HB 978: RELATING TO ELECTRIC UTILITIES.

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 health and welfare of the residents of the State depend largely on residents' abilities to access reliable and reasonably priced electric utility services.  The public utilities commission is tasked with regulating public utilities in the State, including the provision of electric services.

     The legislature notes that the financial condition of an electric utility is essential to its ability to render services to its customers.  It is widely recognized that public utilities must be fit, willing, and able to properly perform the services offered and conform to the terms, conditions, and rules set forth by the public utilities commission.

     The legislature further finds that recent events have threatened the financial well-being of a certain investor-owned electric utility in the State, thereby potentially threatening the well-being of the public, specifically their health, safety, welfare, and economic well-being.

     The legislature also finds that the State's largest investor-owned electric utility has undercapitalized its wildfire mitigation investments, upgrades, and modernization of its distribution and transmission grid infrastructure and generation facilities.

     Although existing law provides the public utilities commission with the authority to appoint a receiver to operate a failed or failing regulated water or sewer utility if it ceases to operate or operates on a substandard or unacceptable level, existing law does not contain express authority for the commission to act on behalf of an electric utility's customers if the utility experiences an urgent, serious, and imminent threat to its ability to provide adequate services.

     To ensure that the public utilities commission has the necessary authority to take proactive measures on behalf of customers when an investor-owned electric utility either fails to provide adequate and reasonable service to its customers or creates a serious and imminent threat to the health and welfare of its customers, the legislature believes that the commission should have the power to appoint a receiver to ensure that electric services are continued or brought back up to appropriate standards.

     The legislature further notes that the goal of a receivership is to protect a troubled company and to help the company return to profitability, thereby allowing it to thrive when the receivership period ends.  An appointed receiver can also ensure that employees are compensated during the protected period and that operations continue to comply with government regulations and standards.

     Accordingly, the purpose of this Act is to provide the public utilities commission with the authority to appoint a receiver to take temporary action, should the commission find it necessary, to assure continued adequate electric services from investor-owned electric utilities.

     SECTION 2.  Section 269-14.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Whenever the commission finds that a regulated water utility, regulated investor-owned electric utility, or regulated sewer utility is failing, or that there is an imminent threat of the utility failing, to provide adequate and reasonable service to its customers, and that the failure is a serious and imminent threat to health, safety, and welfare, the commission may appoint a receiver to take any temporary action necessary to assure continued service or to bring the service up to appropriate regulatory standards.  The commission may also appoint a receiver to take any temporary action necessary to assure continued service if, after notice and hearing, the commission finds that any water, electric, or sewer utility regulated under this chapter consistently fails to provide adequate and reasonable service.  In carrying out its responsibilities, the receiver and any additional outside legal counsel, consultants, or staff the commission or receiver may deem necessary under the circumstances, shall have the authority to gain access to all of the utility company assets and records and to manage those assets in a manner that will restore or maintain an acceptable level of service to customers.  The receiver shall be authorized to expend existing utility company revenues for labor and materials and to commit additional resources as are essential to providing an acceptable level of service.  These expenditures shall be funded in accordance with generally accepted ratemaking practices.  Any costs incurred by the commission, its staff, or the appointed receiver under this section shall be the responsibility of the utility in receivership or its ratepayers.  Control of and responsibility for the utility shall remain with the receiver until the utility can be returned to the original owners, transferred to new owners, or liquidated as the commission determines to be in the public interest."

     SECTION 3.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect on July 1, 3000.

Report Title:

PUC; Regulated Investor-Owned Electric Utilities; Electric Services; Appointment of Receiver

Description:

Provides the Public Utilities Commission the authority to appoint a receiver to take temporary action necessary to assure continued adequate electric services from regulated investor-owned electric utilities.  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 health and welfare of the residents of the State depend largely on residents' abilities to access reliable and reasonably priced electric utility services.  The public utilities commission is tasked with regulating public utilities in the State, including the provision of electric services.

     The legislature notes that the financial condition of an electric utility is essential to its ability to render services to its customers.  It is widely recognized that public utilities must be fit, willing, and able to properly perform the services offered and to conform to the terms, conditions, and rules set forth by the public utilities commission.

     The legislature further finds that recent events have threatened the financial well-being of a certain investor-owned electric utility in the State, thereby potentially threatening the well-being of the public, specifically their health, safety, welfare, and economic viability.

     The legislature also finds that the State's largest investor-owned electric utility has undercapitalized its wildfire mitigation investments, upgrades, and modernization of its distribution and transmission grid infrastructure, as well as its generation facilities.

     Although existing law provides the public utilities commission with the authority to appoint a receiver to operate a failed or failing regulated water or sewer utility if it ceases to operate or operates on a substandard or unacceptable level, existing law does not contain express authority for the commission to act on behalf of an electric utility's customers if the utility experiences an urgent, serious, and imminent threat to its ability to provide adequate services.

     To ensure that the public utilities commission has the necessary authority to take proactive measures on behalf of customers when an investor-owned electric utility either fails to provide adequate and reasonable service to its customers or creates a serious and imminent threat to the health and welfare of its customers, the legislature believes that the commission should have the power to appoint a receiver to ensure that electric services are continued or brought back up to appropriate standards.

