 Think Tech Hawaii, civil engagement lives here. I'm E. Marco Manglestorf, president of Provision Solar and director of Hawaii Island Energy Cooperative. And Jay Fidel, who is with us today, and sometimes Mina Merida, former chair of the Hawaii Public Utilities Commission, a long-time house rep from the beautiful Garden Isle in the Honolay area. And today I feel very, very honored and pleased whenever I can get my friend CEO of Hulu Energy and all around brilliant and good guy to join. It's always fun to get wonky with you, Marco. It's a good time. Many people, I think in our state, to really go down and to true the depths of wantom and that's something I will always appreciate with you, Ted. So I think worthwhile topics to talk about today and the first, because it continues to be in the news and figuratively and literally a hot topic is putting a geothermal venture, which is a geothermal power plant that's been operating three, although 80s in terms of number of parties looking into geothermal in different parts of the Big Island and finally went online after much protest at a heck of a run. And as of early May with 1 through 24, 26, I think we're up to now in terms of the eruption, which is ongoing, approaching the 88-day mark, which I believe was the last eruption run in 1960, I think it was. The power plant has been offline and I've been giving it some thought as a number of other people have in terms of the prospects for it coming back online and under what conditions. So with that, to get your take, Ted, in terms of what do you think should be done regarding PGV? Let's assume for the sake of assumptions that the plant is possible by helicopter, but let's say the cover with lava, if it remains section stops, what do you think should be our course regarding PGV? Well, I'll preface this by saying that neither you nor I are really the decision makers. There's really, to my understanding, two decision makers or mats got to decide what they're going to do. You know, they have an existing PPA and of course Helco with the PUC's oversight has to make a decision. It's really hard to opine while the lava is still flowing. You know, I was just looking last night at the river. There's literally a river going over the rise past that facility. Until that river stops flowing, it's really difficult to say what needs to be done. And frankly, because one of the challenges that Helco has always had is that they just have, there's a lot of energy on that grid. They've never been, you know, this is one of the reasons why your home island utility has been a little recalcitrant about adding more renewable resources because they really have an abundance of energy sources. So, and what that means is with PGV down, Hummelcoo Energy Partners and the other fossil plants have no problem filling in the gap. Now, that does mean even though there's still secure energy, I think that that's going to mean, you know, and time will tell, but I think that that's going to mean that your composite rates is going to go up on your island, at least for the time being, because, you know, the sources that are replacing that power plant in the immediate are fossil based, which means they're going to be more highly, more expensive. Ormatt, I'm sure, has insurance on the facility. I'm sure an option that is in the realm of what they can do, and I've read all that, you know, Mike has said that they're going to do in their level of commitment, and that's all understandable and commendable. Ormatt and PGV have been very committed to not just that facility, but to the island. They are really neighbors for the big island, and I think that they're a good corporate neighbor from everything I've seen from when I was a state energy administrator to including recent times. But there is, I think, an opportunity here if Ormatt decides that it's just time to go, it's just time to go, they have that ability. That option is there. They can declare that facility a total loss, take the insurance money, and exit the state if they so choose to do, I would think. And I've been digging a bit deeper myself into that we're done to the contract more megawatts worth of geothermal compared to this back all the way 32 years to 1986. And you mentioned that conceivably at any given time, say we're out of here, we'll cash out on the insurance, which I believe is up to $100 million. Having the document in front of me, the actual PPA contract at some point, perhaps as early as right now, if they so chose, because on performance on the part of Ormatt providing megawatts to Helco, again, that's speculation on my part. I can't imagine, that's in every PPA, I can't imagine that the time frame of non-performance varies, but that's boilerplate of every power purchase agreement, absolutely. Right, and to what extent there's been discussion at Helco and or HECO about that, it's probably premature because as we both know, the lava flow is continuing. But let me ask you, from one walk, to get a little bit digging over the weekend and a report that all the HECO companies, I believe KIUC has to do as well, is there essentially reporting to the commission what they're generating reserve margin as far as peak demand over the previous calendar year versus ability of the grid and IPPs and a pen and power producers ability to generate maximum amount of power. 