Measure strengthening Hawaiʻi electric grid reliability, safety, affordability moves forward

Hawaiʻi Senate Energy and Intergovernmental Affairs Chairperson Glenn Wakai announced the Senate’s passage of Senate Bill 3326, legislation establishing a state policy framework to restructure Hawaiʻi’s electric industry by separating electric generation from transmission and distribution.

The measure advances amid continued power outages, increasing wildfire risk, aging infrastructure, and Hawaiʻi’s persistently high electricity costs — the highest in the nation.

The Legislature identified the affordability of electric service as a paramount public interest concern. Volatile and elevated energy costs continue to burden households, small businesses, hospitals, schools, and critical services, contributing to cost-of-living pressures and economic strain statewide.

Senate Bill 3326 sets a structural policy direction requiring electric generation to be separately owned and controlled from transmission and distribution services. Transmission and distribution would remain regulated monopoly services under Hawaiian Electric and subject to oversight by the Public Utilities Commission (PUC), while generation would operate under independent ownership and open competition.

“We pay more than two times the national average for electricity in Hawaii. That is hampering business growth and pushing people to leave our state,” said Chair Wakai. “Affordability of electric service is a paramount public interest. This bill creates clarity and focus — allowing the utility to concentrate on keeping the grid safe, reliable, and resilient, while competition drives efficiency and innovation in electricity generation. Doing nothing is not an option.”

Legislative findings conclude that constraints in transmission and distribution capacity — along with procurement delays — have slowed renewable deployment, limited rooftop solar and storage interconnections, and contributed to outages and public safety concerns.

Hawaiʻi also continues to rely on aging generation facilities, increasing long-term cost pressures on ratepayers.

Under Senate Bill 3326:

Transmission and distribution remain fully regulated to ensure reliability, consumer protection, and reasonable rates.

The Public Utilities Commission is directed to oversee an orderly, transparent rulemaking process to implement the transition.

Generation must be separately owned and operated, opening the sector to transparent competition.

Existing power purchase agreements and financing protections are preserved.

Workforce continuity, ratepayer protections, wildfire mitigation, and system reliability must be addressed through implementation.

Electric cooperatives, including Kauaʻi Island Utility Cooperative (KIUC), are excluded.

The bill does not immediately restructure the utility. Instead, it directs the PUC to conduct a comprehensive public rulemaking to design an orderly, phased transition that maintains reliability and financial stability.

“We are modernizing aging infrastructure, addressing wildfire risk, and integrating more renewable energy — all while customers are paying too much,” Wakai added. “Public safety and reliability live on the grid, and that is where this bill puts the focus. By separating generation from transmission and distribution, we can strengthen oversight, improve accountability, accelerate clean energy, and modernize Hawaiʻi’s electric system for the long term.”

Senate Bill 3326 passed second reading and has been referred to the Senate Committee on Ways and Means.