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Hawaii Clean Energy Incentive Based Regulation
Western Clean Energy Advocates
Remarks of Ron BinzSan Francisco, CA • January 8, 2015
Our vision: A world of abundant, renewable energy that sustains all life on Earth.
Our mission: Blue Planet Foundation is a local nonprofit organization committed to clearing the path for clean energy.
• We inspire leaders to change the rules and accelerate cost-effective, secure, renewable energy.
• We inspire communities to adopt smart, replicable energy solutions.
• We inspire everyone to believe in the power and possibility of a future beyond fossil fuels.
BP’s Hawaii Request
A new regulatory regime, pending negotiation of implementation details.• The mechanism integrates utility outputs (goals) in an
approved business plan with utility revenues• Revenue growth is tied to an external measure• Utility performance meaningfully affects revenues• The mechanism is in place for an extended period • Mechanism breaks link of utility sales and earnings
BP’s Hawaii Request
The parties, plus additional admitted intervenors, be ordered to engage in a stakeholder process to negotiate the implementation details of the new regulatory regime, reporting progress periodically to the Commission.
Allowed Revenues Baseline RevenuesIncentive Revenues
Extraordinary Revenues
Outputs To Be Delivered
Approved Business Plan
Rewards or Penalties
Negotiated Revenues
Existing Baseline Revenues
Revenue Growth Factor
New Baseline Revenue
Cost Trackers
Performance Measures
Adjusted Allowed Revenues
Base Fuel + Purchased Power
Hawaii Clean Energy IBR
Decoupling Adjustment
Outputs To Be Delivered
Approved Business Plan
Hawaii Clean Energy IBR
• Safety & Reliability
• Interconnection Quality
• Customer Service
• Environmental Performance
• Fossil Fuel Use Reduction/Elimination
• Customer Engagement
Hawaii Clean Energy IBR OutputsProposed by Blue Planet Foundation
Allowed Revenues Baseline RevenuesIncentive Revenues
Extraordinary Revenues
Outputs To Be Delivered
Approved Business Plan
Rewards or Penalties
Negotiated Revenues
Existing Baseline Revenues
Revenue Growth Factor
New Baseline Revenue
Cost Trackers
Performance Measures
Adjusted Allowed Revenues
Base Fuel + Purchased Power
Hawaii Clean Energy IBR
10 11 12
13 1514
Decoupling Adjustment
16
1
2
3 4
5
6
9
87
14
10
11
12
13
15
Comprehensive business and financial plan approved by the PUC.
Broad measures of approximately six desired outcomes resulting from a successful business plan.
Revenue growth factor (e.g., GDPPI minus X) set by the PUC.
Performance measures to assess achievement of outputs.
Baseline revenues (non-fuel and PPA) from previous period.
Previous baseline revenue times revenue growth factor.
Increment or decrement to revenues based on “report card.”
Agreed revenues associated with extraordinary investment or expense events.
Allowed Revenues before Fuel and Adjustments.
New Baseline Revenues.
Incentive Revenues (+/-).
Revenues related to extraordinary investment or expenses (G, T, D, C).
Total allowed revenues for setting tariffs.
Adjustment based on prior year’s actual revenues compared to allowed revenues.
Allowed base fuel and purchased power expenses.
Revenue requirement from any remaining cost adjustments.16
Hawaii Clean Energy IBR
4
5
6
3
2
1 9
8
7