 We're happy to be here with Henry Curtis, as well as Marco Mangelsdorf. We're going to talk about who's who and what with who honua, my term who's on first. That's H-U on first. Here on Energy 808, The Cutting Edge. Welcome to the show, Henry. Welcome to the show, Marco. Hello, Hacche. Thanks, guys. Marco, can you properly introduce Henry so we know who he is and what he's been doing? And then can you give us an idea of the scope of the discussion we want to have today about Energy 808? Yeah, I'll be happy to. I think I can only really scratch the surface as far as doing an intro with Henry. Since I moved full-time to Hawaii 21 years ago, I came to know early on the name Henry Curtis and Life for the Land. And Henry and I have crossed paths on and off for over the years. And I've developed a tremendous amount of respect and admiration and lo-ha for Henry and Kat and what their team has been doing. And I mean, there's no one who is so omnivorous and so curious and so dogged in his and their pursuit in terms of great issues, social justice, energy, and so forth. So now Henry's been at this a very long time and I feel kind of like a piker next to him. So in this particular case, I thought it would be great to be able to kind of get his download on what's going on, who's on first and who Honua, also known as Honuaola. And the backstory on that, which just seems to go on and on to strikes me as kind of a zombie power plant that just won't die no matter how many adverse decisions. So with that, I'll turn it over to Henry and just if you could, Henry, maybe start with bringing us up to speed in terms of where we are in this ongoing Kabuki dance. Well, 4,917 days ago, who Honua was incorporated in Delaware. And since then- Can you put that in years, Henry? Yeah, 2008 in April, I believe, of 2008. So we're in the 14th year. Okay. And we've been through, I guess now, our fifth real regulatory proceeding at the Public Utilities Commission. First, there was the proposed waiver in 2008. Then they submitted a power purchase agreement in 2012 that was approved by the PUC, but who Honua ran into all sorts of legal problems with labor unions and management and consultants and the whole thing collapsed. Then in 2017, there was another power purchase agreement submitted to the PUC. That was approved. We appealed in one before the Supreme Court in Hawaii. Then the PUC opened up another round in 2019 and rejected the waiver for competitive bidding who Honua appealed. The Supreme Court interestingly enough didn't say that the PUC could not reject the waiver. They said they rejected it on the wrong grounds. And so now we've opened up the fifth round in 2021 and all the sides have submitted testimony. And now we're going through a discovery with an evidentiary hearing slated for early 2022. What about the lawsuit? There was a lawsuit filed by a former investor in San Francisco. That investor and Jennifer Johnson, the principal owner of who Honua settled out of court. So we don't know the status of that. Claudia Roar on the Big Island also has litigation going against who Honua. So there's a number of different issues still on the plate. Who Honua also needs an injection well permit from the Department of Health. So that's also an ongoing issue. What about the public policy considerations of this particular facility? Where does life of the land, how do you feel about what they are trying to do? Well, the number one issue interestingly enough is the economics. Right now, who Honua proposes to supply energy at a far higher cost than any other new proposal on the Big Island or throughout the state. And their price would escalate over 20 or 30 years. Furthermore, they have to run their plant at a minimum load, even if there's cheaper alternatives that are renewable. So they would displace wind or solar in order to maintain their high priced electricity. So the economics is actually really bad for this project. Marco, I'm sure you have a lot of thoughts and questions about this. Why don't you help us go down the track and figure it out? So one of the things that has bothered me the most, aside from the economic perspective, which you just provided Henry, is the notion that if this were to go through and the power plant were to go online under this PPA, that living, breathing trees, not only along the Hamakua coast, but conceivably from elsewhere, living, breathing trees would be cut down, would be brought to the site in Pepe Keio, would be thrown into a combustion chamber and burn. And it has been Pujo Nua's contention that somehow we are to believe that the net effect of cutting down living, breathing trees based on whatever mitigation or replanting of trees that they have proposed, that that's supposed to be a net positive for greenhouse gases, which I'm not a specialist in this matter, which is getting into the arcane and into the various assumptions, but it just intuitively, it just strikes me as wrong, wrong, wrong and not correct that cutting down living, breathing trees would lead to a net positive effect overall in terms of greenhouse gases and putting stuff into the atmosphere. Can you help educate me there, Henry? There's actually two separate issues with cutting down the trees. So if you cut down the trees and you use the logs for construction, for a building, then the embedded carbon would still be in the wood. So it's not just that you're cutting it down, but you're then burning it and releasing it into the atmosphere. And with the IPCC saying that we're basically in deep trouble, that no state or nation has met the requirements of cutting back towards greenhouse gases and trees, as you point out, are