Senate Standing Committee on Commerce and Consumer Protection

Okay. Good morning and welcome.

This is the Hawaii State Senate Committee on Commerce and Consumer Protection in a joint Committee hearing with the Ohio State Senate labor and Technology Committee. The state. This is the Tuesday, February 10, 2026. 9:28am Joint Hearing Agenda.

We're being streamed live on YouTube and if we need to reconvene for any reason, that will be tomorrow, February 11, 2026 and 9:30am in this room 2 to 9. Only measure on this agenda is SP 3001 relating to artificial intelligence. First up we have the Office of Consumer Protection with comments.

Hello, Good morning.

Good morning. Chairs, Vice Chair, Members of the committees. I'm Raji Tolentino. On behalf of OCP. We will stand on our testimony offering. Comments and be available for questions.

Thank you very much. Department of Education and support.

Members of the Committee, Winston Sakurai representing the Department. We stand on our written and testimony and support.

Thank you very much. Attorney General's office with comments. Good morning.

Good morning. Chairs, Vice Chair, Members of the committee's Deputy Attorney General Ashley Tanaka. We did submit comments with some potential constitutional concerns we saw regarding content regulation as well as vagueness concerns.

So we did offer a suggested definition for an existing term in the bill as well as suggested additional section and an additional definition to hopefully address some of these concerns we saw. Thank you. Available for questions.

Thank you very much. SHPDA, Dr. Lun in support.

Testimony in support. Thank you.

Thank you very much. Google in support.

Aloha Chair, Chairs and Vice Chair and Members of the Committee Nahilani Parsons testifying in support of this measure on behalf of Google. We believe that generative AI like Gemini can be a really powerful tool for learning, creativity and preparing young people for an AI driven future.

However, we also recognize that minors have unique developmental needs that require unique protections. While Google has proactively implemented these safeguards, we believe that well crafted legislation can play a meaningful role to establish consistent responsibility floor across the entire industry. We're here today to support SB3001, a thoughtful and effective bill that reflects a risk based approach to safety.

We provided some amendments that we really believe help bridge the gap in terms of addressing some of the concerns raised in testimony and other entities as well as getting us through the, you know, making progress in getting a bill passed the session available. If you have any questions.

Thank you very much. We also have late testimony and opposition from Agentic llc. Is there anyone else who would like to testify on this measure? Members, any questions? Okay, we'll recess. Okay.

Reconvening for a vote on SB3001 after having conferred with the Chair, our co Chair and the Members. The recommendation is to pass with amendments. We will adopt the proposed recommendations of the DCCA Office of Consumer Protection regarding data minimization for minors and clarifying the UDAP provisions.

Adopt the AG's recommended amendments to define some terms, strike section 2, subsection D3, clarify section C5 and add some definitions for clarity. So thank you to the Attorney General's Office for your help on that. And we will adopt all of the Google proposed amendments that do not conflict with the DCCA OCP recommendations.

We'll also defect the effective date of this measure to July 1, 2050 Members. Any discussion? Okay. If not passing with amendments. Chair votes Aye.

Thank you.[Roll Call] Recommendation is adopted. Thank you.

Okay. For the Committee on Labor and Technology. Same recommendation as CPM. As CPM to pass with amendments. Any further discussion? If not, Acting Vice Chair Morwocki for the vote. Chair votes Aye.

[Roll Call]

Thank you very much. We're adjourned. Okay.

Convening this 9:30am Tuesday, February 10, 2026. CPN Committee decision making for measures that were heard previously on February 4th and making recommendations. The first measure is SB 2045, relating to combat sports.

The recommendation on this measure is to pass with amendments adopting the DCCA's requests regarding the board or commission composition and adopting the Boxing Commission's recommendations on many of the items that they commented on in their testimony, including clarifying that the required on site medical professional is a licensed physician.

Clarifying when and under what circumstances the Deputy Combat Sports Commissioner is to submit a written report removing the combat sports registry, clarifying payment for licensed promoters and removing the ambulance requirement, but clarifying that the licensed physician on site and the inspector coordinate in advance with the nearest healthcare facility and also clarifying the mandate for the Commission to appoint inspectors.

There are some technical, non substantive amendments as well and will defect 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. Of the CPN Members present, are there any voting with objections or reservations? [Roll Call] Your recommendation is adopted.

Thank you very much. Next measure is SB 2347, relating to the landlord Residential Landlord Tenant Code. The recommendation is to pass with amendments, will strike section three, which are the landlord requirements, and keep this measure moving so that OCP can hopefully work with the Office of Language Access to provide a multilingual notice of tenant rights.

We'll also defect the effective date of this measure to July 1, 2050 Members. Any discussion? Okay. Seeing none passing with amendments. Chair votes Aye.

Of the CPN Members. Present any voting with reservations or objections? Hearing none. Your recommendation is adopted.

Thank you very much. Next measure is SB2495 relating to consumer protection.

The recommendation on this measure is to pass with amendments amending the bill to require instead of clarifying the authority to enforce and bring action, we'll amend the bill to require the Office of Consumer Protection to publish an annual report with information on accident actions taken by the Office on Potential Violations of the Code and will defect the effective date of this measure to July 1, 2050.

Any discussion? Seeing none passing with amendments. Chair votes Aye.

Of the CPN Members present any voting with reservations or objections? Hearing none. Your recommendation is adopted.

Thank you very much. The last measure on this decision making agenda is SB2777 relating to insurance. The recommendation is to again defer decision making on this measure to February 17, 2026 at 9:30am in this room. 229.

The objective of this measure is to provide consumers with the opportunity to see what insurers are doing in regards to claims in the state of Hawaii. And so we are still working to make sure that that can be done in a way that is easy to understand for consumers and makes sense. There are no objections.

We'll adjourn this agenda.

Okay. Convening this 9:35am decision making agenda. These were measures that were also heard previously on I believe February 4th. The first is SB 2471 relating to the artificial powers of persons. Okay.

The recommendation on this measure is to pass with amendments making changes to the preamble to make it clear that this proposal is directly comparable to the federal ban on 501 electioneering which has been established by federal law and upheld in federal courts because of the tax benefits granted to those organizations under the law and that in Hawaii we charter corporations in exchange for complying with the requirements of the corporate charter language in hrs414.

