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 S.B. No. 1117 entitled:

begs leave to report as follows:

The purpose of this measure is to authorize the issuance of special purpose revenue bonds to assist electric utilities with the financing of capital improvement projects.

The Department of Commerce and Consumer Affairs, Hawaiian Electric Company, Inc., Maui Electric Company, Ltd., and Hawaii Electric Light Company, Inc., testified in support of this measure.

This measure authorizes the issuance of special purpose revenue bonds (SPRBs) to assist Hawaiian Electric Company, Inc., Maui Electric Company, Ltd., and Hawaii Electric Light Company, Inc. with multi-project capital improvement construction programs for the furnishing of electric energy in this State.

Your Committee finds that the use of proceeds from the sale of tax-exempt SPRBs will enable the electric utilities to lower their financing costs, resulting in a savings of approximately $250,000 for every $1,000,000 of bonds sold, over the thirty-year life of the bond, or an overall savings of $40,000,000 for $160,000,000 of bonds over the thirty-year period. These savings will allow the electric utilities to make necessary upgrades and improvements to facilities and infrastructure while mitigating the financial impact on ratepayers.

Additionally, because the proposed projects cost at least $2,500,000, the utilities will be required to obtain the approval of the Public Utilities Commission (PUC) to commit funding. This review process, which also involves the Consumer Advocate, will help to ensure that the proceeds from the state-issued bonds are utilized in a manner that furthers the public interest.

Your Committee has amended this measure to:

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. 1117, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1117, S.D. 1, and be referred to the Committee on Ways and Means.