PUC Annual Report–Fiscal Year 2004-05 - Public Utilities Commission

Public Utilities Commission Annual Report 2004-05State of Hawaii Page 97anticipated or ameliorated and are beyond the control of the utility; and2. Gather, review, and analyze data to determine the extent to which any proposedutility ratemaking structure would impact electric utilities’ profit margins, and toensure that these profit margins do not decrease as a result of theimplementation of the proposed rate structure. 24The Commission selected a collaborative workshop approach to encourage publicdiscussion of its work-in-progress. The Commission observes that the successful design andimplementation of regulation seem to result from balanced, open, and inclusive discussions, like,for example, collaborative workshops. A series of workshops involving stakeholders is likely tofacilitate the identification of key issues and the development of appropriate policies that areexpected to enjoy broad support. It also provides the Commission with an opportunity toarticulate its vision for regulatory policy in Hawaii.The Commission held two (2) of three (3) planned two-day workshops: the first onNovember 22 and 23, 2004 and the second on October 3 and 4, 2005. The third workshop isscheduled for early 2006. The Commission also held its first technical workshop on October 5,2005 to gather information and comments to its approach to simulate, using a computer model,Hawaii’s energy market. For the first two (2) workshops, the Commission published a papermany weeks before each workshop, describing its approach along with actual or expectedresults, and invited stakeholders to provide written comments. The deadline for the submission ofwritten stakeholder comments has ranged from one (1) to two (2) weeks before the workshop.Prior to each workshop, the Commission published a schedule describing a sequence ofpresentations and panel discussions at the workshop.The goals of the first scheduled workshop were to describe and gather comments on theCommission’s methodology in fulfilling its legislative mandate. The goals of the second workshopwere to analyze the design and implementation of various RPS programs in the U.S., to examinepotential alternative renewable energy resources in Hawaii, and to identify proposed or potentialratemaking structures and incentives consisting of candidate RPS components and incentiveregulation mechanisms for implementing Hawaii’s RPS. The goals of the third planned workshopare to further describe and gather additional comments on the incentive regulation mechanismspreferred by the Commission, based upon the input provided at the second workshop, to reviewpreliminary simulation results for Hawaii’s power market, and to discuss an outline for potentialadministrative rules that the Commission may adopt to implement the mandates of Act 95.24 In 2005, the Commission sought an amendment to the legislation to remove therequirement that the Commission ensure that electric utilities’ profit margins do not decrease, butto affirm that the opportunity of electric utilities to earn a reasonable rate of return shall not bediminished as a result of the implementation of the proposed rate design. The Commission willcontinue to support legislation seeking to achieve such an amendment.