STAND. COM. REP. NO. 1016

Honolulu, Hawaii

RE:    H.B. No. 1471

       H.D. 2

       S.D. 1

Honorable Donna Mercado Kim

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2015

State of Hawaii

Madam:

     Your Committees on Energy and Environment and Commerce and Consumer Protection, to which was referred H.B. No. 1471, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO THE FUNDING OF GOVERNMENT PROGRAMS,"

beg leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Apply the environmental response, energy, and food security tax to all fossil fuels sold by a distributor to a retail dealer or end user, other than a refiner, of fossil fuel;

     (2)  Require a percentage of the environmental response, energy, and food security tax on fossil fuels that is collected to be deposited into the energy security special fund, energy systems development special fund, and agricultural development and food security special fund;

     (3)  Exempt coal used to produce electricity, under certain conditions, from the environmental response, energy, and food security tax that applies to all fossil fuels;

     (4)  Authorize independent power producers to pass the environmental response, energy, and food security tax that applies to all fossil fuels on to an electric utility, who may in turn recover the cost through a surcharge, subject to approval by the Public Utilities Commission; and

     (5)  Authorize gas utilities to recover the cost of the environmental response, energy, and food security tax on all fossil fuels without approval by the Public Utilities Commission.

     Your Committees received testimony in support of this measure from the Department of Business, Economic Development, and Tourism; Office of Hawaiian Affairs; Hawaii Renewable Energy Alliance; AES Hawaii, Inc.; Hawaii Gas; and one individual.  Your Committees received testimony in opposition to this measure from Hawaiian Electric Company, Inc.  Your Committees received comments on this measure from the Department of Taxation, Tax Foundation of Hawaii, and Blue Planet Foundation.

     Your Committees find that the State is precariously dependent on imported food and energy.  The environmental response, energy, and food security tax, also known as the barrel tax, is a vital revenue source that supports critical investments and initiatives in clean energy, local agricultural production, and environmental response.  The implementation of this measure will reduce the State's dependence on imported fossil fuels and further the State's goals of food and energy self-reliance.

     Your Committees have amended this measure by making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the records of votes of the members of your Committees on Energy and Environment and Commerce and Consumer Protection that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1471, H.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 1471, H.D. 2, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Energy and Environment and Commerce and Consumer Protection,

________________________________ ROSALYN H. BAKER, Chair

________________________________ MIKE GABBARD, Chair