These entities avail themselves of lucrative tax benefits and liability protections in Hawaii. So we'll also remove the proposed amendments purporting to subject foreign artificial persons to the bill's provisions related to an entity's powers. And on page nine, line 12 will strike the words or donations for clarity in the measure. And there are also technical non substantive amendments.

And we will amend the effective date of the measure to January 1, 2027. Any discussion okay. If not, Vice Chair for the vote. Passing with amendments. Chair votes Aye.

Thank you. Of CPN Members present any voting with reservations or objections? Hearing none. Your recommendation is adopted.

Thank you very much. Next measure is SB 28-29 relating to the powers of artificial persons. The recommendation on this measure is to pass with amendments.

Also making amendments to the preamble, removing proposed amendments again purporting to subject foreign artificial persons to the bill's provisions and making amendments to sections 4, 8, 11, 14 and 14, clarifying the bills provisions, clarifying that the bill's provisions do not invalidate previously entered into legal obligations and also amending Section 13 for consistency.

There are technical non substantive amendments. And again, we'll amend the effective date of this measure to January 1, 2027. Any discussion? Seeing none. Passing with amendments. Chair vote Aye.

Thank you. Of the CPN Members present any voting with reservations objections? Hearing none. Your recommendation is adopted.

Thank you very much. And the last measure on this agenda is SB 2033 relating to renewable energy.

The recommendation on this measure is to pass with amendments clarifying that grid ready home means retrofitted homes and new homes, clarifying provisions related to the cost sharing program and that those requirements apply to interconnecting customers and adding language to clarify that the established process must ensure that relevant safety standards or certifications are complied with.

We'll also affect the effective date of this measure to July 1, 2050. Members any discussion? Okay. Yep. Seeing none. Vice Chair passing with amendments. Chair votes aye.

Thank you. Of the CPN Members present any voting with reservations objections. Hearing none. Recommendation is adopted.

Thank you very much. We're adjourned.

Welcome to this Tuesday, February 10, 2026. 9:45am CPN agenda in Conference Room 229 at the Hawaii State Capitol. The first measure on the agenda. Well, the only measure on this agenda is SB 3000 relating to insurance.

This measure authorizes the Attorney General to bring civil action in the name of the people of the state as Parents Patria against any responsible party to recover certain costs or obtain certain relief, including costs and losses incurred incurred by the Hawaii Property Insurance Association, Hawaii Hurricane Relief Fund and other state entities resulting from climate attributable harm or costs for the risk of future climate attributable harm.

First up, we have the Insurance Division DCCA with comments. Good morning.

Good morning. Chair, Vice Chair, Members of the Committee, Matt Sujimura, on behalf of the Insurance Division, you have the Insurance Division's written comments. I do want to note the HHRF is meeting today right now to discuss per Sunshine Laws, its position and ability to testify on things.

So if you were looking for testimony on their behalf, they are deciding on that today.

And I just want to point out from our written testimony the Insurance Division does want to note the potential redundancy of sections 3 through 5 of the bill that would require either the Insurance Division to account for proceeds from litigation in the rate making process as well as for HPIA and HHRF to account for those proceeds per any civil actions brought under the proposal under this bill.

The Division's rate making and rate approval process actually already accounts for for that process. So that language may not be necessary in the language of the bill.

And we also just want to point out that there may be other concerns with regards to adding administrative steps into, for lack of a better term, the insurance structure and system, which may cause additional delays or confusion for on behalf of consumers. But happy to answer any questions. Thank you.

Thank you very much. Attorney General's Office with comments. Good morning.

Morning. Chair Vice Chair Members of the Committee Deputy Attorney General Jordan Shing on behalf of the Department of the Attorney General who offers comments on this measure. The Department appreciates the intent, however seeks clarification how certain aspects of this bill will be implemented.

For example, the bill authorizes the Attorney General to initiate civil actions to recoup certain costs and loss incurred by HPIA, who is a nonprofit entity under state law, as well as other private insurers. In certain circumstances.

The bill may be interpreted to allow the Attorney General General to legally represent these private entities, which is generally inconsistent with our role as the chief legal officer of the State and its respective offices.

Further, the bill does not specify, I guess in the circumstance where the Attorney General's office successfully prosecutes a claim to recoup these losses from incurred by these private entities who would be entitled to these damages as drafted, it may be interpreted to allow these private parties to monetarily benefit from legal services rendered by the Department which is publicly funded.

I think further, the bill does not contemplate circumstances where both the Attorney General and private insurers and the other private insurers who are given a cause of action under this statute brings concurrent litigation. And I think it's unclear whether or not one or the other would be precluded for bringing an action if either party brings an action.

So further clarification on this would be appreciated because it may be difficult to implement concurrent litigation if it's not addressed. So in closing, we appreciate the intent of this measure. However, we seek further clarification how it be implemented. Thank you.

Thank you. Oh, I think we just received your. Well, for some reason I don't believe your testimony was included in the testimony packet. So thank you for. Thank you for showing up. We might have questions for you. Yeah. Next we have. Thank you very much. Next we have the center for Climate Integrity in support online. Good morning.

Good morning. Chair Keohokalole, Vice Chair Fukunaga and Members of the Committee. For the record, I'm Gordon Levitt on behalf of the center for climate integrity, or CCI. CCI submits this testimony in strong support of Senate Bill 3000.

CCI is a nonprofit organization that empowers communities and officials to hold major oil and gas corporations accountable for deceiving the public about how their products fuel climate change.

SB3000 creates new pathways for the Attorney General and insurers in Hawaii and to recover a fair share of insurance costs from the parties uniquely responsible for the climate crisis, major fossil fuel companies. With extreme weather disasters becoming more likely and the Federal Government dismantling disaster response, Hawaii needs every tool in the toolbox to protect its residents.

That includes expanded Attorney General authority. And the costs are already mounting across the state. Last year, home insurance rates rose by up to 50% in the aftermath of the Maui fires. And people are also increasingly getting dropped by their insurers.

Between 2018 and 2023, non renewal rates increased dramatically statewide, including by 184% on Maui Island and 296% on Oahu. The growing insurance crisis is causing wider economic chaos as well. For example, most banks won't issue a mortgage to a potential home buyer if they can't secure insurance coverage or putting real estate deals at risk?

