Bill Text: HI HCR215 | 2019 | Regular Session | Introduced


Bill Title: Requesting The Auditor To Conduct A Comprehensive Management Audit Of The Division Of Consumer Advocacy.

Spectrum: Partisan Bill (Democrat 10-0)

Status: (Introduced - Dead) 2019-03-21 - The committee(s) on LMG recommend(s) that the measure be deferred. [HCR215 Detail]

Download: Hawaii-2019-HCR215-Introduced.html

HOUSE OF REPRESENTATIVES

H.C.R. NO.

215

THIRTIETH LEGISLATURE, 2019

 

STATE OF HAWAII

 

 

 

 

 

HOUSE CONCURRENT

RESOLUTION

 

 

REQUESTING THE AUDITOR TO CONDUCT A COMPREHENSIVE MANAGEMENT AUDIT OF THE DIVISION OF CONSUMER ADVOCACY.

 

 

 


     WHEREAS, the Division of Consumer Advocacy is mandated by law to "represent, protect, and advance the interests of all consumers, including small businesses, of utility services"; and

 

     WHEREAS, the Division of Consumer Advocacy is given "full rights to participate as a party in interest in all proceedings before the public utilities commission," but the Division's role "shall be separate and distinct from the responsibilities of the public utilities commission"; and

 

     WHEREAS, in 1975, a management audit of Hawaii public utilities regulation found "considerable confusion" in the role of the Division of Consumer Advocacy, then called the public utilities division, in which the Division acted as both staff for the Public Utilities Commission and a representative of consumers, resulting in the Division serving two masters; and

 

     WHEREAS, in 1989, another management audit found that ambiguities and deficiencies still existed in the Public Utilities Commission's and Division of Consumer Advocacy's functions and duties, and that the agencies had been passive and reactive, rather than proactive, in defining and carrying out their separate roles; and

 

     WHEREAS, a subsequent comprehensive evaluation of Hawaii energy utility regulation expanded on these concerns and observed that, unlike most other states, the Division of Consumer Advocacy in Hawaii had combined two functions: (1) an audit and litigation function, which involved traditional accounting review and litigation of utility ratemaking, and which in other states was usually performed by internal Public Utilities Commission staff; and (2) a true consumer advocacy role, which in other states had historically involved advocating as an agent of change for progressive initiatives in the consumers' interests; and

 

     WHEREAS, the 1975 audit proposed placing the audit and litigation staff under the Public Utilities Commission, while creating a separate consumer advocate office; and

 

     WHEREAS, the subsequent statutory amendments in 1976 only partly addressed the 1975 audit's recommendations, administratively separating the Public Utilities Commission and the office now called the Division of Consumer Advocacy, but maintaining the dual roles within the Division of Consumer Advocacy; and

 

     WHEREAS, over the years, the Public Utilities Commission has developed its own independent internal staff capacity, and it no longer needs to rely on the Division of Consumer Advocacy for staff support; and

 

     WHEREAS, the Division of Consumer Advocacy continues to combine its two historical functions, acting as the lead or sole public agency party in Public Utilities Commission proceedings, while retaining its specific title and function focused on consumers; and

 

     WHEREAS, in 2004, another management audit was conducted on the Public Utilities Commission and the Division of Consumer Advocacy, finding that the agencies lacked strategic plans and a vision of Hawaii's regulatory future and their roles in that process, and further finding that the agencies trudged through daily operational work mired in process and individual case details; and

 

WHEREAS, the 2004 audit also cited the "planning and organization deficiencies" found in the 1975 and 1989 audits and concluded that since the time of those audits "nearly thirty and fifteen years ago—neither agency has planned strategies to correct the deficiencies and many of the same serious problems persist"; and

 

     WHEREAS, in the fifteen years since the 2004 audit, public utilities regulation and, more broadly, the electric services sector in Hawaii have significantly evolved, and new technologies, consumer preferences, and environmental and climate imperatives have emerged; and

 

WHEREAS, increasing numbers of consumers are adopting distributed energy resources, leading to a change in the fundamental role of Hawaii's ratepayers from primarily passive consumers of electricity to "prosumers," with the ability to respond to price signals in a way that lowers costs for all ratepayers; and

 

