 Hey, PUC update with Leo Essentian. Thank you for joining us, Leo. Thanks, Jay. Thanks for having me. A more complete introduction. However, I rely on my co-host contributor, Marco Mangelstor. Welcome, Marco. Thank you, my friend. Always good to be back with me and Amano, another Madre. Marco, can you give a proper introduction to Leo? Sure. I'll thank you again, Leo, for joining us today. It's always such a pleasure. And Leo has been with the Hawaii Public Utilities Commission now for about two years. And I always like to ask kind of my Dorothy Wizard of Oz question at the end of the film, where Glenda the Good Witch, or actually it's the scarecrow that asked Dorothy, well, what have you learned, Dorothy? So to you, Leo, what have you learned? And what advice would the Leo of today give the Leo of a couple of years ago as far as views and doubts and tips to we're working as a commissioner of the Public Utilities Commission? Remember, Leo, this is a family show. Yes. I remember when I first got appointed by Governor Yige, basically he told me, you know, go in there, right? It was the last so many months of Randy Wase's term when he retired early. And he said, go in there and kick the tire. Right, and then come back and tell me if you want to want to re-op for the real six years. So I actually did that, right? And I remember because it was opening day 2020 when the shutdown is not happening yet. And I ran into the governor at the Capitol and he's like, oh, we need to talk, right? Because you went and kicked the tires. And I said, well, I already put my application in the governor, so he was doing the indication. But, you know, I think the one piece of advice I would probably give myself or anyone else, right? Thinking about joining the commission is, be prepared for anything, especially someone, right? Coming in and you're not in the energy space per se, like 24-7, like Marco is or, you know, kind. I mean, you're coming in there and you're going to learn that the commission does a lot and there's a lot of topic, right? And it all interconnect and you got to figure out how it all interconnect. Unintended, but you have to like this deal and you got to deal with it, right? And I mean, two years have gone by and I'm getting a little bit more accustomed to everything. But still, right? There's still a lot of stuff. That, you know, I got to go back and look at old files and things like that to kind of bring myself up to speed on where we are. And that's probably one of the things that I think we need to do, right, is going to have this. It's going to check in with everyone and say, where are we? We're probably in the energy scheme in Hawaii. I mean, things have been moving so fast and the light that, you know, we just have to do that. That's my piece of advice, Marco. Yeah, I mean, has there ever been a moment over the past two years when you thought maybe you should have kicked the tires a little harder? Got the heck out of the car. I could have test-drived the car, right? But I only had six foot, basically, to do it. And, right, and back then there were things that the commission had goals in mind. And for the most part, we've accomplished those goals in the two years. There's still a lot more that we need to do, but, you know, for what they set out to do, right? There's got to think, right? I'm coming in in July and those goals are already set by the chair at that time, right? Jay was the current chair and the like. So you're kind of going in there to try to support those goals as well. So maybe if he gave me more time to test-drive it, I would have done it. I'm still glad I asked you that question. But, you know, I'm the type of person, Jay, you know me. I mean, I'm the type of person. It takes some time. I know, I realize it takes some time to get to know everything, even though I came from the energy space prior, but, right, I'm the open-minded person and like I'm there to kind of just soak it all in first and then see where we can go. You know, you had experience with government before. Oh, you know, you were not a newcomer to the, I want to say the wheels of government when you joined the PUC, but now after two years and seeing it under a kind of stress test, right? COVID has been a stress test and, you know, it continues. You know, what else have you learned? Has your view of government changed sitting actually on a commission of this scope and power? Yeah, I think, right? I still find myself sometimes thinking about, right, how government actually operates, right? As a commissioner, I'm on the regulatory side now. Yeah. I'm the guy kind of taking in all the information and making decisions and, right? I think those information could come across a lot more clearer, right? I like it, you know, sort of, you know, kind of laid out before me. I'm a planner, right? I like to see how you planned it and then how you're actually implementing it. So COVID has not helped in that regard because you got to make snap decisions. At the same time, right? We have requirements to take a look at everything that comes in the front door and to render a pretty workable decision. Can't rush that those items either, right? You know, they say that if you're in government and government is by definition political, it always is, it has to be the way it works. And you succeeded something, then somebody else takes the credit. If you fail in something, then you own it. Yeah, that's true. Or somebody tells you you own it. Yeah, right. Whether you really own it or not, it doesn't matter. What's your favorite docket? What's your favorite case, Leo, over this time? The one that has the greatest moment for you, the one that writes itself down in history, that one. Probably have to