Who is more responsible for this mess? The average Hawaii resident or giant fossil fuel corporations that predicted the outcome decades ago and lied to the public about it? Rising insurance costs should be placed back on the entities whose business practices and deliberate decisions created the climate fueled insurance crisis.

We urge this Committee to support SB3000 and continue protecting the stability of Hawaii's insurance market. Thank you for your consideration.

Thank you very much. Next we have the American Petroleum Institute in opposition.

Good morning, Chair. Vice Chair Lori Lum on behalf of the American Petroleum Institute, testifying in opposition on Senate Bill 3000. We do represent all segments of America's natural gas and oil industry, including the companies that provide the fuels and energy products that we rely upon daily Hawaii residents and businesses.

This measure does single out one industry we believe that violates equal protection and due process rights. It also imposes strict liability on the production of products that the state has permitted and licensed and regulated for many years. So fuel remains a legal essential product. The state has identified it as critical infrastructure to supporting our energy system.

Finally, the Bill is being considered at a time when litigation in the state and elsewhere is ongoing. The state, city and county of Honolulu and Maui County are currently litigating climate related claims against major energy companies in Hawaii state courts.

So given the pending litigation, we ask for the committee's consideration not taking action on this Bill at this time. Thank you for the opportunity to express our concerns.

Thank you very much. Okay, is there anyone else who would like to testify on this measure? Okay. In total, we received 45. zero, please. Good morning.

Good morning. Aloha Chair and Vice Chair. My name is Maka Gibson and I'm a proud resident of Kaneohe. I'm here today because SB3000 is about protecting our people in Hawaii. Our hale is more than a structure. It's where Ohana and friends gather, where Kupuna are cared for and where our Kaulu are rooted.

But today, many families are being pushed to the edge as home insurance becomes unaffordable or disappears altogether. After fires, floods and storms like we have right now, the costs keep rising and everyday residents are paying the price. We are taught that with Aloha comes Kuleana.

For decades, fossil fuel companies knew the oil they drilled would make disasters like these worse. Yet they continue to profit while our communities now struggle to recover. That burden shouldn't fall on our working families, renters or taxpayers. SB 3000 is about being pono and Aloha Ina.

It says we protect each other, we protect our aina, we protect affordability. And we hooponopono. We ask those who have caused the harm to help make things right. This bill helps keep Hawaii a place where our Kamaina can stay rooted, not be priced out. Thank you for your support of SB 3000.

Thank you very much. Anyone else in the room who would like to testify? Okay, so we'll move online, I believe. Wayne Tanaka, Sierra Club. We had you online first. Please go ahead. Good morning.

Good morning. Chair Keho Kolohole, Vice Chair Fukunaga, Members of the Committee. Wayne Tanaka with Circle. We are in strong support of this measure. We are. You know, I just want to take a step back and, you know, reflect on what we're dealing with. Right. Like 4 billion people displaced because of unlivable heat or rising sea levels.

We're talking about mass breakdowns in food production systems, hunger, starvation, diseases that, you know, new diseases, old diseases coming back and we're already experiencing all of these things and floods, fires. This is the reality that our children is going to inherit.

Like, that is what the science is almost like conclusively saying, unless we do something to stop the destruction of our planet, which is being perpetrated by the very folks who are paying lobbyists to try and oppose this Bill. I really want to express my deep gratitude for hearing this Bill, for introducing it.

This is not only going to protect people in Hawaii, but I know that other places, other jurisdictions are looking at ways to make the perpetrators of our existential crisis pay for the damage they've done and hopefully pivot us towards a future that's survivable, something that's hopeful.

And so I'm happy to answer any questions, but I just again want to express a very strong support for this measure. Thank you very much.

Thank you. Next, I believe, is that. Ms. Becker, please go ahead. Good morning. We still have you on mute. Okay, go ahead. Good morning.

Yes, good morning. Thank you so much for the opportunity to testify strongly in support of Senate Bill 3000. My name is Kathy Becker. I'm the Responsible Finance Campaign Director at Green America. Green America's mission is to help consumers and investors harness their economic power to create a more socially just and environmentally sustainable society.

And we support SB3000 for several reasons. Hawaii is on the front lines of the climate crisis and for example, the 2023 fires in Maui were more devastating than they otherwise might have been because of drought conditions and heavy winds.

And climate attribution science has developed to the point that scientists can pinpoint how much more likely climate disasters are now than if climate change had not taken place. They've done that. Regarding the fires in California, broad scientific consensus finds that the primary driver of climate change is the burning of fossil fuels.

And so as the number of billion dollar disasters have multiplied, the climate crisis is now manifesting as a property insurance crisis. Major insurance companies are not renewing policies or raising rates. So in Hawaii, rates are up over 23% and non renewal rates have climbed 216% in the last five years. So Hawaii is third in that amount.

At Green America, we supply our Members and supporters with a climate smart insurance directory that lists property insurance companies in all states that don't insure fossil fuel projects and invest little to nothing in fossil fuel companies. And so we've seen from this that there is a paucity of insurance companies in Hawaii. We only have three.

In Hawaii we dug and dug and could not find more. Other states, like for example, Ohio, where I live, has 18. So we do think SB3000 would improve this and hope you pass it.

Thank you very much. Is there anyone else who would like to testify on this measure? Do we have everyone online who would like to testify? Okay. Any questions? Okay. What we're going to do is defer decision making on this measure for one day.

We had a little bit of a hitch in the uploading of testimony because we needed to very rapidly defer action on the hearing yesterday because of the weather event.

And so what looks like happened overnight is we there were a number of pieces of testimony that were not properly uploaded into the system and Members were not able to view that testimony by no fault of their own.

So I'm going to recommend that we defer decision making on this measure for one day and reconvene on Wednesday, February 11th at 9:30am in this room, 2 to 9, so that the Members can view the submitted testimony so that we can make a decision having seen everything. Okay. Okay, we're adjourned.

Okay. Good morning and welcome. This is. It's 10:00am on Tuesday, February 10, 2026 in Conference Room 229. This is a joint Committee hearing agenda between the Hawaii State Senate Committees on Commerce and Consumer Protection and Energy and Intergovernmental Affairs. This was a deferred agenda due to the weather event that took place yesterday.

