Committee hears bills to shield renewable projects from financing risks, defers HB 974

House Committee on Energy & Environmental Protection members on Thursday heard detailed testimony on two bills aimed at reducing financing barriers for renewable energy projects in Hawaii and deferred one measure for further consideration.

HB 974 would authorize the State to enter into "step‑in" agreements for payment obligations under certain power purchase agreements, create a power purchasing cost trust fund, and allow an electric utility to act as a billing, collection and payment agent for the Department of Budget and Finance. Deputy Attorney General Randall Moshe Amo told the committee the attorney general’s office submitted written comments and that “our principal concern is that we need to ensure that any obligations that the Department of Budget and Finance or the state takes on does not create any liability or obligation to the state other than the monies in the trust fund.”

The bill’s proponents said the measure is intended to make independent power producers (IPPs) financeable despite the utility’s weakened credit rating. “Without the use of any state funds or the full faith and credit of the state backing this, we need to ensure that there are sufficient funds to pay the IPPs,” Rebecca Dehaaf Matsushima, vice president of resource procurement for Hawaiian Electric, said. She described the bill’s reserve account as a segregated trust for payments to IPPs that would be returned to customers with interest if unused.

Nicole Bulgarino, president of Federal Solutions and Utility Infrastructure at Ameresco, testified that her company is moving three stage‑3 projects through Hawaiian Electric’s process and that financing difficulty tied to the utility’s credit rating could jeopardize delivering new renewable generation. “The ability to obtain financing is extremely challenging and ultimately could result in not being able to provide the needed renewable power to Hawaii,” Bulgarino said.

Michael Angelo of the Division of Consumer Advocacy and the deputy attorney general both urged safeguards. Angelo’s written comments expressed concern about the scale of reserves and the potential cost passed to customers; he told the committee the Division stands on its written testimony. Committee members pressed Hawaiian Electric on how much the proposed reserve would cost customers: the utility estimated the required reserve as 15% of one month of the covered contracts, which the company said equates to roughly $3.5 billion recovered over 29 months for stage‑3 projects and would amount to about 8 to 16 cents per month for a typical customer in the near term.

HB 338, a separate measure, would clarify that premium interest‑rate adjustments may be included in PUC‑reviewed rates for generation from nonfossil sources. The Public Utilities Commission and the Hawaii State Energy Office testified in support. Hawaiian Electric testified in opposition unless amended, saying the PUC already has discretion and that the bill could unintentionally favor higher‑priced projects. The utility recommended an amendment requiring IPPs to prove by clear and convincing evidence that any premium financing cost adjustment is driven by the utility’s credit rating.

Committee members discussed amendments and asked DCCA and HECO about possible unintended effects on competitive procurement. DCCA expressed concern that allowing premium adjustments could reduce incentive for developers to seek the best financing and suggested time limits or review provisions to guard against permanent premium pass‑throughs.

Decision and next steps: committee staff said HB 974 will be deferred to the committee’s February 6 decision session for further work; HB 338 was moved forward with technical amendments and a July 1, 3000 defective date to allow additional drafting. The committee did not adopt final statutory text in committee today.

Ending: The bills reflect a push to reduce financing barriers for renewable projects, but committee members and several testifiers pressed for guardrails to protect ratepayers and the State’s fiscal exposure while preserving developer access to capital.