 This is State Tech Hawaii, the immunity matters here. I told you we'd be back, and we're back, like MacArthur, huh? Yeah. Okay, I'm Jay Feindell. That's Mike Hamnet. We're co-chairs of this Hawaii, the state of clean energy program, which happens every Wednesday at 4 p.m., courtesy of the Hawaii Energy Policy Forum, of which Mike is the co-chair of that, too. Yeah, it was Sharon Morawaki who just retired. Yeah. And we're going to keep you involved. And we're going to keep you traveling far away. Yeah. Also running for office. Yes. Okay, and we're doing today something called the intersection of our energy and the law, courtesy of the William S. Richardson School of Law. And we entitled this on the tagline, will William S. Richardson please speak up? And you guys are going to speak up. We have three of you. I know there are only two of you now, but we have a third one, too, okay? So my immediate right is Natalie Morland, the student at the William S. Richardson School of Law. And at her left, did I say you were at my right? At my left was Natalie, and at her left is Gavin Tom. And at Mike Hamnet's extreme left is Nathaniel Muller, okay? In the wing. He'll come on the table shortly. Okay, they're all students. So welcome to the show, you guys. It's so nice to have you here. Thank you. Nice to be here. Yeah, great. Why don't you come back over and over again, you know? It's probably a legal experience, you know. I know. I mean, invite me. Okay, so we're going to find out what you guys have been studying at the intersection, the intersection between our energy and the law. Natalie, you're first. Okay, so we are three of nine, I believe, students in Richard Walgrove's clean energy law and policy class. So we've been studying all about the clean energy landscape in Hawaii in particular, and it's been fun. So yeah, we're here to talk about our final projects. So when you say studying, what do you mean? Is there a horn book on the subject? No, there isn't. So we have... They're writing one. They're writing it now, right? So we just have a syllabus, and Professor Walgrove puts all of...he organizes it by topic, and then he'll come up with just the materials that we use for the class. And so he'll give us lists of statutes, he'll give us white papers to read, he'll give us court cases, PUC decisions. Okay, and your topic, you came here today with something in mind, something you've been reading about and thinking about or writing about, what is that? So I'm talking about exit fees, and this is particularly in the context of customers who are exiting the grid or defecting from the grid. And exit fees are becoming a bigger issue because the cost of battery storage is declining, and the cost of electricity keeps rising, and it's becoming more economical for people to install solar plus battery storage and independent from the grid than it is to remain connected. Okay. Yeah, so I'm considering whether the PUC has the authority to impose exit fees and whether it should or should not. Let me add a fact to this porridge and see if Mike agrees with me. Last time I knew about this, if you wanted to merely have a holding pattern in your relationship with the utility and not use any energy from the utility and not sell them any energy, just sort of zero both ways, it would cost you as much as $18 a month. That was if you stayed connected to the grid and didn't use any electricity. So but if your system broke, if your batteries failed, if your solar cracked, I don't know what happens, you could call on the utility to supply you just as much as you need, and the cost of that insurance, so to speak, was roughly $18. That's right. Okay, we're throwing that in the barge. How does this affect your thinking, Natalie? Well, I think it all comes down to whether that $18 a month is something that the customer thinks is worth something. I think that if there were, for example, reconnection fees, then the $18 a month insurance policy might be not a bad idea. But yeah, I mean, it all just comes down to the costs and benefits of doing one or the other. And my thinking is that exit fees aren't going to be totally necessary because of those factors, because of the benefits that there are for staying connected to the grid. And for the benefits the utility will get from those customers. We made a bad decision when we first started with net metering and feed-in tariffs because they didn't really think about who was going to bear the cost of maintaining the wires. And that's really where they got caught. And there's this huge number of people that took the $18.75 a month and the utility said, hey, wait a minute, this is not covering our costs, which is why this whole question is back up in the air. And as you reduce the number of people out there who are in the grid, the utility taking a big loss on this $18, they can't maintain their infrastructure that way. So problem. OK, but the thing about the PUC, I mean, let me just react. Can I react? I'm reacting. Why not? Why doesn't the PUC have authority? I mean, one day the PUC may decide that it's a matter of policy. They want to impose or not impose whatever, you know, address