say, well, I came in halfway on it, but I think the PBR, performance-based regulation, a lot of hard work went into that by the parties. I won't take the credit for that. I just remember, I still remember my first comment to the working group was, right? You can lock me in a room or you can lock commissioners in a room and we could come up with the framework, but no one's gonna be happy. That's why that's how I asked them to be involved and stick with it, right? And to their credit, right? Maybe a little bit more than a year, 15 months or so, they stuck with it and came up with a framework. And it's a new way of how the company or wine electric is gonna look at its profitability and the light and try to prioritize their projects. At the same time, yet to be seen, right? It's only a year in, right? And they're still adjusting, right here and there. And that's what we wanted it to happen, right with me. We're like, right? In the mainland and in other areas, there's been bits and pieces of PBR. We have the full package, right? Yeah, including all the incentives and all of that. So, right? A year in too early to tell, I think going well. I mean, there's still, yeah, there's still adjustments, but for the most part, I think everybody's kind of settled down now. We're still making adjustments as well, right? We work with the working group, right? So you've been in it for more than 15 months, I would say almost close to two years if you go back to, right? Phase one of it. I will have to check in with you again as it goes forward. What's your expectation though? I mean, this is a major piece of work for the commission. It's a lot of, as you said, a lot of new thinking, new ideas, pioneering steps. At the end of the day, Leo, what are you, you know, and you will make an impression on the landscape, on the energy landscape, and on the state of Hawaii for sure. And the state's reputation among other states too. What kind of impression do you want to make and how do you think it will change the landscape? Well, first of all, for Hawaiian Electric, I think it would be very key for them, right? I mean, this is how they make their profit. How they, here to be, you know, a lot of people are called profitable to shareholders, right? Those who are investing in the company. I think it's very important for them to take a look at how they can maximize the use of PPR, right? And there's a lot of, you know, I see it as, it's not black and white, right? You got to take a look at everything and figure out, right? You know, there's a slew of, you know, incentives there, which incentives do you take advantage of? Right? And when? Right, because we're talking a five-year period that we're going to try to implement PPR, right? And we gave them other incentives as well as take a look at, you know, pilot projects, and you see the slew of EV pilot projects coming in now, right? So that's one form. So it's really, can the company and can the state of Hawaii and all of us actually operate within this PPR framework? I think that's going to be the outside, right? And everyone knows, right? There's what we call off-ramps. I hate to use the word off-ramps, but there's off-ramps along the way. But there's also, you know, places where if the market is not going to help, right? The market sees something wrong and it goes south, right? We have a chance to get in there and to make emergency adjustments if needed, right? And we're monitoring that as we go along. I suggest it wouldn't work without that. It has to be tuned up, you know? The other thing that I want to express admiration for you guys, for you and the other members of the commission, you know, you're quasi-judicial. Sometimes people forget that. And that means a lot more to the judicial than the quasi, in my opinion. And that means you have to maintain judicial independence. And you have gone a long way to do that. You have made statements on many issues that show that you care about being independent. You don't want to be, you know, subject to the kinds of things that happen to other state agencies in the middle of the, you know, of a political environment and a heightened political environment because of COVID. And I wonder how you feel about that. Yes, you should feel proud about that, Leo. Oh, yeah, I think we've always tried to maintain that independence. And, you know, speaking for my two years and also prior, you know, before that I've dealt with other commissions as well. I think, right, in each period of time, they've always maintained that independence. I think one of the things we see, or at least I see that, right, some of these things are aged, right? That independent thinking and or decisions that came out or statements that came out. And they're a little age. We need to take a look at them again. We actually are, as a commission now, right, we're kind of looking at, you know, what adjustments do we need to make from old, you know, from old dockets, old decisions, right? Because everybody brings them up and then, and then you kind of scratch your head and you're like, well, it doesn't quite work here, right? Or it's impending something or barring us from doing something, you know, innovative or the like. So I think that's what we need to fight, right? There's this independence, but there's also this kind of, I won't call it power, but it's like this independence to also take a look at past actions, right? And I think that's what we need to look at. I think that's what we need to look at. I think that's what we need to look at or statements or anything like that. Connecting. Yeah. You have a bunch of questions that maybe drilled down on what I've been. Asking Leo about you want to, you want to ask some of your questions, Marco. Sure. I think. Docket. 