Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Energy and Environmental Protection, to which was referred H.B. No. 2237 entitled:

begs leave to report as follows:

The purpose of this bill is to encourage and support the generation of electricity by hydroelectric sources by providing a tax credit equal to twenty percent of the total cost of hydroelectric systems erected and placed in service after December 31, 2002, and before January 1, 2011.

The Department of Business, Economic Development, and Tourism, Hawaiian Electric Company, Maui Electric Company, Hawaii Electric Light Company, and Kauai Electric submitted testimony in support of the intent of the bill with recommended amendments. The Hawaii Renewable Energy Alliance submitted testimony in support of the intent of the measure, but expressed concerns that are related to the findings of the Energy Efficiency Policy Task Force. The Tax Foundation of Hawaii submitted comments on the bill. The Department of Taxation opposed the measure.

Your Committee finds that hydroelectric power is the oldest and most mature of all the renewable energy technologies and should be encouraged and supported along with other renewable energy sources.

Your Committee has amended this measure by:

Finally, one aspect of this bill that deserves further consideration is the appropriateness of extending the tax credit to include repair and maintenance costs of existing hydroelectric facilities, especially those associated with the demise of the sugarcane industry.

As affirmed by the record of votes of the members of your Committee on Energy and Environmental Protection that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2237, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2237, H.D. 1, and be referred to the Committee on Finance.