A proposal for a new utility company focused solely on developing and managing renewable energy — which has the support of the Lingle administration and the Sierra Club's Hawai'i Chapter — is in the Legislature.

The utility would be funded with a consumer surcharge that now goes to Hawaiian Electric Co. for its programs.

Several bills, including Gov. Linda Lingle's energy proposals, would authorize the Public Utilities Commission to select a company to manage renewable-energy programs. The PUC would also set up funding and regulate and monitor the company's progress

HECO has testified in opposition to the plan and stands to lose $19.2 million in surcharges paid by customers that now fund its renewable-energy program.

In written testimony that will be presented to the House Committee on Energy and Environmental Protection today, Ted Liu, chairman of the state Department of Business and Economic Development, said the state supports establishing a statewide energy-efficiency utility.

Liu's testimony said a new renewable-energy utility could save nearly twice as much energy by the year 2020 as the present system.

The move follows a nationwide trend of separating renewable energy from electric utility companies.

"Hawaiian Electric serves two masters," said Jeff Mikulina, director of Sierra Club's Hawai'i Chapter. "Their revenue stream is based on electricity sales. The more electricity they provide, the more money they make. At the same time they are mandated to implement these demand-side management programs such as rebates for solar heaters.

"The governor has proposed letting the PUC pick another entity to run all those programs. Funded the same way, through a surcharge on people's bills, and we think they could be much better at energy efficiency."

Hawaiian Electric spokesman Chuck Freedman said renewable energy is an important part of the services that HECO offers now.

"Our view of operating an effective utility is that it's a mixed plate of energy resources," Freedman said. "It's central station power, it's renewable energy, it's energy efficiency and demand-side management. We are national leaders in energy efficiency."

House Bill 3049, introduced by Rep. Hermina Morita, D-14th (Kapa'a, Hanalei), and seven other lawmakers, refers to a company called Efficiency Vermont as example of the potential for a new renewable-energy utility.

"If you cut energy costs, it's better than a tax refund," Morita said. "You are putting the money directly in people's pockets."

Efficiency Vermont was created by the Vermont Legislature after it determined that a conflict of interest was inherent in the way in which energy-efficiency services were delivered to residents by electric utilities.

Efficiency Vermont spends 90 percent of its surcharge — called a public benefits charge — on programs including rebates, innovative technology, and teaching homes and businesses to reduce power consumption. Only 10 percent goes toward administrative overhead, according to the company's Web site.

Freedman said the Vermont model is inappropriate for Hawai'i because Vermont has 22 utility companies and it can buy power from other companies outside the state.

"We just have one utility on O'ahu and as an island state, we must be sure and produce all the power we need," he said.

Mikulina said if renewable energy is separated from HECO, more money would go toward increasing energy efficiency. He said that in 2004, the consumer surcharge brought in $19.2 million to fund HECO's renewable-energy program. About 60 percent of that was used for shareholder incentives and "lost sales recovery" — which HECO says is for infrastructure maintenance — and 40 percent actually went to rebates and energy efficiency, he said.

"The vast majority of the money going into that fund is being used for administrative, marketing and shareholder incentives when it should be going to providing energy efficiency," Mikulina said.

Freedman, however, said about $9 million was used for renewable-energy program costs including rebates to customers, operating the program and profit for the company. The lost sales recovery accounted for about $10.5 million, he said, which includes the cost of maintaining power lines and infrastructure.

"These costs cover the fixed operations that HECO has in order to provide reliable service," Freedman said. "That is part of our responsibility and it is part of what is allowed under the demand-side management program."

Reach James Gonser at jgonser@honoluluadvertiser.com.