And we have two bills on. We have two bills that are scheduled to hear. SB 3326 is the first relating to energy. This measure requires the Public Utility Commission to initiate the separation of ownership and control of electric energy generation services from transmission and distribution services through the adoption of rules.

First up, we have the DCCA Division of Consumer Advocacy with comments. Good morning.

Morning. Chairs. Vice Chair Member Mickey Knox for the Consumer Advocate. I just wanted to quickly summarize our testimony.

So our point is that this bill might be reaching a little bit for a model from the continent where there are very different structures and contexts and there might be something that is just a little bit closer to home, a little bit more like a modification of the current competitive bidding framework that might work better.

I'm available for any questions.

Thank you very much. Next we have the PUC with comments. Good morning.

Morning Chairs, Committee Members, John Itumura, Chair of the Public Commission. We stand on. Our written testimony are available for questions.

Thank you very much. Hawaiian Electric in opposition. Good morning.

Good morning, Chairs. Vice Chair. Shannon Olivado on behalf of Hawaiian Electric, standing in opposition to SB3326. To summarize, we oppose this bill for the following reasons. First, the Bill proposes a model that may work on the mainland where utilities can lean on neighboring states if supply and demand fluctuate. However, our island grids cannot.

Second, transmission and generation are operationally inseparable in small, isolated grid models, and such restructuring could introduce operational risk. Third, it poses reliability and implementation risks that could add to customer costs.

For example, a 2019 DBED study found that this type of restructuring could take up to 48 months and that that is way more time than our community has or needs. And for these reasons, we oppose SB3326 and request that the Bill be deferred. Thank you.

Thank you very much. Retail Merchants of Hawaii in support. Good morning.

Good morning. Thank you very much for the opportunity to testify. My name is Dave Erdman, interim President and CEO of the Retail Merchants of Hawaii. Retail Merchants of Hawaii supports SB 3326 because Hawaii's high and volatile electricity costs continue to be a burden for our retail Member businesses and working families.

The measure takes a structured, regulated approach to improving long term affordability and reliability by focusing the utility on a resilient and modern grid. Thank you very much for the opportunity to testify.

Thank you very much. Life of the Land with comments. Good morning.

Good morning. Aloha Chairs, Vice Chairs and Members of the Committee. We agree that the cost of electricity is too high. But we have a fundamental problem when people confuse rates with cost. If you buy three bananas at 40 cents each, 10 cents each, you buy four bananas at 10 cents each and that's 40 cents.

Or if you buy one banana at 50 cents, 50 cents is not four times 40 cents. People don't understand the math. Our rates are high, but Hawaii's per capita use of electricity is the lowest in the United States. And three quarters of all Americans get gas or some other Bill that they have that we don't have.

So if you look at the residential cost of electricity, we are not an outlier. We're an outlier in rates, but not in cost. We agree that the cost is too high, but people should be clear that rates and costs are different. And that appears to be one of the drivers of this bill.

The other is that the Bill makes all kinds of assumptions that may or may not be true. They're more applicable on the mainland, less applicable here. So if this Bill were to advance, it needs a lot more substance. Mahalo.

Thank you very much. We also have written testimony in support from the Pacific Resource Partnership and in opposition from IBW 1260. Is there anyone else who would like to testify on this measure? Okay, Members questions.

PUC.

Good morning. Chair Wakai.

Good morning. I'm looking at your testimony. You bring up four reasons why we should have some concern about these this bill. And I want to go through each of your four concerns. Number one, you talk about a lack of competition in this small market.

But when I look at the RFPs HECO has issued over the past number of Years33 phases of it, they have 33 projects that were met and given to various global players. I mean, AES, Amarisco, Oromat, Reworld Plus Power, these are entities that responded to the RFP and also have their own private deals as well.

So there are plenty of global players that want to look at this market. So how 33 seems like a lot of players. How much do you think that we should have to say that we have a competitive electricity market here?

Okay. I want to state at the outset, I also have with me our utility analyst, Daniel Park. The first thought that comes to mind is 33 may or may not be a number.

I mean, given the fact that even you yourself have stated that there's concern with projects that have gone forward, projects that have not gone forward, and that uncertainty leads to a lot of. That is uncertainty in and of itself. Then in addition, what is defined by competitive. There could be different scales.

Does it truly represent an opportunity to provide sufficient energy to the grid? That's also a concern. Daniel.

I'll just add that I think that the number of players that you're seeing like bidding into the RFP, I think that's indicative of the success of the competitive bidding framework which we talked about later in our testimony.

So the competitive bidding framework is already sort of inducing a lot of the competition that we sort of want to see on the generation side.

Okay, so with regard to the first point about a lack of competition, that's erroneous. There's plenty of competition. I mean, I only cite the 33 that got awarded. Who knows how many people actually applied or submitted bids that were rejected. So there's actually more than 33 players out there. So the issue of not a competitive environment.

That's an erroneous comment.

With all due respect. It's not that it's uncompetitive. It's that there is concern that a truly competitive market may not be able to form. Especially when you have these very small island grids. You have, you have. Yeah, it's just difficult to see.

It's not saying that the market is uncompetitive, it's just that there's reason to believe that if we were to sort of deregulate the generation side, that we may not, when we don't have say the competitive bidding framework that we in place anymore, that that market may sort of move in the direction of something less competitive.

I mean, but if we had like maybe three or four respondents, then I'd say you're probably correct. But we have 33 different respondents. I think this is a very competitive environment. And in addition, HECO is allowed to bid on its own contract. I mean, RFPs, right.

Doesn't that potentially scare away competitive or companies that want to bid in? I mean if you're gonna kind of self deal, why throw it, throw your, your name in the hat because he could default. Might be to just pick their own self built project. Well.

That's always a potential.

Right? I mean if you're the one determining who gets to be the winners and you're bidding in yourself, if you're a potential 34th, 35th entity out there. Well, why would I Subject myself to going through all of this regulatory.

Well, not it's not in the regulatory, but through the PUC or HECO's procurement process when there's a good chance they could just pick their own company to be the self builder. So that actually scares away competition.