2021 dash 0024 is a juicy one. And that's one that commissioned open earlier this year. So I think that's what we need to look at. And then we need to look at this utility scale. Renewable energy plus storage in many cases. Docket to keep an eye on all this stuff, which is, you know, across many Island of multiple Island. Multiple projects. And there's a once a month kind of report card that. When electric submits to the commission, which is all part of the public record, they haven't put out the one for this month yet, which I'm anxious to take a look at. So I'm thinking that I mean, one big project developer on G pulled out of the 60 megawatt. Project here on the big Island. That was a big deal. And others such as a, yes, have cited forced major issues in terms of putting at risk. Getting product on time. And what is the, the GCOD general completion date. Has been pushed out, pushed out, pushed out. So I'm going to ask you the question I've asked Jenny and also I'm going to ask you the question. I'm going to ask you the question. Well, Jay Griffin. And how concerned. Are you. Leo, how concerned should people on a Wahoo be in terms of. These projects, these important projects that are being pushed out in terms of actually going online. And affecting that. Reserve margin between what Hawaiian electric has available. To generate and what the actual demand is. How concerned are you about the tight reserve margin? The concern is probably more pressing on a Wahoo. At the same time, the concern is actually. Every jurisdiction that white electric is in. Right, because we have some plan retirements on Maui. Right, we call it a power plant. Retiring and then. Right. What. Or the big island has always had, right? I mean, how can we advance. More and more. And you, you mentioned the projects that have been pulling out. On the big island, but we want to make sure that those are somehow replaced, right? Because the planning. Kind of counted on that those items coming in. But on a Wahoo, I think, right. First and foremost, right? The coal plant ends in September, 2022. There was a lot of projects to come on board. And not so much to replace the actual energy coming from it. Some of it was for grid services and the like. But it's more around reliability issues. What can we do, right? To make sure that we still have reliable power. On, on a Wahoo. Come September 2022. Right. When our, you know, modeling that each NEI has thought. Kind of shows gaps here and there, right? Depending on. When they fix up some old generators that are on still online. And we've kind of worked with HECO or each NEI work with HECO to figure all that out as well. And so right now it's, it's really. A little bit of patchwork here and there, right? We've started up some new programs here on a Wahoo. The battery bonus, what we call the battery bonus program. There's another more formal name for it. And things like that to kind of just shore up the gap a little bit, right? And we're talking a 50 megawatt gap. Right? There's proposals here and there to, I wouldn't say repower, but take a look at biomass on Wahoo, right? Converting the AES plan. And then I would say there's no other shortage of ideas on what to do. It's right. I think it's how do we get. These projects that were approved, right? On time, right? You talk about that docket, right? 2021, 024. That started looking at the interconnection process that was delaying a lot of project. Right? And we, and that was going on before we opened that docket. Right? We said, you know, finally needed something somewhere to talk about instead of all the individual dockets. Right? And then we started to look for each of those projects because we saw the delay in the interconnection process. Right? With all the studies and all of that pushing out the GCOD date. Right? Then you get COVID. Right? You get the pandemic. You get the shutdown. And now you got supply chain issues. You get a gamut, right? And all related. But you're seeing, right? Right? Right? And we're likely to have, we're likely to have even more pressing problems. Omicron is here. I know it was, it was not unanticipatable. It's here. And it is going to have an effect. A on the supply line issue. And it's B, it's going to have an effect on the economy in general. So, you know, what's, what's your worst case analysis. About getting things in order for September 1st. Yeah, I think. You know, at this point. He's really just trying to get. As many of those projects that were approved. Right. Up and running. And I think. It's not so much the September 1st deadline. I mean, we asked all of the developers. How you can move up. Right. Minimum of six months. Everybody came back and said, we can't do six months. Everybody came back and said, we can't do six months. A couple of them said, we can do three months. A couple of them said, well, it's three months, but you know, you got to give us one month of a leg. So it's really only two months. Right. So I mean, there are all these different ideas. But the main point is, right. Hopefully. We can shore up. Right. Like about a two to three month different. So really for the commission. It. And you get online. 2022. And then. Right. These other projects that. Are still being approved and the light. Right. Yeah. You have kind of like outside dates. 2023. 2024. 