Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred H.B. No. 769, H.D. 3, entitled:

begs leave to report as follows:

The purpose of this measure is to exempt unclaimed property held by an electric utility cooperative association from the laws governing the disposition of unclaimed property.

Testimony in support of this measure was submitted by the Department of Budget and Finance and the Kauai Island Utility Cooperative.

Electric utility cooperative associations are nonprofit entities formed to provide essential electric services to their members. Without the need to generate profits and pay shareholder dividends, these cooperatives are able to reinvest "margins" (akin to profits realized by for-profit entities) by allocating them to their members as capital credit contributions, and may also return moneys to their members as patronage capital refunds.

Under current law, unclaimed patronage capital refunds and other unclaimed property held by an electric utility cooperative association are required to be relinquished to the State under the unclaimed property laws, making these moneys unavailable for use by the cooperative for the general welfare of its members.

This measure would enable electric cooperatives to retain and utilize unclaimed funds to further the interests of their members and the larger community by exempting unclaimed property held by the cooperatives from the unclaimed property laws. The cooperative would be required to file an annual report with the Director of Finance listing all unclaimed property in its possession, establish a nonprofit corporation to receive non-escheat patronage refunds (patronage capital refunds unclaimed for five years), and use the moneys held by the nonprofit corporation for charitable and educational purposes.

Your Committee finds that twenty-five states have enacted similar laws and that this measure would enable an electric utility cooperative association to retain the use of its members' moneys for the benefit of the cooperative and the community it serves.

Your Committee has amended this measure by making technical, nonsubstantive amendments for the purposes of clarity and consistency, and to reflect preferred drafting style.

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 H.B. No. 769, H.D. 3, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 769, H.D. 3, S.D. 1, and be referred to the Committee on Ways and Means.