REPORT TITLE:
Utility Gas Services


DESCRIPTION:
Authorizes the issuance of special purpose revenue bonds to
assist the gas utility in providing utility gas services to the
general public; authorizes the issuance of refunding special
purpose revenue bonds; including times subsequent to December 31,
2002.  (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        813
THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                     A BILL FOR AN ACT

RELATING TO THE ISSUANCE OF SPECIAL PURPOSE REVENUE BONDS TO
   ASSIST THE GAS UTILITY IN SERVING THE GENERAL PUBLIC.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The legislature finds and declares that the
 
 2 issuance of special purpose revenue bonds and refunding special
 
 3 purpose revenue bonds under this Act will assist the gas utility
 
 4 in providing utility gas services to the general public and in
 
 5 obtaining lower interest rate bond financing for capital
 
 6 improvement projects through the use of tax exempt special
 
 7 purpose revenue bonds and refunding bonds.  Ratepayers pay for
 
 8 capital costs, including the cost of financing, as part of the
 
 9 rates set by the public utilities commission.  The savings in
 
10 interest cost would be reflected in the gas rates established by
 
11 the public utilities commission in subsequent rate case
 
12 proceedings.  Therefore, the resulting reduction in capital costs
 
13 will benefit the gas utility ratepayers.  Furthermore, these
 
14 bonds cannot be secured directly or indirectly by the general
 
15 credit of the counties or the revenues or taxes of the State but
 
16 rather solely by the gas utility.  Thus, the cost of financing
 
17 necessary capital improvements can be decreased with no cost or
 
18 risk to the State.  For the foregoing reasons, the legislature
 
19 finds and declares that the issuance under this Act of special
 

 
Page 2                                                     813
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 purpose revenue bonds and refunding special purpose revenue bonds
 
 2 is in the public interest and for the public health, safety, and
 
 3 general welfare.  The legislature further finds that The Gas
 
 4 Company, a division of Citizens Utilities Company, is the gas
 
 5 utility serving the general public that qualifies for special
 
 6 purpose revenue bonds pursuant to part VI, chapter 39A, Hawaii
 
 7 Revised Statutes.
 
 8      SECTION 2.  Pursuant to part VI, chapter 39A, Hawaii Revised
 
 9 Statutes, the department of budget and finance, with approval of
 
10 the governor, is authorized to issue in one or more series
 
11 special purpose revenue bonds in a total amount not to exceed
 
12 $19,600,000 for the following capital improvement programs for
 
13 the local furnishing of utility gas by The Gas Company, division
 
14 of Citizens Utilities Company, the gas utility serving the
 
15 general public:  multi-purpose capital improvement program,
 
16 transmission and distribution lines, and other gas utility
 
17 facilities and equipment or any combination thereof; provided
 
18 that approval by the public utilities commission shall be
 
19 required for any project financed by the issuance of special
 
20 purpose revenue bonds under this Act.  The legislature finds and
 
21 determines that the activity and facilities of The Gas Company
 
22 constitute a project as defined in part VI, chapter 39A, Hawaii
 
23 Revised Statutes, and the financing thereof is assistance to a
 

 
Page 3                                                     813
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 utility enterprise.
 
 2      SECTION 3.  The department of budget and finance is
 
 3 authorized to issue from time to time, including times subsequent
 
 4 to December 31, 2002, refunding special purpose revenue bonds
 
 5 authorized in whatever principal amounts the department
 
 6 determines to be necessary to refund the special purpose revenue
 
 7 bonds authorized in section 2.  Any refunding of special purpose
 
 8 revenue bonds authorized in this section, regardless of whether
 
 9 the outstanding special purpose revenue bonds or refunding
 
10 special purpose revenue bonds have matured or are the subject of
 
11 redemption shall be bonds for the multi-project programs
 
12 described in section 2.  In making this determination, the
 
13 department shall comply with federal law relating to the
 
14 exemption from federal income taxation of the interest on bonds
 
15 of the nature authorized by this section.
 
16      SECTION 4.  The special purpose revenue bonds and the
 
17 refunding special purpose revenue bonds issued under this Act
 
18 shall be issued pursuant to part VI, chapter 39A, Hawaii Revised
 
19 Statutes, relating to the power to issue special purpose revenue
 
20 bonds and refunding special purpose revenue bonds to assist
 
21 utilities serving the general public in providing utility gas.
 
22      SECTION 5.  The public utilities commission shall report
 
23 annually to the legislature as to the progress under this Act in
 

 
Page 4                                                     813
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 reducing financing costs of the gas utility including the cost of
 
 2 the bonds at the time of issue as compared to the cost to the
 
 3 utility if the issue was made on other than the issuance of
 
 4 revenue bonds, the estimated benefits derived from the use of the
 
 5 special purpose revenue bonds, and a listing of the projects to
 
 6 be funded by the special purpose revenue bonds.
 
 7      SECTION 6.  The special purpose revenue bonds under this Act
 
 8 shall be issued beginning July 1, 1999, and end on December 31,
 
 9 2002.
 
10      SECTION 7.  This Act shall take effect upon its approval.