Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred H.B. No. 1071 entitled:

begs leave to report as follows:

The purpose of this bill is to:

Testimony in support of the bill was received from Life of the Land and Na Leo Pohai. Hawaiian Electric Company, Inc., (HECO) testified in support of the intent of the bill. Testimony in opposition to the bill was submitted by PUC, Verizon Hawaii, and Oceanic Time Warner Cable. The Department of Budget and Finance (B&F) expressed concerns. The Department of Taxation (DoTax) and Division of Consumer Advocacy of the Department of Commerce and Consumer Affairs commented.

Your Committee heard testimony that while Oceanic is not a utility, it was concerned that the cost to the utility would be passed through to it as it rents space in conduits owned by the utilities. Verizon testified to additional cost concerns due to the changes to its nationwide billing system that the bill would require. Both testified that the consumer would bear the ultimate burden and Verizon expressed concern that this would have a negative impact on Hawaii's economy.

B&F objected to the creation of new special funds, absent compelling justification, and stated the belief that the anticipated revenue will not meet the funding requirement. DoTax commented on the taxpayer requirement, testifying that while there would be no revenue lost, it would constitute a departure from conformity with the taxpayers federal return and expand a precedent for other organizations to seek a similar funding mechanism. There was also skepticism about the revenue potential.

HECO referenced a study by the American Institute of Architects (AIA) that it felt would probably offer a responsible framework to begin the dialogue. Your Committee received the report on February 17, 2004. However, it was not possible, in light of both the first lateral deadline and the bill title, to fully incorporate the recommendations of the report into this bill. Your Committee wishes to keep the issue alive, so that the public policy dialogue concerning the recommendations of the AIA study can begin during this legislative session.

Your Committee has amended this bill by deleting all of its provisions except for:

(1) The creation of the special fund; and

These two provisions are retained to serve as placeholders, as any resolution of the issue will require both a source of funds and an account from which those funds can be appropriated. In addition, future drafts of this legislation should establish a committee to develop a plan for the undergrounding of utility lines and determine how to pay, over time, for the incremental undergrounding of utility lines.

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1071, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1071, H.D. 1, and be referred to the Committee on Finance.