation with regard to these contracts.

(10) The default service provider shall have the right to recover on a full and current basis all reasonable costs incurred under this section and a commission-approved competitive procurement plan.

(11) If a customer that chooses an alternative supplier and subsequently desires to return to the local distribution company for generation service, the local distribution company shall treat that customer exactly as it would any new applicant for energy service.

(12) Notwithstanding paragraph (2), the electric distribution company or commission-approved alternative supplier may, in its sole discretion, offer large customers with a peak demand of fifteen megawatts or greater at one meter at a location in its service territory any negotiated rate for service at all of the customers' locations within the service territory for any duration agreed upon by the electric distribution company or commission-approved alternative supplier and the large customer. The commission shall permit, but shall not require, an electric distribution company or commission-approved alternative supplier to provide service to large customers under this paragraph. Contract rates entered into under this paragraph shall be subject to review by the commission in order to ensure that all costs related to the rates are borne by the parties to the contract and that no costs related to the rates are borne by other customers or customer classes. If no costs related to the rates are borne by other customers or customer classes, the commission shall approve the contract within 90 days of its filing, or it shall be deemed approved by operation of law upon expiration of the ninety days. Information submitted under this paragraph shall be subject to the commission's procedures for the filing of confidential and proprietary information.

(13) A default service plan approved by the commission prior to the effective date of this section shall remain in effect through its approved term. At its sole discretion, the default service provider may propose amendments to its approved plan that are consistent with this section, and the commission shall issue a decision whether to approve or disapprove the proposed amendments within nine months of the date that the amendments are filed. If the commission fails to issue a final order within nine months, the amendments shall be deemed to be approved and the default service provider may implement the amendments as filed.

(14) The default service provider shall offer residential and small business customers a generation supply service rate that shall change no more frequently than on a quarterly basis. All default service rates shall be reviewed by the commission to ensure that the costs of providing service to each customer class are not subsidized by any other class.

            §269-F  Competitive transition charge. (a) To provide each electric utility with an opportunity to recover its transition or stranded costs following the commission's determination under subsection (c), every customer accessing the transmission or distribution network shall pay a competitive transition charge to the electric distribution company in whose certificated territory that customer is located. The costs to be recovered shall be allocated to customer classes in a manner that does not shift interclass or intraclass costs and maintains consistency with the allocation methodology for utility production plant accepted by the commission in the electric utility's most recent base rate proceeding. If a customer installs on-site generation which operates in parallel with other generation on the public utility's system and which significantly reduces the customer's purchases of electricity through the transmission and distribution network, the customer's fully allocated share of transition or stranded costs shall be recovered from the customer through a competitive transition charge. The recovery of transition or stranded costs associated with existing generating facilities is contingent on continued operation at reasonable availability levels of the generation facilities for which recovery has been approved, except when the generation facility is uneconomic on a production cost basis because of the transition to a competitive market.

(b) The competitive transition charge shall be included on bills to customers for a period not to exceed nine years from the effective date of this chapter unless an alternative payment methodology is mutually agreed upon by the customer and the utility or unless the commission in its discretion and for good cause shown orders an alternative payment period. In establishing the length of the period for collection of the competitive transition charge, the commission shall consider the effect on the ability of the State to compete in attracting industry and jobs, on the financial health of electric utilities and other relevant factors.

(c) In determining the level of transition or stranded costs that an electric utility may recover through the competitive transition charge, the commission shall apply the following principles:

(1)  The commission shall allow recovery of regulatory assets and other deferred charges typically recoverable under current regulatory practice, the unfunded portion of the utility's projected nuclear generating plant decommissioning costs and cost obligations under contracts with nonutility generating projects that have received a commission order. Nothing in this chapter shall be construed as requiring an electric utility or a nonutility generating project to enter into an arrangement to buy down, buy out and terminate or otherwise restructure a contract or as authorizing the commission to require a utility to pursue such an arrangement with a nonutility generating project.

(2)  The commission shall allow recovery of an electric utility's prudently incurred costs related to cancellation, buyout, buydown or renegotiation of nonutility generating projects.

(3)  The commission shall determine the level of other generation-related transition or stranded costs that may be recovered through the competitive transition charge.