     The legislature further notes that the goal of a receivership is to protect a troubled company and to help the company return to profitability, thereby allowing it to thrive when the receivership period ends.  An appointed receiver can also ensure that employees are compensated during the protected period and that operations continue to comply with government regulations and standards.

     Accordingly, the purpose of this Act is to provide the public utilities commission with the authority to appoint a receiver to take temporary action, should the commission find it necessary, to assure continued adequate electric services from investor-owned electric utilities.

     SECTION 2.  Section 269-14.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Whenever the commission finds that a regulated water utility, regulated investor-owned electric utility, or regulated sewer utility is failing, or that there is an imminent threat of the utility failing, to provide adequate and reasonable service to its customers, and that the failure is a serious and imminent threat to health, safety, and welfare, the commission may appoint a receiver to take any temporary action necessary to assure continued service or to bring the service up to appropriate regulatory standards.  The commission may also appoint a receiver to take any temporary action necessary to assure continued service if, after notice and hearing, the commission finds that any water, electric, or sewer utility regulated under this chapter consistently fails to provide adequate and reasonable service.  In carrying out its responsibilities, the receiver and any additional outside legal counsel, consultants, or staff the commission or receiver may deem necessary under the circumstances, shall have the authority to gain access to all of the utility company assets and records and to manage those assets in a manner that will restore or maintain an acceptable level of service to customers.  The receiver shall be authorized to expend existing utility company revenues for labor and materials and to commit additional resources as are essential to providing an acceptable level of service.  These expenditures shall be funded in accordance with generally accepted ratemaking practices.  Any costs incurred by the commission, its staff, or the appointed receiver under this section shall be the responsibility of the utility in receivership or its ratepayers.  Control of and responsibility for the utility shall remain with the receiver until the utility can be returned to the original owners, transferred to new owners, or liquidated as the commission determines to be in the public interest."

     SECTION 3.  There is appropriated out of the public utilities commission special fund the sum of $           or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 for any costs incurred by the public utilities commission in determining whether to appoint a receiver pursuant to section 269-14.5, Hawaii Revised Statutes.

     The sums appropriated shall be expended by the public utilities commission for the purposes of this Act.

     SECTION 4.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 2025.

Report Title:

PUC; Regulated Investor-Owned Electric Utilities; Electric Services; Appointment of Receiver; Public Utilities Commission Special Fund; Appropriations

Description:

Provides the Public Utilities Commission with the authority to appoint a receiver to take temporary action necessary to assure continued adequate electric services from regulated investor-owned electric utilities.  Appropriates funds out of the Public Utilities Commission Special Fund.

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.  557

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 978

      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 Consumer Protection & Commerce, to which was referred H.B. No. 978, 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 allow the Public Utilities Commission to appoint a receiver to take temporary action necessary to assure continued service or to bring the service up to appropriate regulatory standards when a regulated investor-owned electric utility is failing, or there is an imminent threat of the utility failing.

     Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs.  Your Committee received comments on this measure from the Public Utilities Commission and Hawaiʻi Gas.

     Your Committee finds that electric service is critical for daily life for every person in the State.  The permanent loss of electricity, such as in the event of a complete company collapse, could endanger everything from public safety infrastructure to personal health equipment.

     Your Committee further finds that utility receivership is a critical tool for protecting utility customers in only the most extreme circumstances, such as a complete company collapse.  Under a receivership, an appointed person is authorized to take temporary action necessary to assure continued adequate utility services.  However, under existing law, the Public Utilities Commission is only authorized to appoint a receiver for a water or sewer utility, not an electric utility.  This measure authorizes the Public Utilities Commission to appoint a receiver for electric utilities in the most extreme circumstances.

     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. 978, H.D. 1, and recommends that it be referred to your Committee on Finance.

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

STAND. COM. REP. NO.  89

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 978

      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. 978 entitled:

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

begs leave to report as follows:

     The purpose of this measure is to allow the Public Utilities Commission to appoint a receiver to take temporary action necessary to assure continued service or to bring the service up to appropriate regulatory standards when a regulated investor-owned electric utility is failing, or there is an imminent threat of the utility failing, to provide adequate and reasonable service to its customers.

     Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs and Climate Protectors Hawaiʻi.  Your Committee received comments on this measure from the Public Utilities Commission.

     Your Committee finds that when a regulated water or sewer utility is failing, or there is an imminent threat of the utility failing, to provide adequate and reasonable service to its customers, the Public Utilities Commission has the authority to appoint a receiver to take temporary action.  Your Committee further finds that the Public Utilities Commission does not have the same authority for regulated investor-owned electric utilities.  This measure addresses this need by allowing the Public Utilities Commission to appoint a receiver for a regulated investor-owned electric utility under certain circumstances.

     Your Committee has amended this measure by:

     (1)  Deleting the appropriation;

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

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

     If the scope of the Public Utilities Commission's authority to appoint a receiver were to be expanded to include gas utilities in addition to investor-owned electric utilities, your Committee notes the concern raised by Hawaiʻi Gas during the hearing that the Public Utilities Commission lacks jurisdiction over the gas utility's unregulated business segment.  Your Committee finds that this issue merits further examination and consideration.

     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. 978, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 978, 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,