STAND. COM. REP. NO.  1218

Honolulu, Hawaii

                , 2015

RE:   S.B. No. 1096

      S.D. 1

      H.D. 2

Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Eighth State Legislature

Regular Session of 2015

State of Hawaii

Sir:

     Your Committee on Consumer Protection & Commerce, to which was referred S.B. No. 1096, S.D. 1, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO ON-BILL PROGRAMS,"

begs leave to report as follows:

The purpose of this measure is to ensure that electric utilities serving as a billing and collection agent in a purely "pass-through" capacity for any on-bill financing or repayment program are exempt from various state or county taxes and state laws regulating financial institutions, escrow depositories, and collection agencies.

The Public Utilities Commission; Department of Business, Economic Development and Tourism; Department of Taxation; Hawaiian Electric Company; Hawaii Electric Light Company; Maui Electric Company; and an individual testified in support of this measure.  The Tax Foundation of Hawaii provided comments.

     Your Committee notes that it has been the intent of the Legislature to not treat the collection of revenues, where such collection represents a pure reimbursement, as income for taxation purposes.  In the current measure, your Committee finds that a utility, while serving as a billing and collection entity, is not actually raising revenues.  Rather, the billed and collected on-bill obligations represent pass-through expenses.

     Your Committee has amended this measure by changing its effective date to July 1, 2112.

     As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1096, S.D. 1, H.D. 1, as amended herein, and recommends that it be referred to the Committee on Finance in the form attached hereto as S.B. No. 1096, S.D. 1, H.D. 2.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection & Commerce,

____________________________

ANGUS L.K. McKELVEY, Chair