Committee orders broad PUC study instead of immediate split of Hawaii's power system

The joint House committees on Energy & Environmental Protection and Labor altered SB3326 on Tuesday to require the Public Utilities Commission to open an independent, comprehensive proceeding analyzing Hawaii's energy pathways rather than immediately moving to separate transmission from generation.

The chair said the study will "identify the best potential paths forward to maximize cost reduction and minimize financial risk to energy services while meeting established state energy goals and maintaining reliability." The amended language instructs the PUC to compare a range of alternatives, from continued reliance on imported fossil fuels to high-renewable deployment scenarios, and to assess whether separating generation from transmission would yield net benefits.

Hawaiian Electric told the committee the structural change in SB3326 would add cost, complexity and risk for isolated island grids. "This bill breaks apart the electric system ... It does increase complexity, cost and risks in a way we don't have the margin of error," said a Hawaiian Electric spokesperson who opposed the measure, citing Hawaii's small, unconnected island grids and a high share of fuel and power-purchase costs in customer bills.

Public Utilities Commission staff and the Division of Consumer Advocacy asked lawmakers to weigh prior multi-year proceedings that examined restructuring. A PUC subject-matter expert noted an earlier docket opened in 1996 and closed in 2003 that involved extensive review and ultimately did not endorse full structural separation. "To my personal knowledge, I'm not aware of an island system that has fully restructured in this sort of manner," the PUC expert said.

Several committee members pushed for the amended study to include a least-cost comparison and to incorporate reliability, resilience and equity considerations. With those changes, the committee voted to pass SB3326 SD2 with amendments directing the PUC to perform the broader analysis before further structural action.

The vote advances the bill as amended; committee members said the study is intended to produce a neutral comparison of pathways so the state can better assess cost, reliability and risk before considering large structural changes to Hawaii's grid.

The committee did not adopt any immediate requirement to unbundle transmission and generation, instead prioritizing a comprehensive, evidence-based statewide analysis. The PUC and stakeholders were invited to provide supplemental material to the committee record to inform the forthcoming proceeding.