I mean, at this point I can say while that's speculative, that is a reasonable assumption.

So your next point that you bring up, Mr. Itamore is wholesale price volatility. If this were to go into effect. But you're not really describing the Hawaii market. Right? Hawaii. Hawaii has IPPS. They sign a PPA that is fixed for sometimes a magnitude of 20 years.

So there is no price volatility like oil goes up and down on a daily basis. And then you're basing that volatility on the California model, which is kind of a freewheeling come one, come all wholesale market. And you the PUC is not prescribed to use the California model. You can go find a better model that's out there.

But you're using California as the comparison when in the language of this bill we're giving you the opportunity to create a model that is very dissimilar to California. Correct?

Correct. So we. Yes, you are correct in also stating that our general concern was that if there were no proper guidelines put in place, then that creates a market that is come all and there's no way to control what happens in that market. It could drive prices high, whether it's crisis or event driven or other factors unknown.

And that's the control, loss of control that we were concerned about.

Right. So we don't want to be California. And the language in this Bill has you having all the power to come up with the rules to make sure that we don't look like California, that it is thoughtful and predictable on what the outcomes and expectations are.

Your third and fourth points go to about how deregulation is compared to regulated markets. But in all of the rest of the country, whether it's regulated or unregulated, they're anywhere between 16 to 12 cents per kilowatt hour. Hawaii is in a totally different stratosphere at 38 cents per kilowatt hour.

So we have a long ways to go to even begin to begin to have this model of deregulated at $0.12 and regulated at at $0.16. We are like in a totally different universe from the rest of the country.

And then you go on to talk about how you have a competitive bidding framework and you have this independent observer and that Somehow although renewable PPAs are coming in cheaper, that somehow the public should wait that for the short term.

It's going to take a while for us as ratepayers to see the benefits of these PPAs that are coming in lower. What I point out, Mr. Itumura, that there was before we had RFPs, there was something called the competitive bidding framework that was put together in 2007. RFPs came around in 2018. I believe that's a long time.

I mean, that's 19 years. How long is the public going to wait to see the benefits of cheaper renewable power? You say like the short term, we're not going to realize these gains, but how long is the short term?

It's been 19 years, Mr. Ichabura, since we went down the road of getting competitive bids for renewable energy and we still see higher and higher prices. Help me calibrate balance that in my mind as to why this is acceptable to you.

Yes, I agree with you, Senator. It's taking too long. You know, unfortunately, a lot of the delay has been with evolution of technology, changing technology, you know, changing circumstances for ipps, whether they follow through at all.

Again, the concern always is that as our grid, just speaking of Oahu, relating to Oahu, will there be a sufficient amount of power available in any given situation?

And that's the overall concern that we're trying to point out, that yes, we have to come up, as you noted, we have to come up with a very carefully planned process that tries to account for that. And now given the history, it's shown that it hasn't been easy. Unfortunately, the details are always the problem.

But I'll turn it over technical to Daniel. But again, generally it's always trying to understand whether there's sufficient energy on the system that would support something like just allowing it to go out to the ipps.

All right, thank you, Chair. So first of all, let me just state that I do understand the frustration that you folks have about rates, you know, rates being very high, and that it is an issue and that we are committed to working with everybody to make sure that the rates are as low as possible.

With respect to what you were just talking about, the competitive bidding framework being in place since 2007, I can't speak to the time before I was at the commission, but I've been at the commission for almost 10 years.

And when I started, I do remember that it was very common practice that the Hawaiian Electric companies would come in, they would ask for a waiver from the competitive bidding framework and they would be granted this.

And it was only in about 2018, when that RFP process that you alluded to kicked off that at least when I've been at the commission, that we've been sort of pushing things through the competitive bidding framework.

So I can't really speak to some of the cost increases that may have come from not utilizing competitive bidding framework prior to 2018, but we have been using it moving forward. And unfortunately, that very first stage of the RFPs, when the projects were supposed to come online, that's unfortunately when Covid hit 2020, and that caused some disruptions.

Certain projects fell out, pricing changed, etc. Things got delayed. So a lot, a lot of these projects didn't really get into service until, you know, much later. And, you know, that's not, that's not to make an excuse for why rates are high.

It's just, you know, things are, we're doing our best to try to make sure that the competitive bidding framework does work and that electricity is, you know, procured at the most competitive and reasonable prices.

Even if we were to use that later date, though, Daniel, I mean, still eight years. And where is the relief to the ratepayer? It's not there. I mean, at a certain point, like this system we've set up isn't working.

That's why this Bill contemplates a new system that will somehow drive prices down and focus the utility on grid reliability. Because in terms of power generation and lowering the rates for the public, they've shown a history of not being able to do that.

Once again, you know, I do sort of, you know, I do understand the frustration with how long things are taking, and I do sort of realize that it's going to sound a little difficult to hear, but, you know, things are getting better in terms of, as more of these, even if it's of incremental progress, as more of these projects slowly get online, they slowly whittle down our reliance on fossil fuel generation, oil generation, then the fuel component of our bills, which represents maybe about half of your Bill, is just going to pay for fuel that's going to slowly come down.

It's not going to come down like all right away, but by the time we get to more renewables, hopefully to 100% renewable by 2045, we should have more of these cheaper renewables online that would have displaced this very expensive and costly fossil fuel generation.

I would believe that if over the past eight years we've actually seen incremental declines in rates, but the complete opposite has happened. So I don't know when I think the terminology Used is perceived rate reductions happen.

I don't know when your Runway is for perceived rate reductions, but after eight years of RFPs that are showing that the renewables are coming in cheaper and for the public to just see the opposite happening with the rates increasing over the past eight years, I don't see how you guys can see that that is acceptable behavior for the public.

That's not a question. I have questions for eco, but I don't know.

Members, Any other questions for the Senator Richards, for the PC?

Thank you and I appreciate PC for being here. I think this whole conversation backs in or leads right into the whole cost of living and that's what we're essentially talking about here. I, I appreciate Senator Wakai's intent to try and get our arms around here.

As I'm looking at this, our grids are all standalone, which are inherently a problem. Economies of scale are inherently a problem because we don't have them depending where we are. From your perspective, and maybe this is asking too much, but because I can when I'm looking at this, conceivably we could have different providers on different islands.