34.6 megawatts, as noted in this particular document, was 45 percent. Well, that drops to 27 percent with the loss of PGV. And my wonky question to you and my wonky friend is, what margin, where has that line drawn in terms of enough rating reserve margin versus you start to kind of munch on your, this is not enough reserve, where's that kind of line, do you know? That's a great question and I have to confess, I don't know what the normal number is on, say, a continental grid versus an island grid. Island grids, you know, it's a, it would be interesting to see if there's a study done on how much excess generation beyond peak, right? That's really not, not just, it's beyond your annual peak, not just beyond your normal daily peak, right? So even 20, but it's one of the reasons I think that contributes to the high cost of electricity in Hawaii is the fact that we do carry a higher amount of excess. And really it's the n minus one minus one, right? If you, you want to have enough excess so that if you have a generator down for maintenance, you know, your largest generator down for maintenance and then your next largest generator has a failure that you still can meet low without rolling blackouts. And even on this island, I don't think you've really had it on your island as much where the utility will announce, maybe you correct me if I'm wrong, but on Oahu, we've had the utility say, hey, there's going to be brownouts today because simply, you know, AES, which is our largest generator is down for maintenance and another generator had a failure. So we have rolling brownouts, which is really a way for the utility just to kind of share the wealth, right? Share the patient. So, you know, 27% is how good of a number that is or not is really more dependent upon how chunky that existing firm generation is rather than what the percentage is. Right. And what that does say is that it's, you know, there's a trade-off. You, if you have bigger generators, you can, you know, at least notionally get more, get a lower price of energy out of it, but smaller generators are now becoming more competitive and smaller generators, especially like combustion turbine generators, are also a better fit to a renewable environment where you've got a lot of variability. Understood. So, and that 27% is, that twice, I'm sorry. So we'll be back with more provocative want to want questions in just a few minutes, just momentarily. Okay. For HECO, for the Allen Huron is 41%. I should say was 41% in 2017. So let me add to an geothermal and the avoided contract, the cost of oil. And it's been like that since the 80s. That's from the beginning. I'm sorry. That's, it's been like that from the beginning of the contract. It was at 30 megawatts avoided cost, which, you know, at the beginning of this, it seemed like a good idea, but clearly as, you know, geothermal should be a low cost stable cost source. And so the addition of that eight megawatts was under the condition that some of the original 30 would also be at a lower fixed cost. So that's why it moved to 25. Right. So that in 2011, the PPA was amended and paid for at avoided cost to 25 megawatts with an additional is a benefit to the ratepayers. So my provocative question to us that would be of greater benefit is unable to deliver. It's hard. It's what you set up. It's incomplete. So let me, I'm going to put myself in Jay's shoes for a moment. But I'll first stipulate, I am not Jay, nor am I Alan, nor am I the commission. So there's a lot of different ways people are going to think about this. But if I were in that position, I would sit down with Mike and the format leadership and I'll say, look, we want to drive down our base cost. You know, we have an opportunity here because you're going to be getting some insurance money to recapitalize this facility. Your technology that you've currently employed, you know, some of it's new, but a lot of it's dated. So, you know, there's an opportunity for a technology refresh and it's going to be based on insurance money. So how about we move more of that generation into a fixed lower rate? That's what I would negotiate is moving from 25 megawatts even to something lower, you know, maybe, you know, 10 megawatts at the avoided price of, you know, avoided cost, vice, a fixed rate. And the reason why I say that is because, and this is, you know, my opinion, if that plant gets shut down, then geothermal is gone from Hawaii's grids for probably a while, maybe a generation, maybe a really long time. I know there are people who would say, yay, can't we make that happen? I think that's a really foolish thing because as Richard Ha says, geothermal is, it's like we're sitting on a gold mine that can benefit the people of Hawaii. It could benefit the Hawaiian people and it just seems very foolhardy to just walk away from it. So I would not be inclined to pull that lever and make PGV go away. I would find a way to drive down the cost of energy using this as an opportunity to get geothermal at a lower price rather than an opportunity to kill geothermal. There will be those and I know there are those who you see this as an opportunity to kill geothermal and I don't wish them well in that pursuit. To make sure I'm understanding you correctly, Ted, what I'm hearing is you're advising, and I'll play my J, I'll channel J right now, if you were king, King Ted, you would go for a revised and amend approach to the existing power purchase agreement with the Pune geothermal venture and ORMAT. I would. Okay. Okay, great. Well let's move from the heat figuratively and literally of the East Rift Zone of the Big Island and move to the micro grid docket. What can you tell me about the micro grid docket which is not too long ago opened by the commission and why should we care? That's a great question and I think it's going to be fascinating to watch why we should care. Act 200 was signed by the governor last week and within a day the public utilities commission opened a docket looking for interveners by the 30th of July. People who want to put together or have a voice and put it together what a micro grid tariff might look like. The bill and the docket both really talked about just a few things. They talked about resilience and they talked about lowering costs and basically new structures for being able to bring on renewables to benefit the grid. Pete Rosig who is a spokesman for HECO, he admonished in his comments in an article about it said that we didn't want other rape payers to have to pay for it but I think that that's really a false