House Standing Committee on Energy & Environmental Protection

Good morning, and welcome to this morning's hearing on with the Committee on Energy and Environmental Protection. We're joined by Representative Nicole Lowen, the Chair, myself, Representative Perruso, as Vice Chair, and then also Representative Matthias. Matthias.

We'll go with Matthias.

Okay. Matthias Kusch. Today is Tuesday, March 11th, 9:00am. We're in Conference Room 325. Just business to take care of. If, because our morning hearings have to adjourn by our floor session at noon, not all testifiers may have a chance to testify. In that event, please know that your written testimony will be considered by the Committee and has been read.

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Such behavior may be grounds for removal from the hearing without the ability to rejoin. So with that, we're going to go ahead and jump straight into our first Measure, Senate Bill 897. The first. Take a look at that. So that's relating to Energy. Establishes Wildlife Liability Trust Fund to be placed within DCCA for administrative purposes.

First to testify in person, we have Michael Angelo from DCCA.

Morning. Chair Lohan, Vice Chair Peruso, Members of the Committee. My name is Michael Angelo. I'm the Executive Director of the Division of Consumer Advocacy. We stand on our testimony offering comments on the bill. Thank you.

Thank you. Next to testify, we have Randall Nishiyama from the AG's office on Zoom in person.

Good morning. Deputy Attorney General Randall Nishiyama. We've submitted our written comments and are available for questions. Thank you.

Thank you so much. Next is testify we have Leo Asuncion of the PUC in person.

Hi. Good morning. Daniel Park. On behalf of Leo Asuncion, Chair of the Public Utilities Commission, we'll stand on our written testimony providing comments and I'm available for any questions. Thank you.

Thank you. Next we have Rebecca Lieberman, Charter Communications, in person.

Good morning. Rebecca Lieberman on behalf of Charter Communications, I stand on my written testimony and I'm available for questions.

Thank you. Thank you so much. Next we have Michael Munakata, Ulupono Initiative, in support in person.

Michael Colon on behalf of Ulupono Initiative, we stand on written testimony and support.

Thank you. Next we have Sandra Larson, AES Hawaii, in support in person.

Aloha, Eliza Talbot on behalf of AES Hawaii. We stand on our written testimony support.

Thank you. Thank you. Next we have Jason Benn, Hawaiian Electric, in support in person Aloha Chair Lohan.

Vice Chair Peruso and Representative Kush. Jason Benn, Vice President for Hawaiian Electric, testifying in support of SB897SD3, requesting that the contents of HB 982HD3 be inserted into the Bill with proposed amendments.

This bill is forward looking and remains in the public interest by protecting property owners, renters, insurers and the economy, protecting customers from the cost increases caused by the utility's exposure to unlimited wildfire liability and preserves accountability for wildfire risk mitigation. Our proposed amendments are responsive to stakeholder concerns while preserving a balanced approach to these objectives.

They include enhancements to the governance of the fund, technical amendments to ensure the administrative process functions properly and importantly address the issue of shareholder contribution to the fund.

As noted in my previous testimony, Hawaiian Electric faces significant challenges in making additional shareholder contributions for a number of reasons, but particularly as we must prioritize raising an additional 1.5 billion of our $2 billion share of the global settlement over the next four years from shareholders and with no customer contribution.

We are acutely aware of the impact of the fund contribution on customers while simultaneously recognizing that this bill is in our customers long term interests and so for these reasons, Hawaiian Electric is proposing an increased total shareholder quarter contribution of 105 million through a combination of payment methods outlined in my testimony.

This approach would reduce customer contributions to 900 million and allow the implementation of the bill and its benefits to proceed without delay.

As I've noted before, the bill is critical to begin the process of restoring investment grade credit and reducing cost to customers, especially now as we need to make critical infrastructure improvements to address safety, reliability, resiliency and to meet the energy policy objectives of the State of Hawaii.

Utilities must serve despite risk factors that are not all within their control. And across the United States there is a growing recognition that unbounded wildfire liability risk leads to higher cost to customers and must be addressed through policy.

More than a dozen states have passed or are actively considering bills or measures to that end and so I ask that you please pass SBA897SD3 inserting the contents of HBA982HD3 with our proposed amendments. And mahalo very much for allowing me to testify. And I'm available for any questions you may have.

Thank you. Next to testify, we have Nicola Park, Clearway Energy Group, in support, in person.

Aloha, Chair, Vice Chair, Members of the Committee, Nicola Park, on behalf of Clearway Energy Group, we support the bill and available for questions. Thank you.

Thank you. Next we have Henry Curtis with comments in person, not present. Next we have David Bissell or Beth Amaro from Kauai Island Utility Cooperative with comments on Zoom.

Aloha and good morning, Chair, Vice Chair, Members of the Committee, Beth Amaro with KIUC. We stand on our written testimony and I'll be happy to answer any questions you might have. Mahalo.

Thank you. Next we have Hawaii Association for Justice in opposition on Zoom, not present. zero.

President, I came to join you guys today. Aloha, Chair, Vice Chair, Members of the Committee. Evan Oy on behalf of the Hawaii Association for Justice, you have a written testimony and we did just want to highlight a few points of our concerns as noted within the bill.

In particular, the, the liability caps that are imposed on those for those who reject claims from the Wildfire Trust Fund at this point in time would be the lesser of, you know, the 500,000 or the aggregate caps that are proposed within the measure.

So, you know, those does offer, you know, us, you know, creates strong concerns for us in that regard as it undercuts consumer rights in that aspect. And so, you know, we do have strong reservations on that front.

And, and I think our testimony also notes, you know, concerns with oversight in terms of the broad discretion granted to the Executive Director within the bill at this point in time. And also, you know, minor amendments in relation to statute of limitations as well as admissibility of evidence in regards to this bill.

So, you know, I appreciate the opportunity to voice our concerns and we'll be available for any questions.

Thank you so much. Next we have Janine Suki, Hawaii Telecom, Hawaiian Telecom, with comments in person.

Aloha Chair, Vice Chair and Members of the Committee, Janine Suki with Hawaiian Telcom. I will stand on our testimony and highlight just a couple of things. One, we have a couple of suggested amendments, one of which would try to delineate the need for compliance with FCC poll attachment agreements. Thank you very much.

Thank you. Next we have Kika Bukowski, IBEW Local 1260 in support, in person, not present. Additionally, we have testimony in support from 11 and testimony in opposition from two individuals. Is there anyone else who wishes to test in this measure? Seeing none Members, are there any questions.

For DCCA? Sorry, I'm scrolling up on my testimony. You had mentioned that there was maybe no nexus between the credit rating that is the, like, the goal of this securitization and this bill. Do you, do you have any, like, underlying.

I would say that this. What There is an excess between three components within our testimony.

The three things that Hawaiian Electric had provided to us, which was in a Moody's white paper, which I believe is in our testimony, is that there needs to be a limit on liability, sufficiently large wildfire fund to cover the cost of a catastrophic event, and transparent guidelines or certification requirements for fire mitigation. So a wildfire mitigation plan.

Okay. But you said there was no certainty the fund would.

Certainty, yes. Okay, gotcha.

So I was just looking for that connection, like what, what evidence you had.

We don't have any evidence. We don't know. The, the big concern of ours, I understand the question now is that, sorry, there's no guarantee that this is going to result in. It's a needed component, but we don't know by how much or when Hawaiian Electric's credit rating would improve. And that's a risk.

And the other thing is that it's a benefit to shareholders to have this fund as well, because there's. When they originally faced the stockholder value went down because of the perceived liabilities that would be coming forth.

Sure. Do you have any suggested amendments to kind of mitigate that connection between stock shareholder value? Yes. And the purpose of the fund to create a kind of a buffer for.

I think it would be more appropriate to have a more balanced sharing of the financial risk between shareholders and ratepayers. And we refer to HB982HD2 as our preferred rep. As a, as a better balance of those risks.

Okay. Thank you.

Thank you.

Sure.

I guess first for he go. Have you done any. I mean, I know there's a lot of uncertainty and no hard numbers, but have you done any kind of calculation regarding potential impact to rate pairs of.

If this bill moves forward and has the intended effect of improving the credit rating, what rate would you anticipate being able to borrow at versus what it would have been without this bill or without an improvement in credit rating, what the impact to ratepayers would be of that versus whether you just went out and borrowed at a higher rate without securitization?

What the Impact to ratepayers would be there. And also taking into account the, the timing aspect of it in that if we, you know, have a securitization bill passed and PUC approves a financing order that it locks ratepayers in for 30 years.

So I guess what I'm getting at is there's just so much uncertainty for us to, you know, have to absorb to feel comfortable passing this bill to understand that it has the intended impact or that the impact on rate payers is better or worse one way or the other.

Because it seems like either way rates are going up. So by how much less you anticipate they go up under whether, you know, a scenario where we pass the bill and it has the intended effect, which is like also an unknown.