the lungs of the planet. It seems absurd that you would chop down the lungs. I mean, if somebody came into the hospital and said they were sick, the first thing you wouldn't do is remove one of their lungs. So one of the things about the trees is that, as I recall, correct, if I'm wrong, or who Honua has said they will replenish the trees, they will cut the trees down, lots of trees, and then they will somehow replenish the trees. Is that a credible argument? First, they don't claim that they will. They claim that somebody they're affiliated with will. Second, they say for the very first time last Friday that, yes, they'll actually have monitoring on what they're planting, but they have not specified where they're planting. They have not specified what they're planting. They have not specified the environmental impacts of what they're planting. They're just saying, trust us. Somebody will chop them down. It's not us. It's an affiliate. Someone will plant alternatives. It's not us. It's an affiliate. We'll claim credit for all the good and any environmental or greenhouse gases that they cause is their problem and they're not part of the docket. So what happens if they fail to make good on that? What happens to the environment? What happened to the project? What happens to energy on the big island? That is, well, if they don't build the project right now, they are out the money because right now, the ratepayers are not on the hook for anything, but if the PUC approves it and if they get their other contracts in place, then, well, that's never gonna happen, but theoretically, then, a rate payer is to be on the hook. So the other thing about this project is they say they've got, again, correct me if I'm off here, but $400 million into it already. I think it's kind of a guilt trip. They have pressed forward and made this huge investment in it. And I wonder, A, if that's so, and B, whether that's persuasive in terms of the, what do you wanna call it, the state economy, the state brand, if you will, to welcome investment? I liken it to going to the store to buy a whole bunch of food or appliances or whatever and you get up to the cash register and instead of the cash register person itemizing each thing you bought, so you can compare it, the cashier just says, your bill is $58,000, pay it now. That is what we're facing with Who Who Knew it. They've been throwing out all sorts of numbers for all kinds of different things and they have not documented a single cost. So if we could kind of go through the sequence here, Henry, so this is the kind of foreplay to an evidentiary hearing, right? And the evidentiary hearing will be sometime in the first months of 2022, are you expecting? It will not be before then, yes. And appearing into your Curtis crystal ball, when would you expect a decision by the commission after the evidentiary hearing, more or less? I would expect that we might see something in May or June of next year. So it could be before the end, hopefully it will be before the end of Dr. Jay Griffin's current term as chair of the commission. So let's just kind of game this out. Let's just assume for the sake of assumption that this commission decides based on going through the evidentiary hearing, doing what the Supreme Court has asked them to do, that they come to the same conclusion. They say we are denying as we did in 2019 this power purchase agreement. Then it stands reasonable to assume that Hujono will appeal to the commission. The appeal will be denied. And what conceivably could Jennifer Johnson and her diligent group of people around her, what could they do to seek some type of redress from a decision that did not go their way? It would be difficult to speculate at this point, but considering that they have been in dozens of lawsuits already, that they filed suit against Next Era, they filed suit against HIKO, they filed suit against Hamakua Energy, they filed suit against all sorts of people. They're very, very litigious. And I would expect if they don't get what they want from a regulatory agency, they would again appeal it. And they probably would go through state court, but who knows, they might try federal court. No, Henry, you've been tracking on this a long time and you can make certain kinds of conclusions and impressions about how the process is working. So I'd like to ask you what you have learned in your conclusions and impressions about the players. What about who, Honua? Where do they stand in your experience as a bunch of investors who come in and wanna do a project like this? What's their nature? What are their characteristics that may differ from the characteristics of other energy developers? I would say that they're on one end of the spectrum in terms of willingness to meet with the community and deal with the community. They're on one end of the spectrum in terms of whether they wanna win through a reasoned process or through political might and power, ram and jam. And they're on one end of the spectrum in terms of how open they are about what they're doing. They're an extremely secretive, extremely litigious, extremely un-community-friendly entity. And they are on an extreme outlier case among energy projects throughout the state. Okay, another player, of course, is the commission. What have we learned about the nature of the commission through all of these proceedings? The commission, I think, the Public Utilities Commission, I think, is stronger and more community-minded now than at any point in their history. That doesn't mean we always agree with their decisions, but it means that they recognize that there are many players and they're seeking to resolve very