HB 339: RELATING TO ELECTRIC UTILITIES.

A BILL FOR AN ACT

RELATING TO ELECTRIC UTILITIES.

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

PART I

     SECTION 1.  The legislature finds that the State's ongoing energy transition from fossil fuels to renewable energy has been driven and supported by certain key energy laws and regulatory policies that were established after years, if not decades, of continued advocacy efforts.  These laws and regulatory policies include, among others, the renewable portfolio standards established in chapter 269, Hawaii Revised Statutes; the performance-based regulation framework created by the public utilities commission for electric utilities; and the encouragement and oversight of renewable power purchase agreements by the public utilities commission, which are contractual agreements entered into by electric utilities and independent power producers for, among other things, the development and production of new utility-scale renewable energy projects.

     The legislature further finds that a bankruptcy or reorganization proceeding involving an electric utility company in the State could result in the acquisition, merger, or consolidation of that electric utility company with an acquiring entity that could ultimately lead to a change in management and control.  In a worst-case scenario, the acquiring entity may seek to weaken, alter, or reverse those key state energy laws, policies, frameworks, and agreements that have greatly contributed to the State's progress towards meeting its renewable energy goals, or reduce the electric utility's capacity to maintain a qualified and knowledgeable workforce with the ability to support and pursue Hawaii's renewable energy goals, as well as to ensure the safe, efficient, reliable, and continuous electric utility service to Hawaii consumers and communities.

     Accordingly, the purpose of this part is to:

     (1)  Require the public utilities commission to consider or impose certain conditions of approval on any order approving, in whole or in part, an application for the proposed acquisition, merger, or consolidation of an electric utility company by an acquiring entity;

     (2)  Establish a process to ensure that when an electric utility is subject to an application for a proposed acquisition, merger, or consolidation by a potential acquiring entity that is an investor-owned utility and seeks approval of the application from the public utilities commission, the electric utility shall demonstrate that it solicited bids from potential acquiring entities that operate under non-investor-owned utilities ownership models; and

     (3)  Require the electric utility to submit those acceptable bids concurrently with an application by a potential acquiring entity that is an investor-owned utility.

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

     "§269-A  Acquisition, merger, or consolidation of electric utility companies; conditions of approval.  (a)  Notwithstanding sections 269-7.5, 269-18, and 269-19, in any public utilities commission order approving, in whole or in part, an application for the proposed acquisition, merger, or consolidation of an electric utility company by an acquiring entity, the public utilities commission shall consider or impose certain conditions of approval established under this section, including any other conditions it deems necessary.

     (b)  The acquiring entity shall not terminate any existing and valid power purchase agreement between the electric utility company and an independent power producer of energy services based solely on the completion of the acquisition, merger, or consolidation; provided that nothing in this subsection shall prevent the termination of a contractual agreement as permitted by its terms, subject to approval from the public utilities commission.  The acquiring entity shall not attempt to renegotiate any material provisions of any existing and valid power purchase agreement, including but not limited to the established payment rates for energy or energy storage or other commercial terms; provided that nothing in this subsection shall prevent the amending of a contractual agreement as may be permitted under its terms, subject to approval by the public utilities commission.  Before the completion of the acquisition, merger, or consolidation of the electric utility company, the acquiring entity shall not unduly influence the terms of any power purchase agreement that is under negotiation between the electric utility company and an independent power producer of energy services.

     (c)  The acquiring entity shall assume and be bound by the terms and conditions of any existing collective bargaining agreement in place at the time of the acquisition, merger, or consolidation, as it applies to covered employees.

     (d)  The acquiring entity shall retain all covered employees and shall not induce or cause a reduction in force, or terminate a covered employee, other than for cause consistent with any applicable collective bargaining agreement.

     (e)  As used in this section:

     "Acquiring entity" means the entity that acquires all or some classes of an electric utility company's interests in an interest exchange, including but not limited to interest in any road, line, plant, system, or other real or personal property necessary for the performance of the electric utility company's duties to the public or any franchise or permit, or right thereunder.