25. How can you come on. Sooner. Right. So it's the whole gamut. It's not only. Those that were targeted for 22. It's. Right. How can we kind? I mean, some things are totally out of our, like, if they're claiming. Like Marco said, some force majeure. And. And I don't think anyone has actually. Involved force for sure. It's just notice. Of course, majeure. Right. That. I don't think anyone has actually. Invoked force for sure. It's just notice. Of course, majeure. Right. One electric still needs to take a look at it. If it's really. Of course, majeure issue and. But some things are really out of. The control of the commission. I mean, the supply chain issue is not only. The supply chain issue, but also the. Withholding by. Department of commerce or customs. Right. Panos coming from a certain. Company in China. Right. And what do you do with that? Right. Some of that stuff is coming already or even in. In the port. Right. But can't get out. Yeah. Well, Los Angeles. His. His 50 some odd ships that are. An anchor outside the port, not going anywhere. So, you know, this just takes us to the question of. Gee whiz with all of that, with all these issues, troubles, challenges, deadlines and all that. You still have to maintain your basic mission. That is to move to clean, move to renewable energy, no matter what. And that includes, you know, a discussion here today. Oh, no. To the extent you can talk about it. Mark, Oh, you want to frame the question about who knew. Sure. We've been talking about this a lot over the months. Obviously it's been a big hot topic and more ways than one. The commission is doing the so ordered evidentiary hearing in January. You know, correct me if I'm wrong here, Leo, you're looking at the market. He leaves. I think it's reasonable assume there will be a D and O from you guys. In order sometime in the April, May, June range, that seems to me to be within the realm of possibility. And then, you know, we'll, we'll see where the chips and the tea leaves fall after that. And I know there's not a whole lot you can say about that, but let me ask you this. Now that we've got, I think a new RFP in the works for a firm generation, firm and dispatchable generation here on this island. Is there anything, stopping Honua Ola aka who Honua from bidding on, on that RFP as well. I do not see anything. The latest on that is a Hawaiian electric. It asked to kind of delay that for, I believe about a month or two. Because of the energy. Right. Pulling out. Right. That was, right. They want to, I think my understanding is one of the things they want to look at is if he can expand that RFP to be island wide. Right. Because I think he was focused on. On the East Hawaii side. And now, right. With. With energy pulling out and then right. Like having to deal with. Right. Cause it's all resource too. Right. Multi resource. It's not just. Renewable resources. We're going to look for renewable. But it's right. Firm and not firm. Firm and intermittent. If you want, if you want a kind, but. Right. That's been delayed. You need some time to take a look at that. How can, you know, we're doing it with. We don't need to do that. Right. On the heels of this one. But I do not see anything. Barring or even. You know. Telling who knew. Not to. Bit into that. As well. I think. The one thing that. Might need to be worked out is the whole. Right. Are you. Are you competing on a level playing field? Right. And I think that's always been the question. Right. When you do these all resource. Type of RFPs, right. And. Right. I think. Right. For me. As a planner. Right. At this point and see what I've seen. Right. Right. For me. As a planner. Right. At this point and see what I've seen over the past couple of years on the commission. I think we really need that balance portfolio. Right. Not. Not one resource is going to solve all of our problems. Well, the. Near term and. The. The farther term out. I think we need to really look at. And be open to. Any type of resource. Kind of coming in to, to hit. What Jay was mentioning, right. Our, our eventual goal of. 100% RPS in 2045 being. Right. It's a zero carbon. And the light by X. By the same year. I think we, we need to be. We need to open it up a little bit more. I think we've always, we've always said that as a commission. It's just how you're looking at the RFPs and what's coming in. What is competitive at the moment. I think I, I remember talking with K. You see a couple of years ago that this was before. They were coming in with their hydro. Project on the West Kauai. And they asked me, they're like, Hey, you know, how is the commission going to see this? Right. And for you see, right? I thought, well, we're going to cross that bridge when we get there, but I see it, right? You did all the low hanging fruit. Right. The more competitive price. Things solar. Basically. Right. And now you're getting into the more expensive, more technologically advanced, more. Right. Capital intensive project. Yeah, it's going to be expensive. How do we deal with that? Before we break Marco, we only have one, one question. One more time for one more question. And that is, you know, I mentioned early on Leo that, that the commission has to have as a quasi traditional organization, a certain amount. A large amount in my opinion of judicial independence. But you are subject to getting questions. And so if you're going to get questions, you can get questions from legislators. And other agencies, I suppose. If I were sitting as a judge. In a purely judicial. You know, environment. I wouldn't myself, I wouldn't take questions. Thank you very much for your question. Have a nice day. But I'm afraid you can't necessarily do that. What's, what's going on? Why don't you frame the question about this Marco? And I think it's a great question. I'll go back to that. It's over. I'll go back to that. And then what do you want to maintain? What do you want to call it quasi traditional independent? Sure, Jay. I mean, there. There are a number of elected representatives in this case, at least one senator that I know of Senator done and