STAND

STAND. COM. REP. NO.88

Honolulu, Hawaii

, 2003

RE: S.B. No. 855

S.D. 1

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Energy and Environment, to which was referred S.B. No. 855 entitled:

"A BILL FOR AN ACT RELATING TO ENERGY,"

begs leave to report as follows:

The purpose of this measure is to make permanent the alternative energy systems tax credit and to replace the credit amounts and qualifying percentages with an unspecified amount.

Testimony in support of this measure was submitted by The Gas Company, HECO and its subsidiaries, the Sierra Club, Life of the Land, Hawaii Renewable Energy Alliance, the Hydrogen Renewable Energy Enterprise, LLC, Hawaii Solar Energy Association, Inter-Island Solar Supply, Vertical Wind Turbine Technologies, LLC, and PowerLight Solar Electric Systems. Comments on this measure were submitted by the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that tax credits for alternative energy systems is worth continuing for the following reasons:

(1) The State depends on imported oil for nearly 90 per cent of its energy needs. This dependence results in the outflow of the State's financial resources and creates a tenuous reliance on an unsustainable and unstable resource;

(2) Tax credits leverage private investment that helps to sustain existing jobs and add jobs as the net number of systems sold per year increases; and

(3) The solar industry is exactly the type of "high-tech" business that Hawaii needs. However, until a critical mass is reached for its demand, it must be supported by incentives.

Your Committee has amended this measure by directing the Tax Review Commission, beginning with the July 1, 2010, fiscal year, to periodically review and submit to the Legislature a report on whether to continue, amend, or repeal the tax credits.

As affirmed by the record of votes of the members of your Committee on Energy and Environment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 855, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 855, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Energy and Environment,

		____________________________ J. KALANI ENGLISH, Chair