(4)  The commission shall consider the extent to which the electric utility has undertaken efforts to mitigate generation-related transition or stranded costs by appropriate means in a manner that is reasonable under all of the circumstances, including consideration of whether mitigation has been commensurate with the magnitude of the electric utility's generation-related transition or stranded costs. During the transition period, electric utilities shall have the duty to mitigate generation-related transition or stranded costs to the extent practicable. Efforts may include the following:

(A)  Acceleration of depreciation and amortization of existing rate base generation assets;

(B)  Minimization of new capital spending for existing rate base generation assets;

(C)  Reallocation of depreciation reserves to existing rate base generation assets;

(D)  Reduction of book assets by application of new proceeds of any sale of idle or underutilized existing rate base generation assets; and

(E)  Maximization of market revenues from existing rate base generation assets.

(5)  Of equal importance to the mitigation efforts under paragraph (4), the commission shall consider efforts undertaken over time, prior to the enactment of this chapter, to reduce or moderate customer rate levels while maintaining safe and efficient operations.

(d)  As a component of its restructuring plan, each electric utility shall file with the commission a recovery plan, including a proposed competitive transition charge and supporting documentation. In evaluating a recovery plan and any proposed competitive transition charge, the commission shall schedule open evidentiary hearings with proper notice and opportunity for all parties to cross-examine witnesses as necessary.

(e)  The commission shall establish procedures for the annual review of the competitive transition charge. The review shall reconcile the annual revenues received from the charge with the annual amortization of transition or stranded costs approved by the commission under this section. The commission shall adjust the competitive transition charge based upon underrecovery or overrecovery of the annual amortization amount

      §269-G  Requirements for electric generation suppliers.

(a) No person or corporation, brokers and marketers, aggregators and other entities, shall engage in the business of an electric generation supplier in this State unless the person or corporation holds a license issued by the commission. Electric cooperative corporations must possess a certificate for service to supply generation services beyond their territorial limits.

(b) An application for an electric generation supplier license must be made to the commission in writing, be verified by oath or affirmation and be in such form and contain such information as the commission may by its regulations require. A license shall be issued to any qualified applicant, authorizing the whole or any part of the service covered by the application, if it is found that the applicant is fit, willing and able to perform properly the service proposed and to conform to the provisions of this title and the lawful orders and regulations of the commission under this title, including the commission's regulations regarding standards and billing practices, and that the proposed service, to the extent authorized by the license, will be consistent with the public interest and the policy declared in this chapter; otherwise, such application shall be denied.

(c) In order to ensure the safety and reliability of the generation of electricity in this State, no energy supplier license shall be issued or remain in force unless the holder complies with all of the following:

(1)  Furnishes a bond or other security approved by the commission in form and amount to ensure the financial responsibility of the electric generation supplier and the supply of electricity at retail in accordance with contracts, agreements or arrangements;

(2)  Certifies to the commission that it will pay and in subsequent years has paid the full amount of taxes imposed by law and any tax imposed by this part;

(3)  Provides the commission with the address of the participant's principal office in this State or the address of the participant's registered agent in this State, the latter being the address at which the participant may be served process.

(4)  Agrees that it shall be subject to all taxes imposed by law and any tax imposed by this part.

Failure of an electricity supplier to pay a tax referred to in this subsection or to otherwise comply with the provisions of this subsection shall be cause for the commission to revoke the license of the electricity supplier.

(d) If an electricity supplier other than an electric distribution company does not pay the tax imposed upon gross receipts as imposed by law or this part, the electric distribution company to whose retail customer the electricity supplier provided generation service shall remit the unpaid tax, as a tax on the use of electricity in this State, to the Department of Tax and may collect or seek reimbursement of the tax so paid from the electricity provider or any other appropriate party that used the electricity in this State. The Department of Tax shall collect and enforce any use tax herein provided or as provided by law.  Failure of the electric distribution company to pay the amount within thirty days after notice provided by the Department of Tax shall cause interest to be imposed on the electric distribution company in accordance with law. Interest shall be calculated from the thirty first day after the department gives the notice required in this paragraph. An electric distribution company or other appropriate person may challenge the imposition of the tax and interest by filing a petition with the department not later than thirty days after the date on which the tax became due.

(e) No license issued under this part may be transferred without prior commission approval.

(f) The commission may forbear from applying requirements of this part which it determines are unnecessary due to competition among electric generation suppliers. In regulating the service of electric generation suppliers, the commission shall impose requirements necessary to ensure that the present quality of service provided by electric utilities does not deteriorate, including assuring that adequate reserve margins of electric supply are maintained.

(g)  Prior to approving the licensure of any broker and marketer or aggregator, the commission shall set forth standards to ensure that all retail customer classes may choose to purchase electricity through a broker and marketer or aggregator.

