 Okay, we're back. We're live. Here it is. I'm given Monday at noon with Marco and me talking about energy in Hawaii. Welcome back to the show, Marco. It's always good to have you on. Another enchanted Monday with my dear friend Jay Fidel. Thank you, Jake. Now that we've got that out of the way. Well, it's funny to talk about. Let's talk at least to some extent about the Maui Energy Conference which filled up last week. And I wasn't there and you weren't there for that matter, but a lot of people there and they were networking up a storm. But you know, what is the Maui Energy Conference? Anyway, it's put on by MEDB in Maui and what is it intended to achieve? I think it's just Maui's annual effort to bring together some of the energy stakeholders, the number of the energy stakeholders from the state, across the state, and they network and they hobnob and they meet in the foyer and they have meals afterwards and they attend panel discussions. Typically, Hawaiian Electric has a pretty strong showing there. I know Alan Oshima was there, President of HECO and Chairman or President of HCI, Connie Lauer was there. I saw the pictures that Henry Curtis was trying to show on his blog. And I think it just kind of looks at various topics du jour from the energy perspective and kind of gives a chance of people to take the temperature of what's hot and what's not. I know there was some discussion over the possibility of nuclear energy in Hawaii. I think that was more kind of an attempt to generate some heat. No pun intended. But I mean nuclear in this state I think is not only is it against, there's a part of the Hawaii state constitution that thou shalt not go nuclear, but I mean just the practicalities of nuclear in our state make it a fantasy and then some that you even spend much time thinking about it. Yeah, it's interesting they talked about it. There are people who do support that. I agree with you though, it's not going to happen. And the provision back in you know the early days in the Constitution was for the proposition that in order to permit any nuclear energy you had to have a some super vote. I think it was three quarters vote of the state legislature. It was you know hard to get that. So it's not and the culture point has not changed at all. Nobody's going to buy into that. And actually there's no good reason to buy into it now. But you know I always wonder you know about these neighbor island conferences on energy when all the players get on a plane and fly in from somewhere else mostly Oahu and you wonder what's really going on. Some like a venue of convenience or maybe not convenience. But I think it'll go on although Genie Skog who is a real big force in the MEDB was retired this year. I don't know if you knew her. And that may change things in the way these conferences are thrown together in Maui. But you have the high brass going there and that's a good sign. And everybody wants to you know bend the ear of everyone else and and so a query how much of the legislature showed up because you know like it or not the legislature is in the catbird on anything that happens. And it's not clear exactly what's happening. For example I don't I don't see any energy initiatives coming off the fifth floor in the Capitol building and I don't I don't know of any remarkable energy developments that are likely to come out of this session. Do you I say kind of the only thing I'm tracking in terms of energy right now is the fate of of a couple bills that would provide some type of state support for energy storage. And there's as of last week I believe was the bill House bill that was heard by the Senate Joint Senate Committee. It was the consumer protection and energy and transportation committee. And then there was a Senate bill that was heard on the corresponding House committee. So I don't know whether both of those committees pass those bills out of committee. Something I need to to look into. So we're about gosh a little more than a month away went for five or six weeks away from the end of the session. So things will be drawing to a close and also kind of related to energy issues. I don't believe that Governor Ege has submitted the name of Tom Gorak to the Senate Commerce Rosbaker's committee in the Senate for confirmation. So he's kind of running out of time to do that and do take a step back. Tom Gorak was appointed by Governor Ege back in late June last year to take Mike Champley's place as an interim appointment because of course in June is when the session is is out. So an interim appointment if I if I got my Hawaii law down correctly is only good until the end of the subsequent session. So gonna soon put up her shut off time for Governor Ege to nominate Tom Gorak or surprise the heck out of everybody perhaps and find somebody else. But it's you know time is drawing to a close to to wrap that up. Well that is you heard it here on Think Tech you know it's something we hadn't been thinking about. I thought that issue had passed us already and it was a fit to complete. But no how interesting. It must be all kinds of sick political undercurrents on that one. You know that Randy Iwasi the chair wanted to have that confirmed right right away. And he was he's been in favor of Tom Gorak been advocating for him. So this is really it's a very discomforting surprise to find out that the name is not yet been submitted. And I agree with you that does leave the possibility that David Ege is under pressure to let it go and try point someone else who perhaps you know would be less political resistance. Wow. Well we have to follow that Marco. We have to follow that and to what extent there may be some some below the surface of happiness with the way the governor handled Mike Champley replacing Mike Champley. When he did with Tom Gorak to what extent there's some political unhappiness in the Senate. You know it's a pretty small body there obviously 25 people who who make decisions on such things. But I think there was a certain degree of unhappiness in the part of a number of post senators and others as to Champley's replacement. And you know remember the timing was at the end of June when the governor announced that Gorak would be taking Mike's place with Mike's term coming to an end. And then all of about 15 16 days later is when the commission