     "Covered employee" means an individual who is employed by and party to a collective bargaining agreement with an electric utility company immediately prior to an acquisition, merger, or consolidation approved by the public utilities commission, of such electric utility company by an acquiring entity.

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

     §269-B  Acquisition, merger, and consolidation of electric utility companies; investor-owned acquiring entities; consideration of alternative applications.  (a)  Notwithstanding sections 269-7.5, 269-18, and 269-19, if an electric utility company is subject to an application for a proposed acquisition, merger, or consolidation by a potential acquiring entity that is an investor-owned utility and seeks approval of the application from the public utilities commission, the electric utility company shall demonstrate that it solicited bids from potential acquiring entities that operate under non-investor-owned utility ownership models and specify whether any potential acquiring entities that operate under such an ownership model submitted bids and the reasons why such bids were or were not accepted.  Upon receiving an acceptable bid from a potential acquiring entity that operates under a non-investor-owned utilities ownership model, the electric utility company shall present the bid to the public utilities commission concurrently with an application by a potential acquiring entity that is an investor-owned utility.

     (b)  The public utilities commission shall, upon receiving an application for the acquisition, merger, or consolidation of an electric utility company, commence a regulatory proceeding to review the application; provided that any bids submitted concurrently pursuant to subsection (a) shall be reviewed concurrently.

     (c)  The electric utility company shall have no obligation to affirmatively state its position in support of or in opposition to any pending application.

     (d)  Notwithstanding any law or rule to the contrary, the public utilities commission shall have the power to consolidate its review of all submitted applications pursuant to this section.

     (e)  This section shall not apply to the acquisition of a not-for-profit enterprise that is not owned by shareholders.

     (f)  For the purposes of this section:

     "Acquiring entity" has the same meaning as in section 269-A.

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

     "Non-investor-owned utility ownership model" means a member-owned cooperative utility or any not-for-profit enterprise that is not owned by shareholders."

PART II

     SECTION 3.  The legislature finds that the public ownership model for electric utilities has consistently delivered lower rates, greater reliability, and stronger community control over energy policy.  Across the United States, publicly owned utilities have outperformed investor-owned utilities in affordability, service quality, and reinvestment in infrastructure.  Hawaiian Electric Industries, the State's dominant electricity provider, is an investor-owned utility.  This structure prioritizes shareholder profits over customer affordability and infrastructure investment.  In contrast, the legislature believes that public utilities should focus on long-term system improvements, reliability, lower rates, and local accountability.

     The legislature further finds that by transitioning Hawaiian Electric to a public ownership model, the State would be able to lower electricity costs by eliminating profit-driven rate increases; reinvest revenues into grid modernization and renewable energy projects; ensure local control over energy policy to align with state climate goals, such as achieving one hundred per cent renewable energy by 2045; and enhance reliability by prioritizing infrastructure resilience rather than shareholder returns.  Public ownership of utilities is a proven model that aligns with the State's long-term goals of affordability, sustainability, and energy independence.

     Therefore, the purpose of this part is to:

     (1)  Authorize the issuance of reimbursable general obligation bonds for the acquisition of Hawaiian Electric Industries to convert it to a publicly owned utility;

     (2)  Authorize the establishment of a nonbypassable electric utility conversion charge, collections of which are to be deposited into a newly established electric utility conversion special fund and used to recover the debt service on the reimbursable general obligation bonds; and

     (3)  Appropriate funds out of the electric utility conversion special fund to acquire Hawaiian Electric Industries and convert it to a publicly owned utility and to reimburse the state general fund for payment of debt service on the reimbursable general obligation bonds.

     SECTION 4.  The director of finance is authorized to issue reimbursable general obligation bonds in the sum of $1,000,000,000 or so much thereof as may be necessary and the same sum or so much thereof as may be necessary is appropriated for fiscal year 2025-2026 for the purpose of acquiring ownership in Hawaiian Electric Industries for the conversion of the utility to a publicly owned utility and the same sum shall be deposited into the electric utility conversion special fund.

