Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committees on Energy and Environmental Protection and Consumer Protection and Commerce, to which was referred H.B. No. 2839 entitled:

beg leave to report as follows:

The purpose of the bill is to promote energy efficiency by allowing owners of qualifying combined heat-and-power (CHP) systems to accelerate the depreciation of these systems under state income tax law.

The Gas Company and Life of the Land testified in support of the measure. The Department of Business, Economic Development, and Tourism supported the intent of the bill. The Department of Taxation opposed the measure. The Tax Foundation of Hawaii submitted comments on the bill.

Your Committees believe that the measure would encourage building owners and operators to install qualifying CHP systems, which is consistent with Hawaii's energy policy of supporting energy efficiency and reducing consumption of and dependence on imported oil.

Your Committees have amended the measure by clarifying that the tax incentive provided by the bill is a tax deduction and not a tax credit.

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. 2839, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 2839, H.D. 1, and be referred to the Committee on Finance.