by two to zero vote with Tom Gorak abstaining to the nothing vote to dismiss without prejudice the application of the acquisition of HCI by next year. So there was certain certain unhappiness among a number quarters that couldn't the governor have just waited a bit longer and allowed Mike to to take part in that final decision that he had been an integral part of the process. And of course like Randy Oase and Miranda Kever were from the very beginning. So again circle back to to the politics and to what extent there's there's going to be any pushback in the Senate to whoever the governor now and let's assume that it will continue to be Tom Gorak who I happen to like I think he's incredibly capable. But it's you know just an example of politics potentially inserting itself into to the process. Yeah and don't forget that that the strange machinations that went on around that vote wasn't clear that Lorraine Akiba was going to vote against next era. It was clear that Randy Oase was going to vote against next era. And I think it was also clear that that Mike Champley was going to vote for next era. So it wasn't settled. And somehow all of that all of that machination there at the end on Mike the end of Mike's term and his summary replacement that way had a in my view it had a profound effect on that vote and vote might have gone the other way had that handle been handled been handled another way. Anyway it says the word next era seems like ancient history at this point. And we haven't heard boo about the possibility of another suitor. And that's not a surprise after what happens next era I doubt any other significant suitor would come on the field right now. So that leaves us with what I'm sorry. I would actually make it different a little bit when you talk about possible fitter because this startup group called 21st century utilities has been quite public over the past year or so when it comes to their express interest which was reiterated by one of their peeps on the ground here here show Roberto show Roberto who spoke at the the Mac yesterday last week the Maui energy conference where she said paraphrasing her that Hawaii would be a great place to try out their new model their new utility ownership model which in fact they have yet to find number 001 in terms of the utility to purchase to be able to execute this new model so that continues to be sniffing around but in terms of a bona fide offer from any new suitor in 21st century as admitted that they have yet to or they have not submitted an offer to to online electric industries for purchase but that hasn't stopped them from talking to energy stakeholders east west north and south here in Hawaii and getting some press coverage for it. Yeah well that you know I certainly agree that that is a logical possibility on the other hand so many people come to Hawaii with great ideas and and can't or don't or won't follow through on them so who is 21st century are they really a suitor do they have the kind of pockets that Nestera had are they you know a viable candidate is their program going to be of interest to anyone and can they meet the bar the bar when I say that I mean can they satisfy the powers that be on all sides of the of the spectrum that they are a qualified and likable candidate that's a long it's that's a hard road to hoe I must say. Well I mean Chairman Randy Oase was quoted last week when he attended the energy conference as saying that he had no regrets about the decision that they made the previous summer in terms of deciding this without prejudice due to send next year away but I mean there's no doubt and he also said something interesting as well I mean which is just kind of reiterating what we all knew or know uh otherwise which is you know next year I came in with a substantial gravity task to say the least right I mean they're a major player on the mainland a number of accolades in terms of how they've run their companies over the years and certainly deep pockets right so they come along with an incredibly I think generous offer of 4.3 billion dollars which one could argue was a substantial uh substantially above market value for that company yep and that that of course caught the eye of the HCI board and they decided to to move forward in this and there's no doubt I think anybody's minded next year was in fact fit willing and able fit willing and able to to pull this off but what's happened in this decision explicitly perhaps for the first time because I mean how often do we get merger proposals like this coming across our little state here never never happened few and far between right but that the new bar that this commission has said is in terms of the subsequent offers to to peel away a major or a corporation is is it in the public benefit is it in the net public benefit and public interest and then when you start throwing phrases like that around then you're I think dealing in perhaps a lot more subjectivity and a lot more judgment in terms of what actually constitutes the what's best for the public and in Randy Oase alluded to that explicitly yeah so that's what happened I mean I guess the decision ultimately turned into do we like these guys are they is their plan going to meet our plan and are they going to be happy are they going to make everyone happy and the answer is well no there's a lot of people complaining about it so therefore it's politically radioactive we can't do this and then of course Governor Ege's repeated contention that they should not be approved did not have a small effect on it had a big effect on it and that was regrettable because it actually wasn't his business to make out that statement any event well I mean what's the likelihood do you think Jay of a an equal or superior offer coming to the HEI board in the near term I mean I of course you and I I don't think are privy to what's going on inside that I'm sure richly appointed boardroom but the likelihood of somebody coming up with an equal let alone better offer in terms of four point something billion dollars I think is kind of a stretch no it never happened never happened not only because of the money you know in the you know business the four corners of the deal but because of what happened to next era you know I don't think they were treated very well they were sort of