Report Title:

Renewable Energy; Renewable Portfolio Stds; Tax Exemptions

 

Description:

Increases renewable portfolio standard goals for electric utility companies to 20% of their net electricity sales by 12/31/20. Mandates greater use of renewable energy in state buildings and projects. Exempts general excise and fuel taxes on alternative fuel. Extends energy conservation tax credit.

 

HOUSE OF REPRESENTATIVES

H.B. NO.

356

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to energy.

 

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

SECTION 1. The purposes of this Act are to:

(1) Increase renewable portfolio standard goals for electric utility companies to ten per cent of their net electricity sales by December 31, 2010, and by an additional one per cent of the companies' net electricity sales per year after December 31, 2010, so that twenty per cent of their net electricity sales are procured from eligible renewable energy resources by December 31, 2020;

(2) Require each state agency to expand the use of renewable energy within its facilities and in its activities by implementing renewable energy projects and by purchasing electricity from renewable energy sources;

(3) Eliminate general excise and fuel taxes on alternative fuel (i.e., substantially non-petroleum-based fuel); and

(4) Extend the sunset date of the energy conservation income tax credit from July 1, 2003, to July 1, 2010.

PART I

SECTION 2. Section 269-92, Hawaii Revised Statutes, is amended to read as follows:

"[[]§269-92[]] Renewable portfolio standards. Each electric utility company that sells electricity for consumption in the State shall establish a [renewables] renewable portfolio standard goal of:

(1) Seven per cent of its net electricity sales by December 31, 2003;

(2) Eight per cent of its net electricity sales by December 31, 2005; [and]

(3) [Nine] Ten per cent of its net electricity sales by December 31, 2010[.]; and

(4) An additional one per cent of its net electricity sales per year after December 31, 2010, so that twenty per cent of its net electricity sales are procured from eligible renewable energy resources by December 31, 2020."

PART II

SECTION 3. Section 196-13, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) Each agency shall [strive to] expand the use of renewable energy within its facilities and in its activities by implementing renewable energy projects and by purchasing electricity from renewable energy sources. Through life-cycle cost-effective measures, each agency shall provide twenty per cent of its remaining energy requirements, after energy efficiency improvement goals have been achieved, with renewable energy resources."

PART III

SECTION 4. Section 237-27.1, Hawaii Revised Statutes, is amended to read as follows:

"§237-27.1 Exemption of sale of [alcohol fuels.] alternative fuel. (a) There shall be exempted from and excluded from the measure of the taxes imposed by this chapter all of the gross proceeds arising from the sale of [alcohol fuels] alternative fuel for consumption or use by the purchaser and not for resale.

(b) As used in this section, ["alcohol fuels" means neat biomass-derived alcohol liquid fuel or a petroleum-derived fuel and alcohol liquid fuel mixture consisting of at least ten volume per cent denatured biomass-derived alcohol commercially usable as a fuel to power aircraft, seacraft, spacecraft, automobiles, or other motorized vehicles.] "alternative fuel" has the same meaning as defined in section 243-1.

(c) The director of taxation shall adopt rules pursuant to chapter 91 necessary to administer this section.

[(d) This section shall be repealed on December 31, 2006.]"

SECTION 5. Chapter 243, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§243- Alternative fuel; exemption. Notwithstanding any law to the contrary, no tax shall be imposed under this chapter on any alternative fuel that is sold or used in this State."

SECTION 6. Section 243-4, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) The tax shall not be collected in respect to any benzol, benzene, toluol, or xylol[, or alternative fuel] sold for use other than for operating internal combustion engines. With respect to these products, other than alternative fuels, the department by rule shall provide for the reporting and payment of the tax and for the keeping of records in respect thereto, in such manner as to collect, for each gallon of such product sold for use in internal combustion engines for the generation of power, or so used, the same tax or taxes as apply to each gallon of diesel oil. [With respect to alternative fuels, the only tax collected shall be that provided in paragraphs (1), (2), and (3) of this subsection.] This subsection shall not apply to aviation fuel sold for use in or used for airplanes.

[(1) Every distributor of any alternative fuel for operation of an internal combustion engine shall pay a license tax to the department of 1 cent for each gallon of such alternative fuel sold or used by the distributor.

(2) Every distributor, in addition to the tax required under paragraph (1) of this subsection, shall pay a license tax to the department for each gallon of alternative fuel sold or used by the distributor for operating a motor vehicle or motor vehicles upon the public highways of the State at a rate proportional to that of the rates applicable to diesel oil in subsection (b), rounded to the nearest one-tenth of a cent, as follows:

(A) Ethanol, 0.29 times the rate for diesel;

(B) Methanol, 0.22 times the rate for diesel;

(C) Biodiesel, 0.50 times the rate for diesel;

(D) Liquefied petroleum gas, 0.33 times the rate for diesel; and

(E) For other alternative fuels, the rate shall be based on the energy content of the fuels as compared to diesel fuel, using a lower heating value of one hundred thirty thousand British thermal units per gallon as a standard for diesel, so that the tax rate, on an energy content basis, is equal to half the rate for diesel fuel.

The taxes so paid shall be paid into the state treasury and deposited in special funds or paid over in the same manner as provided in subsection (b) in respect of the tax on diesel oil.