the question. Maybe it would come up on the basis, for example, of an application, a docket application by the utility that they wanted exit fees in order to discourage and de-incentivize people who want to leave the grid. They don't want them leaving it. So the other PUC, is there any question, really, that the PUC could, they could impose a lot of tariffs and charges and all kinds of, look at your electric bill one of these days, there's all kinds of things. Why couldn't the PUC or the utility or combination of do that without legislative, you know, imprimatur? Well, so without legislative authority or without the specific language and the statute, and the PUC does have the authority to set reasonable rates and to impose these tariffs, but that's assuming that you're imposing these tariffs on a customer. And when a customer is exiting, they're basically saying, we are no longer a customer, you don't have the authority to impose this fee. So legally, I think the safest route, if exit fees were a good policy decision would be to go through it through the legislature and put a provision in the PUC statute authorizing that would be a safer way, wouldn't it? Otherwise, we're going to end up in court. Yeah, exactly. Kevin, you've heard Natalie, you know, talk about her thinking and research and her least preliminary conclusions. How much of what she said you agree with? Well, it's interesting. My particular paper is on the city's kind of introduction to renewable, renewable vehicles. So we're talking about clean energy vehicles. And I believe the mayors of all the islands met back, I think in January 2018 and express the resolution, at least the mayors of Maui and Honolulu did to go clean 100 percent energy efficient vehicles by 2035, I think 10 years before the people have come in. But it's interesting in that, sorry, it's interesting because if we look at Natalie's idea of exit fees and the city's idea of introducing all these renewable vehicles, what energy is going to be left if we don't have consumers in HECO maintaining that base load? So the buses, let's say, for introducing 500 new electric buses, that introduces up, I think, if my math is correct then it might not be, I'm in law school for a reason, but it introduces about 180 megawatts. You're just studying derivatives of those. It introduces about 180 megawatts of needed power to just for this new bus system that they may or may not introduce. So if we're having customers leave the grid and just be independent, who essentially will pay for that? So, I mean, other than the city and county, if everyone- Well, Mike and me will pay for it, we'll be after us and we'll have to write a check for it. Yeah. I mean, I'm only half joking. I mean, the taxpayers will have to pay for it. That's what happens. So what is legal about your analysis? It sounds like an economic analysis. True. Professor Walgrove gave us an interesting choice to write our papers on and I took maybe an unorthodox approach. I wanted to learn more about solar energy, so I'm looking at the placement of solar cells on vehicles in comparison to solar farms. Maybe from a procurement perspective under HRS103D and the paper centers around the efficiency of solar cells, essentially, if it's viable, if it's cost-effective. And then you place that under a regulatory framework that Hawaii has where the bidders are essentially low-balling sometimes. Procurement code. Procurement code. You end up with the lowest bidder who has the lowest efficiency, which may or may not be the best way to approach our goals, our ultimate goals of clean energy, 100 percent clean energy. So what would you throw out the procurement code? I threw out the procurement code in a nanosecond myself. I think Mike would agree with me on that. He won't say this after he retired yet. No, but RCH was exempt from the procurement code. Oh, God, that's... Now I understand everything. Yeah. Okay. So maybe there's a legal point there in the procurement code for dealing with government acquisition and all that. But I like to throw something your way also, as I did with Natalie. I don't know if you remember this, Mike, but years ago, when we started with Carl Friedman, and the notion was we're going to make an index of how much oil we're bringing into the state for transportation, for planes, for aircraft, for cars, all that, and for generation of electricity. And we want to develop an index, which we have been developing an index. And one of the participants in this very open-ended meeting was Henry Curtis, and he said, you guys are missing something. You have to calculate the amount of oil that is in furniture, there's plenty of oil in furniture. You know, and at the time, I said, what, what is this, what? But you know, since then, I began to think about it, and we were all down on fossil fuel, and it was a bad thing. But this morning, this morning before I came here, I was watching a video on YouTube, you know, because what happens is one follows the other, you know, it's almost involuntary. And it said, you know, do you realize that there's oil in everything, in petrochemistry? It's everything we do. And if we