 Connecting Hawaii Business on Think Tech Hawaii. My name is Kathleen Lee and I am the host of this program. You can catch all of our Think Tech Hawaii shows on ThinkTechHawaii.com as well as on Think Tech Hawaii's Facebook and a YouTube channel. Today we have Leo Ascension, which is who is the chairman of the White Public Utilities Commission on our show to talk about renewable energy and grids. Leo, welcome to the show. Thanks Kathleen. Pleasure to be here. I appreciate you being here since I know I mentioned to you that I've seen you on another Think Tech Hawaii show. We love you so much that we have to ask you to come back on various iterations of Think Tech Hawaii shows. So thank you again Leo. If you could introduce yourself to our viewers, we know you are the chair of the Public Utilities Commission, but you can go into more detail about your background. Yeah. I became a commissioner about three years ago and was named as the chair just this past July. July 1st was my first day as the chair. Basically I'm the de facto head of the agency, although we do a lot of our administrative side of the house is done by an executive officer that we have on staff, but we also work as a team. We have three commissioners in total and we work as a team to, for every facet of administering our agency as well as the decision making. Background, I'm basically a planner, an urban planner. That's my background, but I have worked in different state agencies throughout my 30 year career as a planner. Also I had experience working at Hawaiian Electric, so I know the electric side as well, but then ended up here at the PEC appointed by Governor Ige to make sure that we regulate a lot more people than the electricity sector, so I'm responsible to make sure that we're always keeping those other regulated entities in mind as well as doing the work on the electricity side. And you launched into my second question, Leo, so the public utilities commission regulates public utility companies in Hawaii. I know you already talked about electric companies. What else does that include? So we also regulate water carriers, which includes young brothers and a very small shipping company, they both ship property and people. It's called Honohaike. They run between Maui and Lanai, so we regulate those other water carriers. We also regulate motor carriers, which is usually your tour buses, your moving companies, things of that nature, doesn't include Uber, doesn't include taxis. It's more the larger companies that kind. So I think Robert's Hawaii, but even if you see a small mom and pop limo service, we also regulate them. The other two areas that we regulate is private water and wastewater systems. So this is not the municipal system, not the border water supply, but the small private ones that might be in a subdivision somewhere. So we regulate those companies. Altogether, there's about 1600 plus entities that we regulate. Sorry, Leo, I didn't mean to interrupt you, but you were talking about water. So what are some examples of those places just so people have an idea? So one is where I live out in East Honolulu. We have Hawaii American Water that provides sewer or the wastewater system in East Honolulu. So we would regulate that company. Hawaii American Water also has different water and wastewater systems throughout the state. They're small. It might only service 100 to 1,000 people. So they're not on the county system or the municipal system. Got it. And then you mentioned the border water supply as well. I think you're right. Some people might think that they are the entity that regulates some of those that you just mentioned. So what is the difference between the PUC and the BWS? Well, the water company, those are the municipal systems. So they govern themselves. So we would govern everyone else that's not on the municipal. So on any island, there's a water supply department and there's also sewer or wastewater provision systems that are owned by the by government, by city. And so we don't regulate those folks. Got it. And thank you for making that clarification. Let's launch into the conversation on renewable energy. So I know you you're fairly passionate about that. And we there is the Hawaii Clean Energy Initiative that has the goal of transforming Hawaii's economy so that 95% of our energy comes from clean energy. What are some ways that you've seen or maybe what initiatives are the PUC involved in to be part of that movement towards clean energy by 2030, which is coming up pretty soon. Okay. Well, that has been updated, right? The goal is now 100% of generation in the islands have to come from renewable energy sources. And that needs to be done by 2045. Right. On top of that, there is now a net of carbon net zero, right, goal by 2045. So that's, that's the parameters that we're working on now. And, you know, renewable energy is everything from the typical solar wind that everyone knows, but it also includes things like biogas, biomass, right, biofuels. It also includes water. If it's in, you know, wave technology or ocean technology also includes ocean thermal conversion. So there's small, right, there's a, there's a pilot project happening way back when, right, at, at the host park in Kona, the energy lab there. And, you know, but now there's the smaller scale OTECH systems that are being tested also at the park, right? So it's kind of scaled down version that could probably be anywhere. Also includes a recently hydrogen, right? And if, if the hydrogen is produced from renewable resources and that