SB2487, titled the “Hawaii Ratepayer Protection Act of 2026,” amends the state’s utility ratemaking law to reinforce a performance-based regulatory model for electric utilities. The bill states that utility revenues should remain tied to performance rather than traditional cost-of-service ratemaking, and it directs the Public Utilities Commission (PUC) to establish performance-based incentives, including revenue adjustment mechanisms, cost control mechanisms, and reward-and-penalty tools, by January 1, 2027.
The measure also clarifies that the PUC may adopt alternative ratemaking procedures by commission order, so long as the resulting rates are derived from a performance-based model. In evaluating utility performance, the commission must consider affordability and rate volatility, reliability, customer engagement and satisfaction, access to utility data, rapid renewable energy integration, and timely competitive procurement and interconnection processes. The bill expressly excludes member-owned cooperative electric utilities from these requirements.
Impact
The bill amends section 269-16.1 of the Hawaii Revised Statutes to extend and strengthen the statutory mandate for performance-based utility regulation. It updates the deadline for establishing performance-based incentives from 2020 to 2027, broadens the types of mechanisms the PUC must use, and authorizes alternative ratemaking procedures that depart from traditional ratemaking methods, while still requiring a performance-based revenue model. The practical effect is to constrain the PUC’s ability to revert to conventional cost-of-service or forward test year approaches for electric utility rates, and to reinforce a regulatory framework intended to affect electric utilities, ratepayers, and utility planning and procurement practices.
Sentiment
The bill appears to have broad support in the legislative process, with unanimous or near-unanimous committee votes at each recorded stage and no recorded dissent in the available voting history. The bill’s findings and purpose section reflect a strong legislative preference for preserving and deepening the state’s performance-based utility regulation framework, emphasizing customer savings, affordability, and continued reform of utility incentives. Overall, the sentiment is favorable toward limiting traditional cost-based ratemaking and maintaining pressure on the PUC to keep rates tied to performance outcomes.
Contention
The main point of contention described in the bill is the PUC’s perceived movement back toward traditional cost-of-service ratemaking, including rebasing revenues using projected costs and using a forward test year. The bill’s supporters view those approaches as inconsistent with the 2018 Hawaii Ratepayer Protection Act and as likely to increase customer rates by encouraging utilities to pursue capital-heavy projects. The bill also reflects a legal-policy dispute over whether existing statutes constrain the PUC to traditional ratemaking methods; SB2487 responds by explicitly authorizing alternative ratemaking procedures and clarifying legislative intent. No opposing arguments are included in the provided transcripts, but the text suggests the tension is between utility/commission ratemaking flexibility and legislative efforts to protect ratepayers from higher bills.
A resolution to direct the Clerk of the House of Representatives to only present to the Governor enrolled House bills finally passed by both houses of the One Hundred Third Legislature.
Relating to nonsubstantive additions to, revisions of, and corrections in enacted codes, to the nonsubstantive codification or disposition of various laws omitted from enacted codes, and to conforming codifications enacted by the 88th Legislature to other Acts of that legislature.