No. 115
Wednesday, June 16, 2004   Page A-14
ISSN 1521-9402

Governor Signs Bill to Boost Electricity From Renewable Sources in Hawaii

KEAAU, Hawaii--Gov. Linda Lingle (R) signed a bill (S.B. 2474) June 2 that seeks to increase to 20 percent the amount of the state's electricity generated using renewable energy sources by 2020.

The stated purpose of the legislation is to decrease Hawaii's need to import large amounts of oil and increase import substitution, economic efficiency, and productivity by expanding the development and use of renewable energy resources. Pursuing this course offers other benefits as well, including job creation, environmental protection, and energy security, according to the legislation.

"The State's willingness and intent to provide relevant and meaningful support for this endeavor should be embedded into public policy," it said.

The bill amends Section 269-92 of the Hawaii Revised Statutes to:

• Require electric utilities to meet a "renewable portfolio standard" of 8 percent by the end of 2005, 10 percent by the end of 2010, 15 percent by the end of 2015 and 20 percent by Dec. 31, 2020.
• Direct the public utilities commission to devise and implement a rate structure to encourage the use of renewable energy by Dec. 31, 2006, and subsequently determine the impact on utility profit margins. If the PUC determines that a utility is unable to meet the standard in a cost-effective manner, it could issue a temporary waiver of the requirement.
• Instruct the state departments of Land and Natural Resources (DLNR) and Business, Economic Development and Tourism (DBEDT) to work with utilities, other energy developers and federal agencies to maximize research, demonstration funding, and technical assistance for renewable energy technologies; to develop and publish a list of potential sites for the development of renewable energy; and to maximize the use of renewable energy and cost-effective conservation measures by state government agencies.

The act defines renewable energy as that produced by wind, solar energy, hydropower, landfill gas, waste combustion, geothermal resources, ocean thermal energy conversion, wave energy, biomass (including municipal solid waste), biofuels derived from organic sources, and hydrogen fuels and fuel cells derived from renewable sources. In situations where electricity is generated by a combination of renewable and nonrenewable means--for example, where fossil and renewable fuels are co-fired in the same generating unit--the law allows the proportion attributable to the renewable means to be credited as renewable energy.

Amendment 'Weakened' Bill

An amendment to the bill also permits electrical energy savings from energy conservation programs and the recapture of energy through heat exchangers and other systems to count toward the renewables goal.

Sen. Kalani English (D), co-sponsor of the measure and chair of the energy and environment committee, said that amendment and the provision allowing the PUC to waive the renewable requirements have weakened the bill. English pushed for a 30 percent goal for 2020, he told BNA.

"The new law sets goals that are too low. The director of DBEDT testified with confidence that the electric utility companies can achieve the goals stated in the measure, and given that optimism we believe even higher standards could be met," he said.

A range of energy development and environmental groups, including the Hawaii Solar Energy Association, Hawaii Renewable Energy Alliance, and Sierra Club, supported various versions of the bill. The PUC, Hawaii Business Roundtable, Division of Consumer Advocacy, and Hawaiian Electric Co. supported the measure's intent. The state Chamber of Commerce, which opposed the measure, did not return calls from BNA to explain its position.

Jeff Mikulina, Sierra Club director, called the measure a "mixed bag." His group supported the original bill "100 percent," he told BNA, but he also believes several of the add-on provisions--particularly the inclusion of energy conservation programs and certain fossil-fuel electricity generators in its list of renewable resources--have "water[ed] down the clean energy mandate."

"Now if a utility has a program to turn off the lights, it counts toward the renewable goal," he said. The Sierra Club also took issue with the law's requirement that renewable energy sources be at or below the utilities' "avoided costs."

Imported Oil Constantly Rising

The state's dependence on imported oil has been rising steadily over the past decades. DBEDT data show that in 2002, the latest year for which figures are available, the cost of imported oil for electric power generation in Hawaii exceeded $332.4 million, equal to about one-third of the state gross product. That year electric utilities emitted an estimated 9.085 million tons of carbon dioxide, an increase of nearly 15 percent over 1990 levels. Of the more than 100 generators operating at power plants statewide, only 16 utilize nonfossil fuel energy sources, with a total capacity of approximately 175 megawatts, according to department data.

In general, the state's air quality meets federal and state environmental health standards, largely because Hawaii's trade winds and the lack of major polluting industries reduce the buildup of air pollution over the islands. Nevertheless, air pollution does damage Hawaii's environment.

A 1997 state government study on the effects of three major air pollutants on human health and the environment estimated costs, in addition to the $43 per ton emission fee currently paid to the Department of Health, as ranging from 0.002 to 0.044 cents per kilowatt-hour, depending upon the pollutant and the location of the power plant.

"By replacing fossil fuels, renewables can avert many local environmental pollutants, including those that form ground-level ozone and smog, and toxic pollutants such as mercury that pose substantial human health threats," the report stated.

Complete text of Act 95 is available at http://www.capitol.hawaii.gov/sessioncurrent/bills/SB2474_hd2_.htm on the World Wide Web.

By Noreen Parks

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