counts as towards, right, the 100% RPS goal, the renewable portfolio standard goal. So, you know, right now, if you're to look at the percentages statewide, we're on track to actually meet the 2040 threshold. And the 2040 threshold is 40% of our generation is coming from renewable resources. We're actually, 2020 was the 30% threshold. They were well, and I think all of the utilities, electric utilities on the island was somewhere between 32 and 35%. So they are trending ahead of the threshold years. The challenge will be in the later years, right? When what I call the low hanging fruit renewable resources will already been, you know, fully matured, fully pretty much, you know, that's going to be the norm. But then we still need more of it, right? So I can, I can point to Kauai with Kauai Island utility corporation cooperative, right? They, they invested in solar 20 years ago, right? And right now, right, what they're at, they're at 70% renewable for the island, right? Their generation comes from 70%. They're now doing the next kind of next level or the next harder project of a pump, pump storage hydro. And that is very a complex project, it's the expensive project. But then if they get there, if they get that project in, you know, they'll now go from 70 to somewhere around 85, 87% renewable generation, right? So that's the example. So, right, they're kind of like the poster child. At the same time, they are a cooperative, right? They take a little bit more agile than, say, Hawaiian electric, right? Who is a shareholder own, right? So, yeah. So Leo delvented out further, because I did have a question from someone who brought up Kauai as well. How do co-ops work when it comes to utilities such as that? Well, like I said, right, the cooperative is just its ownership in, right? That's the main thing, right? So every resident of the island of Kauai and every business that gets energy from the co-op, they are the members, right? They're not called ratepayers, they're the members, right? And, right, they have a board, just like every other part. And the board makes decisions on how, right, the utility would be run. They entrust that in a CEO to run it. And then they have a full, you know, staff, just like any other utility. It's just, right, there's no shareholder, right, per se. The thing about a co-op, right? And prior to the current co-op, there was actually an entity called Kauai Electric, right? Which was a small investor-owned utility, right? Whenever there's a co-op that is proposed, you can't just come in. You need to have both sides, right? The willing buyer and the willing seller. So in the case of Kauai, some years ago, more than 25 years ago, there was a willing seller in Kauai Electric. And then there was a willing buyer in the cooperative, right, to come in. But the main thing is, I think, right, you see cooperatives on, like, you know, more rural areas, if you will, right? If you're on the mainland, it's more rural areas. Whereas, right, the traditional investor-owned, right, kind of services a bigger area, right, has more, more, more customers in the light, right? So that's basically the main difference, right? They, you know, they, you know, KIUC runs their utility, you know, just like how HECO would, right, on each of the different islands. So it's really, you know, their makeup allows them to be more agile, right? And they can make, right, investments, they make prudent investments, right? And because it's at a smaller scale, that prudent investment right, is more, is more defined, and then you know what results you're going to get. So how would, how does that affect your consumers? Two-part question, how does it affect consumers as far as what they pay for when it comes to utilities? And is that, is whatever is going on in Kauai, is that possible? Or is that in the works for other islands as well? Yeah, so what, Kauai, okay, before Kauai invested in solar, they actually had the highest rates of any of the islands, right, electricity rates. And then, right, it did take time, in fact, when they put in the first solar farm, the rates actually spiked upwards, right, for a short period. And that's rightly so because, right, there is cost in, right, putting in a solar farm, right? And who has to pay for it, it's the members of the co-op, right? But over time, you would see, right, a reduction, right, in your rates. So fast forward 20 years, in fact, I think this past April or May, there were a couple of days where the rate, the daily rate for KAUC was actually lower than the rate on Oahu, right? So it did take 20 years, but, right, you need to make that investment first, right? And it takes time to cut now could it happen on the other islands? Yes, very much so, right? And I think HIKO, right, for Maui Electric, for Hawaii Electric and Light, and Hawaiian Electric here on Oahu, they are doing that, right? They need to, all right, now, right, they got a bigger base. They have different types of surcharges that, you know, sometimes KAUC does not have. But at the same time, like those surcharges, I'll take fuel, right, the fuel surcharge that is a pass through to every customer in HIKO's jurisdiction, right? We all pay it, right? I pay it, you pay it, in your electric bill. And it's a direct pass through, right? Whatever HIKO, whenever they buy the fuel, whatever that price is, right, that entire price gets passed through to the customer, to pay, right? HIKO has no markup or anything like that on that fuel. So the answer to reduce the amount of fuel used is to get more