Report Title:

SPRBs for an ocean thermal energy conversion plant at NELHA

Description:

Authorizes the issuance of special purpose revenue bonds to assist Ocean Engineering and Energy Systems, Inc., with the construction, operation, and other related costs of a Kalina cycle OTEC plant at NELHA on the island of Hawaii; authorization lapses June 30, 2008. (HB468 HD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

468

TWENTY-SECOND LEGISLATURE, 2003

H.D. 1

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 legislature finds that the use of renewable energy resources will reduce the dependence on imported fossil fuel and the environmental impact associated with burning fossil fuel.

The Natural Energy Laboratory of Hawaii Authority (NELHA) was created to develop the natural energy available in the ocean around Hawaii and related industries such as aquaculture. In furthering these developments, the State is now supporting the installation of a fifty-five inch cold seawater supply pipe. The energy required to pump cold water through that pipeline to upstream users and to supply NELHA's other electric power demands can be supplied by a Kalina cycle ocean thermal energy conversion (OTEC) plant, thereby saving more than 1.2 megawatts of power.

Ocean Engineering and Energy Systems, Inc., and its partner Exergy, Inc., have a preliminary design for the patented Kalina cycle OTEC plant with a capital cost of $10,000,000. Exergy, Inc., will provide $3,000,000 in equity investment, leaving $7,000,000 in necessary funding from revenue bonds. The Kalina cycle technology is proven by five functioning plants, some with more than eighteen months of continuous operation. The OTEC plant at NELHA will be designed for continuous operation and will avoid the intermittent operation associated with most renewable energy systems, such as wind, photovoltaics, and direct solar. It will be the first economically viable, commercial scale OTEC plant in the world and promises to be the beginning of a new trend for Hawaii in the global economy.

The special purpose revenue bonds authorized under this Act will provide low interest rate bond financing for the construction of a Kalina cycle OTEC plant at NELHA on the island of Hawaii.

SECTION 2. The legislature finds and declares that the issuance of special purpose revenue bonds under this Act is in the public interest and for the public health, safety, and general welfare.

SECTION 3. Pursuant to part V, chapter 39A, Hawaii Revised Statutes, the department of budget and finance, with the approval of the governor, is authorized to issue special purpose revenue bonds in a total amount not to exceed $7,000,000 in one or more series for the purpose of assisting Ocean Engineering and Energy Systems, Inc., for the planning, design, construction, and operation of any and all elements of a Kalina cycle OTEC plant at NELHA on the island of Hawaii. The legislature hereby finds and determines that the activities and facilities of Ocean Engineering and Energy Systems, Inc., constitute a project as defined in part V, chapter 39A, Hawaii Revised Statutes, and the financing thereof is assistance to an industrial enterprise.

SECTION 4. The special purpose revenue bonds and the refunding special purpose revenue bonds issued under this Act shall be issued pursuant to part V, chapter 39A, Hawaii Revised Statutes, relating to the power to issue special purpose revenue bonds to assist industrial enterprises.

SECTION 5. The department of budget and finance is authorized, from time to time, including times subsequent to June 30, 2008, to issue special purpose revenue bonds in whatever principal amounts the department shall determine to be necessary to refund the special purpose revenue bonds authorized in section 3 and to refund special purpose revenue bonds authorized in this section, regardless of whether the outstanding special purpose revenue bonds or refunding special purpose revenue bonds have matured or are the subject of redemption or whether the refunding special purpose revenue bonds shall be bonds for the multi-project programs described in section 3. In making this determination, the department shall comply with federal law relating to the exemption from federal income taxation of the interest on bonds of the nature authorized by this section.

SECTION 6. The authorization to issue special purpose revenue bonds under this Act shall lapse on June 30, 2008.

SECTION 7. This Act shall take effect upon its approval.