by Andrew Walden

How does housing become less affordable in Hawaii?

As a side effect of Judge Jeffrey Crabtree’s February, 2019, decision in a lawsuit filed by Earthjustice on behalf of Hawaii Solar Energy Association (HSEA) and the Sierra Club against DBEDT’s State Energy Office, a dirty legislative trick from 2008 has--eleven years later--effectively outlawed new installation of tankless on demand gas water heaters in many Hawaii homes.

After grinding its way through multiple Committee hearings, 2008 SB644 CD1, introduced by then-Senator Gary Hooser, became Act 204—but not before legislators quietly slipped a sleeper agent into the bill’s text:

“A variance shall only be approved if an architect or engineer licensed under chapter 464 attests that…a demand water heater device approved by Underwriters Laboratories, Inc. is installed….”

The requirement creates a Catch-22 situation because gas on-demand water heaters are certified by the Canada-based CSA International, not Underwriters Laboratories (UL).

Legislators doubled down on the policy the following year with 2009 Act 155 which states that applications may not even be accepted for consideration unless the gas on-demand hot water system is certified by UL.  And just make sure that only the little guy gets screwed, they added text exempting big developers from paragraph (4) of subsection (a) of HRS 196-6.5, the UL certification requirement:

There is the potential that this provision may be used to allow a developer/builder, the purchaser of a water heating device, of a single-family dwelling, to circumvent the policy objectives of Act 204…. To obviate any attempt to circumvent Act 204, then, the legislature intends that if the potential variance applicant is not the party who will ultimately pay for the energy cost consumption, then only paragraph (1), (2), or (3) of subsection (a) in section 196-6.5, Hawaii Revised Statutes, should apply.

The high-rainfall Hilo and Puna areas of the Big Island, where most solar variances had been granted, are also big centers of owner-builder single-family homebuilding.

In response to questions from Hawai’i Free Press, Alan Yonan, State Energy Office spokesperson, explains: 

Due to the Feb. 5, 2019, ruling by Hawaii Circuit Court in Hawaii Solar Energy Association and Sierra Club v. DBEDT, Civil No. 18-1-1398-09, DBEDT has not accepted three solar water heater variance requests for gas demand water heaters because of the lack of UL approval.

We have provided testimony on numerous occasions regarding our concerns, but the Legislature sets the policy governing variances.

A proposal to remove the language in HRS 196-6.5 requiring that gas demand water heaters be approved by Underwriters Laboratories Inc. was included in a bill considered by the 2019 Legislature (HB557).  DBEDT testified in support of removing the UL language (see attached testimony). However, the bill did not advance beyond the first committee that heard it.

2019 HB557, which remains up for consideration in the 2020 legislative session, offers to repeal the UL certification requirement – and replace it with even more red tape and fines designed to force homebuilders to install expensive solar hot water systems—even in rainy areas where they just don’t work.    

Teamsters Local 996 testified against HB557 explaining:

The proposed amendment is another bill that eliminates the consumer choice for our members and other citizens. The amendment to impose “fines and penalties” seems to target and criminalize consumers, especially those living in low income communities, neighbor islands, and areas with poor solar resources. Imposing “fines and penalties” on the basis of abuse with no examples to justify abuse is unfair. Furthermore, this proposal would lengthen the review period from 30 days to 60 days which is inefficient

HSEA testified in favor, complaining:

To date, over 6,896 variances have been requested and over 6,850 variance requests have been approved. Of those requests, over 6,492 of the requests have been for the installation of an instantaneous gas water heater as allowed in §196-6.5 (a)(4).

HSEA wants all of those people to be forced to buy expensive solar hot water systems, thus driving up the cost of home construction.

Randy Weir, a Kaua'i-based general contractor, tells Hawai’i Free Press:

Homeowners are harmed financially because being forced to purchase a solar water heating system can add anywhere from $10,000 to $15,000 to the cost of a home. Up until last month the state energy office would grant a variance to the 2010 mandate if an owner would use an on-demand gas heater. These systems cost far less: $1000-$2500 depending on the desired output of hot water.

Assuming a cost of $10,000 over that of a gas on demand system, the homeowner would incur, over the course of a 30 year 6% loan, $11,500 in additional interest cost. This may be offset to some degree by saving on propane use. None of this takes into account the very real prospect the solar panel & components may need to be replaced prior to 100% loan repayment.

The state law, most likely written by the solar energy lobby, states that the gas on-demand system must be UL listed. Is it an accident that UL does not certify gas components…only the electrical components within the heater? The end result is that after a recent lawsuit brought on by the HSEA and the Sierra Club the state has been forced to reject all gas variances since none of them qualifies as a UL listed system. This leaves homeowner in the position of being forced to pay substantially more for their homes and does nothing for alleviating the affordable housing shortage. It simply makes it worse.

HB557: Text, Status