     SECTION 5.  There is appropriated out of the electric utility conversion special fund the sum of $1,000,000,000 or so much thereof as may be necessary for fiscal year 2025-2026 to finance the acquisition of Hawaiian Electric Industries and convert it to a publicly owned utility.

     The sum appropriated shall be expended by the department of budget and finance for the purposes of this part.

     SECTION 6.  There is appropriated out of the electric utility conversion special fund the sum of $           or so much thereof as may be necessary for fiscal year 2025-2026 for the reimbursement of the state general fund for the payment of debt service on the reimbursable general obligation bonds.

     The sum appropriated shall be expended by the department of budget and finance for the purposes of this part.

     SECTION 7.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

PUBLICLY OWNED ELECTRIC UTILITY

     §   -1  Electric utility conversion special fund.  (a)  There is established the electric utility conversion special fund to be administered by the department of budget and finance.

     (b)  All electric utility conversion charges collected pursuant to section    -2 shall be deposited into the special fund.  All interest earned on the moneys in the special fund shall be credited to the special fund.

     (c)  Moneys in the electric utility conversion special fund shall be expended to reimburse the state general fund for payment of debt service on reimbursable general obligation bonds issued to acquire Hawaiian Electric Industries and convert it to a publicly owned utility.

     (d)  The electric utility conversion special fund shall be exempt from the central service expenses of section 36-27 and departmental administrative expenses of section 36-30.

     (e)  Upon reimbursement to the state general fund of all debt service on reimbursable general obligation bonds issued to acquire Hawaiian Electric Industries and convert Hawaiian Electric Utilities to a publicly owned utility, any unencumbered and unexpended moneys in the electric utility conversion special fund shall be transferred to           .

     §   -2  Electric utility conversion charge.  The public utilities commission may create, pursuant to an application from an electric utility, a nonbypassable charge referred to as an electric utility conversion charge, which shall be applied to reimburse the state general fund for payment of debt service on reimbursable general obligation bonds issued to acquire Hawaiian Electric Industries and convert it to a publicly owned utility."

PART III

     SECTION 8.  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 9.  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 10.  New statutory material is underscored.

     SECTION 11.  This Act shall take effect on July 1, 3000.

Report Title:

Public Utilities Commission; Electric Utility Companies; Acquisitions; Mergers; Consolidations; Conditions of Approval; Application Review Process; Alternative Applications; Hawaiian Electric Industries; Non-Investor-Owned Utilities; GO Bonds; Appropriation

Description:

Part I:  Requires the Public Utilities Commission to impose certain conditions of approval on any order approving, in whole or in part, an application for the proposed acquisition, merger, or consolidation of an electric utility company by an acquiring entity.  Establishes a process to ensure that when an electric utility is subject to an application for a proposed acquisition, merger, or consolidation by a potential acquiring entity that is an investor-owned utility and seeks approval of the application from the Public Utilities Commission, it must demonstrate that it solicited bids from potential acquiring entities that operate under a non-investor-owned utility ownership model.  Requires the electric utility to submit those acceptable bids concurrently with an application by a potential acquiring entity that is an investor-owned utility.  Part II:  Authorizes the issuance of reimbursable GO bonds for acquiring Hawaiian Electric Industries and converting it to a publicly owned utility.  Authorizes the establishment of a non-bypassable electric utility conversion charge, to be deposited into the new Electric Utility Conversion Special Fund.  Appropriates Funds.  Effective 7/1/3000.  (HD2)

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

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 State's ongoing energy transition from fossil fuels to renewable energy has been driven and supported by certain key energy laws and regulatory policies that were established after years, if not decades, of continued advocacy efforts.  These laws and regulatory policies include, among others, the renewable portfolio standards established in chapter 269, Hawaii Revised Statutes; the performance-based regulation framework created by the public utilities commission for electric utilities; and the encouragement and oversight of renewable power purchase agreements by the public utilities commission, which are contractual agreements entered into by electric utilities and independent power producers for, among other things, the development and production of new utility-scale renewable energy projects.

