Bill > SB2487

This bill, titled the "Hawaii Ratepayer Protection Act of 2026," clarifies and strengthens the existing performance-based regulation framework for electric utilities in Hawaii, aiming to ensure that rates are just and reasonable and that utility interests align with those of customers. It explicitly defines "performance-based incentives" to include mechanisms that adjust revenue based on performance, control costs, reward superior performance, and penalize subpar performance, moving away from the traditional model that incentivized utilities to increase spending. The bill confirms the Public Utilities Commission's (PUC) authority to use alternative ratemaking procedures to establish these performance-based rates and incentives, provided they are derived from a performance-based model. Crucially, it mandates that if the PUC resets an electric utility's allowed revenues by considering the utility's costs, it must presume in favor of using historical cost trends and external indicators that encourage cost control, rather than relying on future cost projections, a practice known as a "forward test year" which can lead to higher rates. The bill also updates the deadline for the PUC to establish these performance-based incentives to January 1, 2027, and is set to take effect on July 1, 2050.

Budget and Finance, Business and Industry

https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=SB&billnumber=2487&year=2026