STAND. COM. REP. NO. 1151

Honolulu, Hawaii

, 2005

RE: S.B. No. 1114

S.D. 1

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Energy & Environmental Protection, to which was referred S.B. No. 1114, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO AN ENERGY STORAGE SYSTEM TAX CREDIT,"

begs leave to report as follows:

The purpose of this measure is to provide a tax credit for the installation of energy storage systems.

An energy storage system (system) is used to store electricity (or an energy product created by electricity) for the primary purpose of shifting the consumption of grid electricity to off-peak hours.

This bill provides a tax credit for the costs associated with the installation of an energy storage system in an amount not to exceed thirty-five per cent of the total cost of the system, or $500,000, whichever is less.

Your Committee finds that the use of energy storage systems will free-up on-peak electrical power, decrease the State's dependence of fossil fuels, improve renewable energy utilization, and reduce energy costs in the State. The tax credit will provide an incentive to promote the use and development of energy storage systems in the State.

Your Committee has amended the bill by:

(1) Adding a purpose section to the bill;

(2) Specifying that the amount of the tax credit (thirty five per cent of the total cost of the system or $500,000) is an aggregate amount;

(3) Setting a maximum annual tax credit amount of fifteen per cent of the total cost of a system;

(4) Clarifying that eligible costs refer to costs related to the installation of a system;

(5) Clarifying that the tax credit may not be claimed until the tax year in which the system is first placed in service;

(6) Prohibiting the application of eligible costs applied to the energy storage system tax credit to other state tax credits;

(7) Prohibiting the use of the tax credit in combination with any other state tax credit for the same system or any equipment used therefor;

(8) Allowing no more than one system on a particular property to be eligible for the tax credit unless at least twelve months has transpired between the completion of a system and the initial installation of another system on the same property;

(9) Clarifying that the carryover use of excess credit is subject to aggregate and annual tax credit limitations;

(10) Including corporations and limited liability companies within the types of legal entities eligible for the tax credit;

(11) Requiring an eligible financing or leasing entity to pass back at least ninety per cent of the net economic benefits of the tax credit through the financing or leasing terms to the actual user of the system;

(12) Clarifying that a system does not include hot water storage systems, air ductwork, air devices, or cooling towers;

(13) Clarifying the definition of "energy storage system"; and

(14) Making technical amendments for purposes of clarity and style.

As affirmed by the record of votes of the members of your Committee on Energy & Environmental Protection that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1114, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1114, S.D. 1, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Energy & Environmental Protection,

 

____________________________

HERMINA MORITA, Chair