(3) If any user of alternative fuel furnishes to the distributor a certificate, in such form as the department shall prescribe, or the distributor who uses alternative fuel signs such certificate, certifying that the alternative fuel is for use in operating a motor vehicle or motor vehicles in areas other than upon the public highways of the State, the tax as provided by paragraphs (1) and (2) of this section shall not be applicable; provided that no certificate shall be required if the alternative fuel is used for fuel and heating purposes in the home. In the event a certificate is not or cannot be furnished and the alternative fuel is in fact used for operating an internal combustion engine or operating a motor vehicle or motor vehicles in areas other than upon the public highways of the State, the user thereof may obtain a refund of all taxes thereon imposed by such paragraphs. The department shall adopt rules to administer the refunding of such taxes imposed.]"

SECTION 7. Section 243-5, Hawaii Revised Statutes, is amended to read as follows:

"§243-5 County fuel tax. The amount of the "county of Hawaii fuel tax", "city and county of Honolulu fuel tax", "county of Maui fuel tax", and "county of Kauai fuel tax", respectively, shall be determined by resolution of the county or the city council of each county adopted in the manner provided by law relating to resolutions involving the expenditure of public money. The amount fixed by the resolution may be, per gallon, one or more cents or a fraction of a cent or both, or it may be zero. [The amount fixed for alternative fuels may be proportional to the energy contents of the fuels, as determined by their lower heating values, times one-half.] No resolution shall be adopted until the county or the city council shall conduct a public hearing on the amount of tax proposed. Public notice of the hearing shall be given in the county at least twice within a period of thirty days immediately preceding the date of hearing. If the resolution is adopted, it shall take effect on the first day of the second month following the date of adoption of the resolution. The county or the city council shall notify the department of taxation of any county fuel tax changes within ten days after the resolution is adopted.

Until and unless otherwise provided by resolution adopted as above provided, the amount of the "county of Hawaii fuel tax" shall be zero, the amount of the "city and county of Honolulu fuel tax" shall be 2-1/2 cents per gallon, the amount of the "county of Maui fuel tax" shall be 2 cents per gallon, and the amount of the "county of Kauai fuel tax" shall be 2 cents per gallon."

PART IV

SECTION 8. Section 235-12, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) For taxable years beginning after December 31, 1989, each individual or corporate resident taxpayer who files an individual or corporate net income tax return for a taxable year, may claim a tax credit under this section against the Hawaii state individual or corporate net income tax. The tax credit may be claimed as follows:

(1) For wind energy systems that are installed and placed in service after December 31, 1989, but before July 1, [2003,] 2010, the credit shall be twenty per cent of the actual cost;

(2) For solar energy systems that are installed and placed in service after December 31, 1989, but before July 1, [2003,] 2010, on new and existing single family residential buildings, the credit shall be in an amount not to exceed thirty-five per cent or $1,750, whichever is less, of the actual cost of the solar energy system;

(3) For solar energy systems that are installed and placed in service after December 31, 1989, but before July 1, [2003,] 2010, on new and existing multiunit buildings used primarily for residential purposes, the credit shall be in an amount not to exceed thirty-five per cent or $350 per building unit, whichever is less, of the actual cost of the solar energy system;

(4) For solar energy systems that are installed and placed in service after December 31, 1989, but before July 1, [2003,] 2010, in new and existing hotel, commercial, and industrial facilities, the credit shall be in an amount not to exceed thirty-five per cent of the actual cost of the solar energy system;

(5) For heat pumps that are installed and placed in service after December 31, 1989, but before July 1, [2003,] 2010, in new and existing single-family residential buildings, the credit shall be in an amount not to exceed twenty per cent or $400, whichever is less, of the actual cost of the heat pump;

(6) For heat pumps that are installed and placed in service after December 31, 1989, but before July 1, [2003,] 2010, in new and existing multiunit buildings used primarily for residential purposes, the credit shall be in an amount not to exceed twenty per cent or $200 per building unit, whichever is less, of the actual cost of the heat pump; provided that a licensed professional engineer reviews the design of the system and provides a written opinion that the system, in accordance with recognized engineering practice, is designed to provide not less than ninety per cent of the daily annual average hot water needs of all of the occupants of the building;

(7) For heat pumps that are installed and placed in service after December 31, 1989, but before July 1, [2003,] 2010, in new and existing hotel, commercial, and industrial facilities, the credit shall be in an amount not to exceed twenty per cent of the actual cost of the heat pump; and

(8) For ice storage systems that are installed and placed in service after December 31, 1990, but before July 1, [2003,] 2010, the credit shall be in an amount not to exceed fifty per cent of the actual cost of the ice storage system.

The per unit of actual cost of a solar energy system or heat pump referred to in subsection (b)(3) and (6) shall be determined by multiplying the actual cost of the solar energy system or heat pump installed and placed in service in the multiunit building by a fraction, the numerator being the total square feet of that unit in the multiunit building, and the denominator being the total square feet of all the units in the multiunit building.

If federal energy tax credits similar to any of those provided in paragraphs (1) to (8) are established after June 30, 1998, but before July 1, [2003,] 2010, then the state tax credit provided in the respective paragraph or paragraphs shall be reduced by the amount of the applicable federal energy tax credit."

SECTION 9. Section 241-4.6, Hawaii Revised Statutes, is amended to read as follows:

"[[]§241-4.6[]] Energy conservation; income tax credit. The energy conservation income tax credit provided under section 235-12 shall be operative for this chapter for all taxable years beginning after December 31, 1990[.] and ending on July 1, 2010."

SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 11. This Act shall take effect on June 30, 2003.

INTRODUCED BY:

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