STAND. COM. REP. NO. 384-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 1937
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 1937 entitled: 

     "A BILL FOR AN ACT RELATING TO AUTHORIZING THE USE OF
     GENERAL OBLIGATION BONDS TO INSTALL UTILITY LINES
     UNDERGROUND,"

begs leave to report as follows:

     The purpose of this bill is to authorize state or county
agencies other than the Public Utilities Commission (PUC), that
are responsible for authorizing land use and other permits and
approvals necessary for utility line construction, to:

     (1)  Find that it is in the public interest to install
          utility lines underground;

     (2)  Seek the issuance of general obligation bonds by the
          Legislature, in the amount that installation of the
          underground lines will exceed the cost of equivalent
          utility and overhead line construction; and

     (3)  Construct overhead lines as usual, according to the
          regular approval process and financed by utility
          tariffs if the request for issuance of bonds is not
          followed by authorization in the next regular
          legislative session.

     Your Committee received testimony in support of this measure
from the Department of Commerce and Consumer Affairs, PUC, GTE

 
 
                                 STAND. COM. REP. NO. 384-00
                                 Page 2

 
Hawaiian Tel, Hawaiian Electric Company, Outdoor Circle, and
Kauai Electric.  The Environmental Center and Life of the Land
commented on the bill.  Testimony in opposition was submitted by
the Department of Budget and Finance.

     Your Committee finds that the benefits of placing electric,
telephone, cable, and other utility lines underground include
increased safety, enhanced aesthetics, and reduced damage and
costs due to wind storms and hurricanes.  Undergrounding utility
lines also increases property values, and thus, tax revenues from
adjacent properties.

     Your Committee heard testimony that the primary barrier to
locating transmission lines underground is the additional cost
involved and that discussions often stall on the issue of who
will pay the added cost.  Under current law and procedures, these
costs have generally been borne by residents and businesses in
the affected area in the form of higher utility bills, although
exceptions have been made in certain areas.  This measure would
provide for certain unspecified projects, and redistribute the
cost of undergrounding among the State's taxpayers.

     Testifiers took various positions on the cost of
undergrounding utilities.  Your Committee heard testimony that
the cost shift was appropriate; the entire community benefits
because the physical beauty of the islands is enhanced when
underground rather than overhead wiring is installed, and
additional public purposes are served by the increased safety and
protection against storm damage afforded by underground
utilities.  Some testifiers stated that persons in the area
involved should bear responsibility for the costs of
undergrounding.

     Other concerns with the funding mechanism under the bill
included the concern that cable companies should share in the
cost of underground utilities, and that issuance of general
obligation bonds, while spreading the cost of underground
utilities widely across the state's tax base, would also limit
the amount of general obligation bonds that could otherwise be
issued for competing public purposes such as public school or
university projects.

     Your Committee finds that the intent of this bill, which is
to establish an alternative funding mechanism for underground
utilities, merits additional discussion that might possibly
resolve the various concerns and interests heard by your
Committee.  To ensure further discussion, your Committee has
amended the bill by leaving its effective date blank.


 
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                                 Page 3

 
     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 1937, as amended herein, and recommends that
it be referred to the Committee on Finance, in the form attached
hereto as H.B. No. 1937, H.D. 1.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,



                                   ______________________________
                                   RON MENOR, Chair