stopped having any oil, I mean, there would be no toothbrushes, no toothpaste, you know, everything would stop. It's not just the cars, it's everything. So are you factoring that in, Gavin? I mean, fact is that oil is not necessarily bad. We need oil for civilization. So, you know, and solar, you heard it here, I think that solar is not going to replace, it's not going to make a toothpaste for you, or a toothbrush, none of that. Yeah, I think it's an interesting point, Jay. When, like I was saying before, if we introduce a whole bunch of new battery-powered SA vehicles to the grid, that energy needs to come from somewhere. And we know while we're attempting to build tons of solar farms, maybe wind farms, maybe in the future, even tidal stuff, that energy in the meantime is going to come from petroleum, burning oil, burning coal. And it's the easiest, I mean, we took a visit to the waste energy plant. H-Power, huh? H-Power. And right next to it is the AES coal plant. And that produces, I believe, three times 180 megawatts in comparison. So when we introduce, let's say, 180 megawatts of bus battery, a need for power, either we're going to have to greatly increase our renewable energy source, or, again, we'd still be relying on fossil fuels. Are you going to go into energy law somehow? Well? What year are you guys in? I'm a third year. Third year? Oh, sorry, now it's getting serious. Oh, yeah. If you got this far, you must never go to commitment, eh? I guess. I can't stop now. I can't stop now. Gavin, how about you? Are you a third year also? Third year also. So it's a little too late. You want to get a job here? How do you want to work this angle? Well, I think clean energy is the future. Right now, unfortunately, I am not working in clean energy. My background's more in the courtroom experience litigation. They have energy in litigation, too. Yeah, that's true. Plenty. So I mean, I am always open to any future industries and clean energies. The other thing everybody seems to forget is we have to firm the intermittent power from solar and wind. And everybody's talking about, well, we could go 100% solar. OK, so then when the sun stops shining, then what? Or when the wind stops blowing. And it's still, unless we get a firm source of power, we're going to be stuck with petroleum as the firming power. But that's why I think this issue of exit fees are from customers exiting because they're installing solar plus battery storage is really interesting because the battery can take the solar energy that's produced during the day and export it at the times when the demand is highest. And so it can at least reduce the need to keep all of the oil plants. Right, no, no, I agree. But it's going to be a long time before we confirm the power with batteries entirely. Aspirations is not always materialized. No, and the aspirations cost money, too. Materialization costs more money, right? OK, so what did we learn here today, Mike? So far, we were about to go to our break, but I thought if you would summarize, and then we'll see if they agree with your summary. We've got law students doing interesting stuff on energy. As far as their training, you know? And the exit fee idea is an interesting one. They're going to have, somehow the PUC and the power companies are going to have to deal with this keeping people on the grid somehow. And I think the notion of very high reconnection fees is probably legally the best way to go because we don't need any legislation to do that. PUC can give them the authority. People will see twice, won't they? I told you about that reporter for our civil beef who went off into the woods and separated from the grid, came back and made a speech. If I wrote an article, actually, in civil beef about it, and he said, I'll never do that. So the market, the market and the experience that he had, which will be repeated, which is being repeated, that will affect people's conduct. But what I appreciate about both of you guys is that you're looking into how people conduct themselves, how they think about this because energy is a moving target. And ultimately, it's an expression of the community because that's people either do it or don't do it. And we have to see where they're going without our incentives or disincentives. We also have to see what kind of incentives or disincentives we need to impose on them legally to have them, us, all of us, go the right direction. Well, and to keep social policy. And to keep the energy system working. I mean, that's. That too. Before we go to the break, I just want to tell you a story. Sharon Moriwaki and I are in Linai. And Linai, they didn't want the windmills there. And they ultimately stopped them. So we were talking to a bunch of high school kids there. And I said to them, this is all on film. I said to this young woman, I said, if you don't have wind or fossil fuel, how and only have, I said, what do you use? She said, we would like to use solar for everything. I said, but solar goes off at night, right? What are you going to do when the sun says? And she says, no problem. We'll go to sleep early. That'll solve it. This only works on the neighbor