complex issues and they have far more capacity for understanding and dealing with complexity than I think they've ever had before. That's encouraging. What about the state Supreme Court? They've been involved a couple of times in this. What do we take away from their approach? I have much less understanding of how the court actually arrives at decisions and how they do it. I mean, we've been there a number of times. We've monitored what they're doing, but that is not my expertise. Okay, and one last group that we should ask about, and that is the public, the ratepayers, the taxpayers, the activist community and the ordinary people who live ordinary lives on the Big Island and elsewhere. What have we learned about their interest in an issue in a proceeding like this one? I think if you look at all the counties in terms of their economic recovery following COVID and other economic downturns, the Big Island, Hawaii Island is hurting more than some other counties are and solar and battery companies are proposing alternatives that will drop the price of electricity. Who who knew is proposing to increase the price of electricity? So if you're concerned about your pocketbook, who who knew is not the way to go unless you're one of the 200 people that they plan to hire. So where does this particular project and this set of proceedings and lawsuits and what have you stand on the road, the march to clean energy? You know, if we can look at that road, look at what you've seen and Marco and I have seen over the last 10 or 15 years. Where does this project stand? What does it mean on the way to 2040 or 2045? I think the three biggest things that will bring about a clean energy revolution or four things is batteries, battery energy storage. Inverters are really undergoing a revolution right now to actually help form the grid rather than just following the grid. The price of solar and wind is really dropping. And the issue that we're really tackling with is how to involve the community more so we don't put certain communities having to carry the burden so that we all can get cleaner energy. Marco, do you got more on this? Because I wanna try to get to the second topic that we were considering that is the koala issue but go ahead, whatever comes to mind. I think maybe one or two more questions here, Jay. It's been my impression, Henry and I'd like to give your feedback on this as well that in the decades that I've been at both the participant and observer of the energy scene and dance here in Hawaii that I have witnessed no other party, outside party, any party that has been more dogged, more persistent, more tenacious, more hardball, more politically hefty in trying to push their agenda in this case, a very substantially wealthy group of individuals on the mainland and whatever companies they've set up in Delaware or wherever else. Would you concur with that? I mean, because it just seems to me that they have just been, I mean, they've pushed every conceivable button, every conceivable lever in the legislature going after people in the community, hiring Warren Lee, former president from Helco. Have you, so my question is, do you find them as well an exemplar in your decades of being in the arena in terms of how they played this game, the hardball that they played? If anything, I would say their hardball tactics have helped us to become as hardball as they are in this proceeding. They are certainly very, very hardball, very pushy to get their projects through, but it would be interesting if you look back and think about 2008 when they first proposed it and think about whether there was an alternative path forward. If they had just said, we want to be community friendly, we want to work with the community, we want to be part of the community, they might have been up and running 10 years ago, but the fact that they have hissed off so many people and so many different groups has not worked to their advantage. Final question is on kind of our personal note, Henry. I mean, you've been involved in so many, so many battles, so many scars I'm sure over the years. Has this one in particular been tougher for you on a personal level or not really? Not really, I would say performance-based regulation, which the Public Utilities Commission is figuring out how to structure the way we reward the utility for doing the right things. That has been a far more intense learning process and far more complex issues, whereas this has just been a real pain in the neck. Speaking of which, where does the utility stand on this, Henry? What have you learned about the way it operates in the circumstance of this particular project? Well, Helco and Hiko are really forced to agree with Pujo Nua, regardless of whether they actually agree, the contract they have with them, they have to be on the same side. So they have to be endorsing it, even if they might be more reluctant behind the scenes. I mean, they were sued as well. I mean, Helco was sued not that long ago by Hiko Nua, so yeah. So yeah, so they tend to sort of make sure that they can't be sued again by Hiko Nua and so are at least nominally still supporting this project. Marco, can you scope out the second topic we wanted to discuss about Kohala? So up in North Kohala, beautiful, beautiful part of the island. There's the wind farm there. There's Kapa'au, there's Havi. There's the outlook of Polo Lou Valley ranch country. I don't spend nearly as much time as I would like you if there's beautiful. And it is fed by one single transmission line that goes along the highway there, the Makai Highway. And there's been concern over the years or longer by a number of people, including