STAND. COM. REP. NO. 1070-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2287
                                     S.D. 1
                                     H.D. 2




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred S.B. No. 2287, S.D. 1, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO THE PUBLIC UTILITIES
     COMMISSION,"

begs leave to report as follows:

     The purpose of this bill is to establish a mechanism to
support and finance systematic conversion of existing overhead
utility lines to underground lines.  The bill as received,
requires the Public Utilities Commission (PUC) to establish a
conversion program and administer a newly created Underground
Conversion Special Fund (Conversion Fund).  Moneys in the
Conversion Fund are to be allocated to the counties based on
criteria to be established by PUC, and are to be used to finance
the conversion of utility lines in undergrounding zones
designated by the counties by ordinance.

Moneys in the Conversion Fund are to be derived from:

     (1)  Legislative appropriations;

     (2)  Voluntary contributions, including:

          (A)  Contributions collected by the Department of
               Taxation along with taxes; and


 
 
 
                                 STAND. COM. REP. NO. 1070-00
                                 Page 2

 
          (B)  Amounts paid in excess of utility bills and
               collected by way of a "round-up program";

     (3)  Amounts that PUC may order to be paid by regulated
          utilities that utilize transmission lines, of up to two
          percent of the annual gross revenues of the utility;
          and

     (4)  An unspecified percentage of moneys in excess of an
          unspecified amount remaining in the PUC Special Fund
          prior to lapsing of excess funds into the General Fund
          under section 269-33(d), Hawaii Revised Statutes, at
          the end of the fiscal year.

     Testimony in support of this measure was submitted by Malama
o Manoa, Na Leo Pohai, and a private individual.  The Division of
Consumer Advocacy of the Department of Commerce and Consumer
Affairs, PUC, and Environmental Center of the University of
Hawaii at Manoa supported the intent of the bill.  Comments were
provided by the Life of the Land and the Tax Foundation of
Hawaii.  Testimony in opposition was received from the Department
of Taxation, GTE Hawaiian Tel, Hawaiian Electric Company, Hawaii
Electric Light Company, Maui Electric Company, and Kauai
Electric.

     Your Committee heard a number of concerns expressed by
various testifiers relating to the costs of implementing an
undergrounding program.  Several testifiers stated opposition to
paying these costs through increased utility rates.  PUC raised
among other concerns, the question of whether it was the
appropriate agency to implement the provisions of this bill.
Other testifiers questioned whether the funding mechanisms under
this bill inappropriately utilized the regulatory mechanism for
collecting tax.

     Your Committee has amended this measure considerably to
establish a new approach and alternative mechanism to facilitate
and fund undergrounding.  The bill attempts to address apparent
conflicts between PUC's statutory mandate and functions and the
goals and benefits of undergrounding, by giving the counties and
communities the ability to take the lead in establishing an
undergrounding project.  Projects could apply either to existing
or new utility lines and related facilities.

     To resolve the problem of equitably distributing the costs
of undergrounding, the measure provides for cost sharing by those
benefiting the most from undergrounding--the affected community,
county, and utilities.

 
                                 STAND. COM. REP. NO. 1070-00
                                 Page 3

 
     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 2287, 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. 2287, S.D. 1, H.D. 2.

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



                                   ______________________________
                                   RON MENOR, Chair