STAND. COM. REP. NO. 333-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2329
                                     H.D. 1




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

Sir:

     Your Committee on Energy and Environmental Protection, to
which was referred H.B. No. 2329 entitled: 

     "A BILL FOR AN ACT RELATING TO ENERGY CONSERVATION TAX
     CREDITS,"

begs leave to report as follows:

     The purpose of this bill is to reduce Hawaii's dependence on
petroleum by repealing the sunset date for the income tax credit
relating to only solar energy systems.  This tax credit is
currently scheduled to sunset on July 1, 2003.

     The County of Kauai Office of Economic Development, the
Hawaii Renewable Energy Alliance, and Na Leo Pohai testified in
support of this bill.  The Department of Taxation opposed passage
of this measure.  The Hawaii Solar Energy Association, the
Hawaiian Electric Company and its subsidiary utilities, Hawaii
Electric Light Company and Maui Electric Company, and the Tax
Foundation of Hawaii offered comments.

     Your Committee has amended this bill by:

     (1)  Establishing a sunset date of July 1, 2010, for the tax
          credit for solar energy systems, instead of repealing
          the sunset date in its entirety.  This would tie in
          with the President's Million Solar Roofs Initiative
          which seeks to install new solar systems on a million
          roofs between now and 2010;


 
 
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     (2)  Extending the sunset date for the tax credits relating
          to wind energy systems, heat pumps, and ice storage
          systems to July 1, 2010.  These tax credits are also
          scheduled to sunset on July 1, 2003; and

     (3)  Inserting language from H.B. No. 2548, which was heard
          by your Committee on February 14, 2000, requiring all
          new single-family residential homes to be built with
          either solar water heaters or heat pumps.  An
          alternative water heating system may be used when both
          a heat pump electric water heating system and a solar
          water heating system have a simple payback period
          greater than ten years when compared to the alternative
          system.  These provisions will take effect on July 1,
          2010, to coincide with the sunset of the energy
          conservation tax credits. 

     As affirmed by the record of votes of the members of your
Committee on Energy and Environmental Protection that is attached
to this report, your Committee is in accord with the intent and
purpose of H.B. No. 2329, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B. No.
2329, H.D. 1, and be referred to the Committee on Finance.

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



                                   ______________________________
                                   HERMINA M. MORITA, Chair