§269-H  Market power remediation. (a) The commission shall monitor the market for the supply and distribution of electricity to retail customers and take steps as set forth in this section to prevent anticompetitive or discriminatory conduct and the unlawful exercise of market power.

(b) Upon complaint or upon its own motion for good cause shown, the commission shall conduct an investigation of the impact on the proper functioning of a fully competitive retail electricity market, including the effect of mergers, consolidations, acquisition or disposition of assets or securities of electricity suppliers, transmission congestion and anticompetitive or discriminatory conduct affecting the retail distribution of electricity.

(c) The commission may require an electricity supplier to provide information, including documents and testimony, in accordance with the commission's regulations regarding the discovery of information from any electricity supplier.  Confidential, proprietary or trade secret information provided under this subsection shall not be disclosed to any person not directly employed or retained by the commission to conduct the investigation without the consent of the party providing the information.  The commission shall disclose information obtained under this subsection to the Division of Consumer Advocacy under an appropriate confidentiality agreement. The commission may disclose the information to appropriate Federal or State law enforcement officials if it determines that the disclosure of the information is necessary to prevent or restrain a violation of Federal or State law and it provides the party that provided the information with reasonable notice and opportunity to prevent or limit disclosure.

(d) If, as a result of an investigation conducted under this section, the commission has reason to believe that anticompetitive or discriminatory conduct, including the unlawful exercise of market power, is preventing the retail electricity customers in this State from obtaining the benefits of a properly functioning and workable competitive retail electricity market, the commission, pursuant to its regulations, shall:

(1)  Refer its findings to the Attorney General, the United States Department of Justice, the Securities and Exchange Commission or the Federal Energy Regulatory Commission;

(2)  Subject to subsection (c), disclose any information it has obtained in the course of its investigation to the agency or agencies to which it has made a referral under paragraph (1); and

(3)  Intervene, as provided and permitted by law or regulation, in any proceedings initiated as a result of a referral made under paragraph (1).

(e) In the exercise of authority the commission otherwise may have to approve the mergers or consolidations by electric utilities or electricity suppliers, or the acquisition or disposition of assets or securities of other public utilities or electricity suppliers, the commission shall consider whether the proposed merger, consolidation, acquisition or disposition is likely to result in anticompetitive or discriminatory conduct, including the unlawful exercise of market power, which will prevent retail electricity customers in this State from obtaining the benefits of a properly functioning and workable competitive retail electricity market. Upon request for approval, the commission shall provide notice and an opportunity for open, public evidentiary hearings. If the commission finds, after hearing, that a proposed merger, consolidation, acquisition or disposition is likely to result in anticompetitive or discriminatory conduct, including the unlawful exercise of market power, which will prevent retail electricity customers in this State from obtaining the benefits of a properly functioning and workable competitive retail electricity market, the commission shall not approve such proposed merger, consolidation, acquisition or disposition, except upon such terms and conditions as it finds necessary to preserve the benefits of a properly functioning and workable competitive retail electricity market.

(f) If an electric distribution company or any of its affiliated companies or any company that an electric distribution company has purchased generation from is found guilty of market manipulation, exercising market power or collusion by the Federal Energy Regulatory Commission or any Federal or State court or, if an electric distribution company or any one of its affiliated companies or any company that an electric distribution company has purchased generation from settles a claim of market manipulation, exercising market power or collusion that is brought by a regional transmission operator's market monitoring unit, the Federal Energy Regulatory Commission or another entity, the commission:

(1)  Shall direct the electric distribution company to take any and all reasonable action to quantify the effect of the market misconduct upon Pennsylvania ratepayers.

(2)  Following public hearing on the matter and a finding of public interest, may direct the electric distribution company to take any and all reasonable legal action, including the filing of a lawsuit as may be necessary, to recover the quantified damages which shall be used to recompense Pennsylvania ratepayers affected by the market misconduct.

If the electric distribution company fails to pursue reasonable action to quantify or seek recovery of damages for Hawaii ratepayers affected by market manipulation, the exercise of market power or collusion, the commission is authorized, following notice and an opportunity of the electric distribution company to comply or contest, to assess a civil penalty, which shall not be recovered in rates, of not more than $10,000 per day for failure or neglect to obey an order of the commission, the continuance of the failure or neglect being a separate offense and any monetary damages recovered by the electric distribution company shall be paid to affected Hawaii ratepayers in the form of a credit to their electric bills or as refunds.

(g) Nothing in this section shall restrict the right of any party to pursue any other remedy available to it under this part.

§269-I  Force majeure.  (a)  An electric utility may recover losses resulting from force majeure through an increase in its retail base rates during any rate cap period.

