 Welcome to Hawaii State of Clean Energy. I'm chairman of the Hawaii Energy Policy Forum and this is the policy forums by weekly program where we cover the latest advances on the energy forums, policy objectives and the latest advances in energy policy and plans in the state of Hawaii. In essence, this show covers the unfinished business in Hawaii's energy transition. Today we're joined by a very special guest, Ed Sniffen, who's the deputy director of highways at the Hawaii Department of Transportation. And I wanna tell you a little bit about Ed first, but this week's show is really gonna be about the road usage charges and the really important work that's gone over the last several years to be able to get a handle on how the Department of Transportation intends to be able to make up the dwindling revenue to cover our road maintenance because of the lesser income that's coming in from fuel taxes. You know, I've known Ed for a number of years now. He's been head of the Hawaii Division of the Department of Transportation. Now since 2015, I believe, had a similar role in 2010, 2011, and then he went off into commandment schools and had another several really important positions and including being executive assistant to the mayor of the Sydney County of Honolulu. We've always known him as being an extremely effective administrator and public servant and worked very closely on something that really kind of led to this sort of push to fundamentally deal with the dwindling supply of fuel taxes. When I was energy administrator, we had proposed or had developed a transportation energy assessment to try to get a handle on really how are we gonna make progress in moving away from fossil fuels for transportation? And it became absolutely clear that a lot of the advances we were hoping to make really couldn't be carried out, particularly if transportation department couldn't carry on some of these improvements because of diminishing fuel taxes. So I know that Ford Fujigami at that time, before he became head of transportation, he was head of the airport division, but I know that when he took on the role being head of transportation, this became a really big issue. And then I know that became a huge priority of Ed. So I wanna engage in a discussion with you today, Ed, and first give you a sense of, give us a little bit of a sense of, how did you take this on and what did it mean to your portfolio of business and how important was it for you to get a handle on this question? Absolutely, and thanks so much for inviting us. Love to be on, love to see you, Mark. I gotta tell you, I appreciate all your help during the time that you were energy chair, head of the energy office to make sure that we could move forward on a lot of our clean energy initiatives. Because of you, we were allowed to move forward on our escrow contracts that cut out 50% of our energy consumption throughout the state highways. So I really appreciate all that work with me at that. And I appreciate that you understood the complexity of moving forward with clean energy or clean energy vehicles, while making sure that we have the funding necessary to take care of the needs of the public. As we had talked about during that time and going forward, the reduction in fuel tax is a bittersweet thing. We are all for it. We're pushing for clean energy vehicles more on the system, electrifying the system to ensure that we can get rid of the range anxiety to allow more people to convert faster. But we also got to make sure we have enough funding in our system that we can carry out the need for the public, make sure we maintain the rules that we have, make sure we make them better, make sure we improve the congestion, make sure we can match those really important federal funds that come through. So looking at all of those things in that perspective, we started looking at what kind of methodology we could use to ensure that we could capture everyone paying into the system their fresh air. At this time, I would argue that the gas tax is a really elegant way of collecting. We don't even know that we're paying it a lot of times. You pay that 16 cents for a state fuel tax every time you go to the pump for every gallon you pay, but you don't have to pay it all at once. The problem with that system though is a lot of people can't afford to convert to clean energy vehicles. So those people are now paying for the use of the roadways when others aren't. And that was the crux of things, that equity piece was broken. So looking at a pay per mile or road uses charge fixes two things, not only making sure that we have the revenues necessary to take care of all the needs of the state, but also we make sure that everybody's paying their fresh air and nobody, and we're not balancing this on the backs of anyone. Yeah, so you raise a really good point. So the fuel tax really didn't kind of, in a sense, the more gasoline you bought meant the more use, but in a certain sense, it really didn't capture all of the kind of miles that you were traveling, really. You're exactly right, absolutely. So in Hawaii, the more affluent you are, the closer to town you can live. The easier your communities are. The more you want to, the less affluent you are, the further on you can live. Now, fuel tax doesn't capture your use when you consider congestion. For those on the leeward coast who are used to driving at hour 20 minutes in and hour 20 minutes or hour 30 minutes home, there's a lot of time that they're burning fuel on the system when they aren't even moving. So getting out of the fuel tax business and getting into the road you just charged makes it fair for everybody. So what was the process that you went to try to get a handle on this? I mean, how did you take this on? It's such a big deal, switching essentially your whole revenue. I mean, it's like, if you're in business, this is like changing your business model, right? Absolutely. Right now I just