Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2909 entitled:

begs leave to report as follows:

The purpose of this measure is to streamline and expedite the rate filings of public utilities with annual gross revenues of less than $2,000,000.

The Consumer Advocate, Public Utilities Commission (PUC), Princeville Utilities Company, Inc., and U. Development testified in support of this measure.

Your Committee finds that public utility rate cases, as traditionally conducted, are lengthy and costly proceedings for both the utility and its customers. Proceedings often span a six to seven month period to allow the Consumer Advocate sufficient time to complete its review, and procedural requirements, such as responding to discovery requests, put a strain on a smaller utility's limited staff resources. In order to support its rate case, a smaller utility may be compelled to hire outside consultants and legal counsel, resulting in additional costs to the utility which are ultimately passed on to the utility's customers. Furthermore, because of the costliness of the procedure, smaller utilities generally file infrequently for rate increases. Consequently, rate increases, when sought, are in the double-digit range in order to account for substantial increases in operating costs since the last filing.

Your Committee finds that this measure would significantly reduce or negate the need for the submission of traditional discovery in smaller utility rate cases by requiring public utilities with annual gross revenues of less than $2,000,000 to utilize a standard form application that, when complete, would contain sufficient information to permit analysis by the Consumer Advocate, to submit financial information in conformance with the National Association of Regulatory Utility Commissioners' Uniform System of Accounts, and to file annual financial statements and updated chart of accounts with the PUC and Consumer Advocate within ninety days from the end of each calendar year.

Additionally, this measure requires the PUC to hold a public hearing on the rate increase request and to strive to issue a decision and order within six months of the application filing.

Your Committee concludes that this measure will provide an incentive for smaller public utilities to submit their rate filings on a more timely or regular basis in order to avoid imposing deferred, but large and financially burdensome rate increases on utility customers. These revised procedures will also help to reduce the agencies' administrative costs in processing rate filings and enable the Consumer Advocate to focus its staff resources on more critical tasks.

Your Committee has amended this measure to:

Your Committee also made a nonsubstantive, stylistic change to the measure.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2909, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2909, S.D. 1, and be placed on the calendar for Third Reading.