So we have a lot more providers generation which again if we have smaller entities, I think we're going to be losing economies of scale there, especially if they're not tied together. If we don't tie all the grids together.

And then that brings back that conversation of whether we should or shouldn't looking on the mainland using that as our model. If a grid goes down, you borrow power from the next grid to help bring you back up. We don't have that luxury.

And so I think, and I'm not an engineer, but we need more standby generation to be able to do that if that happens.

And I know we work hard not let that happen, that cost that we keep striving for reduction, looking at some other bills and I, I want to believe that we're going to see a lower cost with renewables.

But I have to agree with Chair about not seeing that coming forth and I'm not sure that's going to come forth because if we are bidding into this, we're going to be bidding for the highest net return for our investors. So. If we deregulate, I can see a mess coming. So.

I don't think I want to ask you if we should start talking about joining grids together because I know on the Big island we're looking at potentially putting together a cooperative because of the infrastructure costs.

We're a big island and we have huge infrastructure costs that it just it didn't make sense and I fear we may be walking down that road. I guess the question would be, do we need more consolidation of our grids? Would that help our overall costs going forward, which means tying the grids together?

I don't really want to ask you that, but I think I'm going to ask you that.

Okay. First of all, thank you, Senator Richards. You raise a lot of the concerns that we share. Second, I believe there's been attempts to tie the islands together in the past. There's a lot of costs to that.

Without having looked at it, at least for myself specifically recently, one thing that jumps to mind is even if you tie the grids together, we still run into the same issues with reget with respect to issues related to separating distribution and generations or the fact that you're providing the cost generators to be at the IPP levels and they're going to face the same issues.

Like you said, economies of scale. Standalone. Standalone by itself would be very costly and probably many would not want to invest in that scenario. So while tying it together solves one problem, it might not solve another problem. But I do appreciate your observations, if Daniel has anything to add.

So I do agree that if we could, some sort of consolidation of the grids would provide some additional scale. Unfortunately, my understanding of that is that it's going to be extremely costly as well as something of an engineering feat to be able to achieve because of the very mountainous nature of the sea floor around our islands.

So that creates a lot of challenges towards connecting the island grids.

And as you mentioned, in the continental US when they do share power, you also have a market, you have aggregators that are tasked with controlling the price and actually creating that bidding process, with creating competitive bid within that process, which we don't have here.

Important conversation to have. Thank you. Thank you, Chair.

Any other questions for the PUC?

Okay, thank you.

Morning, Chairs. Brian Hiani.

Now, you look at your testimony and you say you point to a study in 2003, 2012 that at that time said that separation was probably not the right thing to do at that time. And then you conclude by saying nothing material has changed these determinations, but a lot has changed since the last study was done in 2012.

You look at HICO's lack of investment on Maui, partially what led to the Maui wildfires, which then led to a $2 billion settlement, which you haven't figured out how you're going to pay for. HECO still is in junk bond status. Last year you begged us to give you securitization as well as limited liability.

And you still have 70 year old generators on the grid that are continuing, continuing to kind of have trouble providing us full capacity power. So how can you say nothing has changed?

Well, I guess to clarify our testimony, what we meant was that nothing has changed in terms of the conditions of, you know, our small island grids as compared to the mainland grids where they have those conditions that favor, you know, separation of the transmission and generation.

I want to focus on your generation capacity. This is a study done by HNEI that came out just last month and they point out that more than 70% of HECO's generation fleet is over 30 years old. It concludes that your aging fleet is experiencing very high forest outages throughout the state.

Considering you're in junk bond status, you have no idea how you're going to pay your $2 billion liability. Where are you going to get the resources to help create the generation capacity that the state needs?

Well, we appreciate, you know, the work that committees did last year in passing the securitization and you know, we're, or trying to use those kind of things as well as, you know, federal funds to, to use that to, you know, build up our grid and replace it with, you know, renewable sources.

Okay. So the only thing I know that's in the works is replacement of yr. Not the entire replacement, but I think replacing half the capacity at yr. Initially you had penciled it out to be about a 700 million dollar investment.

But correct me if I'm wrong, because of all of the financial troubles that you're facing that potentially is going to cost rate payers $1.4 billion. Correct?

I'm not sure the figures exactly. I have to get back to you on that.

Okay. What I'm trying to point out is that HICO at this point is just beleaguered. It has no financial ability to meet all, all of the needed capacity. And for 70 years you've kind of neglected making improvements to the grid.

I mean we're running on all these old dinosaurs and lucky so far that we've been able to, your engineers have been able to keep the machinery running. But in your opinion is it acceptable to have so much baselo power generation on the backs of a 70 plus year old generator?

No, the company agrees that, you know, that's not acceptable and that's why we've taken measures, you know, to upgrade that facility as well as our other facilities.

But you're in no financial condition to do any of those upgrades?

Well, we are Starting to turn the corner. So our financial rating has improved a bit.

You're still in jump on status. No one wants to loan you money. You're begging the US Department of Energy to give you money because Wall street is not going to give you any money.

Well, we have applications in for loans.

And what's the likelihood of those private sector loans coming through?

I believe it's shown some promise. I think we have shown some promise.

Okay. The fact of the matter is you're still in junk bond status. I want to focus on your infrastructure, your, your grid. This report by HNEI again that came out last month, Advancing Solar Development, points out about your circuits. I mean, your, your, your circuits are already choked.

It says here that you have only 5% available space for new rooftop generation. And a couple of months ago, Josh Green and the Administration said that we really want to double down on rooftop generation. But we can't even double down because you have absolutely no capacity to take on more rooftop generation, correct?

I'm not sure. I'm not an engineer. I'll have to get back to you.

Okay. I encourage you to look at this report by HNEI. It says you have only 5% capacity available. That shows that there needs to be more focus by HECO onto grid and distribution and transmission, which is exactly what this bill contemplates. And although you are against.

I understand why you're against this bill, but this bill is not deregulating anything. Right? That's a misnomer that somehow those in opposition are floating around. It's not deregulation. This is just splitting up HECO into two different companies. One to focus on generation and one to focus on distribution and transmission. So you understand that, right? Yes.

