'Unanswered Questions' Hold Up On-Bill Financing

Civil Beat - April 26, 2011

By: Michael Levine

Time is running out for a bill in the Hawaii Legislature that would allow people to pay to install clean energy technology at their homes through their monthly electric bills.The lawmaker who holds the measure in his hands says he still has a lot of "unanswered questions.""It's not dead," House Energy Committee Chair Denny Coffman told Civil Beat Monday afternoon, "but like you said, time is running out."House Bill 1520 likely needs to pass out of conference by the end of Thursday to become law this year. A committee meeting will likely need to be scheduled at some point Wednesday to make that possible.Loading

In an op-ed published on Civil Beat Monday, Blue Planet Foundation Executive Director Jeff Mikulina said passing the bill would remove two major hurdles — cost and complexity — that stand in the way of clean energy efforts."It seems too good to be true, but it's simply leveraging the 'efficiency' in energy efficiency," Mikulina wrote. "On-bill financing is not a panacea, but it would be another tool in the toolbox that enables everyday folks to make smart energy choices. At a time when residents really feel the sharp pinch of Hawaii's addiction to oil, it would be tremendously short-sighted for legislators to reject this smart, sensible policy."But Coffman said he's concerned about how much the state is already laying out for clean energy. Tax credits have been popular — a good thing because it means people are investing in clean energy technology, but a bad thing because it's sapping the government of much-needed revenue. Combine those tax credits with zero-down financing offers from the private sector and "the renewable energy field is going bonkers right now," Coffman said.He acknowledges that despite those credits and deals, the initial investment is still a serious hurdle for many. "Especially when you look at PV (photovoltaic) systems, you have to have some money up front on your own," he said.The proposal didn't get a green light from all concerned parties.Late March testimony [pdf] opposing the proposal or expressing concerns about it came from many quarters: Hawaiian Electric Company, the state's largest electric utility; Hawaii Energy, the Public Benefits Fee Administrator in charge of rebates and other energy efficiency programs; and Public Utilities Commission Chair Hermina Morita, who had the rare opportunity to testify against a bill that she had personally introduced.1Morita continued to oppose the measure even in its later forms, though HECO and Hawaii Energy came around to the intent of the proposal, according to testimony [pdf] and a Senate committee report. One of the changes that was made in the SD2 version — the one currently on the table — was adding a key word, "consider," to a sentence that now reads, "The public utilities commission shall consider implementing an on-bill financing program."Still, Coffman expressed misgivings. He said the bill could be an unfunded mandate and might be worthy of further study before moving forward too quickly."I need to go through and read it because there's a lot of 'shalls' in there," he said.In particular, he said he's worried about how the state is going to fund and implement the program. There's no express reference to any lender or bank in the bill's text; the program is to be "backed" by the public benefits fee, with the PUC determining how much of the fees collected each year should be used to cover the costs of establishing and implementing on-bill financing.Coffman is the lead House conferee, and his counterpart is Sen. Mike Gabbard, chair of the Senate Energy Committee. He introduced his own on-bill financing measure this session — Senate Bill 182 — but it stalled in Senate Ways and Means. Gabbard lamented in a Civil Beat op-ed that his proposal would have been a solution for up-front costs.Gabbard said in an email Monday that he supports both the SD1 and SD2 version of HB 1520. Coffman said he's working with the senator and concerned citizens to craft language, and Gabbard expressed optimism about the talks."Rep. Coffman and I had a good conversation about HB 1520 this afternoon. During the meeting, I gave him a conference draft proposal, which is intended to address some of his concerns. I'm hopeful that he'll agree to these changes and we'll get HB 1520 passed," Gabbard wrote.Asked to characterize the proposed changes in the conference draft he shared with Coffman, Gabbard sent the following email:·         Section 1 tweaks to reflect actual language changes in the bill and comport with the intent of the measure.·         Directs PUC to investigate implementation of an on-bill financing program, then directs them to adopt rules or issue a decision and order for elements of an on-bill financing program that it determines to be cost-effective.·         Eliminate photovoltaic as something that must be considered; PUC can choose which renewable energy or energy efficiency devices they want to include in the program (that are "cost-effective").·         Added "or acquire" in addition to the "purchase" devices.·         Deleted language regarding removing the system or item (suggesting that the systems or devices shouldn't be removed, or the PUC can take up the issue in structuring the program).·         Makes clear that the financing for the systems or devices comes from non-ratepayer sources.·         Clarifies that in considering on-bill financing, the public benefits fee should be "spent as cost-effectively and equitably as possible to achieve energy efficiency savings."·         Add to subsection (d) "Subject to subsection (a)," and then the language that is there currently "the public utilities commission shall implement all elements of the on-billing program that are determined to be cost-effective by decision and order or by rules pursuant to chapter 91 to:..."