islands. Right. OK, Natalie, Gavin, thank you for coming down. Thank you guys, Sharon Moriwaki. We're going to take a short break. And then we're going to talk to Nathaniel. All right, good. This is Think Tech Hawaii, raising public awareness. Hello, everyone. I'm DeSoto Brown, the co-host of Human Humane Architecture, which is seen on Think Tech Hawaii every other Tuesday at 4 PM. And with the show's host, Martin Desbang, we discuss architecture here in the Hawaiian Islands and how it not only affects the way we live, but other aspects of our life, not only here in Hawaii, but internationally as well. So join us for Human Humane Architecture every other Tuesday at 4 PM on Think Tech Hawaii. Hi, I'm Ethan Allen, host of Eligible Science on Think Tech Hawaii. Every Friday afternoon at 2 PM, I hope you'll join me for Eligible Science, where we'll dig into science, dig into the meat of science, dig into the joy and delight of science. We'll discover why science is indeed fun, why science is interesting, why people should care about science, and care about the research that's being done out there. It's all great. It's all entertaining. It's all educational. So I hope to join me for Eligible Science. We're back. I'm Jay Fiedel. That's Mike Hamlin over there. Mike, say hi. Hi, guys. There it is. OK. And then we have Nathaniel Muller. Now we just had Natalie Moorland and Gavin Tom. And now we have Nathaniel Muller. What do you guys have in common again? Oh, we are all lucky enough to be taking Richard Wallsboro's class at the William S. Richardson School of Law. The class course is titled Clean Energy Law and Policy. And he is giving us a myriad of tools in order to properly address the future of our energy economy in the state of Hawaii. Now, he's got a lot of experience in that. You knew. Oh, he is firsthand. He's one of the very sharp little music with every shot. So what did you think of the first half? Both of them are pushing, excuse me, Ms. Moorland and Mr. Tom, are pushing ideas that are. I thought it was Gavin Tom. You're right. Mr. Gavin Tom. Natalie, never mind. Are pushing forward ideas that are. And this is an issue that we are all touching on. They are pieces of a whole because we're trying to rapidly change our entire energy infrastructure, our energy economy over a short period of time. And both of you brought up the issue before of reliability. That is the end goal for this. And so with regards to exit fees, how reliable are those individuals' own energy needs? Are they being met? And with regards to solar panels being placed on vehicles, the next issue is how much energy are they actually going to be taking off the grid? And how much energy could they actually be putting back into the grid? So these are issues that not only compound and aid in the movement towards a new energy future for the state of Hawaii, but also need to be addressed with the potential shortfalls that they can have as well, just like the issue that I'm going to be trying to present as well. Kay, I just want to make a statement and see if Mike agrees with that. Go ahead. You know, the whole thing about energy policy is not so much the policy, but the acceptance of the policy by the stakeholders in the community. And you and I, in our old age, we have seen policy points that could be good and the community rejected. We have seen policy points that could be bad. The community loved it. And so the question is educating the public and the legislature and the courts. And for that matter, to some extent, the PUC as well on whether the policy is good or bad. And you could make so many mistakes, and we will. We have done. We have. So you could find great social and energy technological policy, but at the end of the day, it's like litigation. You have to convince people, all kinds of people. Otherwise, your policy is on the back shelf. Real nice policy right there on the back shelf, yeah. So what's your program about? It's not really a program. It is actually more of a fun fact. And the fun fact starts with the number. Every year it has been estimated by the EIA, the Energy Information Administration, a nonpartisan branch of the federal government, that the state of Hawaii sheds off 6.7% of our annual energy production. Simply be a transmission. That's an electric energy. Yes, literally through the lines. If you guys have ever had a chance to, and I'm sure when you guys are walking along the beach or underneath any of these exposed lines that power our buildings, you can every now and then hear the buzzing. Oh yeah. That is literal heat energy that is being lost. And even though it might only be 6.7% in the grand scheme of things, that actually might be a large percentage of energy that we are actually missing out on. The state of Hawaii produces close to 10 million megawatt hours of energy every year. You calculate that up to 6.7% every year. That ends up to be also an EIA estimate of over 492,000 megawatts. If you are applying the 23 cents per kilowatt hour that a resident of the state of Hawaii pays in their energy, that is almost $117 million, literally lost to the air. The next step that we have to address is who