We're not deregulated here. The PUC is still regulating both sides of the equation here. Generation as well as the distribution.

My understanding was that you wanted to open up the generation to other third parties, right?

Yeah. Which he will be the entity. Let's just HECO Power and HECO Transmission and Distribution. HECO Power will be getting in more private sector competitive bids over here and HECO Transmission and Distribution will continue to do what you guys are doing. So we're not deregulating. We're just saying part of HECO needs to focus on generation.

Part of HECO really needs to focus on distribution and transmission. And to Heco's credit, I mean, with the RFPs that have been put onto the grid, you've shown yourself capable of doing transmission and distribution of private sector inputs. It's not all Hico Kahi and well, you got 3035% or so from private sector entities generating power.

So you have been able to distribute power that's not your own. Right. So this Bill focuses on that. Then you will be good and move that 35% to 100% and you have the ability and track record to show that you're capable of doing that.

Yeah, but our concern is that right Now I believe 40 to 50% is generated from IPPS, independent power providers. But our concern is that increasing that to 100% is going to raise challenges that we talked about in our testimony.

Well, that's the law of the islands right now. Right. You got to get to 100% by 2045.

Right.

Right. So we're going to help you get there.

We're saying doing it by separating it, that's going to give rise to unintended consequences. The problems that we set forth in our testimony, that's our concern.

Monumental problems right in front of your windshield at the moment. So I don't see how you guys are going to extricate yourself from the fact that we have a grid that's unreliable. We have power generation that's just not there. I mean, we didn't even talk about Maui and Big Island.

Those guys are even more of a world of hurt than Oahu. Right? 2028 is doomsday for Maui and the Big Island. Your Malaya is going to go down. No parts, no equipment. Mitsubishi is no longer making parts for that. Your EPA exemption in Kahului goes away in 2028.

There's a humongous puka in your grid on Maui and you're again in junk bond status and don't have the financials to be able to help the people of Maui get assurances that they're going to have electricity come past 2028. Correct?

No, I wouldn't respectfully disagree. We have the plan set up and we worked with the commission and other stakeholders on our IGP. So that has our plan going forward.

I looked at one of your reports that talked about your plan for Maui and is to bring on diesel generators to fill in the pukas that at Maalai and. And Kahalui. So that's not true. You're not going to plan to use diesel generators to shore up the the hole in the future.

I don't. Yeah, I know. Sorry, I don't have the letter on me. I will forward that letter. Okay.

I know it was. Is Hiko's fallback Plan come post 2028 is to bring in more diesel generators onto Maui, which I think is a terrible fallback plan. But it goes to how you're unprepared. You didn't plan ahead for the end of life for your Mitsubishi generators in Maalaya, Right.

You're going to go out of commission in 2028, right? Correct. Thank you.

Thank you, Members. Any other questions?

I believe for life of the land. Mr. Curtis, thank you.

Thank you.

In your testimony, you commented on direct tools like enhanced PUC oversight, data sharing mandates, open access, interconnection rules, et cetera. And you were kind of, you know, indicating that you didn't quite agree with some of the points that were being raised. Do you have additional information that you can share?

Yeah. The bill appears to be saying that the PUC should open this massive docket that will involve a lot of parties and come up magically with some new plan that does not exist.

And somehow this will quickly lower the cost for all ratepayers, while at the same time, Senator Wakai has been talking about how we need to spend lots of money to upgrade jobs generators and lots of money to upgrade grids, and all these expenses we have to make, and yet taking three to five years to magically create a new structure will somehow reduce costs.

And that appears to us to be a real gamble.

Are there some alternatives that you had in mind?

We have a competitive bidding framework which is reducing costs of generation. We have a problem with operations and maintenance, as Senator Wakai has pointed out that because climate change is not under control, we have increased hazards to the grid. We have to upgrade the grid to withstand what's coming.

That's going to add costs no matter what the structure of the utility is. And so we have rising costs that will have to be addressed.

Thank you, Members.

Any other questions? Okay. If there are none, we'll move to the next measure on the agenda. SB 2911, relating to intoxicating liquor. This measure allows direct. zero, we'll move on to SB2911 relating to intoxicating liquor.

This measure allows direct shipment of beer and distilled spirits by certain licensees and requires the liquor commission of each county to adopt rules and regulations. First up, Attorney General with comments. Good morning.

Good morning, Members of the Committee. Deputy Attorney General.

Deputy Attorney General. General. On behalf of the Department of the Attorney General. Our Department has submitted testimony raising our concerns that the Bill may be subject to constitutional challenge under the commerce, the dormant commerce clause as it subjects manufacturers from out of state to manufacturing limits not equally applied to in state manufacturers.

Additionally, it requires out of state manufacturers to obtain permits from the countries it ships to, but does not require this from in state manufacturers. We have submitted recommended revisions to the current wording and the proposed section and I'm available if the committees have any questions. Thank you.

Thank you very much. Lanikai Brewing Company in support.

Hi, Chair. Hi. Thanks for the opportunity to testify. We're definitely in support of this bill. This just simply puts us with alcohol and with spirits and beer, it puts it on parity with wine that already has established this ability to ship directly to consumer.

This also opens up a bunch of sales opportunities for smaller companies like myself that can safely ship products directly to the consumer that they can enjoy safely at their home. All the shipping processes are already in place for signing. For those that are over 21, the wine industry has already thankfully established all those in place.

So there's very limited consumer risk issues that are out there.

And finally it just makes it just things out especially our industry is exposed to a bunch of different new taxes and expenses this year and any sort of opportunities for us to grow revenue and expand into new markets is something that will definitely help buffer our industry from future risk.

Thank you for the opportunity to testify and appreciate the opportunity.

Thank you very much. Next we have Maui Brewing Company and support. Oh, wait. Brewers association in support. Do we have the brewers association?

Not present on Zoom, Chair.

Hawaii Food Industry Association in opposition. Good morning.

Thank you. Chair. Hi. Thank you for the opportunity to testify. We will stand on our testimony in opposition. We believe the current 3 tier system is operating well for consumers and businesses. And we're available for questions if you have any. Thank you.

Thank you very much. Okay. Yeah. Maui Brewing in support.