     The legislature further finds that a bankruptcy or reorganization proceeding involving an electric utility company in the State could result in the acquisition, merger, or consolidation of that electric utility company with an acquiring entity that could ultimately lead to a change in management and control.  In a worst-case scenario, the acquiring entity may seek to weaken, alter, or reverse those key state energy laws, policies, frameworks, and agreements that have greatly contributed to the State's progress towards meeting its renewable energy goals, or reduce the electric utility's capacity to maintain a qualified and knowledgeable workforce with the ability to support and pursue Hawaii's renewable energy goals, as well as to ensure the safe, efficient, reliable, and continuous electric utility service to Hawaii consumers and communities.

     Accordingly, the purpose of this Act is to:

     (1)  Require the public utilities commission to consider or impose certain conditions of approval on any order approving, in whole or in part, an application for the proposed acquisition, merger, or consolidation of an electric utility company by an acquiring entity; and

     (2)  Establish a process to ensure that when an electric utility is subject to an application for a proposed acquisition, merger, or consolidation by a potential acquiring entity that is an investor-owned utility and seeks approval of the application from the public utilities commission, the electric utility shall demonstrate that it solicited bids from potential acquiring entities that operate under non-investor-owned utilities ownership models; and

     (3)  Require the electric utility to submit acceptable bids from a potential acquiring entity operating under a non-investor-owned utilities ownership model concurrently with an application by a potential acquiring entity that is an investor-owned utility.

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

     "§269-A  Acquisition, merger, or consolidation of electric utility companies; conditions of approval.  (a)  Notwithstanding sections 269-7.5, 269-18, and 269-19, in any public utilities commission order approving, in whole or in part, an application for the proposed acquisition, merger, or consolidation of an electric utility company by an acquiring entity, the public utilities commission shall consider or impose certain conditions of approval established under this section, including any other conditions it deems necessary.

     (b)  Through December 31, 2040, no acquiring entity shall propose or support any change or amendment that may have a material adverse effect on the renewable portfolio standards established under part V of chapter 269, including any change or amendment that:

     (1)  Is contrary to the purpose of the renewable portfolio standards laws;

     (2)  Reduces the renewable portfolio standards benchmark percentage requirements established for net electricity sales and generation pursuant to section 269-92;

     (3)  Extends the deadline by which the electric utility company shall comply with the State's renewable portfolio standards; or

     (4)  Seeks to reduce, curb, or limit the authority of the public utilities commission to penalize an electric utility company that fails to meet the renewable portfolio standards pursuant to section 269-92 or other commission order.

     (c)  The acquiring entity shall not propose or support, directly or indirectly, the termination of any existing performance-based regulation framework established for the electric utility company by the public utilities commission, or any change or amendment that may have a material adverse effect on the existing performance-based regulation framework, including any change or amendment that:

     (1)  Reduces the length of any existing or planned future multi-year rate plan to a period of less than five years;

     (2)  Uses a traditional cost-of-service rate case, unless the public utilities commission has previously issued an order directing the use of a traditional cost-of-service rate case;

     (3)  Modifies the existing annual revenue adjustment formula established for the electric utility company by the public utilities commission; or

     (4)  Modifies existing accelerated performance incentive mechanisms in a manner that is contrary to the purpose of the mechanisms or reduces the net amount of renewable energy procured by the electric utility company;

provided that nothing in this subsection shall limit any re-opener mechanism established for the electric utility company by the public utilities commission.

     (d)  The acquiring entity shall not terminate any existing and valid power purchase agreement between the electric utility company and an independent power producer of energy services based solely on the completion of the acquisition, merger, or consolidation; provided that nothing in this subsection shall prevent the termination of a contractual agreement as permitted by its terms, subject to approval from the public utilities commission.  The acquiring entity shall not attempt to renegotiate any material provisions of any existing and valid power purchase agreement, including but not limited to the established payment rates for energy or energy storage or other commercial terms; provided that nothing in this subsection shall prevent the amending of a contractual agreement as may be permitted under its terms, subject to approval by the public utilities commission.  Before the completion of the acquisition, merger, or consolidation of the electric utility company, the acquiring entity shall not unduly influence the terms of any power purchase agreement that is under negotiation between the electric utility company and an independent power producer of energy services.

