Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Energy, Environment, and International Affairs, to which was referred S.B. No. 1114 entitled:

begs leave to report as follows:

The purpose of this measure is to provide a tax credit for the cost of energy storage systems installed for the storage of electricity, or another useful energy product created by electricity, in order to shift electric load to off-peak periods.

Testimony in support of the measure was received from Hawaiian Electric Company, Inc., PowerLight Corporation, St. Francis Hospital, the Building Industry Association, Economy Plumbing & Sheet Metal, Inc., the Plumbing & Mechanical Contractors Association of Hawaii, three private schools, the Hawaii Association of Independent Schools, the Waikiki Beach Marriott Resort, Off-Peak/Elite Energy Group, LLC, Elite Mechanical, Inc., and Chaney Brooks. Testimony in opposition to the measure was received from the Department of Taxation. Comments were received from the Department of Commerce and Consumer Affairs, the Gas Company, and the Tax Foundation of Hawaii.

Your Committee finds that energy storage technologies are an important element of demand-side management, and can help alleviate peak electric loads by shifting these loads to off-peak hours. Thus, energy storage technologies merit a tax credit to provide an incentive to build these systems. Your Committee recognizes the Department of Taxation's concern that, in its estimation, the tax credit may result in $2 million less in tax revenue for fiscal year 2007. Your Committee believes that there will be further opportunity to review the fiscal implications of this measure.

As affirmed by the record of votes of the members of your Committee on Energy, Environment, and International Affairs that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1114 and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.