Amid more than 250 bills just passed by the state Legislature and poised to become Hawaii law, two stand out for their far-reaching potential to seed needed green shoots in the name of environmental stewardship. Senate Bill 1396 creates a climate “green fee” — finally — while SB 897 will help Hawaii’s major power utility, Hawaiian Electric Co., stay solvent and push ahead on crucial improvements for wildfire and disaster prevention. Both measures, though, come with caveats that will require the public, administrators and regulators to stay sharp so these prime opportunities aren’t squandered.
Under SB 1396, a 0.75% increase to the 10.25% statewide transient accommodations tax (TAT) on hotel rooms and short-term rentals will pay into a new fund to help the state respond to climate change and prevent wildfire spread; also, a new 11% TAT will be imposed on cruise ships docking in Hawaii.
Starting next year, SB 1396 is expected to reap $90 million to $100 million annually for much-needed initiatives to protect and manage Hawaii’s well-used but fragile environment: native forests, plants and animals, aquatic resources, coastal lands and freshwater resources. The visionary goal is to ensure that natural resources here are maintained for future residents and visitors, via park and beach improvements and maintenance projects that increase the resiliency of structures and infrastructure against natural and climate-related disasters. These includes hurricanes and sea level rise, as well as wildfire and floods.
SB 1396 is a major win — not just a political one for Gov. Josh Green, who has advocated for a climate fee throughout his three years in office, but for all of Hawaii nei.
“The first of its kind in the nation,” Green enthused in a May 2 statement, saying the bill “represents a generational commitment to protect our aina. Hawaii is truly setting a new standard to address the climate crisis.”
It’s been estimated that $500 million to $600 million is needed annually for climate-related mitigations here — but Green stayed optimistic, saying the new funds could be leveraged to take out bonds for larger projects and to incentivize private-sector help.
“Now that we’ve demonstrated that the state of Hawaii will be committing $100 million a year as promised, there are a lot of people out there that are interested in matching us dollar for dollar for projects,” he said, “and I would not be surprised if some of the super wealthy who have settled in Hawaii might want to help us.”
Let’s be sure they do, to maximize funds for this ongoing, heavy environmental lift. That means state officials must have a clear and fine-tuned list of priorities and projects, with an action-oriented mindset.
Then there’s SB 897, which for the most part, brings optimism and relief.
The necessary aspects of the bill allow energy utilities to tap into “securitization” funding — essentially allowing HECO to take out low-interest bonds for infrastructure upgrades, backed by a new fee on customers’ electricity bills. SB 897 caps the securitized amount, reasonably, at $500 million — initially, $1 billion in securitization was requested, estimated to add $4 more to residents’ monthly bills.
Because HECO’s vitality is so intrinsically linked to this state’s economic well-being, giving it the ability to tap into low-cost financing is in the public’s best interest. This has gained importance after the August 2023 wildfires that destroyed Lahaina, plunging HECO’s credit rating and taking it to the brink of bankruptcy.
Utility improvements such as pole and grid resiliency, early warning systems and grasslands management to prevent wildfire spread will all come at some cost to ratepayers. The onus will be on the state Public Utilities Commission, in upcoming public hearings, to erect firm guardrails on HECO’s securitization terms and rate-increase proposals. The PUC’s conditions for HECO must be mindful of Hawaii’s already high energy costs, and securitized funds must be used for disaster-mitigation projects only.
The PUC also will need to heed a bright red flag regarding litigation caps raised in the Legislature’s closing days. In a floor speech on April 30, Sen. Jarrett Keohokalole, the Senate’s consumer protection committee chair, vehemently opposed last-minute changes to SB 897 “drafted in the shadows” that allow the PUC to limit energy utilities’ future disaster-related liabilities over a given timeframe, possibly shielding them from full responsibility and culpability.
With passage of these bills — which the governor is keen to sign — the Legislature has staked out essential financial wherewithal for protection of Hawaii’s environment. Clearly, the need is great. All this precious money from the state’s new climate fee and from HECO’s imminent rate hike for securitization must go toward anti-disaster actions — carried out with precision, expediency and most public bang for the bucks.