     (e)  The acquiring entity shall assume and be bound by the terms and conditions of any existing collective bargaining agreement in place at the time of the acquisition, merger, or consolidation, as it applies to covered employees.

     (f)  The acquiring entity shall retain all covered employees and shall not induce or cause a reduction in force, or terminate a covered employee, other than for cause consistent with any applicable collective bargaining agreement.

     (g)  As used in this section:

     "Acquiring entity" means the entity that acquires all or some classes of an electric utility company's interests in an interest exchange, including but not limited to interest in any road, line, plant, system, or other real or personal property necessary for the performance of the electric utility's duties to the public or any franchise or permit, or right thereunder.

     "Covered employee" means an individual who is employed by and party to a collective bargaining agreement with an electric utility company immediately prior to an acquisition, merger, or consolidation approved by the public utilities commission, of such electric utility company by an acquiring entity.

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

     §269-B  Acquisition, merger, and consolidation of electric utility companies; investor-owned acquiring entities; consideration of alternative applications.  (a)  Notwithstanding sections 269-7.5, 269-18, and 269-19, if an electric utility is subject to an application for a proposed acquisition, merger, or consolidation by a potential acquiring entity that is an investor-owned utility and seeks approval of the application from the public utilities commission, the electric utility shall demonstrate that it solicited bids from potential acquiring entities that operate under non-investor-owned utility ownership models and specify whether any potential acquiring entities that operate under such an ownership model submitted bids and the reasons why such bids were or were not accepted.  Upon receiving an acceptable bid from a potential acquiring entity that operates under a non-investor-owned utilities ownership model, the electric utility company shall present the bid to the public utilities commission concurrently with an application by a potential acquiring entity that is an investor-owned utility.

     (b)  The public utilities commission shall, upon receiving an application for the acquisition, merger, or consolidation of an electric utility company, commence a regulatory proceeding to review the application; provided that any bids submitted concurrently pursuant to subsection (a) shall be reviewed concurrently.

     (c)  The electric utility company shall have no obligation to affirmatively state its position in support of or in opposition to any pending application.

     (d)  Notwithstanding any law or rule to the contrary, the public utilities commission shall have the power to consolidate its review of all submitted applications pursuant to this section.

     (e)  This section shall not apply to the acquisition of a not-for-profit enterprise that is not owned by shareholders.

     (f)  For the purposes of this section:

     "Acquiring entity" has the same meaning as in section 269-A.

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

     "Non-investor-owned utility ownership model" means a member-owned cooperative utility or any not-for-profit enterprise that is not owned by shareholders."

     SECTION 3.  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 4.  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 5.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect on July 1, 3000.

Report Title:

Public Utilities Commission; Electric Utility Companies; Acquisitions; Mergers; Consolidations; Conditions of Approval; Application Review Process; Alternative Applications; Non-Investor-Owned Utilities

Description:

Requires the Public Utilities Commission to impose certain conditions of approval on any order approving, in whole or in part, an application for the proposed acquisition, merger, or consolidation of an electric utility company by an acquiring entity.  Establishes a process to ensure that when an electric utility is subject to an application for a proposed acquisition, merger, or consolidation by a potential acquiring entity that is an investor-owned utility and seeks approval of the application from the Public Utilities Commission, the electric utility shall demonstrate that it solicited bids from potential acquiring entities that operate under a non-investor-owned utility ownership model.  Requires the electric utility to submit acceptable bids from a potential acquiring entity operating under a non-investor-owned utility ownership model concurrently with an application by a potential acquiring entity that is an investor-owned utility.  Effective 7/1/3000.  (HD1)

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

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 State's ongoing energy transition from fossil fuels to renewable energy has been driven and supported by certain key energy laws and regulatory policies that were established after years, if not decades, of continued advocacy efforts.  These laws and regulatory policies include, among others, the renewable portfolio standards laws established under part V of chapter 269, Hawaii Revised Statutes; the performance-based regulation framework created by the public utilities commission for electric utilities; and the encouragement and oversight of renewable power purchase agreements by the public utilities commission, which are contractual agreements entered into by electric utilities and independent power producers for, among other things, the development and production of new utility-scale renewable energy projects.