got to kick back. Department of Tax Activision cuts me a check every quarter and we can move forward. So now we get to look at a couple of things, right? Knowing that we had these issues on the state side means that we're having them on the federal side as well. On the federal side, we all pay 18 cents for federal gas tax, but over the last 10 years, Congress has been kicking in billions from general fund into the gas tax because there just isn't enough funds there. So it's just not sustainable as we go forward. Knowing that we have a problem, knowing that the feds have a problem, eventually everybody's going to convert to something. So we wanted to make sure we could take the lead on a pilot to show everybody what we could do. We applied for a grant with federal highways and we got four and a half million dollars to run a study that we started in 2019. On that first step that we took on that study, we made sure that we tied the public in. Before we even did our stuff, set up our study, we wanted to make sure we got in feedback or feed in from the public to say, hey, these are the things we like, these are the things we don't like, this is what we know and don't know. So we said- Yeah, why don't we take a look at that slide? Definitely, right? We have a slide from slide number one. That slide number one shows, initially when we first started this off, we sent out surveys to the public. We had calls that went out to everybody. Then we had 14 town halls throughout the state to make sure we could start talking story about road justice charge, what it was and what we thought would be a good way to move forward. And we had really interesting discussions with the public. Some people didn't even know they were paying a gas tax. Some thought their gas tax was $2,000 a year versus the 70 to $75 that it actually comes out to. Some were gonna put this road justice charge on top of the gas tax. We're gonna double up your costs. And others thought that we're gonna take that money and push it out to different slush funds for different elected officials. So we had that good conversation with everybody to make sure we could set up this study, to address everyone's concerns and let everybody know how we're moving forward. Second step to this was we sent 360,000 bills out to everybody. No, of course they're fake bills and we just showed them what you would have paid if we had a road use charge versus what you paid based on your mileage and the type of vehicle you had in gas tax. I saw that, I received one of those. You did, awesome. Did you make, did you have to pay more pay less? Yeah, I mean, it actually looked like I would pay a little bit less. So this is the way it came out, actually. When we had our meetings in rural communities, they're really upset that we were gonna charge in for a mile because they felt like they're being targeted. They have to drive more every day so they're gonna have to pay more, which is right. Which is the way the gas tax is set up as well. But what they found was because in rural communities, the vehicles are a little larger, their less fuel efficient, they'd actually pay less with a road use charge than they do right now. Those near town paid more because of the fuel efficiencies that they had. So it's really good for everybody to see what it would look like and to see exactly what numbers we're looking at between the range of $60 to $75 on average for everyone. And that's what they're generally paying. Some paid a $5, more some paid $5 less, but in general about the same. After we did that portion, we did a study, a hand-drawn study to get 2,000 bus people to actually drive through the system and try to see different technologies it would use to track them throughout the system. So we do this road use charge. And all of that is being pushed into a report that we're looking at releasing next month. So it's going to be exciting. Like you just hit on the head that some people didn't even know that they're paying the tax and others didn't know where that money was going to go. On slide number seven, it shows in general how people felt when we initially started talking about things and then how they felt at the end. So we did some surveys in the beginning and the middle and the end of the survey. And you can see that in general, those that support that stronger throughout the process, those that have electric vehicles and don't want to pay that additional cost that's stronger in the opposition throughout the process. And but the big thing for us is we saw that support increase for those that supported the process in the beginning. And we also saw those that were just unsure decreased tremendously, which is where we wanted to be. We wanted to make sure that people made an informed decision whether it's supported or not throughout the process, we wanted to make sure they were informed. So that's what we saw. This is good public policy. And I think this is really important. We wanna be able to sort of expose to the public when things were actually being done correctly. You guys took on a very difficult subject. You did a very sound methodology. You went through and you appropriately engaged the public and informed the public. And now you have, I guess, a more informed and supportive group of people that are now about to better contribute to better roads. Absolutely. And we really appreciate the public support in all of this. Not only coming in for those 2,500 or so that came into that study, but for all of those community meetings, it was packed rooms the whole time. So people made their time to come out and give their opinions. They sent in a bunch of emails and letters to ensure throughout the process we were informed how the public felt throughout. And it allowed us to guide our study throughout to make sure that we could take care of all those concerns or at least make sure we studied those concerns to find out where we go. In the end, right now what