done and the Della Cruz that chair of the WAMP committee. Who was taking a, should I say, keen interest in the activities and decisions of the public if you look at your crystal ball there, Leo, is we got a legislative session that was scheduled open in less than two months in January. And there are always a whole bunch of bills introduced in the first days, right? What do you anticipate or what do you see as possible legislative, I wanna be careful here, legislative suggestions in terms of the priorities and the decisions of the PUC? Well, you know, I look at it from the planning standpoint, I think, right? And it's the appearance of how these decisions are coming out. I think we need to, like I said, right? We need to be a little bit more balanced. We need to start considering other items on the, in the portfolio, if you will. And I think some of the, right? What the legislature is seeing, right? They look at the action, right? And the actions don't seem to be at balance. I think that's where at least some of the senators on the ways it means coming there, been to their meetings on Hawaii, their visits on Hawaii and also on Maui, right? And there's more and more of them on WAM that have these questions. And some of them blend into other, there are other committees as well, right? With Senator Warkai on energy, also Senator Misalucha on energy and the like, right? They're coming up with these questions and all of them seem to pan around, how can we be a lot more balanced, right? How can we be a lot more open to different types of projects? And yes, there's trade-offs, right? If you talk biomass, right? Yes, there is the greenhouse gas issue, right? But then where does, my question has always been even to like HNEI, where in the range of resources is biomass as far as GHG, right? And the like, and you know, I did it somewhere, it's less than fossil fuel, right? But it's more the solar, right? That's the kind of answers I get back, right? Not definitive and then not anywhere close to Hawaii-based data because we just don't have a lot of that data per se, but that's the kind of answers we get. In that gradient, Leo, where does it stand as against LNG? You know, I haven't looked at that one. I haven't looked at LNG. It's a theoretical question only, I guess. Yes, yes. But I think, you know, we're gonna see some bills coming up that will take a look at what the commission looks at, how we should be looking at it, right? And I think the way I always look at legislation it's not an immediate thing because even if it was an immediate thing, right? It would take us six to 12 months to set that up. And by that, right, you're into a new administration, you're, all right, so that's the other part I take with a grain of salt or a discombing session, right? It's the second year of the biennium, it's an election year, the administration is gonna change midway through that fiscal year, right? How much does it really get done, right? And I think that's gonna be at least the key I'd be for some legislators, some of it, right? I hear things and I kind of like, well, you know, well, great, we're gonna at least start the discussion. Right, it's one of those. I mean, Jay talks about me being in government a while, maybe I'm painted that way with how I look at the legislative sessions. It's a valuable experience. Yeah, yeah, I mean, right? With the pandemic, what I see is that there's a lot of fish to fry and a lot of stuff to get resolved. I think one of the key is going to be, and it's not only for the ledge, but also for the administration and also like for us specifically. And in that regards, that's why we're a quasi-judicial, right, Jay? We're still an executive branch agency, right? So the legislature can poke it prod on us just like how executive branch can poke it prod on us. So I think it's gonna be, what is the priority? What is the priority? Which one will make sense to do? Which ones are on a spectrum? Even if you pass it, we'll go, right? We'll really be set up a year from ex-state, right? I mean, it's going to be, I mean, I can also see the flip side where they tell us, hey, hurry up and do it by the end of the year, right? Which means the end of the administration, right? We'll put the pressure on. I can see that as well. I'm not sure which way it's gonna go at the moment or say that, but I think, I don't know. I'm one that expects that kind of stuff having been in government, right? I mean, it's a time, but it's also, right? When you look at it from another standpoint, it might be the time to do it, right? I've always said, right? A lot of my talks that I've given over the years, right? We're at a turning point on everything that we need to do, right? Economy, energy, I think Jay heard me said as far as climate issues, right? We're at a turning point. And when is that real date and then we got to really go over the hop, right? And I think, right? This session could be the one, right? To kind of set the tone already for the coming of four to eight years. Hey, we're out of time. Marco, we're out of time. Could you give a very exuberant thanks to Leo for coming down and close the show? Would you mind, Marco? Well, I'll close it with this one. Leo said poke and prod. I thought poke and prod. And I thought, whoa, I'm getting hungry. And then you said fish to fry. And I thought you could do with a panko crust or a little garlic butter and wine. So I'm even hungrier now. So, but in the meantime, as we all wait for lunch. Yeah, thank you so much, Leo, for joining us today. It's always such a pleasure. I always learn so much and I do hope we can count to have you back on with us soon, my friend. Thank you, Marco. Thank you, Leo. We hope to see you again soon. Aloha.