Hawaii-2025-SB587-Introduced

SECTION 1. The legislature finds that pursuant to Act 97, Session Laws of Hawaii 2015, Hawaii has committed to achieving a one hundred percent renewable portfolio standard by December 31, 2045. This transition away from imported fossil fuels toward locally available renewable energy sources is critical for ensuring the State's energy independence, economic sustainability, and environmental resilience.

The legislature further finds that the transition to a clean energy economy requires customer-friendly processes to enable widespread adoption of distributed energy resources and electrification technologies. Current interconnection and utility service upgrade processes have led to delays, unexpected costs, and increased customer dissatisfaction, hindering progress toward achieving the State's clean energy goals. These challenges also result in localized power quality issues and power outages when customers increase loads without informing the utility.

The legislature finds that establishing streamlined and transparent interconnection processes will encourage consumer adoption, enable proactive utility planning, and ensure reliability and cost-effectiveness in the power system. The integration of smart inverters and other customer-sited technologies is critical to minimizing grid investments and achieving a clean, sustainable energy future.

Accordingly, the purpose of this Act is to establish a grid-ready home interconnection process that supports the rapid adoption of clean energy technologies, facilitates smart utility investments, and ensures power system reliability.

SECTION 2. Section 269-141, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Grid-ready home" means a residential property equipped or modified to anticipate and streamline the integration of clean electrification technologies such as electric vehicle chargers and heat pumps, distributed energy resources such as photovoltaic systems, batteries leveraging current national standards for functionality such as UL 1741, and advanced grid modernization technology."

SECTION 3. Section 269-142, Hawaii Revised Statutes, is amended to read as follows:

"[[]§269-142[]] Reliability standards; interconnection requirements; adoption and development; force and effect. (a) The commission may adopt, by rule or order, reliability standards and interconnection requirements. Reliability standards and interconnection requirements adopted by the commission shall apply to any electric utility and any user, owner, or operator of the Hawaii electric system. The commission shall not contract for the performance of the functions under this subsection to any other entity as provided under section 269-147.

(b) The commission may develop reliability standards and interconnection requirements as it determines necessary or upon recommendation from any entity, including an entity contracted by the commission to serve as the Hawaii electricity reliability administrator provided for under this part, for the continuing reliable design and operation of the Hawaii electric system. Any reliability standard or interconnection requirement developed by the commission shall be adopted by the commission in accordance with subsection (a) in order to be effective. The commission shall not contract for the performance of the functions under this subsection to any other entity as provided under section 269-147.

(c) The commission shall have jurisdiction over matters concerning interconnection requirements and interconnections located in the State between electric utilities, any user, owner, or operator of the Hawaii electric system, or any other person, business, or entity connecting to the Hawaii electric system or otherwise applying to connect generation or equipment providing ancillary services to, or operate generation and equipment providing ancillary services in parallel with the Hawaii electric system under processes established in accordance with section 269-145. Nothing in this subsection is intended to give the commission general supervision authority over any user, owner, or operator of the Hawaii electric system or any other person, business, or entity that is not a public utility as defined in section 269-1.

(d) Within one hundred eighty days of the effective date of this Act, the commission shall establish a streamlined grid-ready home interconnection process for grid-tied renewable energy generation and storage systems. The process shall include:

(1) A streamlined notification and approval process for customers seeking to install distributed energy resources systems using UL 1741 or equivalent certified functionality;

(2) A cost-sharing fee of $350 to address service upgrades where necessary, to be paid by the asset owner;

(3) Requirements obligating regulated electric utilities to process notifications and grant interconnection to grid-ready homes within two weeks for systems with electrical permits for the grid-ready improvements that have been approved by the appropriate authority;

(4) Provisions to allow distributed energy resources operation with managed power export/import where service upgrades are required; provided that the upgrades shall be completed within three months of ; and

(5) Protocols for virtual commissioning and interconnection agreement issuance within one week of the submission of a commissioning packet."

SECTION 4. Section 269-145, Hawaii Revised Statutes, is amended to read as follows:

"[[]§269-145[]] Grid access; procedures for interconnection; dispute resolution. (a) Each user, owner, or operator of the Hawaii electric system, or any other person, business, or entity seeking to make an interconnection on the Hawaii electric system shall do so in accordance with procedures to be established by the commission by rule or order.

(b) The commission shall have the authority to make final determinations regarding any dispute between any user, owner, or operator of the Hawaii electric system, or any other person, business, or entity connecting to the Hawaii electric system, concerning either an existing interconnection on the Hawaii electric system or an interconnection to the Hawaii electric system created under the processes established by the commission under this section.