we're looking at is, we know we gotta convert. We have to go to a road research. Now we gotta figure out how we do it. Definitely we wanna be ahead of the federal government because the last thing I wanna do is when they say start converting, I don't wanna be behind them, right? Right. So for us, we found that the easiest way to do this is to make sure we started off with a small group. So that's we decided in general, we'll focus just on the EVs first. So those EV owners, that's about 20,000 vehicles on the system, less than 2% of the 1.2 million vehicles that we have, we'll give them an opt-in. So at this time, there's a registration fee that you must pay if you're an EV owner of 50 bucks, a flat rate. You pay that no matter what. Yeah. What we're saying is instead of paying the 50 bucks, if you wanna opt into the road research program, there's a potential you pay less. So we could go through using your mileage that we track on your safety inspection at the end of it. If your mileage is less than the, then you would have paid the 50 dollars, you pay whatever that is, that's small or not. But at the end of it, we're still gonna cap you. We're not gonna just make you pay 100 bucks if that's what it comes out to. There's gonna be a cap to it. We found that's the easiest way and not just for the public, but for us as well. Like I said, gas tax was easy. I just gotta sit back and collect the check. But now I gotta make sure I upgrade my systems to show that we can do this. Yeah, I'm sure that was one of the more stickier issues because obviously the EV owners got an incentive because of us attempting to stimulate movement towards non-fossil fuel vehicles. And obviously, there was good reason to do that. But at the same time, those vehicles are contributing to road degradation and they use the road. So the planners and many thought leaders and analyses had shown that it would be appropriate for all users to contribute, right? Absolutely. And this is why I really appreciate leadership on all of this part. I mean, you capture this better than most in these kinds of discussions. One of the things that I'd love EV owners to understand as well on top of that is we're gonna make it easier for them too. By the administration and the Congress had pushed in about four million per year for Hawaii to start pushing more electrification onto the system. We're gonna start off with seven new electric vehicle charging stations at seven different locations across the state with 150 kilowatt four-port chargers. And that's required by this federal bill that we have right now. The by force and infrastructure law. Awesome, awesome. And after that we'll start pushing out into different areas outside of the corridors that are required by the fence. So there's a bunch of money coming in not only from the formula funds but also from the discretionary funds that we're gonna capitalize on to ensure that EV owners in Hawaii have it very easy to find that area to charge. Well, as an EV owner, I really appreciate that. I know that many EV owners do not have the great flexibility or the great fortune to be able to charge at home. So having these public fast charge stations on the highways or right off the highways and to be kind of orchestrated by you is a huge, it's critical frankly. That infrastructure is difficult to build and at least the initial ones need some public assistance. I absolutely agree with you. The cool thing is HECO and KIUC that the actual companies are on board, fully on board fully understanding that they want people to charge during the daytime so they don't, we don't all blow up the network at night. Well, we had some questions. You already anticipated one which was the one about the EVs. But a fundamental question is now that you've essentially got the report on you've really had a, well, I guess the overall finding is that the road use charge is an appropriate thing and it ought to be pursued. Absolutely, absolutely. That's the recommendation we're making to all policymakers now, that it's feasible, it's prudent, we should move forward. Well, so then what's a realistic timeframe and how would you take the next steps? From our perspective, the next step would be introducing a bill in the next stage or next year to provide this opt-in program for EVs. That would be the first step and we would request that we get six months to start up on it to ensure that we're ready for the population, which I'm moving forward. That would be the first step for us. So Senator Gabbard, are you listening? So basically one of the things that we'll do and we now have reinstituted the Energy Policy Forum and the Legislative Briefing, you know, we should make this a key topic and we'll have the energy chairs and the transportation chairs be wonderful actually to have a draft. Absolutely, I would love that. And this year actually there was a bill in session that went in. We didn't drop it, which is really cool. One of the legislators did. So we supported it tremendously. It just wasn't the right time for- Well, you hadn't announced your findings. Exactly, exactly. So that's kind of important. Absolutely. But we couldn't go against it, right? Sure, sure. No, I mean, it was definitely in the right track. So that's really important. So I guess extremely important for most of these users, you know, obviously inspections are pretty easy to do today. You know, you go there, you know, if you have everything in pretty much in order and you got fluid and your wipers work and your tires aren't too bald, you know, you get approved pretty quickly. So how is this going to complicate the inspection process? Well, because the only information we need from this for road use charge will be how many miles you drove from the time you had your inspection last year to this. Which is pretty much what you're already doing, right? It's already in there, exactly. So that information just gets uploaded into two platforms, one