Sure. There's, it's, it, there's a lot of complexity. Let me answer your first question and take, try to take this in order. Yes, we have done and we've made some assumptions. There's a lot of investment.

I mean, it would be helpful if you shared that analysis with us because I think there's a lot of work to be done to convince us of the need for this bill still.

Yeah, we can follow up with you Chair and the Members, but I just want to point out, like we did do an illustrative analysis based on 250 million of capital.

It's in our testimony, which is largely what we would need to raise based on our current projections on an annual basis for the investments we need to make to make the grid safer, make it more resilient to achieve the policy objectives of the State of Hawaii.

And we see it from the point of credit restoration more than offsetting the cost of the $4 charge over the life of the thing significantly. So the cost of capital and the credit spread we get, we've modeled it several ways and we can try to get back to you with stuff we filed before.

They're all based on point in time interest rate assumptions. And as you said, it's a dynamic situation. Situation. But every version of we've done points to that the credit spread will pay off the $4 within I think it's five years of the restoration of the credit rating. And. Yeah, so I mean, that's the short answer.

I can expand if you want and we can try to follow up with you offline. But elements of it are in our testimony.

Okay. Thank you. You're welcome. I guess for. Or go ahead. Do you want to. You have a question?

I have a question, yes. And I'm not sure But I lack the kind of depth in this area that would help me be able to answer this question myself.

But is it even possible to conceive of having a conditioned approach to the funding of this fund so that if the goal is to achieve investment grade credit, as soon as that goal is achieved, then the funding would shift over to being fully funded by shareholders? Is that even a conceivable approach?

I think that the short answer is I don't think that would work. Let me try to address. Take apart the question in a couple ways. One, that's one of the goals of the bill. The other goal of the bill is really we've driven down wildfire risk from our facilities by 60%. Everybody needs to work together.

You know, there's a legacy of land use and other issues that are really ramping the risk of catastrophic wildfire in Hawaii. That's where our investment really needs to be. And until we can reach a safe place as a society, there needs to be some protection for property owners in the event of a wildfire.

There's a serious benefit to, in my opinion, to property owners, renters, insurers in the economy to have the fund sitting there ready to service. We are foregoing our right to fight it out in court. If as long as there's a. There's our equipment is involved, the fund will pay. So there's a fairness issue.

There's also the fact that this is somewhat the cheapest form of insurance we can get. So it's really. Vice Chair, from the very beginning, we've said this is trying to balance interests and provide these three benefits. So if it's shifted to shareholders, that could have a negative effect and negate the.

Especially if it was written in that way, that would, in my opinion, likely negate the credit rating benefit, though, because.

The way that I'm able to defend this to my constituents is for the sake of stability of HECO and also the importance of you folks being able to kind of return to investment grade credit. So in my mind, like, your response doesn't really speak to that. And I feel like I'm not really communicating clearly.

Maybe you can help me. It's probably my fault. Could you.

I'm just saying, like, as soon as, you know, as soon as HECO achieves that goal of having returned to investment grade credit, then my question is, is it structurally possible to then shift the funding for this wildfire fund to the shareholders so that it's not, you know, it's a conditioned approach.

I appreciate the question. Let us go back and look at it. My gut reaction is that the credit rating is on the presumption that the, that the securitization is going to pay for the fund. And if you remove that presumption, I don't think we get the credit rating.

Okay, thank you. Thank you, Chair.

Just really quickly on the, the chart that you have in your testimony that the incremental cost of non investment grade credit versus security securitization. Yes. And it shows this customer bill savings over time out to year 30. But is that assuming that your, your credit rating would remain below investment grade for the entire 30 years?

No, this assumes the bill passes and that in the. Within the four within. I'm sorry, but I mean savings are.

Counted against a scenario where we don't pass the bill and then your credit rating remains below that assumption is the credit rating would remain below investment grade.

Yeah, that's the comparator. Year one is the point in which our investment grade rating is restored and then it begins to offset the thing and by year five it's in the money. That's the point of this.

Well, so then it seems like a, it's a big assumption to make because the thing you're weighing it against is like, like the idea that for 30 that we don't pass this bill and for the next 30 years your credit rating remains below investment grade.

I think our. What we've been told and which I think Michael alluded to. Right. But I don't want to speak on his behalf. Let me just say clearly we said from the beginning there are three factors that need to happen for us to achieve our investment grade credit rating.

The global settlement needs to be finalized and credit rating agencies have already indicated that that will give us a couple steps once it's court approved. But it will not get investment grade. This bill is required some way to address unmitigated wildfire liability through utility and then physically proving we've reduced risk.

All three factors have to happen for us to return to investment grade credit rating. And as I mentioned earlier, this is being taken up in many states because they're all facing the same problem. Yeah.

I'm just saying doing this via securitization mechanism locks ratepayers in for 30 years. And there could be things that come to pass that would impact those three things you mentioned outside of this that would then change this calculation of whether it's a better scenario for rate payers or not or, or you know, equal or worse.

That's fair. Something else could make it could, anything could happen that could Cause this curve to deviate. I acknowledge that. But the bill also brings in a give back component that would be amor, potentially depending on how the PUC wants to handle it. If the fund accrues interest for the 10 years, you know, based on.

I forget what interest rate we used, assumption it would be 1.6 billion and would flush back against the charge and offset it. So there are multiple mechanisms designed to try to protect against that outcome. Yes.

How much. I mean, how much would that reduce it if it was.

I mean, I could run the minimal. Right.

If an interest is 6% or something.

Well, I mean, it's. It's not minimal. It would. We'll run it for you and get back to you.

I mean, there's scenarios of the $3.60 cent charge. It's.

I think it would significantly offset it if the fund was allowed to accrue interest over the 10 years and return back to either customers or whomever contributed at that point. Yes, I think it would make a big difference. But we'll run it for you offline and get back to you.

Okay, great. Thank you. You have more questions, go ahead.

Representative.

I'll go. Thank you. Chair. I saw that you're selling. I forget the name of it now. It's used to be Hamakua Energy Partners.

Our parent company is selling them. Yes. Or has closed on that deal. Yes.

Yeah. Okay. And is that sale in an effort to like the ASB to raise capital to pay for the wildfire, or is that a strategic move?

I think in the broader. What you're seeing is we are trying to. We have to raise. We've raised through an equity raise, five, about one payment of the four. All of this is designed to give us either the financial flexibility or actually raise the cash to get the remaining 1.5 to settle the global settlement.

So that answer your question, Representative?

Yeah. And I guess I was just getting at like, as a publicly traded company, there is no. A lot of what I hear is that Helcos hoarding cash or shareholders. But as a publicly traded company, am I correct that your books are essentially open and there is no Bahama account? There is nothing like.

Yeah, yeah, they're heavily audited. They're subject to Sarbanes Oxley, and they're disclosed quarterly through the disclosure process.

So there's a lot of transparency in your accounting and very much so. What your, your fiscal state is.

Absolutely. Yes.

Okay. Thank you.

Okay, if there are no more questions.

I have more questions. One more question, Caroline.

I guess for consumer advocate. I mean, I guess I'm just curious, in your opinion, do you feel the information we've been provided, I mean, do you, do you feel confident that this would be in the best interest of ratepayers over the long term or it's, it's like impossible to know?

I think something has to happen to improve Hawaiian Electric's credit rating and there needs to be a multi pronged approach to address that. I think this bill attempts to get at one of those issues.

From our perspective, it just needs to be a balanced sharing of risk because there are benefits to shareholders as well between shareholders and ratepayers.

Do you think securitization is the appropriate, this is appropriate use of securitization, like that mechanism, Because I understand the need to limit the liability. But this mechanism of securitization, it just seems to me like it would, it would be a more direct and ongoing nexus with benefit to shareholders if it was just.

If we authorize securitization just to directly borrow funds for, you know, infrastructure improvements or wildfire mitigation, then you would have ongoing improvements that are needed for the whole system that, you know, the benefits of those play out over the entire 30 year period. Is there a way to look at the.

Addressing the liability issue without tying it into the securitized insurance fund? Because I think that's where that's a.

Hard thing to answer. I mean, from our, what we've said last session as well was if there's securitization, I think for this bill, would presumably be the lowest impact on ratepayers if they're going to contribute to this fund.

Our preference would be if securitization is to be used, to be used more toward infrastructure investment because that buys down the risk and is a benefit to ratepayers.

But I guess, yeah, I guess it would be hard to figure out a different way to address the liability question. But I mean the securitization just more directly for financing those kind of improvements would presumably also have some kind of, some kind of impact on helping the credit rating, et cetera? Yes.

It wouldn't adjust the whole picture and. That would be part of the wildfire risk reduction.

Yeah.

Okay, thanks. I guess just really quickly, same question for Ulupono, just to get, we haven't heard from you as much. Get another perspective.

Yeah, thank you. Yeah, I was thinking while you were talking to me, I mean, this is emblematic of a societal risk, expanding risk. Right. Wildfires are new, normal and as a result we are going to have to socialize risk and this is one way to do it.