     Notwithstanding, the legislature finds that a bankruptcy or reorganization proceeding involving an electric utility company in the State could result in the acquisition, merger, or consolidation of that electric utility company with an acquiring entity that could ultimately lead to a change in management and control.  In a worst-case scenario, the acquiring entity may seek to weaken, alter, or reverse those key state energy laws, policies, frameworks, and agreements that have greatly contributed to the State's progress towards meeting its renewable energy goals.

     Accordingly, the purpose of this Act is to:

     (1)  Require the public utilities commission to consider or impose certain conditions of approval on any order approving, in whole or in part, an application for the proposed acquisition, merger, or consolidation of an electric utility company by an acquiring entity; and

     (2)  Establish a process to ensure that when an application for the proposed acquisition, merger, or consolidation of an electric utility company is filed with the public utilities commission by an acquiring entity that is an investor-owned utility, alternative applications from entities that operate under a non-investor-owned utilities ownership model may be concurrently submitted and reviewed.

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

     "§269-A  Acquisition, merger, or consolidation of electric utility companies; conditions of approval.  (a)  Notwithstanding the provisions of sections 269-7.5, 269-18, and 269-19, in any public utilities commission order approving, in whole or in part, an application for the proposed acquisition, merger, or consolidation of an electric utility company by an acquiring entity, the public utilities commission shall consider or impose the following conditions of approval established in this section, including any other conditions it deems necessary.

     (b)  Through at least the year 2040, the acquiring entity shall not propose or support any change or amendment that may have a material adverse effect on the renewable portfolio standards laws established under part V of chapter 269, including any change or amendment that:

     (1)  Is contrary to the purpose of the renewable portfolio standards laws;

     (2)  Reduces the renewable portfolio standards benchmark percentage requirements established for net electricity sales and generation pursuant to section 269-92;

     (3)  Extends the deadline by which the electric utility company shall comply with the State's renewable portfolio standards; or

     (4)  Seeks to reduce, curb, or limit the authority of the public utilities commission to penalize an electric utility company that fails to meet the renewable portfolio standards, pursuant to section 269-92 or other commission order.

     (c)  The acquiring entity shall not propose or support, directly or indirectly, the termination of any existing performance-based regulation framework established for the electric utility company by the public utilities commission, or any change or amendment that may have a material adverse effect to the existing performance-based regulation framework, including any change or amendment that:

     (1)  Reduces the length of any existing or planned future multi-year rate plan to a period of less than five years;

     (2)  Uses a traditional cost-of-service rate case, unless the public utilities commission has previously entered an order directing the use of a traditional cost-of-service rate case;

     (3)  Modifies the existing annual revenue adjustment formula established for the electric utility company by the public utilities commission; or

     (4)  Modifies existing accelerated performance incentive mechanisms in a manner that is contrary to the purpose of the mechanism or reduces the net amount of renewable energy procured by the electric utility company;

provided that nothing in this subsection shall limit any re-opener mechanism established for the electric utility company by the public utilities commission.

     (d)  The acquiring entity shall not terminate any existing and valid power purchase agreement between the electric utility company and an independent power producer of energy services based solely on the completion of the acquisition, merger, or consolidation; provided that nothing in this subsection shall prevent the termination of a contractual agreement as permitted by its terms, subject to approval from the public utilities commission.  The acquiring entity shall not attempt to renegotiate any material provisions of any existing and valid power purchase agreement including but not limited to the established payment rates for energy or energy storage or other commercial terms; provided that nothing in this subsection shall prevent the amending of a contractual agreement as may be permitted under its terms, subject to approval by the public utilities commission.  Before the completion of the acquisition, merger, or consolidation of the electric utility company, the acquiring entity shall not unduly influence the terms of any power purchase agreement that is under negotiation between the electric utility company and an independent power producer of energy services.