on the highway safety side and one on the road use charge side. So it's a pretty simple conversion right now. That's it. So basically you're saying this in terms of, you know, typically when you're passing new policy, there's always these questions, particularly in the committees, you know, what would be the burden? You know, two taxpayers and so on. So basically there's no burden. No, not at all. For us, the only thing that reason that we have that 1% increase on everything is to ensure that we have the personnel necessary to track and to collect and to enforce. Those are the three big things. Yeah, so enforcement, what's that? I mean, just to make sure that people are reporting and reporting correctly, they're accurately. Reporting and paying. Those are the two follow-ups that we're gonna have. I see. Yeah, in those areas. Okay, so the payment will be based on, so there will be a billing. Yeah. So that's actually part of the answer as well. So obviously it won't change the inspection process, but there'll be an additional step, which is instead of this thing where, you know, you currently got gasoline and it was included in your gasoline bill. Like you said, you didn't have to do anything. Now you actually have to collect money. So are you gonna do that through a third party or is it something you're gonna build the capacity? Like you said, you have to have people to track it and so on. So there's two scenarios that we're looking at. One is to use our existing workforce to build that second platform for us to build out to the community, or we use something that's already available. We use the city and county who's already doing it for us. Oh. Through registration fees and way taxes. And I'm leaning more towards the latter because they're already set up for it. So you'll issue the report in June. People who listen to this show will know pretty much what's already happened. You know, what the findings are gonna be. And there'll be a push for legislation. Absolutely. The pushes for the legislation and then another six months, we should be up and running. That's great. That's great. I mean, since there has been such a thorough investigation of this and since it doesn't add any sort of burden on the taxpayer and the processes. One would think that this would be a pretty straightforward process. It's something hopeful of. Some complications come in when we look at the different levels of tax of gas tax. Federal, state, and county. So of course my push is gonna be to get the counties on board to go through road use discharge versus a gas tax. We'll get rid of that as well. Right. And then we'll be ready for the federal government to convert at some time. So hopefully we'll have it all collected and all at once. When I think it'll be very helpful for you to point out something that I didn't really think too deeply about was that, and actually didn't know to the extent that you explained that essentially this whole fuel tax issue is being subsidized by the federal government to make up shortfalls. Absolutely. So essentially this makes that whole process more self-sufficient and allows the taxpayer who's going to pay one way or the other essentially won't be providing subsidy to kind of filling gaps for a program that really wasn't working anymore. You're absolutely right. And that's where we want to get to. In general it's about the funding, the revenues to make sure that we can do what we need to. But it's also about the equity piece. Everybody should know when I pay a tax I know exactly where my money's going. And that's what the crux of this situation is. Oh, that's extraordinary. I mean, it's so wonderful to hear such a clear explanation and a good policy process. Any other, we've got a little over a minute left, minute and a half. Any other things that you want to bring to our attention that's going on that's sort of exciting within highways? Yeah, definitely. I mean, related to this energy sector, we want to make sure that we are cleaner in our operations daily, of course. So the money that's coming into our federal and to our state system, not only is ours for roads and bridges, but for cleaner roads and bridges. We're using better materials for our asphalt pavements to ensure that we don't have to pay for the next 20 to 25 years once we touch our road. We're using CO2 and train concrete to make sure we can put waste into our concrete products to make them better over time and capture some of those emissions that we want to get rid of. We want to make sure that we put waste into our AC roads as well. So we're running plastic pavement technologies to ensure we can take some of our trash and put it into the roadways to make it better as well. Although those different initiatives definitely cost a little bit more for us to do, but it's so much more beneficial to the environment to ensure that we're our Hawaii today, it's better and better, even with as we service everyone in the waiting to be. So that's where we're going to go. That's all standing. You know, our guest today, Ed Sniffin, deputy director of highways, kudos to you, your department, and of course, the Jade Boutet and the wonderful work that's going on at the Department of Transportation. You know, I can't thank you enough for taking the time out of your busy day to walk through this road use charge program and the exciting future for it, hopefully, later this year and in next legislative session. I hope you'll join, and I hope you'll have an opportunity to join us again. I would love to. Thanks so much for the invitation. This has been a blast. Okay, thanks so much. That's a closeout for Hawaii state of energy and good evening. Thank you so much for watching Think Tech Hawaii. If you like what we do, please like us and click the subscribe button on YouTube and the follow button on Vimeo. You can also follow us on Facebook, Instagram, Twitter and LinkedIn and donate to us at thinktechhawaii.com. Mahalo.