Legislature Looks Past GEMS for Cooling

posted in: March 2016 | 0

Following Gov. David Ige’s state of the state address, in which he proposed us- ing nearly two-thirds of the Green Energy Market Securitization funds to air condition 1,000 public-school classrooms, both cham- bers of the Legislature heard companion bills that would authorize the Department of Education to spend up to $100 million in GEMS funds for various purposes, all intended to cool classrooms in one way or another.

When the bills were heard, testimony was overwhelmingly favorable to the idea.

But it would seem that over the last month, someone – whether at the Legislature or in the governor’s office – began to have second thoughts about whether this would be the best way to reduce temperatures in overheated classrooms.

Evidence of this re-thinking surfaced in late February, when an entirely new means of financing for cooler classrooms was floated in the Senate version of the GEMS-for-schools bill (SB 3126). Here’s the explanation in what was proposed as Senate Draft 2 of the measure:

“On January 7, 2016, the department of budget and finance reported to the council

on revenues that the State will receive approximately $170,000,000 of increased reimbursements from the federal government, primarily for Medicaid. The $170,000,000 increased reimbursement was not anticipated by the administration when it prepared the executive supplemental budget request for fiscal year 2016-2017. The reimbursement is the realization of the general fund.

“The legislature further finds that the use of general funds for providing air conditioning and heat abatement for public schools is preferable to using green infrastructure loan funds. First, the department of education will have more flexibility in using general funds for air conditioning and heat abatement measures. The types of projects that the department of education would have been able to fund with green infrastructure loan funds were unclear and apparently limited to energy efficiency and conservation projects. Second, using general funds instead of green infrastructure loan funds precludes the need for annual debt service payments.”

The bill holds the appropriation amounts to the same levels in the original bill: $100 million for improvements from the designated fund (now Medicaid reimbursements instead of GEMS) and $30 million more in general-obligation bonds.

As to what is to be done with the GEMS funds, the Legislature has an idea for that, too: “Using the green infrastructure loan funds for utility-scale projects, as recommended by the consumer advocate before the public utilities commission, may be a possibility in the future.”

Whether GEMS funds may still be loaned out to the DOE is an open question. On February 23, the Hawai‘i Green Infrastructure Authority filed with the Public Utilities Commission a program notification that would allow schools to be eligible for a new “loan product” — the “GEMS Commercial EE Loan Product” — for energy efficiency improvements undertaken by large electrical consumers.

At the February 24 HGIA meeting, where a vote had been scheduled to approve the $100 million loan to the DOE, Luis Salaveria, director of the Department of Business, Economic Development, and Tourism, said, “We’re having constructive discussions on possible financing of a project with the DOE. It’s a complex deal, given the number of stakeholders.” At his request, the vote on the DOE loan was deferred.

— Patricia Tummons

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