Helco, that if that transmission line were to go down, you would have communities up there who would be high and dry without power for who knows how long. So there's been efforts and thought and Henry can tell us how long this has been going on. I know it's been going on for years to create something of a micro grid there in North Kohala that would be more robust or provide more robustness in terms of power staying on during adverse events. So they're looking at different options in terms of small generators, solar plus storage and so forth. So with that kind of intro, where are things at, Henry? And do you feel that maybe just maybe there's some real progress that's being made now? It's hard on a different level because transmission lines are one of those things that even if they're overhead, HIKO won't show you a map of the transmission lines because it's a security issue, which is really strange but there is far more restrictions on actually understanding how the grid operates. Certainly having a single line for the community even if you were to put in a lot of energy in Kohala, you couldn't export it because of the weakness of the line. So you really need to match the supply and the demand in Kohala and that would be a micro grid. So you could disconnect from the line and be totally secure up there supplying your own power. Now, I think part of the issue is HIKO is trying to figure out whether they should do it or somebody else should do it. And the PUC has been wrestling with how micro grids actually operate. They've made some important decisions in the last few months and year but I can see that taking off in a year or two if somebody really wants to transform the Kohala area. The wind farm up there does have a power purchase agreement renewal underway and there is a small battery up there. The battery would have to probably be enhanced if it was going to become a micro grid. Well, micro grid sounds like the right solution for Havi. It's kind of remote from the rest of the Big Island. It's got its own resources. It sounds like a good solution. Also, I wanted to ask you is this happening anywhere else or is the micro grid for a vicinity or a neighborhood like this a first in Kohala? It's I think a first in many ways, many places around the country that have competition don't allow a rival utility to exist on the utilities footprint. In Hawaii, anybody can form a utility. So right now I could form a utility on the Big Island and supply all the power to the Big Island. Of course, we would need transmission lines. We would need PUC regulation and all that, but you can have rival utilities set up operations. I think one thing that has to be on the utilities mind is if a third party comes in and establishes a micro grid in Kohala, would that lead to other people providing micro grids in other areas and carving away from the utility? So the utility is undergoing a rapid transition and has to figure out what the winning path moving forward is that keeps it financially whole while at the same time advancing cutting edge technology. You think this might happen elsewhere? Yes, there are a number of places that could carve away. Kahuku could decide that they are so fed up with the wind system up there that they want their own power. A place on Molokai communities could there decide we have a weak grid there. Why don't we just set up a micro grid? So there are real possibilities in different places why not might do something. So I think the utility is trying to figure out what is a winning solution that keeps them as part of the players involved. Sure, but what you're making me think of, Henry, is that the micro grid can exist in an area which is already covered by the utility and it can exist and it can flourish and it can do better and maybe offer the energy at a cheaper price even. It also means, and I don't want to speak for you Marco, but it means that a co-op can be developed in the same island in the same neighborhood and have renewable facilities systems existing within the grid that the utility has established before by developing a bunch of micro grids just like the one we're talking about in Kohala. Am I right? Yes, you are. There are two issues that pop up. One is if you're connected to the HECO grid, you need a seamless transition. So if either the grid goes down or the micro grid goes down, people don't suddenly lose power or have their systems fried. So you need a transition that's seamless. And second, if the micro grid is very large in size, you need a fair amount of standby or reserve power in case something goes wrong. So those are issues that are sort of on the very cutting edge of how we deal with that. You think there's a future for it in Hawaii? You think there's a future for all of this Henry? Marco, you wanted to jump in on this. Is there, Henry, isn't there a micro grid or two on Oahu at Schofield or am I misremembering is there anything similar that's going on on Oahu? Well, I can answer that. There is a micro grid, but it's within the Army base. Yes, it's a micro grid operated by HECO that's leased on land from Schofield. And when micro grids were first being subject, were first being proposed, that would not have fit into the definition because it was utility owned. Now the definition of micro grid is expanding to include both utility and non-utility. The military has also tried micro grids in Camp Ayaia having both an outer micro grid and an inner micro grid in case something goes wrong with the power coming from the HECO grid. Well, I can see if we can collectively get this right and actually do a micro grid in North Kohala and it could serve as the example and there's