renewable resources on the system, right? Because that's what you're displacing. Now, you might not get totally to zero use of fossil fuels because there's always going to be some fossil generation on standby just in case, right? We have 40 days of, you know, rain and or no wind days, right? That's not generating to be stored in batteries. So there's that backup, if you will. But the closer we can get fuel use down to zero, which means they don't have to buy that much fuel, which means, right, the cost that's passed through to the consumer is lowered, right? So now I will say that for Oahu, I understand, right, that we have limited amount of space. There's competing interests for that, you know, open space, right? Be it conservation, be it for agriculture, be it for a formal housing, be it for more commercial area, etc., right? And so that's one area where I think, you know, the state and the counties where government really needs to look at what is the priority, right? And to me, right, we have the goals that I mentioned, right, of 100 percent renewable generation is in law, right? So, but so is the provision of a formal housing, so is the provision, right? We do want to double our egg production, right? How do we, how do we make it all work together? Basically, right, we need more renewable energy resources and projects to come online, because that's what's going to drive less fossil fuel use, which means HECO needs to buy less, which means the costs of that fuel, right, the pass through is less, right? Because it's all equated to how much fuel HECO currently buys, right? They're also subject to, right, global markets, right? You saw a spike in, we saw a spike in just your gasoline that you use for your vehicle, right? HECO was not immune to that, right? It's still fossil fuel, so they saw the spike in prices, global prices as well, so when you see that, it results in your bill going up, right? And there is like about a two to three month lag, right? HECO has to buy it, whatever they buy today is going to actually be used in two months, right? Because it needs to get here, it needs to go to the refinery, right? And et cetera, et cetera, until HECO can actually use it, right? So if today's price, you know, I don't look at the prices every day, but say the price was $100 today, right? When HECO actually uses that, that's the price that's being passed through, right, to consumers. So today's bill, if you got your bill, right, this month and you saw a spike, you can go back two to three months, right, and look at where fuel prices were, right, on the market, on the global market, and that's probably why, right? Two to three months ago is when, right, everything started spiking. In fact, it started spiking, right, right when Russia invaded Ukraine, right, because that's part of the global fuel supply, right? So that's basically how it works. I mean, we need more renewables on the project, and that points to how did Kauai do it, right? How did they prudently do it? And, you know, that could be a model for Hawaiian Electric. Of course, Hawaiian Electric has more assets, aging infrastructure as well. So some of that needs to be updated as well, right? We can just jump into kind, so there's this, you know, entire plan that the utility has, I'm talking Hiko, right, on how are we going to really achieve within their jurisdiction, their islands that they service, how did they get to 100% renewable generation? Thank you, and I appreciate you tying everything into a global perspective as well. I think sometimes we miss that, right, because we're so focused on local issues. But on that note, let's talk about the grid. When people say, okay, someone's going off the grid, what is the grid? The grid is everything from the power plan to the distribution, or what we call TND, transmission and distribution, right? From the power plan, it gets transmitted out to, right, local areas. And then it's distributed down to the customer. That is the grid in its entirety, right? So when you talk about going off the grid, right, you're taking, you know, if give you an example, if a condo somehow wanted to go off the grid, let's make it very simple. When a customer, one single family home wants to go off the grid, means they're going to produce their own power, they're going to store their own power and use their own power and not rely on any of the electric utility, right? Now, some people might be comfortable with that. Some people might say, you know, I can only have so many solar panels or, right, I can't put up a wind turbine, right? I can only have space for so much battery. So I do need backup, right, or standby, which is back to the utility. So in a way, right, unless you're truly going to be 100% off the grid, more than likely you're going to be more like 95% off the grid, right? Because you still need a wide electric to be there in case of that day of 40 days of rain, right? And you don't get as much sun and solar production in generation. So, right, there's this piece that everyone forgets when you say going off the grid. But getting back to your question, right, the grid is the entire from power plant to, right, the wires in someone's house. You mentioned, and I'm glad you have a smaller example. What about with larger examples? Like landowners taking, you know, themselves off the grid and in the process taking like larger businesses, hotels, or what have you off the grid? How would something like that affect the local economy and the local community? Yeah, so on that scale, right, you start to