I don't know if it's a perfect mechanism, but I do believe that we need to do something. And if the charge to Hawaiian Electric is make investments, bring down the risk, keep costs down, this is one way to do it. So my perspective is probably not the best solution out there. It's a tough pill to swallow.

But given the fact that we are facing kind of this broader and continual and probably expanding risk, we're going to have to do something about how collectively to do so in order to maintain the services that we're going to need going down the line, which is, you know, the health of the utility.

Do you think this return of the interest, like offsets, for example, if there was a scenario where there was federal legislation passed that, that address the liability issue, and so that was taken care, not taken care of, but, you know, addressed in some other way yet we still had this, you know, securitization order in place in Hawaii that locked ratepayers in for 30 years.

Would that return on interest, like, kind of offset what the. In your opinion the alternative scenario would be where they weren't paying that fee?

You know, I think we've considered it internally, and I think it does make sense. You know, interest rate, as long as this return obviously would help to offset. I guess the challenge is what are you doing to incur that interest? Right. Are you increasing your costs on the front side?

So it might be a challenge, and I think it would have to be borne out. Maybe, you know, Hawaiian Electric can do some calculations.

I still think it would still be a net loss for ratepayers in that scenario if the liability question was addressed.

I guess, you know, and that's. To me, that's. That's a burning question is what is the alternative? Right. So we are trying to make an investment now to forestall a bigger crisis later and hit at a direct, you know, at that instant, we'll have a rainy day fund, a pool of money that we can leverage.

When you said you. Sorry, finish. I'm sorry.

Zero, I'm just saying that, you know, that's kind of the point of insurance in a way. And doing a fund like this would be to kind of anticipate and have something ready so that immediate impact doesn't cause broader impact.

When you said you're not sure this is the best solution, like, what do you have in mind?

Yeah, I don't know. Sorry. If I did, I'd be proposing it. Yeah. I don't know if this is the least Worst option or whatever. But it's a tough pill to swallow. And, you know, I mean, it's a lot of money, obviously. But I do think, like I said, we're going to have to socialize risk.

And if this is the mechanism to do so pending in front of us right now, this may be the best avenue.

I mean, I guess I feel somewhat uncomfortable just with the idea of securitization for this purpose.

I would have preferred to, like I said before, to see it just sort of a more direct mechanism to help the utility borrow at a lower rate directly instead of securitization to pay into this fund that's supposed to improve interest rates, that's supposed to help them borrow at a lower rate instead of just securitization.

So the rate is lowered and we have a guarantee on that at least.

Yeah. I mean, I think it's also a balance. Right. Like if you're doing that, then you would also need to create some kind of mechanism to approve or disapprove. We already have the regulated side. Right. The PUC is going to be making those oversight decisions and helping the utility make the right choice in terms of expenditures.

And so, you know, they are still regulated, they are still closely monitored. Their investments will be scrutinized. And so I think that's part of having that trust in that process too.

Okay.

All right. Thank you.

Kush.

Thank you for dcci. And I promise this is the last one. It's uncharted. You know, you had mentioned several times about shareholders that this would benefit shareholders. And notwithstanding that, the shareholders are probably like Hawaii ers and local shareholders who took a hit along with everybody else in this, including taxpayers, for the state's portion of liability?

Do you see a mechanism that would be productive in this to instead of maybe having an interest rate return, have a shareholder component that would be returned to rate holders to help, you know, if there is a desired lift to shareholders because of risk mitigation, would that, you know, and it could potentially be substantial, would that be a good avenue to help ratepayers absorb versus just a straight, you know, Treasury 10 year Treasury interest rate kind of thing?

That's. That's a great question. I don't have a good. I don't have a good financial mechanism off the top of my head on how to address that.

Would that kind of satisfy your concern about shareholder?

If there was a way that this was. I'd have to see the mechanism to. I don't know. You know, the answer is I don't know. Yeah.

Okay. Okay. Unless Helco, unless you had any ideas on that. So the concern that I've heard a lot and that we haven't addressed today in these questions is the enrichment of shareholders. Right. You know, should this go through? Helco's fiscal health improves greatly. It De. Risks the stock as it is currently.

Utilities are considered usually a pretty mundane safe haven stock. And so the equity would. Would be, you know, would rise. And so is there a mechanism that the ratepayers could share in that potential increase, but they would also be exposed to downside? Of course.

Yeah, I don't think you can share without the downside. I think just to be abundantly clear, you know, principal benefit still remains with the customer even as we talk about it from a credit rating perspective. But there's also a cost of equity. And really, utility costs are based on a weighted average cost of capital.

It's the cost of the equity, the cost of the. So it is principally, in my opinion, to the benefit of the customer for the utility to be healthy. And investors have a lot of choices, especially now, if you're watching the market, you know, they're going to look for the highest return at the lowest risk.

And all of that bears on all of us in Hawaii. We all have to pay for the lack of health. So I think it's not a bad thing for your utility to be financially stable. And that's what other states are recognizing as well.

But I still stand on the premise that all of that is to the benefit of the customer and risk and reward are tied together.

Okay. Do you happen to know off the top of your head, how many local shareholders. State of Hawaii shareholders.

Yeah. And that's the other thing. Like my grandma, about 22,000 local investors, and many of them were dependent on the dividend, which is suspended, have lost about 75% of their value in Hawaiian Electric. So as things go, we're very heavily locally owned, and some of them have ridden through with us as well.

Do you know the percentage?

I don't know the ballpark percentage. Because of the equity raise we diluted a little bit. Huh? 20%. That was prior to the equity raise. Yeah. So prior to raising the equity for the settlement, it was 20% of our shareholders. Yeah.

Okay.

Thank you. Thank you.

Okay, so seeing no further questions, we're going to move on to SB 137 relating to electric utilities. This requires the PUC to consider whether approving a proposed merger acquisition would or would not further the state's renewable energy goals.

And it 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 filed by acquiring entities that operate under a non-investor-owned utilities ownership model will be concurrently reviewed.

Also requires an acquiring entity of an electric utility company to assume and be bound by any existing collective bargaining agreements entered into by the electric utility company as it applies to covered employees. We're going to start with Michel Angelo DCCA with comments in person.

Chair, Vice Chair, members of the committee; stand on our testimony, and provided comments. Thank you. Available for questions.

Thank you. Next, we have Leo Asension, Public Utilities Commission, comments in person.

Hi, good morning. Daniel Park again for the PUC. We'll stand in our written testimony providing comments and I'm available for any questions.

Thank you. Next, we have James Abraham, Hawaiian Electric, with comments in person.

Morning Chair, Vice Chair, members of the committee, my name is James Abraham. I'm testifying on behalf of Hawaiian Electric, offering comments and a suggested amendment for Senate Bill 137.

We do support the original intent of this bill to ensure that there's protections for all the progress that's been made in the Hawaii energy industry over the past years and decades. However, we do have some concerns with specifically the overbroad definition of acquiring entity in this bill and that it may reach purely local transactions.

Just an example, you know, sometimes one utility may transfer utility equipment, such as a transformer from Oahu to Hawaii island where it could better serve customers. And the overbroad definition of acquiring entity could reach these purely local transactions. So, we do offer an amendment for the committee.

We would appreciate if you consider it because I think it would support the original intent of the bill.

Thank you so much. Next, we have Micah Munekata, Michael Colon from Ulupono Initiative in support in person.

Hello Chair, Vice Chair, and members of the committee, Michael Colon on behalf of Ulupono. Yeah, we stand in strong support of this bill. We believe that, you know, we need to protect the long-standing policy wins that we've made over the last several decades.

And this bill would also seek, you know, to ensure and send a strong message to any acquiring entity, whatever that means, that there would be, you know, they need to consider this and then as the regulators evaluate that process that they would need to take that into account.

Also, with respect to the co-op formation concept: you know, if there was a bona fide offer from an investor-owned utility to acquire the utility, a co-op may not have the same opportunity to submit a co-op competing offer.

And so, the intent behind this is helpful to provide a window for co-op to submit a bid and give them just a little bit of time. I know there's some questions about how that process would work.

And we're open to, you know, developing a process in collaboration with stakeholders on how to make that fair, open and transparent. Mahalo.

Thank you. Next,A

Aloha Chair and Vice Chair: Henry Curtis, Life of the Land; as to the part where an acquiring entity would have to obey existing law, we don't think that's necessary to put in this bill.

They would certainly be subject to thousands of information requests that the Public Utilities Commission. The PUC would surely say that they would have to obey existing law. So that's not really important.

As for putting a co-op somewhere in the mix, that certainly sounds great, but no one has been able to figure out where you would put the co-op into the mix. You can't do it while the utility is secretly negotiating with an acquirer.

And there is no mechanism that after it arrives at the PUC, we're certainly open to hearing any ideas about how someone would do it. But until someone can actually come up with a process that would allow it to occur, the bill is premature. Mahalo.

Thank you. Next, we have Kiko Bukowski, IBEW Local 1260, in support in person.

Chair, Vice Chair, we stand in our testimony in support.

Thank you. And finally, we have Sandra Larsen, AES Hawaii, in support, in person. Thank you so much. Members, are there any questions?

I guess, Ulupono. I mean, I think we've seen the testimony on the different versions because we originally heard the bill, and it said there would be a process where the PUC would consider alternatives. But then people made the point, well, if the utility hasn't agreed to something that wouldn't be appropriate.

So, we change the language to say the utility should show that they have considered alternatives. But then we've also heard pushback against that as kind of being a viable way to open up this opportunity. And I think it's a good point that we can't quite figure out the right way to fit it in.

I mean, any thoughts on that?

I thought we, you know, we had considered possibly some sort of notice if, you know, if and when Hawaiian Electric gets a bona fide offer, they could provide notice to the Commission that we - that they had received an offer and that they're evaluating without any other details maybe, and then that would start the clock for a co-op offer.

To be submitted directly to the utility; then if it happens, then the utility in its own process could potentially evaluate and choose one or the other or none.

And then when they submit for approval for the purchase and sale to the Commission, after that clock window had gone, they would have to provide details as to why they chose one or the other and the details about the offers. So, I don't know if that's a perfect solution.

There is probably problems, but that was kind of something that we had considered as potential workaround open to discussion.

It would certainly create more opportunity than having nothing.

Yeah, and I mean I think that's the concern. And I, you know, yes, the process is the challenge here, but co-ops are hard to form and more likely than not, a quick, fast-moving investor-owned utility offer would be the one that's most desirable and quick for the utility to pick.

And you would just probably bowl over a co-op opportunity. And I think this is where right in that moment is when everyone says, "What about a co-op?" Right. And so, we're just trying to figure out a way to make sure that that's, there's a window for that to happen with it built into the process.

And then regarding the language in the bill, you know, I think the original version was really specific about what could be considered, and I think we changed it. Right. It was saying it was mandates, which I think there were constitutional issues about violating free speech. So, we changed it to the PUC may consider.

And this version has kind of none of that is just a general statement. I mean, do you think that the general statement kind of covers the...

You know, I mean, obviously I think we prefer the original one that kind of specifically delineated some of those existing laws. And I point taken that it is already existing law. I guess we're in an environment where relying on goodwill and good faith in business practice and elsewhere is not really working.

And so, trying to reaffirm and re enshrine those wins is kind of important to us at least.

All right, thank you.

Thank you.

Seeing no further questions, we're going to move on to Senate Bill 1501 relating to energy. Allows the state to enter into step in agreements for payment obligations arising under certain power purchase agreements. Establishes the Power Purchasing Cost Trust Fund.

Establishes that revenues from on-bill charges for power purchase agreements and accompanying reserves shall be held in trust by the state and that independent power producer shall hold a beneficial interest in the revenue and reserve to the extent of the amounts owed under the covered power purchase agreements.

Appoints, authorizes and empowers an electric utility to serve as a billing, collection, payment and managing agent of the Department of Budget and Finance in service of the performing of performing step in agreements.

So first to testify, we're going to call on Randall Nishiyama from the Attorney General's Office on in person.

Good morning. Randall Nishiyama for the Department of the Attorney General. We submitted our written comments and are available for questions. Thank you.

Comments. I'm sorry. Thank you. Next we have Michael Angelo, DCCA with comments, in person.

Chair, Vice Chair, Members of the Committee. We stand on our testimony providing comments available for questions. Thank you.

Thank you. Next we have Luis Salaveria, Department of B&F, with comments in person.

Good morning Vice Chair, Chair. Luis Salaveria, Director of Finance for the State of Hawaii. I'll stand on on the written comments that we provided all. Although if I may clarify, the state has been working with all of the interested parties, in particular with this Bill.

We do understand that providing some degree of certainty within this particular market will ultimately help the ratepayers. We still have some concerns with the Bill going forward, but we continue to work with all the interested parties to see if we can come to some kind of resolution. Thank you. I'll be happy to answer any questions.

Thank you. Next we have Leo Sancion, PUC, in support, in person.

Hi, good morning. Daniel Park for the PUC. We'll stand on our written testimony supporting this measure and I'm available for any questions. Thank you.

Next we have Michael Colon, Ulupono Initiative, in support, in person.

Good morning. Chair. Vice Chair Michael Colon, Ulupono Initiative. We strongly support this Bill as it will protect power purchase agreements and, you know, make these projects more fungible.

One thing to bear in mind is that every project that is withdrawn or doesn't go through currently that are in the current procurement usually takes several years to come back, if they can come back at all. So it's a missed opportunity every time a project falls through.

That much renewable energy, that much lower cost, that much decarbonization is what's at stake. And so it's important that we kind of bolster this industry. It's a very important Bill.

Thank you. Next we have Tony Kawal, TerraForm Power, in support, in person.

Good morning. Chair, Vice Chair. Tony Kawal with TerraForm Power. We stand in our testimony in support of this Bill. Mahalo.

Thank you. Sorry, I mispronounced your last name. Next we have Sandra Larson, AES Hawaii, in support, in person.

Aloha. Eliza Talbot on behalf of AES Hawaii. We support this bill. We strongly support this bill, and we support the amendments proposed by HECO as well. And our testimony actually reflects the same amendments. But we did want to just kind of emphasize a few things, and that is that this bill is so incredibly important to all of the independent power producers, especially for our 2045 renewable energy goals and to ensure the reliability of the grid and our resilience. And so we really hope that the Committee will support this bill, and we are here to answer any questions. Thank you so much.

Thank you. Next we have Rebecca Dayhuff Matsushima, Hawaiian Electric, in support in person.

Good morning, Chair and Vice Chairs. My name is Rebecca Dayhuff Matsushima with Hawaiian Electric in strong support of this bill. With the amendments that we submitted, we believe this bill is crucial for our customers and the development of new renewable energy projects. We've been working with various state agencies, as well as the IPPs to try to address all of the concerns that have been raised in written testimony to date, and I believe that our current redline versions go a long way to addressing most of those concerns.

These proposed amendments limit the recourse to the state. They ensure timely payments to IPPs. They limit financial impacts to our customers and also ensure that the bill does not benefit Hawaiian Electric. The bill will help avoid higher cost contracts with independent power producers and just allow projects to move forward and address the financing concerns of developers with their financing parties due to our current credit rating. This bill, like I said, is for the benefit of our customers and will help reduce rates in the long term. Thank you.

Thank you. Next we have Nicola Park, Clearway Energy Group, in support in person.

Aloha, Chair, Vice Chair, Members of the Committee. Nicola Park on behalf of Clearway Energy. Stand on our written testimony in support. We also support the amendments proposed by Hawaiian Electric generally. We continue to work with B&F in the state as well as Hawaiian Electric to align on amendments that will also work for our lenders.

Clearway did have three projects, as Michael alluded to, that did withdraw from a stage three procurement with Hawaiian Electric due to concerns on finance, financeability, and credit. And so we really think this bill goes in the right direction in terms of addressing those concerns, including around bankruptcy protection. Thank you. Available for questions.

Thank you so much. Next we have Jeff Mikulina, Hawaii Executive Collaborative, Climate Hawaii, in support on Zoom. Not present. We also have testimony in support from Longroad Energy, Plus Power, Ameresco Inc, Blue Planet Foundation, General Contractors Association of Hawaii, and Nexamp. Is there anyone else wishing to testify in this measure? Seeing none.

Members, are there any questions? Seeing no questions, we're going to move right on to SB 1220 relating to renewable gas tariff. Requires the gas utility companies to submit proposed renewable gas tariffs to the PUC by 8-31-2025.

Requires the PUC to establish a renewable gas tariff within nine months of receiving a completed application for proposed renewable gas tariff. Provides that the PUC shall determine the completeness of the application no later than 30 days after the application is filed. First to testify, we have Michel Angelo, DCCA, in person with comments.

Chair, Vice Chair, Members of the Committee. Stand on our testimony for any comments, available for questions. Thank you.

Thank you. Next we have Daniel Park, PUC, with comments, in person.

Hi, good morning. We'll stand on our written testimony and I'm available for any questions.

Thank you. Next to testify we have Julie Yunker, Hawaii Gas, in support, in person.

Hi, Good morning. Chair, Vice Chair, Members of the Committee, Hawaii Gas appreciates the opportunity to testify in strong support of SB 1220. This Bill provides a cost effective, timely path to establish a renewable gas tariff allowing environmentally conscious customers to choice to opt in without burdening other ratepayers under current regulations.

Creating a renewable gas tariff requires a general rate case, a costly and time consuming process that can take up to two years and cost two to $3 million which gets passed on to the ratepayers.

This means that without this Bill, the next opportunity to propose a renewable gas tariff may not come until 2030 or later, delaying access to renewable energy options. SB 1220 SD2 streamlines this process by - one - requiring gas utilities to submit a renewable gas tariff by August 31, 2025.

Directing the Public Utilities Commission to review and act within nine months, ensuring no rate impact on non participating customers, customers maintaining existing PUC authority and standards for fair and reasonable rates.

We're ready to act and submit a voluntary renewable gas tariff by the deadline. Ensuring a balanced, fair and sustainable approach. We urge the Committee to pass this Bill to support Hawaii's renewable energy goals. Thank you.

Thank you. Next we have Yanni Psareas, Coalition for Renewable Natural Gas in support on zoom.

Thank you, Madam Chair. Yanni Psareas, Legislative Affairs Manager of the Coalition for Renewable Natural Gas. We present over 400 Members who produce over 90% of renewable natural gas in North America.

We strongly support SB 1220, which creates a pathway for gas utilities to offer renewable gas options without requiring a full rate case. This Bill maintains all regulatory standards while ensuring the tariff is voluntary with no rate increases for other customers. The PUC will retain full authority to ensure rates are just and reasonable.

And especially at a time when federal energy policy is uncertain, Hawaii has the opportunity to demonstrate climate leadership while reducing dependence on imported petroleum and showing themselves as a clean energy leader in the nation. And we urge you to pass this important legislation. Thank you.

Thank you. Next we have Henry Curtis, Life of the Land, in opposition, in person.

Aloha. Henry Curtis, Executive Director of Life of Land. The previous speaker just pointed out that the PUC establishes just and reasonable rates and Hawaii Gas reported that this would have to be done in a rate case.

Interestingly enough, there is a rate case currently at the PUC by the gas company and the PUC will establish just and reasonable rates. What the gas company would like the Legislature to do is to add additional profit on top of that. This is the inappropriate method of doing that.

Second of all, can you imagine if the ramifications of this Bill if next year Hawaiian Electric comes in and says they want a premium for selling renewable electricity? Or the water company coming in and saying they want to sell renewable water produced by solar? This sets a very dangerous precedent.

It singles out a single company for special rights. Finally, you might say that if the gas company were going to say we're actually going to produce more renewables and this is why we need it, but they're not. They have no plans to increase renewable energy for five years. Mahalo.

Thank you. Next we have Carl Campagna, Hawaii Bioeconomy. Sorry, he's not testifying but he submitted testimony and support for Bioeconomy Trade Organization.

Micah Munakata submitted testimony and support from the Ulupona Initiative and then the Kapolei Chamber of Commerce also submitted testimony in support. Is there anyone else wishing to testify in this measure? Seeing none. Members, any questions?

No questions. We are going to move straight on to Senate Bill 588 which is relating to renewable energy. Authorizes certain government entities to establish a self certification process for behind the meter customer cited solar distributed energy resource systems and exempt the systems from Federal Emergency Management Agency. No rise, no impact declaration requirements under certain circumstances.

First to testify we have Carol Tiaobeam, DLNR with comments in person. Morning Chair Vice Chair Carol TL Beam with DLNR. We stand on our written comments. If you have any questions, we'll be here. Thank you. Thank you. Next to testify we have the professional and vocational licensing folks from the contractor's license board in opposition in person.

Good morning Chair and Vice Chair. I'm Candace Ito. I'm the Executive Officer for the Contractors License Board and I'm standing on the board's testimony. Thank you. Thank you.

Next to testify, we have Hawaii State Energy Office in support, in person.

Aloha Chair, Vice Chair, Members. Members gone. Monique Schaefer with the Hawaii State Energy Office. We stand on our written testimony in support and I'm available for questions. Thank you.

Thank you. Next we have Daniel Park from PUC with comments in person. Or Leo Ascension.

Me again. It's fine. Daniel Park here for the PUCM. We'll stand on our written testimony and we're available for any questions.

Thank you. Next we have Dante Hirata Epstein from Hawaii Green Infrastructure Authority and support in person.

Good morning. Dante Hurot Epstein from the Hawaii Green Infrastructure Authority. We send in our comments and support and are available for questions. Thank you.

Thank you. Next we have Rocky Mould, Hawaii Solar Energy Association with comments in person.

Aloha Chair, Vice Chair, Rocky Mould, Hawaii Solar Energy Association. We'll stand on our written comments on this bill. Thanks.

Thank you. Next we have Beth Amaro, Kauai Island Utility Cooperative with comments on Zoom.

Yes, good morning. We have submitted testimony and have offered an amendment for consideration and I'd be. Happy to answer any questions on that. Thank you.

Thank you. Next we have Lauren Zirbel, Hawaii Food Industry Association in support on Zoom. Not present. We have, in addition, testimony and support from the Climate Protectors of Hawaii, Carbon Cashback Hawaii350, Hawaii Grassroots Institute of Hawaii and testimony in opposition from IBEW local union 1186. Testimony and support from 10 individuals. Is there anyone else wishing to testify?

Seeing none. Members, any questions? Okay. So efficient. We're going to move on to Senate Bill 589 relating to renewable energy authorizes retail wheeling of renewable energy and requires the PUC to establish policies and procedures to implement retail Wheeling and microgrid solutions service tariffs: ensures that fair compensation is provided for solar and energy storage exports.

First to testify, we have Michael Angelo, DCCA, with comments in person.

Chair, Vice Chair, members of the committee; stand on our testimony, providing comments available for questions. Thank you.

Thank you. Next, we have Public Utilities Commission with comments in person.

Hello again. I'm Daniel Park for the PUC. We'll stand on our written testimony and we're available for any questions.

Thank you. Next, we have Kaiulani Shinsato, Hawaiian Electric, in opposition in person.

Morning Chair, Vice Chair: James Abraham on behalf of Kaiulani Shinsato, testifying on behalf of Hawaiian Electric in opposition to Senate Bill 589. The PUC has ongoing dockets that are examining the issues that this bill relates to.

And so, we believe that those administrative proceedings are the proper venue to hash out these complicated issues with, you know, the relevant stakeholders participating. In particular, I wanted to touch on the retail wheeling issue because the PC opened a wheeling docket last year.

And so, we've had some, some good progress on that docket with, you know, various stakeholders being involved. And the provision in this bill that touches on retail wheeling would actually conflict with the progress that's going on in that docket. So, it would kind of jeopardize the progress that's been made.

So, we would respectfully ask that this bill be deferred and allow the PC and the parties to continue the work on these issues. Thank you.

Thank you. Next, we have Ted Peck, Energy in support, in person.

Good morning. My name is Ted Peck. On this bill, I have no comment on the wheeling component of it. I think that that signs stand separate than the retail compensation.

I wanted to make clear that, you know, a lot of folks have seen, and I've seen some testimony saying that and I've heard comments that retail, it's not really fair.

It's a return to NEM. I think, restraining that if a customer is exporting to the grid during a grid service event, that is what should be compensated at the retail rate. And the reason why is because that owner of that system has authority over their system.

And if it's going to cost them to participate in helping the grid and being a good grid citizen, their interests are going to say that they're not going to participate.

And when five years from now, we have a quarter of the energy on our grid coming from rooftop solar, we want those systems to be participants in a strong grid and not just to be independent operators with the grid as backup. That's not healthy for the grid.

And the utility typically pays a premium both for evening energy, and for grid services. So, this is not out of step with what they typically pay. And what you're doing here, you're not circumventing what the PUC is doing. You're setting a principle and guideline for them to operate under.

I'm available if you have any further questions. Thank you.

Thank you. Next, we have Henry Curtis, Life of the Land, in opposition, in person.

Aloha Chair, Vice Chair, and member: Henry Curtis, Executive Director of Life of the Land. Wheeling has been really popular by people who don't much understand it. The PUC opened up a docket in 2007 that went to 2019 without resolution.

They recognized that some issues should be addressed in other dockets such as the microgrid tariff proceeding. UH proposed something, although it wasn't called wheeling. They, they proposed solar in West Oahu that would then be used to offset their Manoa campus electricity, counting it on one bill.

So, it was a form of wheeling; WH, Life of Land, HECO, and the consumer advocate were parties to that proceeding. The proceeding ended because they couldn't figure out a way to lower the rate sufficient to make it popular for UH and yet not to have an impact on other ratepayers. The PUC currently has a proceeding open on wholesale rates to do it at the wholesale level.

If that proves successful, which it may not because right now it's under evaluation. There are many different parties, there's public meetings. If that turns out to be possible, then you figure out all the cost shifting that might occur and only after that would you go into retail wheeling.

But the PUC itself has said that if wholesale wheeling is successful, they will in this docket, look at retail wheeling. Therefore, there is absolutely no purpose in passing a law that suggests that they should do exactly what they're doing, but, but they should have a timeline to do it really quick and sloppily. Mahalo.

Thank you. Next, we have Kiku Bukowski, IBEW Local 1260 in opposition in person.

Chair, Vice Chair. Members, we stand in our written testimony in opposition.

Thank you. Next, we have Rocky Mould, Hawaiian Solar Energy Association, in support, in person.

Aloha Chair, Vice Chair, member of the committee: Rocky Mould, Hawaii Solar Energy Association. We'll stand on our support of this bill but want to just add. We actually support adding back in the specific 50,000 installation target as well as the one-to-one crediting component that Ted Peck just talked about.

These are super important aspects of this bill. We still like the bill without them, but we think those would really strengthen it. What this bill is about is setting the framework and the foundation for a rapid acceleration of rooftop solar and energy storage.

In the past bills that we heard in this hearing, we were talking about how to shore up the utility and how to backstop large scale projects that are dropping off. We can add rooftop solar and energy storage today. We have a proven track record in the battery bonus program, and we can fill that capacity in the near term pretty quickly. So, I'm here for questions if you have them. Thank you very much.

Thank you. Additionally, we have testimony and support from Alternate Energy, Legacy Energy, Ulupono Initiative, Sunspirit Energy, Blue Planet Foundation, Photonworks and Engineering, Fairwind Inc. Malama Solar, Green Power Projects, Grand Solar Inc., and Solar Services Hawaii, along with testimony from 13 individuals in support. Is there anyone else who wishes to testify on this measure?

Seeing none. Members, are there any questions? Sure, Lowen.

I guess start with the PUC. PUC's testimony -

I am Nathaniel Court. Lots of time. PUC, sorry, go ahead.

Yes, PUC's testimony, and Hawaiian Electrics, for a decade, comes in and opposes the wheeling bills and says we have ongoing dockets, and you know, we have Henry Curtis, Life of the Land's testimony saying let's not rush this.

I mean, I think we can hardly be accused of rushing anything when there's been, you know, this bill dies every year for a decade because there's ongoing dockets looking at this issue that never come out with a recommendation. So, what do you have to say to that?

Well, like you said, there is an open docket right now and -

Well, that's what I mean, there's an open docket is what we've heard for 12 years. Let's make it 12.

Yes, yes. Yeah.

And then probably more. That's before my time.

And then also there's a bill, I think Senate Bill 1332 also talks about wheeling too. And I think the amendment actually extended it to having us report to them whether it's feasible by 2027 of the lead session. Right. So that's what we got. It's an ongoing -

Well, it's obviously feasible. It's just a question of whether we want to make sense to do it or not.

Well, I think that's what we're trying to determine right now, whether it's feasible or not in the current docket. And then right now we're actually looking at intra governmental wheeling, which was that 2007 docket. Right? Yes. Because that's kind of the low hanging fruit. So that's what we're discussing with stakeholders right now.

We already went to two stakeholder meetings already. We have three more, you know, scheduled until August. And then our plan is to by next year to provide a report to the ledge regarding the feasibility of wheeling, on intergovernmental wheeling. And then if it, if it is, then we would together or established policies.

And procedures for that for intergovernmental wheeling. But this, I mean, this bill is a little bit different. And also, the dockets that you refer to in your testimony include like the CBRE docket.

Which was first opened in 2015.

Right.

Exactly.

The 2019 DER docket and there's a 2018 microgrid docket. Those are all any sort of anticipation that any of these will come out with some kind of statement about wheeling, specifically that provides some path forward or resolution. I mean, why do you need now till 2027?

I mean, these dockets are consistently cited as the reason why we can't move a bill. What work is being done in these dockets to address these questions?

Well, we also, I think, have to understand what wheeling is, too. The definition of wheeling, too. I think this CBRE, the microgrid, you know, wheeling would help, microgrid; but then CBRE might be considered different than wheeling. So -

But these are the dockets cited in your testimony. Right.

So, in terms of expanding renewable energy. Right. I think that's the ultimate goal. Right. I think right now. And that's one. Those are tools in the two tests. Right. To the microgrid, CBRE, DER, and wheeling. Right. And wheeling, we're exploring right now.

And I think Leo Asuncion, the chair, actually testified last session saying that we would investigate that. And we open a docket, and we did open a docket last year, and that's what we're doing right now to make sure it's the feasibility. And if it is feasible, then we will go ahead and establish policies and procedures for wheeling. And we also want to look at -

Our intergovernmental wheeling.

We also will look at retail wheeling as well. But first -

Okay, but you're not answering my question, which is that these dockets are cited in your testimony as these are what you're citing as the work is ongoing on looking at retail wheeling. Therefore, don't pass this bill because we have these dockets that we're working on to address the questions that are purportedly being addressed by the bill.

So please explain what work is being done in these dockets.

Yeah. So, I think in the bill, it actually brings up CBRE, and not just wheeling, but CBRE, DER. Right. So that's why we're addressing those specifically. That was in the bill about talking or in the preamble talking about what's to do, how can we actually expand or meet that goal, the weighted RPS goal by 2045.

So just give an example for CBRE. Yeah, sorry. For CBRE.

I mean, I'm familiar with CBRE and, you know, the DER programs, but I would say that, I mean, those programs have been. I wouldn't call them resounding success. I think there's a lot more that the PUC could do to, you know, move forward on more CBRE and to have better.

I mean, as Ted mentioned in his testimony, to have programs for DERs and grid services that actually encourage the deployment of DERs.

So, I don't know if you - we actually put out inclinations such commission in response to the - and also there's an EO coming out too. Right. That we have to respond to as well. And in our inclinations, we talk about actually increasing DER by 400 megawatts by in five years. That's in inclinations.

CBRE right now in phase two, tranche 1, and we're moving into tranche 2, we have about 200 plus megawatts there that is, you know, reserved for CBRE that we can use. Now we have to kind of figure ways to incentivize more, you know, small projects, mid-tier projects and large projects to participate.

Because right now we only have about like maybe 33 plus megawatts out of 235 megawatts that is participating. And it includes LMI projects as well.

Yeah, but I mean, we ended up there for a reason. The reason that it hasn't been deployed more broadly, I think is based on a lot of decisions that came out of the PUC.

Yeah. And so though, for the tranche 2, one thing we were looking at too is like CBRE, are there other alternatives, you know, to kind of incentivize more participation, you know, for developers?

One thing we did for CBRE, tranche 1, which helped with LMI projects, which actually lowered the interconnection costs by actually allowing system costs to be passed on to HECO or to the utility so that the developer doesn't have to take on that cost. So, if they wanted to do an LMI project.

So that's one thing that helped. And I think we had some developers do that. So, we did that for Tranche 1 and Tranche 2. We're thinking of other ways to, you know, get more participants in there as well. And it's been challenging across the other states as well too.

It's not just in Hawaii, you know, it's California, and other states as well. It's been challenging to get the CBR projects online.

Okay, but I guess you're still not telling me why. I mean, you're citing these dockets as the reason that we should not consider wheeling. And you know, should I assume that imminently some big decisions are coming from the PUC that are going to really move us forward on DERs.

Are we talking about wheeling now? For wheeling? Because if we're wheeling, we are, well, wheeling -

Or because you're saying your argument is these dockets are relevant because these are the mechanisms, we should be using to expand deployment of DERs and meet that goal. Well, what's forthcoming, that's going to change? It's been a long time. We've been waiting a long time.

So, this is all again to help expand renewable energy. Right. CBRE and all that. Right. And we need just one area we're investigating right now.

Okay. Not answering my question but thank you.

I mean, yeah, apologize. I mean, I mean if you want, we can respond by written response if you need.

Yeah, yes, thank you.

Thank you.

I guess for HSEA or Ted. I mean, I assume you're participating in some of these dockets.

Yes.

Do you see that there's some imminent decision coming that's going to change the landscape?

So, in the DER docket in particular, we're talking about modifying the bring your own device program, which is the grid service program that would benefit from these underlying fundamental principles in terms of one-to-one crediting fair compensation for services and these kinds of things.

So really - and it's the components, it's these kind of compensation mechanisms that are going to be needed to achieve this aggressive target, this five-year near-term target that the Governor set in his Executive Order, but also that the PUC mentioned.

You know, just now they actually in their inclinations talked about a 400-megawatt goal in five years that actually corresponds to 5000-8kW systems if you think about it, which is about the average size of a system. So those match with each other.

So, we're hoping for a decision imminently in the next, hopefully, next days, weeks that will modify the bring your own device program to achieve that level of compensation necessary to get to those goals, those efficient goals. On wheeling, the intra-governmental wheeling docket is ongoing.

It's been an ongoing, you know, it's been a long-time effort as mentioned by many testifiers here today. And I think it's really just a matter of making a decision. A lot of the- there's been a lot of paper thrown and flying with analysis and it really is about making a decision, I think.

Sorry, Ted. Sure. I guess if you want to add again about. I mean, I think you kind of made the point that, you know, wheeling would be one way to incentivize deployment of more DERs. But also, if the Commission and the Utility will come out with more attractive programs, that would be another way to achieve that goal.

Yeah, they. The battery bonus program was oversubscribed and that was at $850 a kW plus a $5 per kW per month. And so, we're working and then the initial BYOD was $100 per kW capped at $500.

And so, the compensation for that and when we worked it out, you know, we do lease programs and so we did a little higher math on it and you actually lose money under that initial program and most people in the market saw that over the length of being involved you lose money.

So why would I do that? I'm just going to use that battery and my PV system to meet my own requirements and not be a good grid friend, beyond my inverter having smart inverter functions, which means that if I'm interconnected, I'm a basic good citizen on the grid, which is different than 10 years ago now.

And with batteries that takes power out of the middle of the day and moves it into the evening and so it assists at least in people taking care of their own load in the evening.

Grid services means that the utility has a finger into all of those systems providing again fully one quarter of the energy on the grid. It's really not helpful. If that quarter of the energy that's coming onto the grid, the utility has no ability to steer that.

That's what grid services do, is gives the ability for the utility to transact how that energy interacts to provide a better grid.

Sir, go ahead.

Quick point. So that underlying compensation framework and that underlying structure that's part of the grid service program that we're talking about with one-to-one crediting and compensation for grid services that underlines can underlie all of these programs.

So, if you set those fundamental principles correct, that will flow through to CBRE, that will flow through to wheeling if it's decided upon, and that will flow through to really all renewable energy that's added to our grid through the tariff structure. So that's sort of an underlying fundamental principle.

Do you see - because you know there's always the concerns raised about the idea that there will be a negative impact on non-participating rate payers.

But I mean the grid services, properly valuing grid services and also looking at the big picture seems kind of key towards like hitting the right point there because there's a benefit grid wide to getting people to participate in those programs.

Do you, I mean, what would you say, what would your answer be to people who have concerns about the, the cross subsidization?

I have two thoughts. One is that it's a little bit of fear mongering, it's a very qualitative because there is a cost basis there. But the reality is that the grid pays for those grid services anyway. And this is fair compensation for that.

I'd say so. When you hear criticism of this bill and retail crediting that it's for all exports, that is not our position. We're not calling for retail and one to one crediting for all exports to the grid.

We're only calling for that for a grid service event during a grid service program when the utility and stakeholders have determined that the grid needs that power the most and it's most valuable. And so, it's actually a benefit.

It's flipping kind of that NEM argument on its head because those exports are being used directly to benefit grid stability and bringing renewable energy to more participants.

And the reason why the utility is calling on that energy is because it has a need, because there's less energy available. And from a market perspective that drives up the value of the energy that shows up to meet those needs.

Great, thank you. Quick question, I guess, consumer advocate; I mean I think this was- we'll let you have the last word just for timing. But I mean I guess I do wonder when I look at your testimony because you kind of, I mean I think you acknowledge the value of grid services but also raised concerns about the impact to non-participating customers.

And I mean, I guess I would just say it does seem like there's not a good mechanism for considering the benefit to everybody of those grid services.

And I think that there ought to be a way that we can hit on the right balance of making these programs attractive because we want people to participate and having that be a benefit to everyone. Yeah, I mean I guess what would you say to that?

I think that's a good point. I mean we need to consider net benefit analysis. Right. Because these systems can provide services for certain if they're available when called upon during an emergency event. For example. I think the aspect of what's the most cost-effective use of providing that. That's addressed in grid planning processes.

That's addressed in - it's addressed in 2019-0323 where they're evaluating those.

I guess a different question would be like if, when, you know, if or when the PUC, you know for example last year, came out with an order that seemed to disincentivize people participating or you know, getting new DER systems.

I mean if you end up in a scenario like that, I think it's a net negative to all rate payers.

I think, well, I mean I don't know that it was disincentivizing people from procuring systems. I think it's how they choose to use their system. I mean, there's existing tax credits at the state and federal level. Right. Where we're already supporting through taxpayer dollars, already supporting these, which is a good thing.

And then it's a question of, okay, should ratepayers be other ratepayers who can't participate in those benefits get the benefits of resiliency of a battery, for example, and can use that for their own benefit, whether they should be compensating other customers for that.

I guess I'm just saying the CA is always concerned about the impact of these programs being too generous and the impact to the other customers. But to flip that around, I mean, are you also concerned about the impact of, you know, disincentivizing people from participating in these programs that the impact that has over the long term to not be taking advantage of this good services that could be available if the programs are designed. Right.

Yes. I mean people should in terms of -

And that's an impact to non participation customers also.

Right. Yeah, I agree. In terms of incentivization though, it's: what are we going to do with the incentive, is how should other customers be paying for someone?

We have to evaluate the benefits both to the grid as a whole and all customers as well as individual individuals who own the systems and what benefits they're receiving that might be different than somebody else who can't afford to own the system.

Right. I'm just saying if you flip that around, there could also be disadvantages to system wide, including to those ratepayers that don't own those systems for going down a path where we don't push to continue to adopt more DERs.

I mean, where do we end up, you know, this far down the road? What fuel source and at what cost if we don't try to maximize deployment of DERs and make sure that those DERs that exist are participating in grid services programs.

Agree that we certainly want to ensure that DER customers or DER continues to be a viable option for customers. How we use that, those analysis of how we use it and what the proper compensation is for how customers are using it and how it's benefiting the entire grid. That's part of what's being addressed in 2019-0323.

Ah, the mythical dockets that go on forever. Okay, thank you.

Are there any more questions? Oh, additional question.

No, I just forgot. I was trying to sneak over for you.

Please. No questions.

I used my -

There's no such thing. Do you have addition?

Yeah, I do for PUC. This bill - all right. You know, just listening to all these conversations and the pros and cons, would you agree that maybe the reason this has sat on your docket for so long and it goes back and forth, I mean, I feel like we're just going back and forth.

There's all these weights, like, you know, wealthy solar homes that have access to equity lines and the ability to write them off and all these things that are available to have battery systems and the lower socioeconomic people do not have access to those, but they are subsidizing them through their taxpayer dollars.

And then there's the maintenance of the physical grid that the utility must maintain. Are those like some of the complex interactions that the PUC has been deliberating and going in presumably circles for years?

Well, yeah. I mean, for all those docs you're saying that are open, right? You know we are, I mean, I know this frustration, right. From the 2007 going for the wheeling, right?

And that's why I think the Chair decided, let's look at this right now and then make a decision within like a year or two, you know, and come back to the ledge with the report.

And in this, our testimony, we say that we'll provide a report to the ledge by the end of, by 2026 to let you know how we're going to integrate all of these together. I think, yeah, it's challenging and the thing is that there's some success, some failures in some areas.

But I think right now, since it's an open docket, we're trying to. And also, even in our inclinations too, we're trying to point out ways we can kind of pivot and you know, to be more aggressive in trying to secure more renewable energy.

Okay, that helps, sort of. But yeah, I guess it's just part of the muddy wheel we're turning here.

Yeah. Do you have any questions about DER because I can - okay go ahead.

Thank you. Okay. Moving on to Senate Bill -

You made a comment that I wanted to speak to. No? I'm sorry.

Yeah, we can talk after. Thank you. Yes, offline would be Great. Senate Bill 533 relating to education requires a local investor owned electric utility to provide and Fund support to public schools impacted by the utility's planned public safety power shutoff program. First to testify is Superintendent Hayashi, the DOE, and support in person, not present.

Next to testify we have the AG's office with comments on Zoom in person.

Good morning, Chair, Vice Chair, Member, Ann Horiucci from the Attorney General's Office. As we noted in our testimony, the Department is concerned that as written, the. Current draft of the bill is vague. And unclear as to what it does. And how it would be accomplished.

We believe actually that or we suggest that the Public Utilities Commission might be the more appropriate entity to oversee and. Direct how the utility would implement implement. The provision and funding of support to public schools impacted by the public Safety power shutoff program and to ensure that.

Such support is appropriately provided in coordination with the program and other related utility initiatives. The office. We're happy to work with the Legislature on revisions that might best effect with. The intent of the bill. Thank you. I'll be available for questions.

Thank you so much. Last to testify, James Abraham, Hawaiian Electric with comments in person.

Morning Chair, Vice Chair, Members of the Committee. James Abraham testifying on behalf of Hawaiian Electric, providing comments on Senate Bill 533 and also requesting that it be reverted to the prior formation of the bill.

As noted in our written testimony, the Department of Education is in the best position to oversee and manage the schools that are in these impacted areas.

The DOE's testimony does appear to seek an appropriation and we would agree with that framing that the DOE be provided funding to continue their resilience and preparedness efforts for these schools that are in these high wildfire risk areas. So we do respectfully request that the Committee revert the language to be an appropriation to the DOE. Thank you.

I'm available for questions.

Thank you so much. There is no additional testimony. Is there anyone in the room who would like to provide testimony on this measure? Seeing none. Members, are there any questions? Seeing none, we're going to move on to our last measure, Senate Bill 1341 relating to energy industry information reporting.