kicked out of town and that you know how do you avoid that it's a hard one so I don't think there are a lot of next errors around and I don't think it's going to happen and and that that leaves the question of course this 21st century question that you alluded to a minute ago is what is their business model it's not tried yet how does it mix in with the other possible business models and when we get back from this break Marco I'd like to talk about the emerging new business models for utilities because that must have been discussed in Maui it was discussed in Maui before and I'd like to hear your thoughts about what what are the potentials right now we'll be right back after this break hello my name is Reg Baker and I'm the host of business in Hawaii with Reg Baker we broadcast live every Thursday at two o'clock we highlight businesses and individuals that are successful in Hawaii and we learn their secrets to their success I hope you can join us and listen in because we always have a pack of information on successful stories in Hawaii Aloha hi I'm Tim Appichella I'm the host for Moving Hawaii Forward and the show is dedicated to transportation and traffic issues in Oahu we are all frustrated by sitting in our cars in bumper to bumper traffic and this show is dedicated to talking with folks that not only we can define the problem but we hopefully can come to the table with some solutions so I invite you to join me every Tuesday at 12 noon and let's move Hawaii forward okay Marco so what what are the you know emerging options these days given 21st century given kawai and the kai you see giving HIEC these days what what does what does it look like you know what what are the most viable alternative options and how well are they doing well I mean you're kind of asking me the very good question Jay which is exactly what the state of Hawaii decided last year to appropriate more than a million bucks to to address that question I'm referring to a a bill and a law that was signed by Iggy last session last year that appropriated if I'm not mistaken 1.4 million dollars to pay an independent consultant to address those specific questions so they in fact chose a company this is back in January the state shows a company called London Economics which is based on the east coast and they had the winning bid if I remember correctly of $970,000 the bid had to be a million or less and then the rest of that 1.4 million here will be doubled up by by admin costs on the part of D-bed itself so I spoke to one of the D-bed folks who is listed as kind of the point for this particular study and I said so when when can we expect to see this this report that more and more people are talking about there was mention of the conference as well and he said well our goal is sometime latter part of 2018 but at least in time for the opening of the 2019 session so the takeaway for me being is that we're going to have to hurry up and wait wait wait wait wait wait to get this this report that London Economics will be presenting to the state and will of course be part of the public record so it's not a very satisfying answer to to your question and to you and I are not being paid $970,000 to to address that question but it'll be really easy to see what what London Economics comes up with for that that type of pretty penny well yeah exactly I mean I like to express something which may you may be thinking and that is just it's an awful lot of money for D-bed to spend I thought we were strained and stretched we have problem paying for the rail and so many other things so many unfunded obligations in this state we have you know like 40 billion dollars worth of unfunded we can throw away a million dollars for another study and I really don't like the idea that they're going to be finishing just before the session so somebody pops a bill and legislator and tries to execute on their plan before it has time to breathe or be socialized and I and I think you know what we need is a homegrown plan if we could just belly up to that I mean D-bed goes and spends an enormous amount of money on these conferences you know the the verge conference coming up that's really expensive and they got all these studies going on to never result in anything why can't we you know put a little money into for example uh credits for storage uh why why do we spend millions on these studies that go on the back shelf and this will also go on the back shelf if we want to figure it out we should figure it out locally you know if they gave us 970 thousand dollars in a in a room for a week you know Marco you and me we could figure it out how much of that 970 would you like oh you know I think I'd probably settle for 30 or 40 30 or 40 percent because last thing I've wanted to come across is since I've a greedy solar dude I'm probably already already accused of that enough as it is Jay so I'm more than happy to allocate the majority percentage to you with with gratitude thank you very much you know really I and then of course every time you have a study like this you have a two-year throw on it so nothing ever happens so we're a long way from making the kind of speed we need to make if we're going to reach any of these goals and I'm very sorry to see that I see the legislature I see at the governor's office and I certainly see it at dbed that's where the state energy office as you remember but you know Jay beyond the utility ownership models is of course they're very near and dear to my heart the hawaii island energy co-op I mean to me the more kind of primordial existential question is what is it exactly do we want our electric utilities to do out here and you would think that perhaps on the on the surface that's kind of an easy question to answer all we want lower rates yes who's going to disagree with that we want more cost-effective renewables and more energy independence of course well who wants to who's going to disagree with that but how do you get there from where we are and I think you get a bunch of smart dedicated energy stakeholders in the room 10 or 20 of them and you address that question of what is it that we want to have our utilities do not in 2040 or 2045 because that's you know practically a lifetime away for some of us but what can can and should we do in the near term the next three five