take off, you know, a good amount of the load, right, that's on a grid. So now what you're left with is one, the utility who's generating, say it's a power plant, right? They won't have to provide that much load, right? You don't have to produce as much energy because somebody's off the grid now, right? But then that doesn't mean that it just would cut, that may mean that the generators that they have are now running inefficiently, right? Because they were sized to provide, right? Let's use some numbers, 100 megawatts, right? And you take off 30 megawatts, you know, off the grid, right? So now your generator that was designed to provide 100 megawatts only needs to produce 70, but that means you're running that generator very inefficiently, right? Because generators are made to run at some kind of optimal efficient range, right? So taking that much load off might mean that now, and you would still have to produce that, that's 70 percent, right? 70 megawatts of load. Someone still needs to pay for it, and it's going to be the people that are still on the grid, right? The person off the grid is going to say, I don't need to pay any bills, anything from, say, the utility. So that means everyone else who's left needs to make up, right, that cost, right? So that's the impact, right? The impact would be to businesses, to residents in the area or in the jurisdiction where, right, this utility operates would be left footing the bill, right? And that's probably the major economic impact, right, on somebody on a large scale going off the grid. Leo, I wish we had an hour show, but because you're delving into more questions for me, but I know you do have other obligations to thank you again for the work that you do on the PUC. Is there anything else that you would like to add? No, I think, you know, beyond the lookout, right, there's a lot of different programs. I know recently, right, you know, bills have been going up because mostly of the fuel surcharge, you know, I am assured that we, and this is more for Wahoo, right? There's a number of projects to come online. They were all impacted by supply chain issues and the like. We're seeing those developers now kind of sort themselves out and starting to get more parts. We're starting to see the projects start up again, right? We just had, for example, on a Wahoo, right, Mililani Solar came online. They're actually providing 39 megawatts of power, which helps the utility. There's another one coming online later, hopefully by the end of this year, to provide another 40 plus megawatts, and then we have about eight more projects coming online in 2023 and 2024, right? And, you know, kind of like back of the envelope calculations, show that if those total of, you know, nine or 10 projects are online, bills can be chopped in half from what they are today. So in other words, there was a projected $15 increase, right? It would now be $7. So if you do the simple math, you probably need another eight to 10 more projects, right, to really drive the bill down, right, to what it was, say, pre-pandemic, right? So that's what it's going to take. And then if you do that, right, you lower, again, right, you lower the fuel costs, right? You lower the surcharge that gets passed on, right? And that should impact your bill. And we get a little bit closer to 100% renewable energy goals, right? So I think that's the thing that, you know, that the public should know about, that that's why we keep doing what we're doing, right? We're going to have another RFP for renewable energy sources on Oahu, the big island, and on Maui, right? So that's coming. And so, right, that's the framework that Hawaiian Electric uses to get more projects online, right? So be on the lookout for that, right? If you're a developer, right, that's going to come out. And I can't give you a timeframe on when it's going to come out, but I would say soon. Thank you, Leo. Appreciate that. Let's pull up the website. If people would like to learn more about you or the Hawaii Public Utilities Commission, where can they go? So it's at puc.hawaii.gov. And you see the front page there. A lot of the front page is about, you know, the latest happenings or dockets that the commission is working on. But if you scroll through the top, there's like an about us tab or button, and then you can click on that. And you can find out more about the commission, who we regulate, find out who the commissioners are, and all of that. Wonderful. And again, yeah, go ahead, Leo. Your final thoughts. The other part is that on the website, we do have, right, what we call our document management system. And that is every document that is filed with the commission and in the certain dockets, right? So it would be key if you know what the docket number is, but you can do a quick search on it as well, right? And then it will give you a list that you can see which one, your particular card. But then, right, it has every document there because it's a, it becomes a public document when they file it with us. That's actually really good to know and something I did not know prior to this. So thank you, Leo. I appreciate you being on the show today. Again, this was Leo Aracension, Chairman of the Hawaii Public Utilities Commission. And thank you again for coming on Connect with Hawaii Business. We also want to thank Jay Fidel and the entire staff at Think Tech Hawaii for making shows like this possible. Today, we had Eric and Haley who helped us out. So until the next time, Aloha. 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.