is supposed to pay for these sorts of things? And as we've seen the fuel costs, it passes on over. These are fun facts. They're fun facts, okay. As we've seen the fuel costs, it is completely fine to pass that on to the consumer. But the consumer shouldn't be happy with this. Even though the energy sector in Hawaii as a whole nears almost $2 billion, $117 million is still a good chunk of change. And again, if we're getting to the transition period, that $117 million, every single dollar spent needs to be saved in order to successfully get to the new energy future that we're building up. The point is that by allowing these losses to continue to occur, we are effectively incentivizing utilities and energy providers to shift the costs back to the consumers and therefore succumb to it. So how should they conduct themselves differently? And that's a great question. Actually, recently the PUC just agreed and accepted the, excuse me, I know I have a lot of notes. It's the- Can I take the notes? You're more than welcome to. It is the- This could help me. It won't help you, but it'll help you too. It was an August 2017 grid modernization strategy that was put forward by HIKO. It has just recently been approved by the PUC. And actually within that, they are looking at piggybacking strategies in order to make sure that they are mitigating energy loss. Such things as actual real-time measurement systems of electricity as it is flowing through the lines. And then- Suppose I find out about that 6% of loss, right? What do we do about it? As an individual or as a- As a utility company. I mean, the person who has the power, that's a pun. The power to do something over it. It's very difficult, right? Because we're actually- Give me an example of how I might alleviate the loss. So this comes back to the simple rules of physics behind it. We're talking about ohmic loss. We're talking about corona effects. And again, if I'm coming here as someone who's supposed to be looking at the law, it's very difficult for me to be coming and talking about the science of it. I'm not a physics guy. I'm supposed to be looking at law and policy behind it. This reminds me of the CAFE standards. You know, where the federal authorities say you must make a car that will give you 50 miles a gallon on a gas. You must do that. Or you must make a fleet that gives you an average of 50 bucks a gallon. That's what- Whatever. 50 miles a gallon. However they frame it. Well, you could have something here, too, the sense of the utility. We're gonna watch you guys. And we don't want a 6% loss. Then you have to find a way to give us a 3% loss. Is this your paper? Is this your research? In the end, the outcome, and this is something that I will hope to propose and prove through the fun world of shifting facts and information of saying that it should, those costs should be shifted back into the PUC or the energy provider themselves. But with regards to your question before, how do we- How do we- What do we actually tell the PUC? What do we actually tell these power companies to do? And as of right now, it is most simply putting in new lines. The way that for a comparison, South Dakota and Wyoming have only around 2% energy loss via transmission. But it's because the majority of their energy is actually transported through over 700, it is a 756 kilovolt line, the very big towers. The higher the voltage of the line, the less loss. But of course, this system that we have in place is still fairly old, and so the smaller the voltage, the more distributed these things are. Okay, so the idea would be- The more loss there is. You don't lay this, well, you lay this on the utility. You say, you're the utility, no, we want you to put in new lines and spend the money in order to do that. The utility says, that's fine, but we're gonna build that into our rates because we're a utility. And we come to you every so often with a rate increase request, as they have done recently. And it's gonna cost us $500 million to do Oahu. So can you please give us a very substantial rate increase? Well, actually the grid modernization strategy that was agreed on by the PUC was a six-year plan costing over $205 million. Part of their strategy is to mitigate these losses through line loss and transmission loss. So $200 million. So this is already happening. It is already happening, but of course they are shifting those costs to the consumers. Sure, and you look at the big island and their line losses over there are huge because you're taking relatively small populations and you're taking a very big island to get the electricity around. And now I pay 34 cents a kilowatt hour over on the big island. So you're talking about a change in the utility law because this is a different calculation of rates. If you're saying you gotta eat it, you guys, you know, and instead of giving any dividends to your stockholders, who are gonna sell that stock when the word gets out in this model? Instead of giving dividends, you eat it. In fact, maybe you can make a capital call, get the extra money, make a loan, get the extra money because we're not gonna make the tax payers, rate payers pay