STAND. COM. REP. NO. 2736

Honolulu, Hawaii

RE:    S.B. No. 2752

       S.D. 1

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2012

State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B. No. 2752, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO ELECTRIC UTILITIES,"

begs leave to report as follows:

     The purpose and intent of this measure is to authorize the Public Utilities Commission to allow electric utilities operating within the State to recover all power purchase costs.

     Written comments in support of this measure were submitted by the Department of Budget and Finance, Public Utilities Commission, and Blue Planet Foundation.

     Written comments in opposition to this measure were submitted by one individual.

Your Committee finds that financial rating agencies impute debt associated with power purchase agreements when establishing an electric utility's debt rating.  This may result in greater difficulty for an electric utility to obtain favorable financing for capital improvements, which ultimately results in higher costs to customers.  This measure will reduce the imputed debt levels of local electric utility companies, thus enhancing the financial strength and credit ratings of the electric utility companies.  Your Committee finds that fiscally strong electric utility companies will ultimately benefit electric utility customers in the form of cheaper rates from lower costs of capital.

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2752, S.D. 1, and recommends that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

DAVID Y. IGE, Chair