     (e)  As used in this section:

     "Acquiring entity" means the entity that acquires all or some classes of an electric utility company's interests in an interest exchange, including but not limited to interest in any road, line, plant, system, or other real or personal property necessary for the performance of the electric utility's duties to the public or any franchise or permit, or right thereunder.

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

     §269-B  Acquisition, merger, and consolidation of electric utility companies; investor-owned acquiring entities; consideration of alternative applications.  (a)  The public utilities commission shall, upon receiving an application for the acquisition, merger, or consolidation of an electric utility company, commence a regulatory proceeding to review the application.  Notwithstanding the provisions of sections 269-7.5, 269-18, and 269-19, upon commencement of the regulatory proceeding to review the application, if the application proposes the acquisition, merger, or consolidation of an electric utility company by an acquiring entity that is an investor-owned utility, the public utilities commission shall, for a period of one hundred eighty days, suspend its review of the application and immediately establish a process, subject to the requirements of this section, for the consideration of alternative applications from acquiring entities that operate under a non-investor-owned utilities ownership model.

     (b)  If bona fide applications are submitted to the public utilities commission by acquiring entities that operate under a non-investor-owned utilities ownership model for the acquisition, merger, or consolidation of the electric utility company within the one hundred eighty day period, the public utilities commission shall review the applications concurrently.  The electric utility company shall have no obligation to affirmatively state its position in support of or in opposition to any pending application.

     (c)  Notwithstanding any law or rule to the contrary, the public utilities commission shall have the power to consolidate its review of all submitted applications pursuant to this section.

     (d)  This section shall not apply to the acquisition of a not-for-profit enterprise that is not owned by shareholders.

     (e)  For the purposes of this section:

     "Acquiring entity" has the same meaning as defined in section 269-A.

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

     "Non-investor-owned utilities ownership model" means a member-owned cooperative utility or any not-for-profit enterprise that is not owned by shareholders."

     SECTION 3.  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 4.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect upon its approval.

Report Title:

Public Utilities Commission; Electric Utility Companies; Acquisitions; Mergers; Consolidations; Conditions of Approval; Application Review Process; Alternative Applications; Non-Investor-Owned Utilities

Description:

Requires the PUC to impose certain conditions of approval on any order approving, in whole or in part, an application for the proposed acquisition, merger, or consolidation of an electric utility company by an acquiring entity.  Establishes a process to ensure that when an application for the proposed acquisition, merger, or consolidation of an electric utility company is filed with the PUC by an acquiring entity that is an investor-owned utility, alternative applications submitted by entities that operate under a non-investor-owned utilities ownership model are concurrently reviewed.

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

STAND. COM. REP. NO.  780

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 339

      H.D. 2

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Consumer Protection & Commerce, to which was referred H.B. No. 339, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO ELECTRIC UTILITIES,"

begs leave to report as follows:

     The purpose of this measure is to:

     (1)  Require the Public Utilities Commission to consider or impose certain conditions of approval on any order approving, in whole or in part, an application for the proposed acquisition, merger, or consolidation of an electric utility company by an acquiring entity;

     (2)  Prohibit acquiring entities from proposing or supporting amendments that may have a material adverse effect on renewable portfolio standards or the existing performance-based regulation framework or terminating any existing and valid power purchase agreement between the electric utility company and an independent power producer, with certain conditions;

     (3)  Establish a process to ensure that when an electric utility is subject to an application for a proposed acquisition, merger, or consolidation by a potential acquiring entity that is an investor-owned utility and seeks approval of the application from the Public Utilities Commission, the electric utility shall demonstrate that it solicited bids from potential acquiring entities that operate under non-investor-owned utilities ownership models; and

     (4)  Require the electric utility to submit acceptable bids concurrently with an application by a potential acquiring entity that is an investor-owned utility.

     Your Committee received testimony in support of this measure from the International Brotherhood of Electrical Workers Local 1260 and Ulupono Initiative.  Your Committee received comments on this measure from the Department of Commerce and Consumer Affairs; Public Utilities Commission; and Life of the Land.