(c) In establishing a rule or order for the utility interconnection process for renewable energy and storage systems for grid-ready homes, the commission shall ensure the process:

(1) Allows licensed electricians to isolate electrical service at utility meters for meter panel replacement, meter socket adapter installation, or main panel upgrades; provided that access shall be subject to:

(A) Notification by the utility provider to the owner of the grid-ready home of the planned service disconnection on the morning of the planned service disconnection;

(B) Confirmation of passed inspections by the appropriate authority; and

(2) Establishes a virtual commissioning process whereby system installers may submit documentation confirming compliance with filed settings and operational requirements of the installed distributed energy resources."

SECTION 5. Section 269-145.5, Hawaii Revised Statutes, is amended to read as follows:

"§269-145.5 Advanced grid modernization technology; principles. (a) The commission, in carrying out its responsibilities under this chapter, shall consider the value of improving electrical generation, transmission, and distribution systems and infrastructure within the State through the use of advanced grid modernization technology in order to improve the overall reliability and operational efficiency of the Hawaii electric system.

(b) In advancing the public interest, the commission shall balance technical, economic, environmental, and cultural considerations associated with modernization of the electric grid, based on principles that include but are not limited to:

(1) Enabling a diverse portfolio of renewable energy resources;

(2) Expanding options for customers to manage their energy use;

(3) Maximizing interconnection of distributed generation to the State's electric grids on a cost-effective basis at non-discriminatory terms and at just and reasonable rates, while maintaining the reliability of the State's electric grids, and allowing such access and rates through applicable rules, orders, and tariffs as reviewed and approved by the commission;

(4) Determining fair compensation for electric grid services and other benefits provided to customers and for electric grid services and other benefits provided by distributed generation customers and other non-utility service providers; and

(5) Maintaining or enhancing grid reliability and safety through modernization of the State's electric grids.

(c) The commission, in carrying out its responsibilities under this chapter, shall ensure the grid-ready home interconnection process aligns with principles of advanced grid modernization technology by:

(1) Streamlining customer access to renewable energy and storage resources;

(2) Enhancing customer participation in reliance-enhancing energy programs through rapid integration; and

(3) Optimizing grid operations to accommodate increased electrification while minimizing infrastructure costs."

SECTION 6. Section 269-146, Hawaii Revised Statutes, is amended to read as follows:

"[[]§269-146[[] Hawaii electricity reliability surcharge; authorization; cost recovery. (a) The commission may require, by rule or order, that all utilities, persons, businesses, or entities connecting to the Hawaii electric system, or any other user, owner, or operator of any electric element that is a part of an interconnection on the Hawaii electric system shall pay a surcharge that shall be collected by Hawaii's electric utilities. The commission shall not contract or otherwise delegate the ability to create the Hawaii electricity reliability surcharge under this section to any other entity. This surcharge amount shall be known as the Hawaii electricity reliability surcharge.

(b) Amounts collected through the Hawaii electricity reliability surcharge shall be transferred in whole or in part to any entity contracted by the commission to act as the Hawaii electricity reliability administrator provided for under this part.

(c) The Hawaii electricity reliability surcharge shall be used for the purposes of ensuring the reliable operation of the Hawaii electric system and overseeing grid access on the Hawaii electric system through the activities of the Hawaii electricity reliability administrator contracted under section 269-147; provided that amounts collected under the Hawaii electricity reliability surcharge shall not be available to meet any current or past general obligations of the State.

(d) The commission may allow an electric utility to recover appropriate and reasonable costs under the Hawaii electricity reliability surcharge for any interconnection to the Hawaii electric system, including interconnection studies and other analysis associated with studying the impact or necessary infrastructure and operational requirements needed to reliably interconnect a generator, as well as from electric utility customers through a surcharge or assessment subject to review and approval by the commission under section 269-16.

(e) The commission may allow the Hawaii electricity reliability administrator contracted under section 269-147, if contracted to perform the commission's functions under section 269-142(d), to recover appropriate and reasonable costs under the Hawaii electricity reliability surcharge for the implementation and operation of the grid-ready home interconnection process, including staffing, training, and infrastructure upgrades required to meet the grid-ready home interconnection process's timelines and standards.

[~~(e)~~] (f) Nothing in this section shall create or be construed to cause amounts collected through the Hawaii electricity reliability surcharge to be considered state or public moneys subject to appropriation by the legislature or be required to be deposited into the state treasury."

SECTION 7. Section 269-149, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The Hawaii electricity reliability administrator shall report to the commission each year on the date of agreement under section 269-147 following the original contracting between the Hawaii electricity reliability administrator and the commission on [~~the~~]:

(1) The status of its operations, financial position, and a projected operational budget for the fiscal year following the date of the report[.]; and

(2) The status, effectiveness, and outcomes of the grid-ready home interconnection process, including:

(A) The number of customers served under the process;

(B) Average timelines for interconnection approvals and upgrades;

(D) Total costs recovered by the electric utility in service of the process; and

(E) Value of infrastructure upgrades deferred or avoided as a result of the process."

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect on July 1, 2025.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	587
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII