Senate Standing Committee on Commerce and Consumer Protection

Morning and welcome to the Hawaii State Senate Committee on Commerce and Consumer Protection. This is Thursday, March 202025. We're in Conference Room 2 to 9. And this is our 9:30 a.m. Joint Committee hearing with our colleagues from the Committee on Energy and Intergovernmental Affairs. This meeting is being streamed live on YouTube.

And in the unlikely event that we experience technical difficulties and need to abruptly end this hearing, we will reconvene as soon as we can prior to our hearing. Deadline time at 11:15 a.m. this is a deadline day. These bills need to be moved on today in order for them to proceed in the legislative session.

So if we go dark standby, we'll try and get back on immediately. Again, this is a 90 minute hearing slot. We observe a 2 minute testimony time limit. We have a number of bills and like I said, we want to move on them today.

So we would respectfully request that if you submit in written testimony that you use your allotted time to either clarify or emphasize your written remarks or you can stand on your testimony.

Because we it has been sent to the Members and we've reviewed the written remarks and refrain, if at all possible, from reading your written testimony verbatim in its entirety in the interest of time. Okay. First measure is HB108HD2 relating to intoxicating liquor.

This measure allows direct shipment of beer and distilled spirits by certain licensees and requires the liquor commissions to adopt rules. First up, we have Lanikai Brewing in support. Good morning.

Hi, Good morning. Thanks for the opportunity to hear the Bill. I'm going to stand on my written testimony and just provide a little bit of opposition towards, from some. I'm sorry, provide a little bit of comments based on some of the opposition that we've read in the testimony.

You know, I think the most important thing to understand is the majority of the producers here in the State of Hawaii have actually don't have wholesale agreements. They're very small. Just like any business, it takes a while to get off the ground to get your product up and going.

So 108 will actually benefit our smallest and most fragile producers in the state the most with their ability to export their products and get their products moving and then establish relationships as they grow with the wholesalers. So really this Bill tends to lean towards benefiting our smallest and most fragile.

For us that do have wholesalers, our wholesalers do not carry all of our products. And if they did, if they carried and distributed all of our products, we wouldn't be here today.

So our small batch and rare products are often just kind of left off to the side and we have no sales channel to be able to produce and move those products. So our ability to basically have a sales channel for our own products that our wholesalers are not willing to distribute. HB 108 here definitely supports that. Yeah.

So there's also false claims due to the increase of access to underage consumption. If this was the case, we would have seen this 30 years ago when wine started shipping. But in the reality is the products that are going to be shipped and direct to consumer again are rare products and they're not super inexpensive.

And then you add shipping on which is pretty expensive. So you know, we've all been to parties in our youth and you've never seen a box of Franzia arrive by UPS, with a 30 or $40 add on fee.

So again, this is for rare products that either people want to have a taste of Hawaii that they're shipping to friends and family or it helps the small producers get their products out. So thank you for the opportunity to testify. Please consider support of HB 108.

Thank you. Kōloa Rum Company in support.

Thank you. Aloha. Good morning. Appreciate the opportunity to testify this morning. I stand on my written testimony previously submitted. I wanted to give a couple of examples of what we experienced at Kōloa Rum.

We began distilling and selling in 2009 and we opened our tasting room at the time and that was the first licensed tasting room permitted tasting room in the State of Hawaii for distilled spirits and was the only one for six years.

During that time and up till now, we get 2 to 3 unique visitors litters per day coming from all over the world, of course, mostly from the US Mainland and they buy.

We're able to sell our rum in the distillery and oftentimes we're asked to ship it to them because their luggage is full, they're afraid of being overweight. We cannot and sometimes we lose sales because of that.

Another thing is that in building on or adding on to what Steve said is that we produce a lot of specialty products. This is something that's about to launch to benefit Iolani palace, which we feel very strongly about as being something very iconic and important in Hawaii.

This is not going to be for sale anywhere on the mainland, only here in Hawaii. So this is going to generate a lot of interest and people will want it. But we're not able to sell it outside the State of Hawaii because we just don't have distribution.

A year ago we did a commemorative product for the University of Hawaii Athletic Department to commemorate their back to back men's volleyball national championships. Very limited edition. Very few retailers around the state were interested. They just didn't think they could sell it.

We had people calling us, grads from all over the mainland weren't able to sell it and ship it. So that's just two examples of how having the ability to ship to consumers would definitely benefit us and help us grow. Thank you for your time and consideration.

Thank you very much. Hawaii Food Industry Association and opposition online. Morning.

Good morning. Chair, Vice chairs and Members of the Committee. We stand on our testimony and opposition and I'd be happy to answer any questions.

Thank you very much. Maui Burn company in support.

Aloha. Thank you for the opportunity to testify standing on the written testimony previously submitted and much like Steve, you know I'd like to talk about this opposition first. I'll start with a story about Maui Brewing. I think it makes sense.

20 years ago when we started, it was 26 years years old and I was laughed out of every office from every wholesaler in the entire state.

They told me I had no hope of selling any beer in this state because why would you put good beer in cans, locally made cans, even at that and why does it cost more than Heineken. I didn't have the avenues to find another market.

I didn't have E-Comm, you know 20 years ago we didn't have Instagram, we couldn't build brands. DTC at that time would have helped me reach consumers to build a brand that these wholesalers might then be attracted to. Instead I bought a truck a used.

I was on the side of the road more than I was actually driving on it. I bought a truck from Penske and I self delivered. I was championed a Bill to allow self distribution. So I sold this beer hand by hand case by case all around Maui.

Within two months I was selling more beer than the wholesalers thought I could sell in years with their 80 plus salespeople. Just this last year our wholesaler was purchased two years ago. Sorry, our wholesaler was purchased by Raise which is a great partner of us. So we do respect the three tier system.

They paid more than $35 million for the rights to our brand. Had anybody given me an opportunity earlier to build a direct to consumer shipping that would have gotten the attention so much sooner and maybe my job would have been a little easier.

I'm better for it but I still I'm here to support the smallest of us in this state real quick because I don't have much time left. Opposition. They'll tell you that minors will be getting increased alcohol to increased access to alcohol. Cannot happen, the common carriers have 21 and up they age gate.

You cannot get a beer left on your doorstep. It's just not going to happen. They will tell you it will be job loss. It's the same argument they used when wine got direct to consumer shipping 30 years ago. They say it breaks the three tier system.

We have great partners in the three tier, but even at our size, they do not take all of our products. Thank you very much. Thank you guys. Appreciate it, Randall, along with my story.

Thank you. Brewers Association and support.

Good morning. Thank you for taking my testimony. I'm Sam Dewitt, state government affairs Director for the Brewers Association, the 501(c)(6) national Trade Organization that represents small and independent craft brewers, their beers and the growing community of craft beer enthusiasts. There are more than 9,500 craft brewers in the country.

Now, this is a different marketplace than when the three tier system was thought up, when it was implemented. And frankly, direct consumer shipping for craft beer is an idea whose time has come.

You've heard from Members here today who would like to get their products out into the marketplace more broadly, get their products onto the continent a little more consistently, be able to keep a relationship with the people who come visit their tap rooms on the islands and by way of like a beer shipping club, the same way you can join a wine club when you go to a winery in Napa.

There's nothing fundamentally different with this idea. And in fact, we're seeing more and more states start to hear these bills and move them along. just this year, in this year's session, there are bills currently moving in Texas, Florida, Iowa and Nevada. There are another 10 that are pondering for a future session.

Like I said, this is an idea whose time has come and it's imperative that brewers be able to reach the mainland on their own time without the help of a wholesaler. This supplements the wholesale three tier system. It doesn't replace it. Thank you for your time.

I will stand on my written testimony and stand for any questions.

Naehalani Breeland in support. Good morning.

Chairs, vice chairs, Members of the Committee. My name is Naehalani Breeland and I'm the President and co-founder of Ola Brew. We're a community and employee owned brewery where we have over 4,200 shareholders.

We also have a mission to support the growth of Hawaii's agricultural economy and in doing so we source fruits and botanicals from 120 farmers throughout the state. And since we opened, we've sourced over $3.8 million in local Ag, creating a more circular economy. We've also begun resurrecting our Monarch era distilled spirit, Okolehao, which is.

We've won over 60 international awards for that spirit. And we're really excited to present something to the world that's now 100% Hawaii grown and made. I'm also talking about some of the points from the Hawaii Wholesalers Liquor Association. One of the primary concerns is direct shipment of alcohol moving into the hands of miners.

I think Garrett and Steve as well as Sam mentioned really eloquently points on that. But I also want to talk about the fact that we have multiple directors of our liquor commissions that have supported this Bill.

And it's significant not only because it demonstrates their commitment to compliance and prioritizing small business, but also because they know and trust us as license holders. I also want to say lastly that the concern for that it will negatively impact employees from the wholesalers is false.

I want to speak to my 75 employees that are also owners of Ola Brew and the well being of the 4,200 community shareholders and their proud investment. And how this Bill will actually negatively impact their investments and their ownership in our business.

Thank you very much. Beer Lab Hawaii and support. That's all the testimony we received from individuals who indicated they would be present. Is there anyone I missed or anyone who would like to testify on this measure. Please come up. We got two chairs.

You can go ahead and just keep filling the chairs until everyone who's testified is done.

Good morning. My name is Kyle Reutner. I'm with Kō Hana Rum, Manulele Distillers. We're a farm-to-bottle operation located in Kunia, here on the island of Oʻahu.

We've grown since 2011 from a quarter acre of Farmland to a few hundred acres of agricultural land that all goes into a value added product made in Hawaii, creating around 50 jobs. And we're able to sell that direct to consumer from our shop in Kunia. And we have a wonderful partnership with our wholesaler as well.

However, we're unable to reach a lot of our guests and the people of Hawaii that come from neighbor islands because of different rules in different places and choices that people that operate retail and wholesale get to make for us as to where our product goes on those neighbor islands.

So we're unable to meet the needs of our island from a farm to bottle operation. And I think that I would like to support the opening up of that and I'll yield my time.

Thank you. Chairs and Committee Members, I am Kenneth Hoo. I am the secretary for the Hawaii Liquor Wholesalers Association. We submitted testimony in opposition. Primarily this Bill would allow out of state manufacturers beer and liquor to ship from out of state directly to Hawaii households.

This is going to create all kinds of problems with minor access, is going to create all kinds of problems with tax revenue. And we pointed that out in our testimony. Thank you.

Good morning.

Hello. My name is Justin. I represent Koʻolau Distillery, Justin Rivera. And I'm very happy to sit here and speak to you today, for those who cannot. I have lots of customers from in and out of state who want our products. We're a military veteran business, and I have products shared all the way from Antarctica to Mongolia.

No joke. These pictures come in on a regular basis and these are fans and customers that we could be getting money from on a routine basis to support our economy. The any opposition to this Bill, even the one we just heard, seemed pretty baseless. It is a repeat of the same talking point without any additional evidence.

I'm a very factual evidence based person and if you could prove that, I think their argument may have some merit. But they have not. They just repeat the same thing over and over again. Not to mention the additional jobs that would consume. We make small batch products, sometimes 200 bottles or less.

There's no distributor interested in my 200 bottles. My customers and my fans around the world are if you would like to change the moniker to just made locally, from made locally to made locally, shared globally. This is how we do it. Thank you.

Is there anyone else who would like to testify.

Good morning. My name is Keith Molini with Kuleana Rum. Works in Kohala on the big island. In addition to growing sugarcane and distilling rum, we also have a restaurant and a tasting room. And we do produce limited edition rums that we would like to sell to customers direct.

And we're looking at, as a restaurant operator, looking at direct to consumer as another revenue stream to be able to offset the high cost of running an opera restaurant operation as well. So in addition to the testimony of my colleagues in the business, speaking from a restaurant operation, it will give us another revenue stream. That's it.

Thank you. Thank you.

Justin Haken. house of brewing. I am the face of the small brewery that they mentioned earlier. I have five things on my chart. Right now that I'm delivering, when I leave. Something like this helps a five person brew like I love immensely. We cut out a lot of the issues people have with getting our beer.

Like, it's not me just delivering. Now ship it direct to them. So it's a model that's been proven time and time again. If you look up a brewery called Great Notion up in the West Coast, they're able to scale through their direct consumer business and then bring on distributors.

So I think all the, the claims about, my gosh, think of the kids. I think all this stuff is baseless. And it's, it's a model that's been proven to work on the mainland in many states. And I think we should be the next one.

Thank you. Is there anyone else.

Last call. Members any questions. I got one. Senator.

A little bit not quite in tune with this, but to the point you're talking about resurrecting the Okolehau. There was some work done several years ago about protecting the name Okolehau. Were you involved with that or are you aware of that?

I have been involved with that. I'm not sure if what you're referencing is the same thing that I've federal.

There was coming out. Okay, yes.

So there's the TTB. What we would do with Okolejao is create the same type of regulation that say tequila has, champagne has that. It would be a regional product and you would have to source Over 51% of Hawaii grown key from. From Hawaii. And so, you know, not anybody could copycat around the world. Right.

So that we would be valuing this.

Here and then to clarify that, and then it would have to be distilled here. Is that correct? Correct. Yes. Okay. So geographically it had to be.

Yes. And so something like HB108 is a perfect example of how we could scale that business. And we do want to, you know, share it around the world like King Kalakaua did. It won awards in. In France and in Chicago in the late 1890s. So.

So I was contacted about that to get some. Give input on that going forward. Where are we in that process right now?

Because I know it's a hard process. We have a going and we're now able to send in. We've had a lot of our shareholders, a lot of our 4,200 shareholders submitting written testimony and signing a petition that will allow us to have that regulation. A lot of times these things take years, right?

So they take, you know, three to 10 years. But we started three years ago, so. So, so we're. We're on. We're on the right track.

And 108 would help.

108 would absolutely help that. All right.

Thank you. Thank you. Chair.

Any other questions, Members? Sure. Senator DeCoite.

I have a question for you. Sure. So at your present state, how many employees do you employ?

Yeah. So between the brewery, distillery and the restaurants, we sit around 550 teammates in the State of Hawaii.

How long you been in business?

20 years. January 28th. This past January. Congratulations. Thank you.

During Covid you were super instrumental when we needed disinfectants and stuff. How much of that did you supply to the State of Hawaii?

Well, thank you. It's. I think it's any of our duties to help when we can help, and that's what we do. I don't Think we sold any. We gave it all away. Which as I think many know around the world, got me in a lot of trouble. Wrongly so.

But, but you, but you helped. I mean, in a time when we needed the help. Yes. How important is this Bill to the company expansion and where will it take us? Expansion of employees or company itself?

Yeah, great question. I, I think for us, you know, I always try to approach this with the very transparent nature. I think for us it doesn't move the needle a lot. I'm here on behalf of an industry that I believe I helped to create here in Hawaii 20 years ago.

Like I said, laughed out of every wholesaler office, had no opportunity. And the world has vastly changed. There were four breweries by the end of the first year I opened. There are now over 30. There were three distilleries that are now in the teens. Right. We've created a cottage craft beverage industry that is value added. Agricultural, tourism.

I do believe it will create a lot of jobs. I do believe it'll export Aloha. You know, I think Justin had a great term about, you know, made locally, you know, available globally, shared globally. That's a great, great way to look at it.

You know, and I think for us, we, we look at that the system exists already. This chaos theory that was positioned earlier by a gentleman that just doesn't hold water. I have in front of me the permit applications for direct shipment. I have reports for direct shipment that are required.

I have what the permit applications, like I said, I have everything you would need. We have a common carriers to do it to not only audit and tax collect appropriately from inbound shipping or inner island shipping, you know, we have all of this in place for wine.

So it's kind of, you know, irresponsible to say that it wouldn't work for these other types of beverages. So, you know, I do think this is great for the state. I think it's great for our, our industry.

Even us, at our size, as I mentioned, we are unable to sell all of our unique, very esoteric small batch production because even our great partner in Island Distributing, it's just the juices aren't squeeze. There's just not enough volume for them to actually take it and go to market.

Thank you. Thank you, Chair. Any other questions? Members Co chair.

All right. Those who are opposed to this measure seem to think that this three tier system is just so sacred and how dare anyone try to touch it and change it in any way. But the three tier system really hurts the small guy.

It helps the middle and larger guys to get their product to perhaps a global market. But it really impacts the smaller person. Right. So if you're struggling here trying to get into the three tier system, you could struggle and be a miserable failure because you have no other means in which to get your product to market.

Yeah.

So I want to ask questions regarding what the wholesalers testimony stated and then they apparently there's some sting in Vermont. I don't know when this happened but they were saying that in 20% of the cases in, in Vermont that those who are under 20 were getting their hands on on to liquor.

Is that going to be happening here in. Well, not in Hawaii, but when you send your products to wherever it might end up, sure.

First I'd address the three tier. Three tier are great partners. We do not want to break the three tier system but it is disparate in how it applies to large, medium and small breweries. I can tell you in this last year, our wholesaler, as large as they are, they're the Miller Coors House and have several craft brands.

We're the single brand in their portfolio that's positive. Every other brand is negative for them. So we have a great partner there. We're not, we don't want to break that. But even they won't carry the 10 cases of Black Pearl that, you know, 120 bottles is just not worth getting into their inventory.

As far as the sting operations, if you give me a story, I promise you I will find facts to support it. I do not see that as something that would happen regularly. Of course there are going to be bad actors.

I'd love to know was it a, you know, big brother visiting home from college, this 21 that got the shipment and it ended up in the hands of his little brothers and sisters? I don't know, I could posit all kinds of ways that that happened.

But I can tell you that UPS who submitted supportive testimony has over a thousand employees in the state. They support this. FedEx supports this. Those are the only two ways that we can actually ship. Can't ship through U.S. postal Service because they have a system that's already age gated.

And I challenge you, if you go to a winery, find a winery that you love, ship that wine to your house and while you're in Committee and they try to drop it off, if someone's not home that's 21, you're going to be upset that your wine's not outside your house because they won't leave it.

So I think this sky is falling is the Same argument I've heard for more than 20 years in my career, probably 30 years ago when they were getting DTC, but when I sat in front of many of you in different positions in many cases to champion the rights of self distribution by the small guy, who I still am today, I'm a bigger fish in a very small pond, but still not a big brewery championing those self distribution rights.

They said the same thing, that they're going to lose jobs, wholesalers are going to go out of business, retailers are not going to be able to have sales. None of this occurred. In fact, we turned that into a very lucrative business for our three tier partners.

So this is something that the time has come and I think for our smallest Members of the brewers guild and the distilleries here, this helps them the most. And hopefully those businesses are around for a long time to give the support to our islands that it very well needs.

In our darkest days, which we've had a few too many of in the.

Last few years, one of the other issues the wholesalers bring up is that they believe that we're going to see a significant loss of tax revenues. I guess that's under the assumption that somehow all of you guys are bad actors and aren't going to pay your taxes.

But when you do your small allotments of stuff to wherever it may land up, I mean, you're fully intending to pay your taxes on that?

Zero, of course. I think running a clean business is the only way you make it to 20 years. You know, and here this is the. Every county has their own system. This is the County of Hawaii. This is their direct report. There's a requirement for that. This is a sample of a report, obviously redacted.

Know Paula at Maui Wine is the largest winery in the state. They, she submitted testimony as well in support that without DTC they would not have survived the last four years. So we have the system in place that has to be reported, checked off by liquor, reported on your M18 and the tax is paid.

So this theory that there is no system, that there's no mandate for this, that there's no, no way to track all this incoming product, um, that's just completely false because I'm holding the papers that show you how to do it, that are approved by every County of liquor or county, county liquor Department. Yeah. You pay your taxes.

Absolutely.

So if this bill were to pass, I mean the wholesalers will still get their piece of the action. This just is an additive for those with smaller runs or just smaller entities that don't have access to the wholesalers. So this really only pluses to this, there's. There's no loss of jobs. It's actually the opposite. Right.

It's going to enhance jobs. It's going to get your beers to markets that might not have access to it. It's going to increase tax revenues. I just don't see where, where the downside is. It's not as if you're taking away business from the post savings.

You're adding to the entire allotment of business of spirits and alcohol going on at the state.

Absolutely. I don't think anyone's going to be ordering here in the state. Especially going to order bikini blonde lager through the mail. They're not going to pay $15 for a six pack plus. Well, I think we're 1199, which, you know, plus $20 to ship it.

They're just going to walk down to ABC or to Safeway and pick it up. Now Black Pearl, which I might make 120bottles of a year, that is a special bottle that sells for anywhere from 80 to $100 depending on where we sell it.

And most of that is just through our restaurants because we don't have the distribution because these are products that the wholesalers themselves don't want to sell. No one in the room is saying, we don't need the wholesalers. They're the best partners when you have scale, but they do not service the smallest Members.

And even me being a larger Member here in the state, they don't sell my 120 barrels, sorry, 120 bottles of say, Black Pearl. And the best part about things that are esoteric and unique is that when someone buys a Black Pearl and enjoys that Imperial coconut porter Asian rum barrel with extra vanilla and Cacao, they enjoy that.

And they say, zero, you know, I remember pineapple monoise, one of my favorite beers. I'm going to go buy one at the six pack. Six pack at the store. And the wholesaler gets that revenue. So this is all supportive. No, I think on our side we do not say there's only one path forward. That means no wholesalers.

Quite the contrary. This is a way to build brands that the wholesalers actually pay attention to and in our case support our partners in the wholesale trade.

If I can follow up with Garrett, one of the, I mean a number of the wholesalers or the, the entities that oppose the measure have also said is that, you know, we do this Bill, we're going to allow an influx of, of imports that cut out the Three tiered system and it's going to really significantly disrupt the market and cause all sorts of ancillary problems.

What's your reaction to, to that piece of this?

I think the wholesaler's primary revenue base is the, the large distributor or sorry, the large brands. Right. I think the concern is that Bud Light for some reason is going to start shipping direct to consumer. That is just not a, that's not realistic. So again, these are products, why? Yeah, too costly for them to do.

And who's going to pay the shipping from the mainland to, to Hawaii to buy a cheap six pack of beer? It just doesn't, the economics don't work out right. You're going to see an influx of beers, maybe like great notion like our friend Justin mentioned or others. Yes, there will be some, but these.

How often are you going to be buying through the mail for let's say beer which is a relatively low cost, enjoyable item. Right. It's much cheaper than say a big bottle of wine. But you've got a lot of enjoyment out of a six pack for $12. Do you enjoy it the same when that lager cost you 30?

It's a different situation. So I think that it's, it's, it's misguided to say that there's just going to be this massive influx. If anything there will be more exporting from Hawaii to the state, to the mainland, as opposed to internal. In Hawaii we don't expect to ship a lot throughout Hawaii.

We expect to ship more to the mainland. A state like Texas, where we have a lot of demand. But unfortunately our wholesaler there just doesn't see the value in putting someone behind our brand. So, so we're actually being terminated from that wholesaler because we're just too small for them even at our size in that state.

So this allows us an opportunity to ship to Texas.

What about, you know, we have, we have this big, this big Amazon distribution center. Certain amount of really common popular items that are, that are shipped from Amazon. They just hold it in inventory at that big distribution center and you can get the thing the day of or the day after.

I don't think it's very reasonable to expect, you known UH season ticket holders to order like three cases of Heineken on Monday for the game on Saturday. Unless you have one of these big re. These big shippers just like retrofit their facility and start holding inventory.

Well, I think that was a attempted by Drizzly. Drizzly went out of business on the mainland. Uh, I do, you know, I believe that in the future we are going to see Amazon shipping beverage alcohol. It's just, if you really read the tea leaves, this is where it's going. It's not for us.

We wouldn't, none of us in the room would want our product sitting in an Amazon warehouse getting hot. Just degrade the product. So, you know, we, we would decline to, to ship that way. Is it possible? Certainly it's possible.

I might flip that script a little bit and to ask the wholesalers why they're not in the room. I'd ask the wholesalers if I could.

Okay, so we're gonna, we're not gonna, we're not gonna make assumptions about the character or the intent? Oh, no, no. They're testifiers. I do need to make sure we draw there. Yes, it's, I think it's totally okay for us to have a conversation and rebut each other's arguments. Absolutely.

I have to draw the line on that because we have condo bills coming up. Sure.

No, I just meant if our, if our wholesalers could say, hey, you know, we're going to support 100% of the beverages that you produce in the State of Hawaii, I mean, then, then we have access to market for the smallest of us. Right. We don't have that. And I think that's what it is.

And again, the utmost respect, I would call one of my greatest personal friends, the President of my distribution company. And so I think if that says anything about my position with wholesalers, you know, I love them. Okay, so thank you very much.

Any, any other questions? Senator Dacoick?

Gary.

Yes, ma' am.

You know, in a time when I'm super challenged with tourism and so forth, you know, marketing has been huge and branding of our budget.

How many different states and countries do you think the small distilleries reach out and then the return of customers that come back to you that really wants to now taste that right here in Hawaii or Maui that have raved about it.

Sure. Speaking for ourselves, the brewery and distillery, through our social media presence, I mean, we see people coming from all over the world to come visit the brewery, to eat at our restaurants, to try the things, the very things that they cannot get in their markets that they would love to get.

So I certainly think that anybody in the room is making what I would call a value added agricultural product and certainly contributes to agritourism.

We like to think of it as beer tourism, in some cases whiskey tourism, but we certainly attract from all over the world and I think that export of the Hawaii brand again talking about Maui wine.

In the first days after the Maui fires, they had over $65,000 worth of orders for wine, which was a boon because all the restaurants we lost the points of distribution that supported the winery to get through a period of time we could not have any orders for beer, although we lost those same several hundred pods points of distribution in Lahaina.

So we are still crawling our way back from the damage done from losing West Maui. And DTC would have been a great way for us to say hey, you want to Maui businesses. You know, here's how you do that.

Thank you, thank you.

Thank you ma' am

Members, anything else? If not, thank you very much. Thanks for everyone who testified. We'll move on to the next measure on the agenda. HB 982 House Draft 3 relating to wildfires. This measure establishes the Wildfire Recovery Fund and allows securitization for electric utilities. First up, we have the DCCA with comments.

Morning chairs, Vice Chairs, Members of the Committee Nadine Ando here as Director of DCCA we stand on our written testimony offering comments on this measure and will be available for questions.

Thank you very much. Let me see. Division of Consumer Advocacy with comments.

Morning chair, Vice Chair, Members of the Committee Michael Angelo, Executive Director. We stand on our comment or our written testimony.

Thank you very much. PUC with comments.

Good morning Chairs, Vice chairs and Members of the Committee. Daniel Park, PUC. We'll stand on our written testimony providing comments and I'm available for any questions. Thank you.

Thank you. Attorney General's Office with comments online. Oh, in the room. Good morning.

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

Thank you very much. Hawaiian Electric in support.

Hawaiian Electric testifying in support of HB92 HD3 requesting the contents of SB97 SD3 HD1 be inserted into the Bill with proposed amendments. The Bill is forward looking remains in the public interest protecting customers from cost increases caused by the utilities exposure to unlimited wildfire liability for future fires. It does not apply to past claims.

And I want to again make clear our company's commitment to pay its $2 billion share of the global settlement with no contribution from customers. Utilities must serve despite risk factors that are not all within their control.

And across the United States there is growing recognition that unbounded wildfire liability risks leads to higher cost of capital resulting in higher cost to customers and must be addressed through policy.

More than a dozen states have passed or are actively considering bills or regulatory policy changes to that end and this Bill is critical to begin the process of returning to investment grade and reducing costs to customers, particularly now as we have to make critical infrastructure investments to improve safety, reliability, resiliency and pursue the energy policy objectives of the State of Hawaii.

We continue to believe that the existence of a Wildfire Recovery Fund coupled with a limitation on liability provides significant benefits and represents the best balance of interests and we therefore request Committee consider passing the current version of Bill with our proposed amendments, including adding a provision requiring a study on how to best implement a Wildfire Recovery Fund in the Future.

Please pass HB92 HD3 with our proposed amendments and mahalo for allowing me to testify and I'm available for any questions you may have. Thank you.

Thank you very much. IBEW 1260 in support. Clearway Energy Group in suppor. Thank you for standing on your testimony.

Coppola Chamber of Commerce in support online.

They are not available on Zoom Chair thank you.

Hawaii Association of Justice in Opposition. Good Morning.

Good morning. Chairs Vice Chairs Members of the Committees Evan Oue on behalf of the Hawaii Association for Justice we stand in strong opposition to this measure at this current time due to the liability caps that are imposed by this measure.

We did want to highlight that the liability caps would set a dangerous precedent as it's a very aggressive and would be the first of its kind liability cap on economic damages throughout the country.

You know, as proposed the measure contemplates assess valuations of the buildings and structures only and in in Hawaii the realistic the reality of it is that many majority of our tax assessed valuations are included within our land.

So this would the building valuation would only be a a fraction and would create a substantial cap for future wildfire victims. You know many other states have implemented much less aggressive forms of caps and even presumptions that actually properly account for the cost of repair.

You know so the our primary concern with this as well is that if the liability caps as proposed would prevent many of these victims from being able to repair their homes and you know, substantially undercut their rights in that instance, you know, if they're forced, if they don't have enough funds to rebuild their structures and you know, put themselves back into a position that they were before the fire, you know, they would have to choose between leaving or having to relocate and ultimately this you know, could displace a lot of future wildfire victims.

And that's our primary concern. You know with that in mind we did recommend you know, an amendment to the cap which takes into account and properly assesses cost of repair in this regard and fairly balances and protects our future residents and future wildfire victims.

So for these reasons, you know, we oppose the bill and are looking to propose this amendment as well.

Thank you Chair Ulupono Initiative in support. Thank you. Iron Workers Stabilization Fund in support

Thank you very much. Charter Communications with comments online.

Morning Chairs by chairs Members of the Committee. Felipe Monroy with Charter Communications. Happy to stand on our written testimony and answer any questions that you may have.

Thank you very much. Well, I forgot to mention earlier but in total we have, we have a substantial amount of testimony on this measure. In terms of written pieces of Testimony we have 80 individuals or organizations who testified in support of the Bill. Four in opposition and seven with comments.

Is there anyone else who would like to testify on this measure? Members questions. Okay, I have questions for the PUC. In your testimony and he's testimony you state that there are many states that have passed or are considering these types of measures. How many have passed measures like this?

My understanding is that it's two. So California has theAB 1054 Fund as well as the Self Insurance program and Utah as well. Yes.

So when you say many you mean many are considering it?

Yes. Yes.

Few have actually adopted it?

That's my understanding, yes.

Okay. Where are we with the PUC's proceeding on welfare mitigation plans?

Chair, I can answer that. Thank you. Aloha. Good morning Chair, Vice Chair and the Members Committee. My name is Andrew Cavia. I'm a utility analyst for the Public Utilities Commission where we're currently at with the Wildfire mitigation plan we just put out. Well, not just put out.

We put out an order opening the docket 2025-0156. We're currently going through the timeline. Note that we are planning to have a public informational meeting on April 23rd and 24th from 5pm to 7pm we do have a draft agenda that we were not yet ready to share with the public.

But if you want, if you would like it we could provide it to you. We are going to share that with the parties of the docket. Notably, we have admitted interveners to the docket. We have received wine lectures plan. We have issued IRs and we are going to receive our responses from IRs. Yes, informational requests. Sorry.

And we, we do plan on having Electric's reply statement of position by 08-29-2025.

Okay, thank you. By August?

By the RSOP by 08-29-2025 with any applicable order thereafter.

Okay, can, you know, I don't have it in that moment. Can you just clarify because, you know, you submitted amended testimony. There are these requests for the adoption of, of language from changes made in the House. Can you just clarify for the Committee again, your position on.

Sure.

So while we are comfortable with the House draft 2 that was passed out the other day, we did note that the house draft of SB897 doesn't sort of provide additional details about what may be required in any wildfire mitigation plan, whether it's the specifics of plan itself or any sort of process for the Commission to regularly and periodically review those wildfire mitigation plans.

So we had inserted the amendments here that would sort of provide additional clarity about that for the Committee's consideration should the committees decide that they want that additional clarity about what should be in the wildfire mitigation plans as well as the periodic review process.

So the updated draft of that Senate measure that was moved out of CPC in the House is not available online. We haven't seen it. What is the PUC's position on the liability caps?

Well, we believe that some sort of liability cap would be credit positive and that it would support the company's financial stability. As to the precise dollar amount of the liability cap, we don't have any specific number that we're willing to sort of present at this moment.

Okay. So you're generally supportive, but don't have a position on the cap as, as it was articulated in the House?

We are supportive of the concept of some sort of liability cap because we do recognize that it is credit positive and would it would help support the financial stability of the utility, and that will in turn result in, you know, hopefully lower cost of capital for the utility to be able to continue to finance its ongoing operations.

But as to the precise dollar amount at this point in time, we can't really tell you what sort of precise what dollar amount that cap should be set at.

That's kind of a, kind of a big question to leave to us, you know, the trigger for. Well, on the measure prior to its amendment, and I believe in the measure we have, you know, the Fund proposes to be triggered when there's a catastrophe that destroys 500 or more structures.

So aside from the liability cap, isn't that a high threshold? Yeah, it's essentially Lahaina. And that was testified to when we heard the bill in the Senate

For the liability cap. I think as it's wrapped it, I wouldn't disagree with that assessment, that, that that's potentially a high liability cap.

Yeah. Okay. Are there any follow ups with Senator McKel?

Yeah. Well, first of all, to have a finite structure number, what if you hit 501? I mean 199. I mean that's one question. But I mean, granted you're not recommending a specific cap amount.

I mean, couldn't we look to the other western states that have these kinds of funds with liability caps? Because it seems to me the plain spar was saying the caps proposed in the Bill are very aggressive compared to other states. Right.

Couldn't we look to these other states and say, okay, they've established these reasonable caps so we should look to them to adopt the cap level?

I mean, that's a good suggestion. I would also like to point out that the House draft that was passed out, I believe limited the cap here to economic damages. And so any sort of personal injury claims would not sort of be limited in terms of liability there.

So like victims could still pursue non economic claims, you know, for any damages. They aren't economic in nature.

Okay. Stay here. Can I, can I ask Kiko to come up? Just grab another chair. Stand by in the back row. Yeah. So. Thank you. Mr. Ben Hugo currently carries catastrophe insurance to pay claims. If there's another event.

What's the, what's the coverage that you carry does not take you up to the liability cap limit or a threshold that's proposed in the measures. Right?

It does not. So can you hear me? Yes. One of the reasons we still want to look at the fund, it is the cheapest form of insurance we can get. So we have about $150 million in liability coverage. When we've gone to the market more recently, premiums have been about 350k per million.

So if you extrapolate that out, that's a pretty steep cost to ensure the delta between what we have insurance for and what the cap would be. Yeah.

So yeah, I mean like we've testified to before that insurance is normally part of their cost of service and we would go to the Commission, but it would have to be reasonable. And right now the pricing we're getting is not reasonable.

So that's why we're looking towards a securitized Fund is the cheapest way to get that insurance or get that.

So for the PUC, you know, in the Utah Bill, the deductible to the, to the utility was $10 million. Yes. So I'd assume the deductible should be at least 150. If we're going to.

Pursue a deductible I feel like that that's a decision for these, these committees to decide, like, where that deductible should be and in terms of sort of properly balancing the sharing of the risks and benefits of having this fund. Right.

So, you know, my, my concern about this whole thing, so thank you for that. My concern about this whole thing is what happens if there is an event that's below 500 homes but above $150 million in value.

So if we just did some basic math and we assumed that catastrophe were to strike somewhere in the State of Hawaii, and let's just say the average value, because the aggregate cap limits that are proposed in the Bill are based off of assessed value.

So let's assume conservatively that home values in the area where the disaster struck were $500,000 each. So that's already, that's probably not Oahu, but let's just assume it's 500,000 at a 200 structure catastrophe with an average value of $500,000. That's $100.0 million in damage. Right. That's 200 structures. The threshold in this measure is 500.

What happens if there's a disaster, a wildfire that destroys 325 structures?

Well,to the extent that the utility wouldn't be able to utilize the fund as it's currently set up. Right. That, yes, the utility would have to rely on any sort of existing insurance that it has to cover that.

Well, and so in the House measure where they get rid of the Fund, the liability cap would kick in yet either. Right?

Ah, that would be correct, yes. So, but you know, existing homeowners, existing property owners would still have their own insurance. Right. And those insurance policies, to the extent that that damage is covered, would pay those affected homeowners and property owners for any damages.

Like what happened in Lahaina.

Thats correct, yeah.

You know, that's, I'm concerned about that being the position of the PUC. If we're being asked to move toward a House draft that gets rid of the fund and expands the delta between a, you know, the liability, the risk here to the utility.

Well, if that's the concern, then I think that that could be quick, you know, remedied by adjusting the definition of what would qualify, you know, lowering the threshold. Yeah, so instead of that or lowering.

The threshold of liability caps, I mean, lowering the cap on the liability. Sure.

That, that also works as well. That's correct.

Okay, well, thank you for that. Any, any follow ups on that. Senator Richards.

Senator, did I hear you correctly? The premium for $1.0 million coverage was 350,000?

On top of what we have, it escalates as we go up, so when we last look to get any amount above the 150. Yes. It's 35% premiums annually.

Annually. Okay, thank you. Thanks. Chair.

Is there anybody from the Insurance Council here? Jason, you can stay there because I'm gonna ask just a quick question. So I'm looking at the consumer advocates commentary about we're gonna, we're being asked to create a fund contemplate liability cap.

And they say in their testimony, consumer advocate, that even if you were to get everything you want in this Bill, there's no guarantee that there's going to be an improvement in the utility's credit rating. How much the credit rating might improve and when that improvement might come. Is that correct?

That's correct, Senator.

So the only guarantee in this Bill is it's going to cost consumers with no clear outcome that's actually going to benefit you and your credit rating.

Thank you for the question.

So clearly we have strong indication from all credit rating agencies, and you're seeing it move in multiple states now, that what credit rating agencies and investors need to have to shore up the credit rating of the utility is some assurances that we can address future financial liability exposure to wildfires, meaning a cap on liability, meaning some sort of fund to cover it.

And also that we're actually working as hard as we can to drive down the physical risk. And in our case, we need to clear the $2 billion that we owe to the settlement as well. But all of those are important pieces.

And to get to investment grade along the way, you could see slight improvements that are still below investment grade. But we need all those pieces to happen, Senator, which will take a little time.

And is it guaranteed?

There's no guarantees on anything.

So we give you two out of four. Three out of four. Four out of four. Nothing is guaranteed. That all of these tools are going to get you out of junk bond status.

As as far as we can see right now, those are what are required. That's what's happened in California, where two of the three utilities have maintained credit rating with these versions of these instruments in place. Yeah. And I'll just remind everyone, as far as the company prior to the fire, we were at near an 8.

We were at one rating agency at A minus. Right. So we're now the very, very bottom. So it's really important that we start to take steps towards improving that the, the credit spread is, is pretty large on every piece of equipment we're going to put in the ground. Senator. Okay, thank you.

Can I ask Evan a question? Sorry. I mean, there's no point from the insurance Council, so I'm going to ask you some insurance questions. Okay. What I understand with insurance, I mean, there's always risk and it never disappears.

So if you, if the HECO gets the liability cap that they seek, the risk is only going to go someplace else.

And I would imagine it's so for the insurance companies, if I'm State Farm or Allstate or an entity and I know that there's a cap, that I'm going to make some decisions as to what am I going to exit this market? Am I going to underinsure property because I'm only going to get X number of dollars?

I mean, how is a liability cap, in your opinion, going to affect the performance and the presence of insurance companies to continue to do business in the state?

You know, thank you for the question, Senator. I can't speak for the insurance companies directly and I can only, you know, assess that it might make it harder for them to stay in the market and this may cap their ability as well.

But I don't want to fully speak for them as to how this would impact their viability to remain here. It could potentially make it harder, though.

And we've been also seeing in terms of affordability and having availability of insurance, many of our older properties, because there's no longer a mortgage on them, they often go uninsured or underinsured in many instances.

So those, those properties would be adversely impacted by this particular measure, especially if the cap remains that only assess valuation for the building and structures.

Right. And when you underinsure, there's downstream fallout from that as well. Right. Because then you have a mortgage and then the bank is not going to allow for a mortgage if you as a property owner are underinsured. Right. You're going to jeopardize the mortgage market and the financial markets for individuals.

It could potentially have that effect.

Thank you. Thank you, chair.

Senator McKelvey. Yeah, just real quickly, Wine Electric. I mean, we've kind of opened the door to this conversation and it's been the question I get a lot still from outside of Hawaii. And I'll ask it now, you know, because it does speak to the, the financial health of the utility business.

Utility was the sale of your bank assets. And I'll just be blunt, you know, how come it was such an undervalued sale?

So qualifying that I work for the utility and not the holding company, but will be as responsive as I can. We sold the bank for the maximum amount of money we could get at this time. So that's what the market provided. And as the parent company went out to shop it

The evaluation of it was far higher. Then you look at the metrics of banks. I guess a lot of people ask the big question.

Given that it was worth so much more, there would have been interested entities that would have seen that and potentially paid more, which then of course makes you guys financially stronger.

Right. I can, I'm gonna quickly get out of my depth, but I want to be as responsive as possible.

What I can assure you is that the company did every effort to get under time pressure to sell the bank for the maximum amount it could get to address the situation to put us in the best possible position to sell the $2 billion.

Like I cannot fathom a situation where they would have sold it for less than what they could have got. I will take a little speculation here and say that banks started to the value after Silicon Bank, Silicon Valley Bank and some of those other things occurred.

So the book value versus what we could get on the market may have been different. But I'm speculating there. Senator, I'm just trying to give you the most responsive answer.

And I really appreciate that. Thank you being able to ask this question. Thank you, chair.

Members, Senator Richards.

I'm listening to my other Senators.

Yes, sir.

And I hear that the concern for liability, liability cap exposure, but by the same token deeply concerned about the function of our power grid because that's impacting our entire economy as well as perspective of going forward.

This Bill coming forth critically important for longevity because I can see if we don't get our rating up, our cost of money is up and thereby our costs are up and thereby our rates potentially would go up. And I see this kind of as a spiral and we're trying to figure out where we balance this.

Can you, I know it's been explained, but can you briefly summarize the intent with the replacement of the, the language? What's your thought process on that?

I'll be as clear as, as possible. You know, we still want to see what we proposed originally, which is in our mind the best balance of interest, which is a reasonable cap with a reasonable size fund. But we understand that many folks are still concerned about the complexities of the fund and the admin process.

And for that reason we're willing to say, well, the cap that was introduced on the House side provides us a super meaningful first step. And if we can study and address everyone's concerns on the fund, I think that's kind of where we're at as a reasonable balance. Ideally, we want both the fund and the liability cap.

Try to be as brief as I could, but also try to be as transparent as possible.

And I appreciate that. Thank you Chair.

Any other questions, Members? Okay, I have follow ups. How, if we do liability caps, how long do you need them? Is it still the 10 year plan as proposed in the first draft of the Bill?

I mean, I would think they would need to be durable until the risk was reduced sufficiently and then they would be irrelevant thereafter. But I mean, there's always a tailed event we can be exposed to Chair so I mean, I would imagine they would be durable there. You know, we, we've seen it in Hawaii before.

A tail event can put us all in a spin. And this issue is shared by all of us, this risk so.

And it's scary because everyone, it's very scary. I mean, it was, it's really recent. When you, when he presented before the EIG CPN and Public Safety Committees in November, you went over your mitigation plan, which is the most recent. Is it fair to say that that's still pretty sound?

Because we don't have a decision from the PUC yet and they're going through their process and so that's the last public information we have on the Wildfire mitigation plan. Your strategy, some initial numbers, I guess, like this first phase, the next three years, what you're going to do and what you're gonna, how much it's gonna cost.

Is that still, are those, are those estimates still pretty close?

I think what we presented to you folks in November is materially still the same. It's just been refined and I think our numbers are still pretty close. I think Mr. Ching is here. I think we're projecting 130 over the next three years, which is consistent with what we presented.

What I thought I remember from the presentation, you can come up, Colton, if you want to, was 120 million in 2024 and about 350 in total over the next three years. Yes.

Chair, Colton Ching from Hawaiian Electric. So we filed with the Hawaii Public Utilities Commission, our Wildfire safety strategy on January 10th, and that has some slight updates and changes from the material that we presented back in November.

But are those numbers generally in the ballpark?

Generally in the ballpark, strategy $450 million of wildfire mitigation work over the years 25, 26 and 27.

And then were you, were you required as a part of that plan to project and itemize the full plan? Because it's 10 years, right?

Yeah. So the strategy only covers what the utility is proposing and planning to do over the next three years. And we projected the volume of work and the costs associated with that. We did do, however, to your question, do analysis of risk reduction efforts and benefits over a longer period of time.

But what we filed in the strategy was the plan for the next three years.

And how, how are you going to pay for the 450? Do you guys have a plan to pay for the 450 now or do you need the securitization to finance the 450?

So the $450 million. Right. The work contained in the Wildfire Safety strategy, part of the work in there is work for which we've already received PUC approval for recovery through the EPRM mechanism, as well as the Department of Energy Grant. It's about $95 million of grant funding. But then it also identifies additional work and expenditures.

In our filing, we indicated to the PUC that we intend to file a separate cost recovery application for those investments not already recovered through the EPRM mechanism or the DOE grant for filing that we would be doing later.

And so that would, that would be a General Order 7 application with the request to recover the additional dollars through the. Through the same EPRM mechanism.

Okay. So this initial phase is itemized. You have a finance plan, and those are known quantities. Okay. That's the only question I had.

Any other. Senator Richards. Yeah. Follow up on this again, coming back to your financing and your, your rating, but having the cap structure that allows us to know what potentially the high end of what any exposure could be thereby, that'll kind of put the guard rails around you.

Coming back to your comment about cost of insurance, if there was a way to insure at a substantially reduced rate thereby you could take your cap higher, is that something that would work? And so this cap could be elevated if there's a way to get the insurance there.

Thank you, Senator. So theoretically, yes. I mean, if they could see that we had insurance that was reasonable, covering the gap and up to the caps, and I think that would have the same effect. Just don't see currently from what. From what we see, we don't see a market for that like a product that we do it.

Okay, thank you. Thank you, Chair.

Any other questions? If not, we'll move to the next measure. Thank you very much. Which is HP 1055 HD1 making an appropriation, an emergency appropriation to the PUC. I think all we have, all we have on this is Hawaiian Electric and Support and then the PUC.

Good morning Chair. I apologize, it's been a long night. Chair Wakai, Vice Chair Fukunaga and Vice Chair Chang as well as Members of committees. My name again is Andrew Okabe. I'm a utility analyst of the Public Utilities Commission. I am here on behalf of the Commission. I stand on Commission's written testimony in.

Strong support of 1050 HB 1055 HG1. I'm available for any questions with about this matter as well as any other matters relating to WMP as you see fit to ask me.

Thank you. Is there anyone else who would like to testify? Members questions. Okay, I'll yield to the co. Chair. Hello. Pleasure.

Yes. Chair. Yes, I'm online. Yeah, sorry, I was speaking and it wasn't acknowledging me speaking. There we go.

We are on House Bill 1055 HD1.

I realize that I do want to testify on that if I could just very very briefly. Thank you. So First Aloha Chair, Vice Chair, Members of the Committee. Chair, My name is Greg Masakian and I'm testifying as an individual.

But I do serve on a number of boards in the state and I do represent many residents of the State of Hawaii on those boards. I will make a comment. I just saw this as I'm waiting to testify in another bill.

So I took the time to read and what I would like to make a comment on, and it's something I see that's pervasive in our state is that when we seem to have a problem with something or we're not quite clear what to do, we tend to want to study or we tend to want to run to the consultants or we want to get expert opinions and in some cases that's okay, that's something you should do and we respect that.

But in other cases where the entity, the company, the agency should be doing their job properly, I have concerns with that and I'm going to just read one very quick statement off of the declaration and promise from heco. Our declaration, most progressive and forward thinking energy company in the world.

So I ask if it's the most progressive and forward thinking energy company in the world, why are we putting money towards consultants for that? I would expect that they would have the people that they need to provide the expertise already.

So that's my only comment and maybe this is still warranted but I haven't had enough time to dig into this again. I'm here for another bill today so thank you for the opportunity to make that comment.

Thank you. Is there anyone else in the Internet that would like to testify? Members, any questions? Okay. Yield to co Chair from Expo. Thank you.

Okay Members, we're moving on to House Bill 974 HD1 relating to energy first in our testifiers list we have Louis Sulliv very from Budget and Finance Facility commentary Randall Nishama from the Attorney General's.

Office Good morning. Deputy Attorney General Randall Nishama. We've submitted our written comments and I'm available for any questions that you may have. Thank you. Thank you Mr. Nishama. Leo Asun or someone from the PUC.

Aloha Chair Vice Chairs Members of the Committee. My name is Max Markich. I'm an economist at the PUCM. We've submitted our written testimony providing comments and are available for any questions. Thank you.

Thank you Max Michelangelo Consumer Advocate Vice.

Chair Members of the Committee stand on our for testimony question.

Thank you Michael. Brian Duncan from Plus Power has submitted testimony support Ren Westco Also in support Nicola park from Clearway.

Aloha Chairs, Vice Chairs, Members of the Committee. Nicola Park on behalf of Clearway Energy. We stand on our written testimony and support. Just wanted to emphasize the importance to our investors as one of the largest energy developers in the state that this step in be assumed.

This really comes down to the language of shall versus May that's been brought up in the bill subject to diligence and subject to terms of a step in agreement we support but we really would like the shall language to remain in the bill.

Just wanted to emphasize as well that the state is really not putting any financial support there. This is really a pass through mechanism from ratepayers to IPPS under power purchase agreements. Thank you. Available for any questions. Thank you Nicola. Colton Ching.

Good morning Chairs, Vice Chairs, Members of the Committee. My name is Colton Ching testifying on behalf of Hawaiian Electric in strong support of HP974HD1 with the proposed amendments HP974HD1 is crucial for Hawaiian Electric's customers and the development of new renewable energy projects.

We have been working with and continue to work with various state agencies as well as independent power producers to address the concerns that they raised in their testimonies regarding the original bill. And our proposed amendments that we've written in are based upon these discussions.

HP974HD1 will help avoid higher cost contracts with independent power producers that we contract with by addressing financing concerns raised by these developers due to the current credit rating of Hawaiian Electric and to ensure system reliability by avoiding project delays, avoid or potentially project cancellations due to the same financing concerns and challenges.

Ultimately, this bill is for the benefit of all of Hawaiian Electric's customers without which our customers will likely see increased costs due to the higher power purchase costs as a result of the higher financing costs that they will incur.

Hawaiian Electric believes that the solution offers the best way to address developers financing concerns that have been raised and reduce costs to customers. And we strongly support HP 974HD1 with our proposed amendments. Thank you for the opportunity to testify and I'm available to answer any questions you folks may have.

Great. Thank you for joining us. Colton. Micah Munakata from Ulupono. Thank you. Mariah Nicole Algerino from Ameresco submitted testimony and support. Sharon Menor from the Chamber has submitted testimony and support. Eliza Talbot from AES has submitted testimony with support and suggested amendments. Ryan Sakuda from the Contractors Association in support. Jeff Piciluna.

Good morning chairs. Jeff Piccolina representing Climate Hawaii with part of the Hawaii Executive Collaborative. We're sort of an unorthodox array of organizations that are all putting a shoulder against climate issues and clean energy. And you can see on a testimony we have about 16 local organizations and businesses, unusual grouping of folks who are supporting this measure.

Recognizing that we're really at a pivotal time in our transition toward clean energy and this will play an important role in making sure that we stay on track. Just want to highlight one piece that's critical.

These independent power producers that are signing these contracts with the utility for large scale renewable projects, they price in the risk and if there is risk of default, that's going to show up in that price that they have with the utility raising the price for all of us.

So it's critical that there is this backstop and some comfort that there will be an off taker in the future and that's what this measure does. So we appreciate you hearing this and moving it forward. Mahalo.

Thank you Jeff. Frank Schultz, an individual in opposition. Brad Albert from Next. Nick Samp has submitted testimony support. Is there anyone else wishing to testify on House Bill 974? If not, aloha.

Sorry, this is Eliza. This is Eliza Talbot with AES Hawaii. Just wanted to testify in strong support of this bill and emphasize that we support all of the amendments proposed by. HICO and echo the concerns and comments. By Clearway as well. So thank you so much for the opportunity to testify. Five.

Thank you, Liza. Is there anyone else wishing to testify on HB 974, if not Members? Any questions?

Yes, Senator McG's office. Yeah. So this bill in this draft could, could theoretically or maybe put the state on the hook with liability. Right.

We would want to ensure that the state has no liability at all. We're just a pass through.

But I mean BNF raises their own concerns of requiring it when it's not in the state's best interest. And they point to your testimony.

That's correct. So that's the discussion over Shell vs May. And clearly we would like the state. To be able to do its due. Diligence before accepting the responsibility as pass. Through to protect the taxpayers, right?

Yes, Correct. Okay, thank you, Chair.

Any further questions? Jeff, thank you. So your suggested amendment is to actually make it a little bit more encompassing by including community based renewable energy projects. Because I think right now it talks about future PPAs.

So can you help me understand like how, how many other people are we scooping in to benefiting from this program if we put your amendment in right.

And for clarity, that's Blue Planet Foundations, not, not Climate Hawaii. But. Yes, but Blue Planet foundation feels like that would be important to make sure that there's sort of a level playing field for all those that are signing these long term contracts.

And the an organization that's doing a community based renewable project would be treated the same and have that same sort of backstop for their projects. Right now, unfortunately, the community based renewable program is quite small and there's not many players there.

But we want to make sure that they're on the same playing field as larger utility scale projects.

Great. Thank you Members. Any further questions? Okay, we're going to take a brief recession.

Hey, good morning and welcome back.

This is our 9:30 a.m. CPN EIG Joint Committee hearing in conference room 229. We're here for decision making on the 9:30 agenda. The first measure is HB108 HD2 relating to intoxicating liquor. The recommendation on this measure is to pass with amendments defecting the effective date of this measure to July 1, 2050 Members. Any discussion? Seeing none.

Vice Chair passing with amendments. Chair votes Aye.

Thank you. [Roll Call] Measure is adopted.

Thank you very much.

For EIG same recommendation. Any discussion you have not Senator Chang? I vote yes.

For the IG Committee, HB102 chairs recommendations passing commitments. [Roll Call] The recommendation stopped.

Thank you. The next measure is HB982 HD3 relating to wildfires. Members, a brief comment on the measure. I acknowledge that this is a significant measure for our state's largest public utility, for our ratepayers and for the whole community.

Regarding wildfire mitigation, as testified during as Testified to by HECO in the Q&A, the first 350 $1.0 million phase of the wildfire mitigation plan is already financed and itemized. The later phases of that plan are not financed, non itemized and not approved currently by the PUC.

But that process is ongoing and we will monitor and watch that with great interest. As a. As it comes to the bill, it appears what we're talking about here with this measure is not that first fleet, not that first, most immediate, most important phase of the wildfire mitigation plan.

What we're talking about is how we can assist the utility with the later phases of the plan. This is a risk reduction credit enhancement strategy being proposed that would potentially benefit all of us, including the utility in those later years.

From my perspective, the most immediate help we can provide and are proposing to provide in the Legislature right now is being proposed in the form of the $800 million General Fund appropriation to go to the global wildfire lawsuit settlement, which as testified to last year and along the way seems to be the biggest concern facing the utility, the litigation overhang.

And so because this bill would take years if enacted to benefit us and the utility, what I'm proposing is that we take some time to really consider the impacts of the precedents that we are proposing to set in the measure that do not exist anywhere else in the country short of two states.

So the recommendation on this measure is to delete the contents of the bill and insert the study and working group that was proposed by Hico in their testimony. Members, any discussion? Okay. If there is none. Vice Chair passing with amendments. Chair votes Aye.

Thank you. [Roll Call] Measures adopted.

Thank you for EIG seeing recommendation. Any discussion? If not Senator Chang? I vote yes.

Chair's recommendation for HV 8982 is to pass with amendment. [Roll Call] The recommendation is adopted.

Thank you very much. The next measure is HB 1055 HD1. This is the emergency appropriation to the PC. The recommendation on this measure is to pass with a defective effective date of July 1, 2050. Any discussion? Okay, seeing none. Vice Chair passing with amendments. Chair votes.

I thank you. Of the Members present. Any voting with reservations or objections hearing? None.

Measures adopted for EIG Member same recommendation. Any discussion? If not Senator Chang? I vote yes.

Recommendation for HD 1055 pass with amendments. Of the Members present, are there any objections or reservations?

For the last measure, House Bill 974 HD1 relating to energy. This is a necessary bill considering HECO's dire financial situation. We need to have some assurances for the power producers that whatever he's future might be that they will be guaranteed to be paid under the terms of whatever business they come up with.

HECO absent this bill, there's very little chance that many of these projects that are on the books will get the financing that they need. So we recognize that as a body and would like to pass this measure out, but with a number of changes. I had three red line drafts from the state, the HECO, other parties.

I gathered a majority of them. I deleted a couple of them. So with your indulgence, It's a very complicated bill. I want to just kind of read off of what we're going to take as amendments.

First of all, we're going to keep the language in the bill to require BNF to enter into the step in agreement not made but require them. We will include language that the Budget, Department of Budget and Finance due diligence must be completed within 30 days of the bill's passage.

The Department of Attorney General provided a lot of amendments, suggested amendments. We are going to take all of them except this is not the exceptions. We're not going to take these.

What we are not going to take are on page 4 and 5 adding in language regarding monies received from independent power producers related to power purchase charges also under the section covering purpose of this act changing instances of required to allow or establish not taking that number three under 269B changing instances of shall to me we're not taking that suggested amendment.

Also we're not taking this Suggested amendment by AG under Section 269B Subsection A. We would delete as determined by the Department solely within the Department. Well, we're just going to delete that section A, subsection a and under 269b subsection f we will delete. We will delete prompt and full what I just mentioned there.

We are not taking those suggested amendments but accepting everything else from the Attorney General's Office as we move on to the other suggested amendments as noted by the PUC, all renewable energy is at risk and Blue Planet's testimony will be to ensure the community based renewable energy project should be included.

We will make amendments that provides for the step in agreement to apply to purchase energy from any power purchase agreement removing any references that applies to only Stage three and Integrated Grid plan. Also, we will take Hawaii Electric suggested amendments as follows.

We would add amendments to ensure timely payment of two PPAs and prioritize PPA payments for from collected revenues. Also add amendments that the PPA shall remain entitled to all payments owed under the covered PPAs even if the revenues for any particular month were not timely collected.

Also, another HECO amendment we're going to take is under section 269B subsection 8.

Other terms and conditions imposed by VNF should not impede payments as and when due for power purchase costs owned under the PPA also in section 269B subsection K and provision that the IPP can be by notice to the Department that the utility has failed to file timely submissions as described in subsection J.

Also insert the word promptly refer to referring to performance of the obligations by the utility and Department. And also another HECO suggested amendment in 269e subsection B. The Reserve fee should be reinstated and replenished if necessary. Also add language to section 269F subsection F as follows.

The Department's contracts with electricity electric utility for such services under Section 269F subsection A and subsection E is exempted from Chapter 103d hrs and also technical non substantive amendments for clarity and consistency. Sorry for the like the amendments but those are the suggestions Members. Any discussion?

Take 20, I have a discussion. Yes. Yeah.

Thank you for the changes but I can't support the bill at all. The Biggest reason being is we're potentially exposing the taxpayers to potential liabilities. There's a 103D exemption that concerns me, obviously, and there's so many raft of changes.

But you know, I'm probably going to oppose this on the floor, but for right now I'll go with reservation. But there are serious reservations on the measure. Chair.

So, okay. If you look at some of the AG suggested amendments that had the same thoughts that you did, I think they kind of really shorted up so that the state is not going to be liable. But I understand there's always that potential risk. It's out there we can't guarantee.

And I appreciate you understand that, Chair. Thank you.

Okay. Any further discussion? If not Senator Chang? I vote yes.

Chair's recommendation for HB 974 is to pass with amendments. Of the Members present, are there any objections or reservations? Seeing None. The recommendation is adopted.

CPN, same recommendation, passing with amendments. Chair votes Aye.

Thank you. Vice Chair votes with reservations. [Roll Call] Thank you. Measure is adopted.

We're adjourned. Good morning and welcome.

This is our Thursday, March 20, 2025 10am agenda in Conference Room 2 to 9. This is the Hawaii State Senate Committee on Commerce and Consumer Protection. First measure is HB850. House draft one relating to condominiums. First up, we have Hawaii First Realty in support. Dale Head in support online, Greg Misakian with comments. All is. Did we get.

Mr. Head, are you there? Good morning.

Pardon me. I had to activate my camera here. I got reservations about this. Let me speak real fast. Okay. Aloha. My name is Joe Head. See, I resided in a large condominium complex for about 35 years and was on its board of directors for over a decade.

During that time I resisted intrigues from three management companies and has spent several years now coming to our Capitol seeking a change of state law to allow for all HOA members to cast their own votes at Association elections. House Current Resolution 811 makes three points which I'd like to address.

Point one, that a board may choose to have an electronic meeting, electronic voting and mail in voting. Please note, there is no requirement to confer a ballot on members who cannot attend or participate at a meeting. The situation falls short of people receiving their full voting rights. Point two specifies the cumulative voting applies to all candidates.

This line implies pushing cumulative voting onto associations which may not have it in their bylaws. Point three clarifies that individual votes are used in cumulative voting. Ah, but there is no mechanism provided here to notify Members who stand in a proxy how their votes were cast.

Their proxy form, which is not mentioned in this Bill, is a means to give away votes which often leads to abuse by some management companies. They receive all proxies and are not prohibited from secretly conferring them onto their preferred candidates, thereby manipulating the election.

This seemingly innocuous Bill is barely one link in a very long chain of bills sought by company agents over many years decades to massage state laws in order to give them advantage over HOA members which is anti democratic and converts the words consumer protections to in fact be super exploitation. Thank you.

Thank you very much, Mr. Head. Next we have Greg Misakian with comments online. Good morning.

Good morning again. Thank you. Chair, Vice Chair, Members of the Committee. My name is Greg Misakian. As I said earlier, I serve on a number of boards in the State of Hawaii and I represent quite a few people in the state on those boards to advocate on their behalf. I do not support HB 850 HD1 as written.

This Bill is not properly worded to provide better consumer protections for condominium owners. I did offer to help revise it, but I wasn't contacted. This year, again, like others, it has been 100% clear that many of our legislators are not listening to the residents of Hawaii who have asked for better laws and consumer protections for condominium owners.

You are scheduling bills that either do nothing at all or are confusing at best. And the most substantive bills to provide help for the many thousands of residents who live in condominiums were, in my opinion and many others, intentionally not scheduled for Committee hearings.

Some of these bills were HB 1311, House Bill 1312, HB 1313, House Bill 1315, House Bill 890 and SB 1265. I ask our legislators to please stop listening to the condominium. Excuse me. I ask our legislators to please listen to the condominium owners, myself and others that I represent.

And please stop listening to the same group of people in the trade industry, the attorneys, the management company lobbyists, the parliamentarians who are also making money when there's more conflict, and others who come to you.

If you look at the people supporting this Bill because it is improperly worded and it goes against condominium owners, you'll see that 90% are attorneys, lobbyists, parliamentarians. The few that are making comments or opposing are the true condominium owners and the ones that know best. So I really ask this year that you please stop.

We're almost done with this session. Please stop pushing the bills that are really detrimental to condominium owners. This is one of them. It needs to be amended if it's to be moved forward. Thank you.

Thank you very much. Steve Glenstein, Association of Parliamentarians. Good morning.

Good morning, Chair. Vice Chair, apologize. I could not wait. I had to run because I'm going to another meeting in a short while. I've submitted written testimony on behalf of Hawaii State Association of Parliamentarians and I believe it points out the major issues with the Bill.

Basically, it's cleaning up language that already exists, making it a little bit more clear, making it very clear that owners still have the right to decide whether or not they want to have an in person meeting or have a meeting that is completely separate, you know, do mail voting, what have you.

It still just cleans up what exists in the statute to make it more clear. And I ask that you pass the Bill with the, with the amendments. I'm available for any questions if you wish here.

Thank you very much. Is there anyone else who would like to testify? In total we had 23 who submitted testimony in support for an opposition and one with comments. Members, questions? Okay, we'll move to the last measure, HB 1050 HD1 relating to Title 24, Hawaii Revised Statutes. This is insurance Bill.

First up, first and only testifier, DCCA Insurance Division in sport.

Good morning, Chair, Vice Chair, Members of the Committee, Jerry Column, Acting Insurance Commissioner. Testimony and support.

Thank you very much. Is there anyone else? Okay. Members questions? Okay, it's not then. I'm prepared to go into decision making unless there are questions or comments. All right. First measure HB850 HD1. The recommendation on this measure is to pass with a defective effective date of the July 1, 2050. Any discussion. Vice Chair.

You know, it's so rare that you see some of the people on different sides of this issue voting together. And in terms of some of the provisions of this Bill, I really cannot support empowering a condominium board to authorize electronic voting in any in person meeting without first having to obtain prior owner approval. So I'm going to.

People know that. Thank you.

So noted. Any other discussion?

I couldn't hear the discussion.

Before, but what the vicer's comment is that she'll be opposing the measure.

Okay. Right. Well, out of due caution, I'm just going to go reservations because I got. To take a deeper dive on everything. That just kind of occurred, so.

So noted. Any other discussion? I'll be doing ditto as well. Okay. There are no other comments. Vice Chair, passing with amendments. Chair votes Aye.

Thank you. [Roll Call] Measure is adopted.

Thank you very much. Last measure is HB 1050 HD1. The recommendation is to pass with the defective effective date of July 1, 2050. Any discussion? Seeing none. Passing with amendments. Chair votes Aye.

Thank you. Of the Members present, are there any voting with reservations or objections? Hearing none. Measures adopted.

Thank you. Urgent.