STAND. COM. REP. NO. 206-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2330
                                     H.D. 1




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

Sir:

     Your Committees on Energy and Environmental Protection and
Consumer Protection and Commerce, to which was referred H.B. No.
2330 entitled: 

     "A BILL FOR AN ACT RELATING TO ENERGY,"

beg leave to report as follows:

     The purpose of this bill is to support the small scale
production of electricity at or near the point of use.  This bill
requires the Public Utilities Commission (PUC) to:

     (1)  Develop and implement a grant program to offset costs
          of eligible distributed generation systems; and

     (2)  Establish appropriate interconnection and safety
          standards and requirements and operating agreements for
          distributed generation systems.

     Distributed generation is the small scale production of
electricity at or near the point of use, as opposed to central
generation, where electricity is produced in large quantities at
a remote site and transmitted to multiple users.

     The County of Kauai Office of Economic Development, the
Hawaii Renewable Energy Alliance, and The Gas Company supported
the intent of this bill.  The PUC, the Consumer Advocate, the
Hawaiian Electric Company, Inc., and its subsidiaries, Hawaii
Electric Light Company, Inc. and Maui Electric Company, Limited,
testified in opposition to this bill.

 
 
                                 STAND. COM. REP. NO. 206-00
                                 Page 2

 
     Your Committees find that a subsidy is not appropriate for
distributed generation at this time and that the PUC would have
inherent conflicts if it administered this grant program.
Accordingly, your Committees have amended this bill by deleting
the substance and inserting therefor new material the purpose of
which is to assist renewable electricity producing facilities by:

     (1)  Allowing such facilities to benefit from the State's
          enterprise zone program; and

     (2)  Providing an exemption from the general excise tax for
          the sale of electric power to a public utility.

     The amended language of this bill originated from H.B. No.
1966, which authorizes the sale of wind farm generated
electricity sold to a public utility to qualify for state
enterprise zone benefits.  During the public hearing on this
measure, certain testifiers urged that the scope of the bill be
expanded to include other renewable energy technologies.
However, due to the narrow title of H.B. No. 1966, your
Committees agreed that H.B. No. 2330 represents a more
appropriate vehicle.

     As affirmed by the records of votes of the members of your
Committees on Energy and Environmental Protection and Consumer
Protection and Commerce that are attached to this report, your
Committees are in accord with the intent and purpose of H.B. No.
2330, as amended herein, and recommend that it pass Second
Reading in the form attached hereto as H.B. No. 2330, H.D. 1, and
be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Energy and
                                   Environmental Protection and
                                   Consumer Protection and
                                   Commerce,

                                   
                                   
                                   
                                   
______________________________     ______________________________
RON MENOR, Chair                   HERMINA M. MORITA, Chair