     Your Committee finds that the State has established several goals to transition the State from fossil fuels to renewable energy, including the renewable portfolio standards and performance-based regulation frameworks.  However, the potential for mergers or acquisitions involving investor-owned utilities poses a risk of backsliding or undermining these advancements to the detriment of utility customers.  This measure allows the Public Utilities Commission to impose conditions on an acquiring entity with respect to the goals.

     Your Committee has amended this measure by:

     (1)  Removing the conditions that prohibited an acquiring entity, through December 31, 2040, from proposing or supporting any change or amendment that may have a material adverse effect on existing renewable portfolio standards;

     (2)  Removing the conditions that prohibited an acquiring entity from proposing or supporting the termination of any existing performance-based regulation framework for the electric utility or making changes or amendments that may have a material adverse effect on such framework;

     (3)  Authorizing the issuance of reimbursable general obligation bonds in the sum of $1,000,000,000 for the acquisition of Hawaiian Electric Industries to convert it to a publicly owned utility;

     (4)  Authorizing the establishment of a non-bypassable electric utility conversion charge, collections of which are to be deposited into the newly established Electric Utility Conversion Special Fund and used to recover the debt service on the reimbursable general obligation bonds;

     (5)  Appropriate funds out of Electric Utility Conversion Special Fund to acquire Hawaiian Electric Industries and convert it to a publicly owned utility and to reimburse the state general fund for payment of debt service on the reimbursable general obligation bonds; and

     (6)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 339, H.D. 1, as amended herein, and recommends that it be referred to your Committee on Finance in the form attached hereto as H.B. No. 339, H.D. 2.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection & Commerce,

STAND. COM. REP. NO.  90

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 339

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Energy & Environmental Protection, to which was referred H.B. No. 339 entitled:

"A BILL FOR AN ACT RELATING TO ELECTRIC UTILITIES,"

begs leave to report as follows:

     The purpose of this measure is to:

     (1)  Require the Public Utilities Commission to consider or impose certain conditions of approval on any order approving, in whole or in part, an application for the proposed acquisition, merger, or consolidation of an electric utility by an acquiring entity; and

     (2)  Establish a process to ensure that when an application for the proposed acquisition, merger, or consolidation of an electric utility is filed by an investor-owned utility, the Public Utilities Commission suspends its review of the application for one hundred eighty days for the consideration of alternative applications from non-investor-owned utilities.

     Your Committee received testimony in support of this measure from Ulupono Initiative; the International Brotherhood of Electrical Workers Local Union 1260; and Climate Protectors Hawaiʻi.  Your Committee received comments on this measure from the Department of Commerce and Consumer Affairs and Public Utilities Commission.

     Your Committee finds that if the Public Utilities Commission considers the application of an acquisition, merger, or consolidation of an electric utility, the Commission should consider certain conditions of approval for the application and establish a process to ensure that bids for acquisition from non-investor-owned utilities are concurrently considered.  This measure establishes certain conditions of approval related to a potential acquiring entity's perceived or actual support for or opposition to the State's renewable portfolio standards, the existing performance-based regulation framework, power purchase agreements, and collective bargaining agreements.

     Your Committee has amended this measure by:

     (1)  Adding a requirement that the acquiring entity be bound to existing collective bargaining agreements and retain all covered employees;

     (2)  Deleting the requirement that the Public Utilities Commission suspend its review for one hundred eighty days and establish a process and instead requiring an electric utility subject to an application for a proposed acquisition, merger, or consolidation by an investor-owned utility to:

          (A)  Demonstrate that it solicited bids from entities operating under a non-investor-owned utility ownership model, specify whether these types of entities submitted bids, and reasons those bids were or were not accepted; and

          (B)  If the electric utility accepted a bid from an entity operating under a non-investor-owned utility ownership model, present the bid to the Public Utilities Commission concurrently with an application by an investor-owned utility;

     (3)  Changing the effective date to July 1, 3000, to encourage further discussion; and

     (4)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Energy & Environmental Protection that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 339, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 339, H.D. 1, and be referred to your Committee on Consumer Protection & Commerce.

Respectfully submitted on behalf of the members of the Committee on Energy & Environmental Protection,