to ten years and my position is that it's not I don't think it's going to be as easy as you might think to get a clear consensus on the roadmap ahead beyond the kind of vague generalities of 100% renewable in in decades from now I think that's more much more juicy philosophical profound question that that we need to be addressing for more effort into yeah I agree 100% I mean all the steps that preceded the PSIP were oh lurching from one side of the boat to the other they had too many stakeholders of 80 people were involved everybody had to have a voice it was the same thing like next era there were so many people involved everybody speaking and there was really no way to come to a clear decision on it and even in the case of PSIP after waiting for years and bouncing it hither and yon now the now the the PUC is not taking action and when will we hear from them and that's the only main plan you know in the in the channel right now so we don't have a system for deciding these questions we don't have an energy authority which in retrospect that was Neil Abercrombie's idea when he first took office we don't have that we we have so many captains commanding this ship that there's nobody commanding this ship and I don't know what's going to happen but I am not optimistic about reaching a plan or executing a plan but let's talk about another factor that has driven right up the middle here and that is the Trump the Trump what do you call it the the Trump Trump times the Trump chapter we're now living living in the time of dirt something right dirt something right yes so you know fact is that he's taking actions that are usually inconsistent with other actions I mean just one small example where he's you know he's giving 54 billion dollars to the military but he's cutting the coast guard I don't understand that and he's you know he's now he's going to punish us all with a tax increase bill that is going to reduce the tax by by by substantial percent for the top earners and and reduce it a lot less for the middle earners and the result will be that we wind up paying more tax and giving it to the military and all the the regulations that are protected us all of the Obama clean energy initiatives that were intended to move things ahead on clean energy are are being abandoned as essentially that's got to have an effect on Hawaii's initiative doesn't it well it absolutely Jane before I get to that subject it kind of just brings to mind you know what this the with this proposed budget of spending a lot more on military national security there was a book it got a fair amount of play gosh I believe it was really 1990s by an author by the name of Paul Kennedy Paul Kennedy the rising fall of great nations and he looked back historically to from Rome Roman times to the British empire and from that book came a phrase known as imperial overstretch which essentially to put in a very kind of simplistic form you have a state that is spending more and more and more to try to project power or project interests far and wide and it essentially leads to from a to a collapse from outside in or and or inside out and yeah I can't help but be struck you know granted that there's no way the the Trump budget is going to pass anywhere close to its current for a proposed form which is only somewhere on 50 pages or so was that it wasn't a budget proposed as much it was an overview of a budget he would like to see passed I mean and that's what the congress does I mean they decide ultimately where money is going to be spent and how much and so forth but the notion that we're spending substantially more on military national security while infrastructure crumbles while those neediest among us are the ones including a lot of Trump voters are going to be the ones who are really suffering I just can't help but be destructed by that now in terms of how Trump's policies as far as energy goes are going to affect Hawaii I think at least in their terms going to be fairly nominal effect because where we're kind of obviously the middle of the Pacific and where the captains of our own boat and we may have too many captains as you pointed out a few moments ago certainly at times but I think we're more immune to some extent to the the craziness that takes place in Washington because because of where we are and how far along we are already in terms of developing renewable fuels renewable energy to make us less dependent on important fuels and less dependent hopefully on on the craziness that goes on in our nation's capital yeah but let me offer this thought you know it's it's uh that he's not going to spend money on pearl harbor I think you're going to see pearl harbor diminish he's not going to spend money on military activities here he doesn't like Hawaii Hawaii has been against him he's a very punitive kind of guy and and I think we're going to we're going to feel it more and more all the time it's going to reach out and touch us somehow and the other thing the last thought I'd like to offer you on this is this where if Obama or some reasonable president were in office he would be thinking of new ways to incentivize you know renewables new ways to empower the grid new ways to enhance the renewable energy and transportation we're not going to see any of that we might have seen it and it's hard to say what the opportunities might have been but they will not take place under this administration instead we're going to have the michigas and that means craziness in washington your point for closing remarks marco go for it oh gosh we live in uh interesting times kind of across the board jay and i'm still very much a fan of of california or again washington and hawaii all voted very blue in the past elections that that we would break off and become the people's republic of cal c o w h and that we would be a place of tolerance diversity renewable energy environmental thinking ecology and all that stuff and we'd be immediately one of the largest economies in the face of the earth so with that little fantasy uh i take my heart off to the to the new people's republic if anyone ever starts you and i can be ambassadors of goodwill yeah sovereignty looks better and better well thank you marco great to talk with you two weeks hence again yes yes okay need to take care aloha talk to you bye bye