Aloha Chairs, Vice Chairs, Members of the Committee, thank you for the opportunity to testify. Apologies we couldn't be there in person due to the storm and the reschedule. I have just a few extra points to add on. You know, where the opposition takes the the idea of DTC.

You know, the things we hear is that the three tier system works well so we shouldn't make any changes. That sounds not unlike the previous Bill where if we don't really make changes for the future, then we're caught making changes in the immediacy.

So for me, what I'm looking at is the three tier system worked great for large brewers, it does not always work great for smaller brewers. And what I mean by that is most of our small producers here in the state don't access to market.

So a distributor frankly just doesn't even want to talk to them, let alone distribute their products because they're too small. So what this Bill is about is bringing parity to wine. You know, wine has been allowed to ship through mail for over 20 years now.

You know, and a few things about that, the the same issues that HFIA and others, the Wholesalers association have brought up. They're the same things that they said would happen when wine fought to get DTC over 20 years ago. And in fact wineries have thrived over the last 20 years by allowing this direct to consumer.

Additionally, there's been no documented increase in youth drinking due to DTC. DTC shipping of wine after more than 20 years.

I think the idea that a miner would order booze that they're not legally allowed to possess, order it online, wait a week, pay a premium and then still have to show ID to receive it is just totally illogical.

So for those reasons we continue to support DTC as it brings new market opportunities for our small producers here in Hawaii.

We're happy to work with the AG's office on their language and I'd only draw attention to the fact that that language was inserted in order to be, you know, to defer to the wholesalers association in that they don't want the big brewers being able to do this. They have all these restrictions.

And we said, well, let's just self restrict and try to work with the wholesale. Despite many attempts to contact the wholesalers to find a work together, we have not been able to get a hold of anyone to have any sort of meaningful discussion. Thank you. Aloha. Thank you very much.

Is there anyone else in the room or online who would like to testify on this measure? SB2911. Okay. Seeing none. In total, there were 10 individuals or organizations in support, six opposed and the Attorney General's office again offering comments. Members questions?

Okay. If not, we'll recess briefly. Okay.

Reconvening on this 10am joint agenda between the CPN and EIG committees. First measure SB 3326 relating to energy. We had robust conversation. I appreciate all the parties for sitting in there and allowing us to have it. The recommendation is to keep this measure moving.

The proposal is to amend the language of Section 2 to clarify requirements for the Public Utility Commission. Remove section 3, requiring administrative rules to be adopted within a specified time frame and add language based on IBEW 1260's testimony. Add language to acknowledge that existing collecting collective bargaining agreements will be honored by future owners and operators.

We'll also defect the effective date of this measure to July 1, 2050. Members discussion. Senator Lamosao, thank you.

I just want to say I appreciate the amendments that are going to be put in this bill, especially with the recommendations or the concerns brought up by IBEW 1260.

But I also have concerns of in addressing some of what Life of the Land had addressed in their testimony and just unsure if this will be a cost saving to the ratepayers.

Thank you. So noted. Any other comments or concerns? Chair Senator Richards? Yeah.

Thank you. I share some of Senator lamassa's concerns. I'm thinking Big Island. I'm thinking our grid. I completely agree with trying to get the cost down. I think it is a good conversation to have, but I will be going with reservations because I think we need to. I have my concerns. Thank you.

So noted. Vice Chair.

Similar concerns as noted by the previous two speakers.

Thank you. There are no other comments, Senator McKelvey.

I just actually appreciate you moving this forward. We'll be voting straight up on the measure. Just came from a place where there's 10,000 people without power right now with no timetable as to its restoration. So focusing on transmission, I think should be the core focus of our utilities.

And so I think this conversation needs to happen, especially now. So thank you.

Thank you. Anyone else? Senator DeCoite..

Thank you. Chair Sorry for arriving late. Couldn't blame Hawaiian electorate. I'll bring Mokulele on this one, but I appreciate the electric being on for the super bowl, but slight concerns, but thank you. Chair.

Thank you. If there are no other comments, then Vice Chair for the vote. Passing with amendments. Chair Votes Aye.

Thank you. [Roll Call] Your recommendation is adopted.

Thank you. For Members of EIG, I want to point out that this is not deregulation, it's just separating HECO to focus on generation on one side and transmission and distribution on the other side. As we heard this morning, HECO is financially beleaguered, doesn't have the financial wherewithal to improve the grid, much less improve the transmission system.

This Bill would allow, at least on the generation side, for other players to help them get the power that all of us, as the public needs. And hopefully at the same time, with competition, we'll lower the rates, which are currently more than two times the national average for all of our constituents.

And with regard to the commentary about life of the lands criticisms of the Bill, I will forward to you a document that goes point by point and addresses everything that Henry Curtis has mentioned, that it's all in the Bill. He, he wants it to be prescriptive, but it's not. We shouldn't be prescriptive.

We should let the PUCC determine what the rules are. But I will forward that to you to just allay some of your hesitation as this Bill moves on, that we've taken into account many of the thoughts that the life of the land has brought up.

But ultimately, sure, this Bill has a level of risk, but I guarantee you that doing absolutely nothing is only going to imperil our communities to have more and more blackouts and to have higher and higher rates. And as we heard as well from the Puc, we had the RFP process in effect for the past eight years.

HECO has enjoyed lower electricity supply coming in, and we as the consumers have not seen any of that benefit on our bills.

After eight years, if he was incapable of showing us, the public that they want to help address the cost of living in Hawaii, that at a certain point we have to fight a different path to success. And I assure you, Members, this is a better path to success.

So having said that, any more further discussion for EIG, if not Senator Chang, I vote yes.

Reservations.

Last measure is SB 2911 relating to intoxicating liquor. The recommendation is to pass with amendments adopting the proposed amendments submitted by the Attorney General's office, making technical, non substantive amendments and defecting effective date of this measure to July 12050 Members. Any discussion? Seeing none. Passing with amendments. Vice Chair votes Aye.

Thank you. Of the CPN Members present, are there any voting with reservations or objections? [Roll Call] Thank you. Your recommendation is adopted.

Thank you. For Members of EIG, same recommendation. Any discussion? If not Senator Chang. I vote yes.

Are they meeting other objections or reservations? Seeing none. The recommendation is adopted.

Thank you. We're adjourned.