(b)  The commission, after a hearing to determine the electric utility's losses from force majeure, shall permit the utility to fully collect any approved force majeure increase through an appropriate customer surcharge mechanism.

(c)  For purposes of this section, "force majeure" means a major event or combination of major events, including new or expanded state or federal statutory or regulatory requirements;  hurricanes, tornadoes, ice storms, or other natural disasters;  or acts of war, terrorism, or civil disturbance, beyond the control of an electric utility that the regulatory authority finds increases the utility's total reasonable and necessary nonfuel costs or decreases the utility's total nonfuel revenues related to the generation and delivery of electricity by more than ten percent for any calendar year during the freeze period.  The term does not include any changes in general economic conditions such as inflation, interest rates, or other factors of general application."

     SECTION 3.  Chapter 269, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§269-  Provisions not applicable to electric utilities.

The provisions of sections 269-17, 269-17.5, 269-18, 269-19, and 269-19.5 shall not apply to electric utilities, as defined in section 269-1."

     SECTION 4.  Section 269-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

     ""Electric utility" includes a public utility, as defined herein, which produces, conveys, transmits, delivers, or furnishes electric power."

SECTION 5.  Section 269-6, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "§269-6  General powers and duties.  (a)  The public utilities commission shall have the general supervision hereinafter set forth over all public utilities, and over electric utilities to the extent provided within part A, and shall perform the duties and exercise the powers imposed or conferred upon it by this chapter.  Included among the general powers of the commission is the authority to adopt rules pursuant to chapter 91 necessary for the purposes of this chapter."

SECTION 6.  Section 269-7, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  The commission may investigate any person acting in the capacity of or engaging in the business of a public utility within the State, without having a certificate of public convenience and necessity or other authority previously obtained under and in compliance with this chapter or the rules promulgated under this chapter[.] in cases where such certificate or authority is required."

     SECTION 7.  Section 269-7.5, Hawaii Revised Statutes, is amended by adding a new subsection to be appropriately designated and to read as follows:

     "( )  No electric utility, as defined in section 269-1, shall be required to obtain a certificate of public convenience and necessity under this section."

     SECTION 8.  Section 269-15, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  In addition to any other remedy available, the commission or its enforcement officer may issue citations to any person acting in the capacity of or engaging in the business of a public utility within the State, without having a certificate of public convenience and necessity or other authority previously obtained under and in compliance with this chapter or the rules adopted thereunder[.], if such certificate or authority is required.

     (1)  The citation may contain an order of abatement and an  assessment of civil penalties as provided in section 269-28(c).  All penalties collected under this subsection shall be deposited in the treasury of the State.  Service of a citation issued under this subsection shall be made by personal service whenever possible, or by certified mail, restricted delivery, sent to the last known business or residence address of the person cited.

     (2)  Any person served with a citation under this subsection may submit a written request to the commission for a hearing, within twenty days from the receipt of the citation, with respect to the violations alleged, the scope of the order of abatement and the amount of civil penalties assessed.  If the person cited under this subsection timely notifies the commission of the request for a hearing, the commission shall afford an opportunity for a hearing under chapter 91.  The hearing shall be conducted by the commission or the commission may designate a hearings officer to hold the hearing.

     (3)  If the person cited under this subsection does not  submit a written request to the commission for a hearing within twenty days from the receipt of the citation, the citation shall be deemed a final order of the commission.  The commission may apply to the appropriate court for a judgment to enforce the provisions of any final order, issued by the commission or designated hearings officer pursuant to this subsection, including the provisions for abatement and civil penalties imposed.  In any proceeding to enforce the provisions of the final order of the commission or designated hearings officer, the commission need only show that the notice was given, a hearing was held or the time granted for requesting the hearing has run without such a request, and a certified copy of the final order of the commission or designated hearings officer.

     (4)  If any party is aggrieved by the decision of the commission or the designated hearings officer, the party may appeal to the intermediate appellate court, subject to chapter 602, in the manner provided for civil appeals from the circuit court; provided that the operation of an abatement order shall not be stayed on appeal unless specifically ordered by a court of competent jurisdiction after applying the stay criteria enumerated in section 91-14(c).  The sanctions and disposition authorized under this subsection shall be separate and in addition to all other remedies either civil or criminal provided in any other applicable statutory provision.  The commission may adopt rules under chapter 91 as may be necessary to fully effectuate this subsection."