construct because the reality is that people today legally have the ability to leave the grid and they're growing in their technology ability to leave the grid and so the real attractiveness to this from a policy perspective is that as these new technologies come on board as people deploy them to meet their needs a micro grid tariff is really a way to incentivize that new technology remaining on the grid and bringing grid capabilities so that you're really building the grid of the future rather than balkanizing your electricity load and taking it off the grid because they hit the grid becomes inhospitable for new technology coming on the grid. How's that? That's a great answer and I want to give a shout out to my friend Nicole Lohan representative of Nicole Lohan who represents the Kona side. This is a bill that she strongly reported if not originated. So, yes, no kudos to Nicole and where do you think let's say is the prime candidates to do some initial on the ground of a micro grid? I and the bill did mention always thank you the lab there in Kona. I really think that's the wrong construct because we don't need to have a pilot the technology is there we need to allow a thousand flowers to bloom this is not something that needs to be piloted it just needs to be approved and moved out because the technology as I said is is there it is it is available today what we really need to do is remove barriers for people to bring on that technology on the grid taking a piloting approach all that does is really create barriers for people to deploy it operationally so I don't like talking about this as a pilot. Well, little did I know that you were going to channel your Mao Zedong by mentioning the the the south let a thousand be correct no you are you are I I I wasn't thinking within that way but yes the bottom line is we need to allow the market to move forward how's that for a counterpoint to a Mao Zedong comparison yes we need to we need to unleash the market because the market is ready to move and we in Hawaii have a a a pendant for constraining the market to our detriment yeah and we need to not do that and that's actually the reason why this this bill in the stock it exists is to do just that if there is already a microgrid tariff it's called rule 14h yeah we have been connecting microgrids to the grid using rule 14h there is nothing if for microgrid tariff to make sense it has to be incentives for people to bring that to the grid because otherwise they're not going to do it continuing with this thread a little bit further and continue to be my usual mischievous and provocative self here Ted what do you see a progression or likelihood and or more and more grid defection in the near term let's say it was called the near term the next 18 to 36 months it's well grid defection I think is a bit of a misleading term I would I would use the term load defection because what will happen is people will deploy these systems and then they will have the ability to take a load off the grid temporarily when these systems are generating and not interconnect them to the grid that's that's a potential today and as long as that generation system doesn't connect to the grid then there's there's no reason there's no requirement for interconnection and you know the the switching of load is akin to turning on and off your water heater it's very much allowed you know and if the there are some utilities on the mainland that talk about having demand charges for residential units meaning that you pay more for you know you basically your costs get shifted to either a fixed cost or based on your peak load on the grid and I think that that's really a recipe for disaster that's not really going to get the if if folks are thinking or the commission is thinking that that's a solution I don't think that it's going to result in the fruit that they're thinking it will result in so really the right answer is let's build a grid together that all these assets can work together I don't know what do you think about that and just to be be clear for those those who don't know necessarily what a demand charge is as I understand it essentially you have utility rate pay or utility customer typically it's on the mid to large commercial size who are maintaining who are paying a notion that the utility has to maintain enough generating capacity to be able to meet the demand of of all its customers and if you extend that to to residential then it's the same principle right that you have essentially all who are paying a charge a fee to the utility company in order for the utility company to be be able to maintain an adequate amount of generation to meet all possible demand do I have it right yeah and well the way alpha and we're short on time the way I would finish this up just today or yesterday the federal government abandoned a case where they were trying to prosecute somebody who built a plastic gun for bypassing gun control laws and the federal government abandoned it because it simply was a dead end and so the the challenge with trying to legislate out innovation is that the only way you could do it is on a totalitarian basis totalitarian basis so the reality is it's no matter it's like designer drugs if you build something one way to try to achieve an outcome the market is going to innovate its way around that and so it's just a bad it's just a bad pathway to go down if you ever have a chance to become king king of energy ted i would be happy to offer my services uh all uh lord of the rings is uh your grimoire tongue i don't even know what to say to that well what can i say except it's been uh it's great as always talking to you ted one wonk to another uh thank you so much for coming into the studio thanks for one of these one of these days uh we will both be there together and my goodness what fun we'll have it'll be a great time i look forward to it so much and blessings to amina on her travels and jay thank you