WHEREAS, segments of the electric energy sector traditionally subsumed under the regulated utility monopoly model have increasingly opened up to market competition, thus creating lower costs to consumers and an increased range of energy services and choices; and 

 

     WHEREAS, recent statutory changes such as the State's one hundred percent renewable portfolio standard, carbon neutrality goal by 2045, and the Hawaii Ratepayer Protection Act have been passed in light of the unprecedented crisis from climate change and the full-scale transition to renewable energy underway in Hawaii and across the nation; and

 

WHEREAS, these changes in consumer preferences and roles, market directions and structures, and environmental and clean energy laws and policies necessitate an expanded long-term and visionary perspective in utility regulation and consumer advocacy to advance customer and public interests in clean energy transformation and the resulting reductions in electrical costs and environmental and climate harms that this transformation will provide; and

 

     WHEREAS, utility regulatory practice must change from its traditional focus on auditing utility costs and rates to a new vision for aligning utility incentives with a broader, modern view of the consumer and public interests; and

 

WHEREAS, the Public Utilities Commission has articulated this strategic vision in its landmark Inclinations document in 2014, and in Act 5, Session Laws of Hawaii 2018, the Legislature similarly enacted the nation's first mandate to break the direct link between utility investments and revenues; and

 

WHEREAS, the Legislature has also enacted various amendments broadening and supplementing the Public Utilities Commission's mandate, including requiring the Public Utilities Commission to consider the need to reduce the State's reliance on fossil fuels through energy efficiency and increased renewable energy generation, and to explicitly consider the effect of the State's reliance on fossil fuels on price volatility, export of funds for fuel imports, fuel supply reliability risk, and greenhouse gas emissions; and

 

WHEREAS, the only similar amendment that has been made to the Division of Consumer Advocacy's mandate thus far is the addition of general language in 2003 that the Division of Consumer Advocacy "consider the long-term benefits of renewable resources in the consumer advocate’s role as consumer advocate"; and

 

WHEREAS, the Legislature finds that it is a paramount concern and priority to ensure that Hawaii's regulatory agencies are fully aligned with state clean energy laws and policies and are best positioned and equipped to navigate the transformation of Hawaii's energy sector; and

 

     WHEREAS, recent audits have been conducted on both the Public Utilities Commission and the State Energy Office in 2018, but no audit has been conducted on the Division of Consumer Advocacy since 2004, despite the concerns raised in previous audits, the evolutionary changes in utility regulation and the energy sector, and the Division of Consumer Advocacy's ongoing prominent role in the Public Utilities Commission's clean energy proceedings; now, therefore,

 

     BE IT RESOLVED by the House of Representatives of the Thirtieth Legislature of the State of Hawaii, Regular Session of 2019, the Senate concurring, that the Auditor is requested to conduct a comprehensive management audit of the Division of Consumer Advocacy, including but not limited to:

 

(1)  Updating the findings of previous audits, including the problems regarding the inherent ambiguity and conflict in the Division of Consumer Advocacy's roles and the lack of strategic vision;

 

(2)  The actions, initiatives, and performance of the Division of Consumer Advocacy in promoting Hawaii's clean energy goals, including the State's one hundred per cent renewable mandate and greenhouse gas and climate commitments;

 

(3)  The actions, initiatives, and performance of the Division of Consumer Advocacy in representing, protecting, and advancing the interests of all consumers, including the interests of consumers who adopt clean energy resources such as distributed renewables and energy efficiency; and

 

(4)  Any recommended improvements, including proposed legislation, to update, redefine, or realign the Division of Consumer Advocacy's mission and organization based on the evolving needs of utility regulation and the consumer and public interests; and

 

     BE IT FURTHER RESOLVED that, in conducting the audit, the Auditor is requested to solicit comprehensive feedback from the stakeholder community involved in clean energy issues in Hawaii; and

 

     BE IT FURTHER RESOLVED that the Auditor is requested to submit a report of findings and recommendations, including any proposed legislation, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2020; and

 

     BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Governor, Auditor,


Director of Commerce and Consumer Affairs, Chairperson of the Public Utilties Commission, and Executive Director of the Division of Consumer Advocacy.

 

 

 

 

OFFERED BY:

_____________________________

 

 

Report Title:

Consumer Advocacy

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