PUC Annual Report-Fiscal Year 2010-2011

From Hawaii Public Utilities Commission

I. EXECUTIVE SUMMARY

This Annual Report is prepared pursuant to Section 269-5, Hawaii Revised Statutes (HRS), and is one of the few opportunities for the Hawaii Public Utilities Commission (Commission) to publicly share its goals and objectives, update its accomplishments, track data and trends in a comprehensive way, and shed light on the inner workings of the Commission through a summarization of key regulatory proceedings. To reflect the most current information where possible, please note that summaries of regulated utility reports, financial, and budget information reflect the State‟s fiscal year ended June 30, 2011, i.e., Fiscal Year (“FY”) 2011. Discussions of dockets or other proceedings before the Commission reflect a status as of November 15, 2011.

The Commission is responsible for regulating 220 utility companies, 4 water carriers, 680 passenger carriers and 582 property carriers in the State (Section II.A. Diagram of Responsibility). During the FY, the Commission opened 369 new dockets relating to those regulated utilities and transportation companies, completed and disposed of 363 dockets from its total case load, and issued 846 decisions and orders (Section VII.A. Docket Proceedings).

In addition to the Commission's traditional duty to oversee and regulate public utilities to ensure the provision of essential and reliable service at just and reasonable rates, the Legislature has entrusted the Commission with increased authority and discretion in implementing the State's clean energy policies. Three major legislative mandates, the Renewable Portfolio Standard, the Energy Efficiency Portfolio Standard and the Public Benefits Fee are key energy policies driving the Commission (Section V. Clean Energy Legislative Mandates). Given the State‟s overall desire to promote clean energy policies to stabilize Hawaii's economy and move towards energy independence, the majority of the Commission‟s time and resources are devoted to this sector.

As the high cost of energy reverberates in every sector of Hawaii‟s economy, the Commission is working aggressively to review fixed priced contracts in an effort to “delink” electricity prices from oil costs and provide ratepayers with stable, long-term, and predictably priced contracts. However, the most cost-effective means of providing relief to the electricity consumer is through energy efficiency and conservation.

According to the American Council for an Energy-Efficient Economy‟s (ACEEE) 2011 State Energy Efficiency Scorecard, Hawaii is ranked twelfth in energy efficiency for a second year. The annual scorecard, in its fifth year, is a comprehensive ranking of states based on metrics capturing best practices and effective leadership in energy efficiency policy and program implementation. In the amount of electricity the state actually saved, Hawaii ranked third in terms of overall energy savings and tenth for its energy efficiency program and policies. The state scored zero points in the natural gas category because there is no natural gas service in Hawaii. As such, the inability to rate the state in that category, dropped Hawaii‟s overall ranking from ten to twelve.

To view the ACEEE report in its entirety, go to http://aceee.org/research-report/e115.

Public utilities, like the customers they serve and the society and economy in which they operate, continue to undergo significant changes due to rapid developments in technology, markets, economic conditions, consumer needs and environmental concerns. The Commission is not a static and reactive structure and acknowledges these changing conditions and the need to update regulatory practices and approaches to develop the requisite knowledge and skill sets to timely address and align the performance of regulated entities to serve the public interest in the most efficient and cost-effective manner. Therefore, adequate staffing and resources are of critical importance to the Commission‟s ability to carry out its statutory duties.

In response to Act 143, Session Laws of Hawaii 2006, the Commission conducted an in-depth review of its organization to develop a comprehensive plan to restructure and supplement the Commission and its resources to function more effectively and efficiently in light of, among other matters, changing regulatory conditions, duties, and requirements, and advances in technology. In FY 2011, the Commission, for the first time since the approval of its reorganization plan enacted in Act 177, Session Laws of Hawaii 2007, was appropriated funding for all positions recommended within the plan, increasing the Commission‟s total full-time, permanent position count to 62. However, a key component to the reorganization plan, the relocation of the Commission‟s entire Oahu office, was not approved. The relocation of the Commission‟s office is required to accommodate all existing and newly created reorganization positions and to meet the Commission‟s specific needs for a hearing room and adequate document storage space. Therefore, due to lack of adequate space, the Commission prioritized and focused on four (4) key reorganization positions to recruit for while backfilling existing positions. This, unfortunately, resulted in the Commission having to refrain from recruiting for seventeen (17) funded positions.

The Public Utilities Commission Special Fund (“Special Fund”) is used to cover the operating expenses of the Commission and Consumer Advocate. The Special Fund sources of income include public utility fees, motor carrier fees, penalties and interest, application and intervention filing fees, Hawaii One Call Center fees and duplication fees. For FY 2011, the regulated utilities and transportation carriers paid $15,785,126 in public utility fees and $1,253,281 in motor carrier fees, respectively. The total revenues of the Commission’s Special Fund were $17,165,178 for FY 2011.

Pursuant to Section 269-33, HRS, any amount over $1,000,000 remaining in the Special Fund at the end of each fiscal year is transferred to the State‟s general fund. For FY 2011, an excess balance of $9,755,240 from the Special Fund was transferred to the general fund. This excess balance amount transfer includes the balance of the moneys appropriated through Act 180, SLH 2010, the 2010 Appropriations Act (Section VI.A. Fiscal Information).

In FY 2011, the Commission‟s ARRA grant allowed for the staffing of two (2) temporary positions and twenty (20) training opportunities attended by a total of 116 staff (many staff attended more than one training opportunity). Commission staff, through these training opportunities, increased their technical knowledge specifically in the evolving electricity industry and was fortunate enough to be trained by experts from entities such as the National Association of Regulatory Utility Commissioners (NARUC), New Mexico State University‟s Center for Public Utilities, National Regulatory Research Institute, U. S. Department of Energy, Michigan State University Institute of Public Utilities, National Renewable Energy Laboratory, and Sandia National Laboratories, among others.

As we enter FY 2012, the Commission continues to put a high priority on technical staff training in addition to a renewed focus on strategic planning in establishing the Commission as a key policy leader and driver, particularly in the area of energy, and to fulfill the Commission’s primary purpose as an effective regulator to align the performance of regulated companies with the public interest.

To see the full report go to: http://puc.hawaii.gov.

PBN: Hawaii PUC Issues 2011 Annual Report