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 S.B. No. 2278, S.D. 1, entitled:

beg leave to report as follows:

The purpose of this bill is to promote energy efficiency by allowing taxpayers to accelerate depreciation on investments in combined heat and power (CHP) systems.

The Gas Company, Life of the Land, and a concerned individual supported this measure. The Department of Business, Economic Development, and Tourism supported the intent of this bill. The Tax Foundation of Hawaii submitted comments on this measure. The Department of Taxation opposed this bill.

Your Committees find that CHP systems have been proven to significantly reduce fossil fuel consumption, converting 80-90 percent of consumed fuel to usable energy. In addition, CHP systems currently have a 30-year class life. This bill accelerates the depreciation of a CHP system by reducing the class life to 22 years. Decreasing the class life would provide an incentive for building owners and operators to install energy-efficient CHP systems.

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 S.B. No. 2278, S.D. 1, and recommend that it pass Second Reading and be referred to the Committee on Finance.