     SECTION 9.  Section 269-16, Hawaii Revised Statutes, is amended by adding a new subsection to be appropriately designated and to read as follows:

     "( )  This section shall not apply to electric utilities, as defined in section 269-1."

     SECTION 10.  Section 269-16.3, Hawaii Revised Statutes, is amended by adding a new subsection to be appropriately designated and to read as follows:

     "( )  This section shall not apply to electric utilities, as defined in section 269-1."

     SECTION 11.  Section 269-28, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     (c)  Notwithstanding the provisions of subsection (a), any person acting in the capacity of or engaging in the business of a public utility in the State without having a certificate of public convenience and necessity or other authority previously obtained under and in compliance with this chapter and the rules promulgated thereunder, if such certificate or authority is required, may be subject to a civil penalty not to exceed $5,000 for each such offense, and, in the case of a continuing violation, $5,000 for each day that uncertified activity continues."

     SECTION 12.  Section 269-54, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

     "(d)  Whenever it appears to the consumer advocate that:  (1) any public utility has violated or failed to comply with any provision of this part or of any state or federal law; (2) 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 public utility has failed to comply with any provision of its charter or franchise; (4) 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 rates, fares, classifications, charges, or rules of any public utility whose rates are regulated by the public utilities commission are unreasonable or unreasonably discriminatory, the consumer advocate may institute proceedings for appropriate relief before the public utilities commission.  The consumer advocate may appeal any final decision and order in any proceeding to which the consumer advocate is a party in the manner provided by law."

     SECTION 13.  Section 269-27.2, Hawaii Revised Statutes, is repealed.

     ["§269-27.2  Utilization of electricity generated from nonfossil fuels.  (a)  The public utilities commission shall investigate and determine the extent to which electricity generated from nonfossil fuel sources is available to public utilities that supply electricity to the public, which electricity is in excess of that utilized or otherwise needed by the producers for their internal uses and which the producers are willing to make available to the electric public utilities.

     (b)  The public utilities commission may direct public utilities that supply electricity to the public to arrange for the acquisition of and to acquire electricity generated from nonfossil fuel sources as is available from and the producers are willing and able to make available to the public utilities, and to employ and dispatch the nonfossil fuel generated electricity in a manner consistent with the availability thereof to maximize the reduction in consumption of fossil fuels in the generation of electricity to be provided to the public.  To assist the energy resources coordinator in effectuating the purposes of chapter 201N, the public utilities commission may develop reasonable guidelines and timetables for the creation and implementation of power purchase agreements.

     (c)  The rate payable by the public utility to the producer for the nonfossil fuel generated electricity supplied to the public utility shall be as agreed between the public utility and the supplier and as approved by the public utilities 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 public utilities commission according to the powers and procedures provided in this chapter.

     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 electricity to potentially enable utility customers to share in the benefits of fuel cost savings resulting from the use of nonfossil fuel generated electricity.  As the commission deems appropriate, the just and reasonable rate for nonfossil fuel generated electricity 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.

     (d)  Upon application of a public utility that supplies electricity to the public, and notification of its customers, the commission, after an evidentiary hearing, may allow payments made by the public utility to nonfossil fuel producers for firm capacity and related revenue taxes to be recovered by the public utility through an interim increase in rates until the effective date of the rate change approved by the commission's final decision in the public utility's next general rate proceeding under section 269-16, notwithstanding any requirements to the contrary of any other provision in this chapter or in the commission's rules or practices; provided the amount recovered by the utility and the amount of increase in rates due to the payments for firm capacity and related revenue taxes to be charged to the consumers of the electricity are found by the commission to be:

     (1)  Just and reasonable;

     (2)  Not unduly prejudicial to the customers of the public utility;

     (3)  Promotional of Hawaii's long-term objective of energy self-sufficiency;

     (4)  Encouraging to the maintenance or development of nonfossil fueled sources of electrical energy; and

     (5)  In the overall best interest of the general public.

The evidentiary hearing provided for in this subsection shall be conducted expeditiously and shall be limited to evidence related to the above findings.  Notwithstanding section 269-16, no public hearing shall be required, except as the commission in its discretion may require."]

 

     SECTION 14.  In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

     SECTION 15.  If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

     SECTION 16.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 17.  This Act shall take effect upon its approval.

 

 

 

INTRODUCED BY:	_____________________________

 

 

Report Title:

Electric companies; Customer choice; Deregulation

 

Description:

Creates a competitive market for the generation of electricity; deregulates electric utilities with respect to rates and other matters with consideration to transition costs; provides direct access by retail customers to the competitive market.

 

 

 

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