Report Title:

Alternative Energy Improvements

Description:

Allows a property tax exemption for alternative energy improvements placed in service after July 1, 2004, but before June 30, 2014; adds seawater air conditioning with, or without, thermal energy storage as an eligible energy source; adds thermal energy use as an applicable energy process.

THE SENATE

S.B. NO.

3003

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to alternative energy improvements.

 

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

SECTION 1. The legislature finds that it is the policy of the State of Hawaii to provide dependable, efficient, and economical statewide energy systems capable of supporting the needs of the people. Further, this policy includes increasing energy self-efficiency where the ratio of indigenous to imported energy use is increased. Moreover, this policy is also designed to provide greater energy security in response to threats to Hawaii`s energy supplies and systems. Finally, this policy encourages the reduction of greenhouse gas emissions which contributes to global warming.

The legislature also finds that renewable energy and energy efficiency systems used to implement these policies are generally capital-intensive and, as a result, are subject to relatively high property taxes. These high property taxes add significantly to the cost of energy produced or displaced by renewable energy or efficient energy systems.

In 1976, the legislature provided a property tax exemption for alternative energy systems. This exemption expired in 1981.

A number of states currently have similar property tax exemptions for renewable as well as efficient energy systems (i.e. "alternative energy improvements"). Such exemptions promote the use of renewable and energy efficient technologies.

The purpose of this Act is to reinstate the property tax exemption for alternative energy improvements placed in service after July 1, 2004, but before June 30, 2014. This Act also adds seawater air conditioning, with or without thermal energy storage as an eligible energy source, and adds thermal energy use as an applicable energy process.

SECTION 2. Section 246-34.7, Hawaii Revised Statutes, is amended to read as follows:

"[[]§246-34.7[]] Alternate energy improvements, exemption. (a) The value of all property in the State (not including a building or its structural components, except where alternate energy improvements are incorporated into the building, and then only that part of the building necessary to such improvement) actually used for an alternate energy improvement shall be exempted from the measure of the taxes imposed by this chapter; provided the property exemption shall be applicable only with respect to alternate energy improvements which are installed and placed in service after [June 30, 1976] July 1, 2004 but before [December 31, 1981.] June 30, 2014.

Application for the exemption provided by this section shall be made with the director of taxation.

The director of taxation may require the taxpayer to furnish reasonable information in order that the director may ascertain the validity of the claim for deduction made under this section and may adopt rules under chapter 91 to implement this section.

(b) As used in this section "alternate energy improvement" means any construction or addition, alteration, modification, improvement, or repair work undertaken upon or made to any building or any and all components of a distributed energy system that serves one or more buildings which results in:

(1) The production of energy from a source, or uses a process which does not use fossil fuels or nuclear fuels. Such energy source may include, but shall not be limited to, solid wastes, wind, geothermal, solar, seawater air conditioning with, or without, thermal energy storage, or ocean waves, tides, or currents. Such energy process may include, but shall not be limited to, bio- conversion, hydro-electric power, thermal energy use, thermal conversion, or osmosis; provided that nuclear fission shall be excluded from the provisions of this section; or

(2) An increased level of efficiency in the utilization of energy produced by fossil fuels or in the utilization of secondary forms of energy dependent upon fossil fuels for its generation.

(c) As used in subsection (b), "distributed energy system" refers to a variety of thermal energy or electrical generating technologies that can be combined with energy management and storage systems and be used to improve the operation of a building's energy system, whether or not those technologies are connected to a distribution network. Distributed energy systems also includes district energy systems, combined heat and power systems, and renewable energy systems, but do not include utility electricity generating power plants."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2004; provided that on June 30, 2014, section 2 of this Act shall be

repealed and section 246-34.7, Hawaii Revised Statutes, is reenacted in the form in which it read on June 30, 2004.

INTRODUCED BY:

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