certainly be a lot of learning that would take place and learning curve four places, Y and I, Hanna on that side of Maui and other parts of the state that are fed by one transmission line. So, I mean, this is kind of exciting and I think it's gonna be really important to see one of these, you know, when North Kohala is gonna be the first one in just to see it through to completion and learn from it. And that seems to me to be the good direction to go to and as Jay and I have talked before, I mean, it's inevitable in my opinion, there's gonna be a category three, four, five hurricane ramble through our island chain. And then we're gonna be saying, oh, darn it, we should have done more two years ago, five years ago, 10 years ago. So it'd be nice to try to rather than ring our hands and oh, we should have, should have to actually do it before we really need to. And that raises a very complex issue that's sort of at the very edge of the future. And that is how do you harden a system to withstand a hurricane or a tornado or a lightning strike or fire? And what, and whether it's cheaper to build a bunch of micro grids or strengthen the existing grid and how do you protect the equipment when the storm hits? So those are all very complex issues that involve a lot of technology, a lot of finance and a lot of brain power. And we're just sort of at the beginning of that experiencing what to do. Yeah, well, we could learn about it. You could learn about it in the existing micro grids here in the army in Oahu. And we can learn about it in developing the one in Kohala. But isn't a big part of that, Henry, a matter of burying the power lines underground instead of leaving them on poles? Interestingly enough, if you bury them underground, you can detect faults before they occur, but it's still harder to get to them to fix them. And undergrounding varies by cost a lot and how you put the lines in. For example, with Hart and Dillingham, there are a lot of things that we don't know about what's underground. So we have to be very careful in spots. But yes, and the other issue is there are sections, for example, Waikiki where they're working on lines underground and you have to wait for the tide to go down because the tide rises up. And as sea level rises, more and more stuff is going to suddenly get submerged that was in dry land. So with climate change coming, we are going to be facing real challenges on our total infrastructure. New Orleans survived with all their dams, but they lost all their power. So you can't look at just one sector by itself. You have to look at water, wastewater, power, other things. Well, you're right, it's complex. Look what happened in New Orleans there. The towers, both the poles and the towers went down in the wind and that knocked them out for quite some time, at least 10 days. And that would happen in Hawaii if we had an extreme storm. On the other hand, the underground power lines, maybe, I'm guessing, maybe you know more about this, the underground power lines may be protectable, maybe more resilient by cutting edge technology where they become waterproof and where faults are reported back to the people who could manage the power line so they know exactly where the problem is and they can dig up and repair that section of the underground power line. It seems to me that that would be worthwhile developing, that kind of technology, is it happening? It is, but part of the issue is how much do you harden? For example, we could spend trillions of dollars and make our system totally secure. And it could be that nothing ever strikes and it's a total waste of money. So it's a trade-off on how much we're willing to spend and what will happen that we don't know is coming. And there's a line somewhere where you're willing to spend a certain amount of money to cover a certain amount of risk. And we haven't really had that discussion about where that is. Well, you know what this suggests to me, Henry, is that in the microgrid situations, such as in Kohala and possibly elsewhere, it's a new facility, it's a new idea, it's a new development. And it allows us to use our best thinking, our best technology, because we're building it from the ground up. And we could do better that way, don't you think? And so it would require a creative entrepreneur, investors who are willing to take that risk and put the money in, but we could develop all kinds of new systems in building microgrids, couldn't we? Yes, we can and we could become leaders in figuring out how to do that and exporting our knowledge once we've done it. Marco, it's time for you to summarize and wrap up and leave your pearls of wisdom for the public to think about. Well, I just wanted to, it's gonna sound very strange coming from me, Jay, but there are companies out there, Florida Power and Lighting, one of them which is part of Next Year Energy, that have put a substantial amount of effort, time and resources into hardening their grid, which makes sense of course, because they have hurricanes over in that part of their, they're part of the world as well. So there are examples of companies who know how to do this, but Henry hit it perfectly. I mean, there's a trade-off between how much, how much is prudent and how much is too much for ratepayers to bear. So I feel very pleased that we've been able to cover these two juicy big island topics in some detail here. And I just want to thank you again, Henry, for joining us and having this very interesting and well worth the discussion. So Mahalo. And thank you, Marco. And thank you, Jay, for all you have done to advance energy. Thank you, Henry. Thank you, Marco. Aloha, you guys. Aloha.