Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred H.B. No. 1777, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to limit the applicability of the contested case hearing requirement for public utility rate increases to increases in basic service rates.

Verizon Hawaii testified in support, while the Public Utilities Commission (PUC), Consumer Advocate, and Life of the Land testified in opposition to this measure. Oceanic Communications submitted comments on the measure.

Under this measure, the PUC would have the option, but not the duty, to consider a public utility's request for a proposed rate or fee increase in a contested case proceeding, unless the request was for an increase in basic service rates.

Your Committee finds that the public's right to notice and an opportunity to be heard on utility rates or fees that may affect them should not be curtailed, and that this measure would diminish the due process protections currently afforded ratepayers under the law. Further, your Committee finds that the term "basic service rate" is ambiguous and equivocal, except as it is used in the telecommunications industry. Therefore, establishing a contested case requirement only for increases in basic service rates would create uncertainty in the law with respect to other public utilities, such as electric, gas, private water systems, and wastewater systems. Finally, your Committee notes that where the parties to a proceeding are in agreement that a rate increase is warranted, they may stipulate to waive their right to a contested case hearing. The Consumer Advocate is a party to the stipulation and the stipulation is approved pursuant to a public hearing.

Your Committee has amended this measure by replacing its contents with language that amends section 269-16.9, Hawaii Revised Statutes. As amended, this measure clarifies that the PUC, upon motion, notice, and hearing, may exempt a telecommunications provider from the public hearing and contested case requirements in rate-related matters.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1777, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1777, H.D. 1, S.D. 1, and be referred to the Committee on Ways and Means.