Bill Text: HI HB1637 | 2022 | Regular Session | Introduced
Bill Title: Relating To Renewable Energy.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Engrossed - Dead) 2022-03-24 - Report adopted; Passed Second Reading, as amended (SD 1) and referred to WAM. [HB1637 Detail]
Download: Hawaii-2022-HB1637-Introduced.html
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
1637 |
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THIRTY-FIRST LEGISLATURE, 2022 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO RENEWABLE ENERGY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that Act 97, Session Laws of Hawaii 2015, requires electric utilities in the State to achieve a one hundred per cent renewable portfolio standard by December 31, 2045, with the intent to transition the State away from imported fossil fuels and toward renewable local resources that provide a secure source of affordable energy. The successful deployment of large-scale renewable energy projects is integral to the achievement of this goal.
The legislature further finds that, in late 2021, the city and county of Honolulu real property assessment division unilaterally changed their tax treatment of some parcels of land on which renewable energy projects are sited from agriculture to industrial for tax purposes. This change resulted in a drastic increase in property taxes for affected projects, resulting in some renewable energy project operators receiving bills that were hundreds of times higher than their prior bills. An increase of this scale is not one that could have been reasonably anticipated and factored into contract negotiations or other business considerations when the affected projects were under development.
The legislature additionally finds that the increase in real property taxes for renewable energy projects would significantly impact the viability of existing and future renewable energy projects and consequently the State's progress toward meeting its one hundred per cent renewable energy goal. Power purchase agreements that have already been executed would require renegotiations with the utility and renewed approvals by the public utilities commission, neither of which are guaranteed. Increased costs of renewable energy projects would likely be borne by ratepayers, with low- and middle-income residents bearing a substantial energy cost burden.
In response to the tax increase, the Honolulu city council adopted Ordinance 21-32 to create a partial exemption for renewable energy projects. While this newly enacted ordinance provides some relief, there is still a large increase in the tax burden for these projects. In addition, this action could have a chilling effect on the future development and financing of renewable energy in all counties in the State due to the increased uncertainty and perception of risk resulting from these events.
The legislature finds that, under section 8-10.27 of the Revised Ordinances of Honolulu, the city and county of Honolulu provides an exemption from real property taxes for real property that is owned or leased and actually used by a public service company. This means that energy projects owned by the electric utility – both renewable energy and fossil fuel powered facilities – are exempt from real property taxes, while independent power producers are not.
The purpose of this Act is to provide more certainty for renewable energy developers and rate payers and ensure that these projects are allowed the same tax exemptions that are already provided to utility-owned energy projects under county law, while also mitigating any potential revenue loss for the county, by:
(1) Prohibiting the counties from imposing real property taxes on land or land improvements used to produce or store renewable energy that is sold to an electric utility; and
(2) Authorizing a county to impose an annual fee of up to $1,000 per megawatt of nameplate AC capacity generated by a renewable energy project sited on real property within that county that is actively producing and selling energy to an electric utility.
SECTION 2. Chapter 46, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§46-
Renewable energy projects; property tax prohibition; optional
annual fee. (a) No county shall impose a real property tax on
land or improvements on that land that are used for the production or storage of
renewable energy, as defined in section 269-91, that is sold to an electric utility;
provided that this section shall not apply to any portion of the property that
is not used for the primary purpose of the production or storage of renewable
energy.
(b) A county may impose an annual fee of up to $1,000 per megawatt of nameplate AC capacity generated by a renewable energy project that is actively producing energy and selling it to an electric utility, and is sited on real property within that county; provided that any renewable energy project that sells electricity to a not-for-profit utility shall be exempt from these fees."
SECTION 3. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.
SECTION 4. New statutory material is underscored.
SECTION 5. This Act shall take effect on July 1, 2022.
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INTRODUCED BY: |
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Report Title:
Counties; Real Property Tax; Renewable Energy; Prohibition; Optional Annual Fee
Description:
Prohibits the counties from imposing a real property tax on land or land improvements used for the production or storage of renewable energy that is sold to an electric utility. Permits a county to impose an annual fee of up to $1,000 per megawatt of nameplate AC capacity generated by a renewable energy project that is actively producing and selling energy to an electric utility and sited on real property within that county.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