It adds Hyema and office of Homeland Security to list of agencies that may examine the energy industry information. Statement submitted Pursuant to section 486j 3 hrs adds the promotion of emergency management and critical infrastructure protection as relevant purposes of the energy data collection program. First to testify we have James Tokioka, dbet.

zero, sorry, he's not testifying in person. He submitted testimony in support. The Department of Law Enforcement also submitted testimony and support. And we have the Hawaii State Energy office submitting testimony and support in person.

Good morning, Chair, Vice Chair, Members. John Chim from the Hawaii State Energy Office will stand on our written testimony in support.

Thank you.

Thank you. No other testimony was provided. Is there anyone in the room who would like to provide testimony on this measure. So, seeing none, Members, are there any questions? Seeing none, we're going to move into straight into decision. We're going to gavel out and come back for decision making.

All right, welcome back. For decision making Committee on Energy and Environmental Protection, Tuesday, March 11, 9:00 am Agenda Room 325 first up on the agenda. Well, actually, for the first three bills on the agenda, so Senate Bill 897, Senate Bill 137 and Senate Bill 1501.

We are going to defer decision making until tomorrow, March 12 at 11:15am in this room, and we will put out an agenda for that. So just a little more time to get all the amendments in order. And then next on the agenda we have Senate Bill 1220. This is the renewable gas tariff.

So for this we're going to adopt the suggested amendment of the consumer advocate in their testimony, make some technical amendments for clarity, consistency and style, and we'll just redefect the date to July 1st, 3000 to be consistent with our defective date and move this forward for further discussion. Members, any discussion.

Based on the testimony of life of the land, I'm going to be voting with WR in this measure.

All right, Vice Chair, please take the.

[Roll call]

Noting the excused absence of Representative Ward, Chair, your recommendation has been adopted.

Thank you. For Senate Bill 588. Just based on conversations with the, you know, the organizations that help draft this bill and work on it, we've decided at this time to defer this bill. They're working on other solutions to address these issues. So SB588 defer moving on to SB589.

And this is the retail Wheeling Bill that we were just discussing. So for this we're going to add in the Der installation goal that this Committee passed out in the companion bill, HB790. And also on page six, line six, we'll take out the word fare.

But at the end of that subsection on line 13 will add the rate shall be sufficient to encourage deployment of DERs in order to meet the goal in section whatever the section is, the Der installation goal.

And then on line 15 again, we'll remove the line the word fairly, but we'll add to subsection end of subsection B, the compensation shall be sufficient to encourage participation in GRID services programs. And we will redefect the date to July 13,000 Members. Any discussion? Seeing none.

Vice Chair on SP589, SD1 Chair's recommendation is to pass with amendments. Chair and Vice Chair voting aye. And noting the excused absence of Representative Ward, are there any Reservations or no votes. Seeing none. Chair, your recommendation has been adopted.

Thank you. And SB533 relating to education. So for this bill, we're going to change this to a General Fund appropriation to DOE to support public schools impacted by utilities, planned PSPs. And we'll add just some more specifics about the purpose of that appropriation in the into the actual substantive portion of the bill.

So not just in the preamble.

So the purpose will be to assess alternative power solutions, assess the feasibility of establishing regional emergency hubs, develop contingency plans and training to maintain school operations during outages, assess fire safety measures, assess and develop accommodations for electricity dependent students and staff, and then we will note in the Committee report that Department of Education recommended an amount of 1 million in each fiscal year and we will redefect the date to July 1st, 3000.

And with that. Members, any discussion Seeing none.

Vice Chair on SB533? SD2 chairs recommendation is passed with amendments. Chair and Vice Chair voting aye. Noting the excused absence of Representative. Representative Ward, are there any reservations or no votes? Seeing none Chair recommendation has been adopted.

Thank you. And then For Senate Bill 1314, this is relating to energy industry information reporting. We are going to pass this out as is Members. Any discussion Seeing none Vice Chair on.

SB 1341 chair's recommendation is to pass as is noting the excused absence of Representative Ward, Chair and Vice Chair voting aye. Are Are there any reservations or no votes? Seeing none. This charity recommendation has been adopted.

All right, thank you. And we are adjourned.

All right. Welcome to the Joint Committees on Energy and Environmental Protection and Committee on Labor. It is Tuesday, March 11th, 11:15 am. We're in room 325 here with chair Sayama and all our Members. We have a couple bills on the agenda today, so we'll jump right in. First up is SB 1500 relating to electric utilities. Sorry.

Making sure I had the right agenda. And so this is the bill that provides the PUC the authority to appoint a receiver. And first up to testify, we have. Hang on one second. First up to testify, we have the Consumer Advocate.

Still. Morning. Good morning. Chair, Chairs, Vice Chairs, Members of the Committees. My name is Michael Angelo. I'm the Executive Director of the Division of Consumer Advocacy. We stand on our testimony providing support for this bill. Available for questions. Thank you.

Thank you. And the Public Utilities Commission.

Hi. Good morning. Chairs, Vice Chairs, Members of the Committee, Daniel Park for the Public Utilities Commission will stand on our written testimony. And I'm available for any questions.

Thank you. And IBEW Local 1260 in support. And then we have Hawaiian Electric.

Morning Chairs, Vice Chairs, Members of the Committees. My name is James Abraham testifying on behalf of Hawaiian Electric, offering comments and proposed amendments to Senate Bill 1500. We appreciate the intent of the bill to protect utility customers when there is an imminent threat of a utility failing.

We have provided the Committee's amendments to broaden the scope to all public, or, sorry, all regulated public utilities, which we believe better serves the intent of the bill. And with that, I appreciate the opportunity to testify and I'm available for any questions.

Thank you. That's everyone we had who submitted testimony in advance. Was there anyone else here to testify on this measure, if not Members? Any questions? Okay. We will move on to Senate Bill 997, also relating to energy.

This grants the PUC ability to authorize preferential rates for the purchase of firm renewable energy from facilities that meet certain prevailing wage requirements, requires the PUC to forward certain requests for preferential rates to the PUC for approval. And first up to testify, we have the Consumer Advocate.

Aloha. Division of Consumer Advocacy stands on its testimony providing comments on this bill. Available for any questions. Thank you.

Thank you. And the Public Utilities Commission.

Morning, Chairs, Vice Chairs, Members of the Committee. Anand Samtani with the Public Utility Commission on behalf of Leo Asuncion. We stand on our written testimony offering comments. I'm available for questions. Thank you.

Thank you. And the State Energy Office.

Good morning, Chairs, Vice Chairs, Representatives. Cameron Black on behalf of the Hawaii State Energy Office. We stand on our written comments in preference of the original version of SB 997 requiring labor standards for new renewable energy projects, including prevailing wages and use of registered apprenticeships. Thank you very much.

Thank you. That's everyone. We have signed up to testify on this. Is there anyone else here to testify on this measure? If not, Members, any questions? Okay. Consumer Advocate, I guess. Quick question. So just make sure I'm reading this version of the bill correctly. This would allow preferential rate for the contract, not the customer.

I believe that's correct, yes. Yeah.

I mean, normally when we use talk about preferential rates, people think of it in terms of preferential rates on your electric bill. But what this version of the bill is talking about is actually allowing the developer to get paid more for energy because they're using...

Yes. There's still the potential that that could get passed on to ratepayers in the PPA.

So it actually increase rates?

It could.

Yeah. Okay. All right, thanks. Any other questions, Members? All right, should we go straight to decision making?

Okay. All right, we'll go straight into decision making. First up, we are voting on SB 1500 relating to electric utilities. So we're going to move this forward for further discussion. We're just going to remove the appropriation section and then we will redefect the date to July 13000. Members, any discussion?

Can do.

[Roll call]

Okay, thank you. For the Labor Committee, we'll be providing the same recommendations to pass with amendments. Members, any comments? Seeing none. Vice Chair for the vote.

[Roll call]

Thank you.

Thank you. And then for Senate Bill 997 relating to energy, for this, we're going to revert the language back to the original SB997, which is also a bill that we considered last year. So this would establish labor standards for renewable energy projects. We're going to make one amendment to that language in SB997.

So on page four, lines 11 to 12 will remove subsection H. We'll remove subsection H on page four, which is the section that grants exemption, basically for just not feeling like doing it, it seems like. So we'll take that out and redefect the date to July 13000. Members. Any discussion? Seeing none.

Vice Chair on SB997, SD3. Chair's recommendation is to pass with amendments. Noting the excused absences of Representative Quinlan and Representative Ward. And Chair and Vice Chair voting aye. Are there any reservations or no votes. Seeing none. Chair recommendation has been adopted.

Okay. Same recommendation for the Labor Committee to pass with amendments. Members, any comments? Seeing none. Vice Chair for the vote.

Thank you. Chair voting on SB997, ST3. Chair's recommendation is to pass with amendments. Members of the new votes with reservations. One reservations. Representative Kong and Representative Reyes. Order with reservations any Naval Chair recommendations adopted. Thank you.

All right. Thanks. And we are adjourned.

Sam.