for it. Very true. Is that what you're saying? Yeah, it's... But again, this goes back to just how the actual facts, how capital is gained through these systems as it is today. There's really not that much incentive for the utilities or the energy producers to actually eat these costs. They can easily shift it on over to the consumers. But part of this, again, goes back to the actual lines themselves, the actual transmission lines themselves. As one of the... As China is actually going through and doing, I believe it's called the Belt and Road. One Belt, one Road. Yes. It's also known as the New Silk Road. One of the ideas that they're putting forward is a tarot-watt line that is going from one side of China to the other. Something similar that we've been talking about and has come up in many HECO issues repeatedly is the intra-island connection. Now, whether that is, again, politically feasible, socially feasible, whether that will actually happen. Technically or economically feasible, too. It is economically feasible, but it's the same question. It's actually ready to do it. It's going to pay for it. Mike, you got some spare change. Sure. Okay, Mike, we're out of time, okay? And I would like to get your... You can ask some cross-examination questions of Nathaniel. He's ready. I can tell you he's ready. And or maybe you should do that and then summarize. Which way is the wind blowing at the PUC about this? That's a great question. Obviously, the PUC just agreed to $205 million over the next six years for a grid modernization. So obviously, the PUC is all for it. But again, it's how far are we willing to take it, whether these means are edible. Yeah, right, exactly. We got new commissioners who are into policy, who are from UH, not far from your law school. Matter of fact, one from HNEI and then another that has to be confirmed from HNEI. Yeah, just Malcolm from us. Yeah, they're into energy policy and social policy and all that. And they can make these calculations you're talking about. And they're up to this kind of issue. So maybe we'll see some real change here. Who knows? I'm excited for it. But it'd be interesting to see how they're going to deal with the line-loss issue. I mean, modernization of the grid is probably far overdue. And as they move toward distributed generation is another strategy that could be used to reduce the line-loss. Actually, that comes along with a lot of fear as well, because of the varying amount of voltage that can be entered and then lost into the system. Because if it is individual parties that are actually putting more energy into the system, one of the parts of the grid modernization strategy is actually real-time monitoring of that so they can properly calculate it. But then we get into death spirals, whether people just immediately jump ship. And whether, as was spoken before in the previous segment, whether this energy regime, as we know today, is still a feasible and still has enough money to keep it running. Yeah, because if you raise rates too high, not to be talking about this, if you raise rates too high, people are going to do the bailout thing. They're going to separate. And in that case, that's a spiral down, because then the utility has less money coming in, and they have to find another way to make it up. So we've really covered some interesting issues here today. Their policy, their energy policy, and their law policy. This is an interesting class. I might sign up. So, you know. You want to sign them up? Your registration opens in two weeks. Yeah, registration opens. Mike, can you summarize this and sort of close the show, could you? Well, I think that the law school is, I think that the class that they're taking is an interesting class. And at about time, we've got some other folks involved in discussions about the whole energy issue. And I think the law side of it is very interesting, especially with what we've gone through with the changes in the feed-in tariff and the net metering and all that. And I'm just waiting for the dust to settle. And I'm not sure. These guys are going to be watching the dust settle. Yeah, they'll be determining what happens as we get to 2040, 2045. So at the end of the day, I'm talking to all three of you, at the end of the day, assuming you stay in Hawaii, you'll stay in Hawaii, right? Okay, I heard that. Just speak under Ossil. You guys will be instrumental in the last chapters of this huge initiative that we have seen begin. I mean, Mike was there when it just began, but you're going to see the end of it. Isn't that exciting? And you'll have a lot more to say than he and I then. For sure. I do love a happy ending in movies or otherwise. Okay, well, we're working on that. We're working on that. A happy ending here for the intersection of our energy and the law with my co-host and co-chair of the Hawaii Energy Policy Forum, Mike Hamlet with Gavin Tom with Natalie Moreland and with Nathaniel Muller. Thank you very much. And thank you to Richard Wallscrew for making this all happen. And to Avi Soyd for making the law school what it is today. Very nice. Thank you. And thank you guys too. Thanks, Kevin. Aloha.