 Bingo four o'clock rock. I'm Jay Fiedel. This is Think Tech and our flagship energy show like five of them Yeah, and this is Hawaii the state of clean energy supported by the Hawaii energy policy forum a word on what we're doing here today We have the honor of Jeff owner Jeff owner was a consumer advocate for nearly 200 years Consumer advocate of the state of Hawaii I mean, he really was there a long time if you if you put this in perspective 2008 was the you know the demarcation of the clean energy initiative That's when lingo lingo made the energy agreement, which is very interesting sometime in other study that And shortly thereafter you became the consumer advocate. When'd you come consider again? I started in January 2011 Oh 11, okay, and and for those critical years, you know, he was in the middle of the mix I would say and He appeared in a lot of our energy policy forum programs And he was a friend of the energy policy forum and an important consumer advocate And we have the honor of having him here today This is special because he's the former consumer advocate now But he still comes around Jeff welcome to the show. Thank you Jay Now I'm gonna have a formal introduction by Ray Starling. They're co welcome to you to Ray. Well, thank you Jay I'm glad to be here and You know in keeping with this month's Theme that we're gonna look at whatever happened to this or that Clean energy initiative. We thought that since Jeff was available now to come and talk without the pressures of Worrying about that. He was Consumer advocate and we wanted him to talk about Whatever happened to all of those Clean energy initiatives that looked so great when they got started and then some some actually made it down the road a bit and then others just fell off the The edge and we've never heard about him again. And so Jeff has some thoughts on that He was right in the middle of the every dog fight that happened along the way And so we're very happy to have him on board today. Yeah, it's all about continuity So, you know in 14 minutes Can you tell us what happened Where do I get? well, let me start by saying that You know the role of the consumer advocate has always been to protect consumer interests in all matters that come before the Public Utilities Commission and The goal the statutory goal is to make sure that The utilities provide were safe and reliable service at just and reasonable rates Because of the statutory, you know renewable portfolio standard the energy efficiency portfolio standard Our state policy to renewable energy Those goals and that mission has changed so it included incorporating renewable energy But not at any cost to make sure that the costs were You know, we had cost-effective projects that didn't cause too much harm to ratepayers And this is important for two reasons. One is you don't know her ratepayers Yes, the other is if you have economic changes that are sudden and disruptive you have a bad effect on the economy The economy does not absorb these changes easily. So you have to moderate things Certainly true So, you know, the first question is, you know, what happened to some of these renewable energy projects So what I wanted to talk about was Because one of the first things that that struck me when I when I took my position as consumer advocate was the competitive bidding framework I you know, it seemed it was a cumbersome process It took too long. They were already complaints back in 2011 about it It trying to evaluate bids was very difficult when you're looking at a project, a solar farm, a 25 megawatt solar farm on Oahu And trying to compare it to a 200 megawatt wind project on Lanai to cable to Oahu I mean, how do you decide, you know, which project should be accepted and which one should it? And but that's what was the nature of the the competitive bidding framework And that was a problem and you know, so And back in 2013 Hawaiian Electric, I thought had a pretty good idea You know, let's let's try to seek waivers from the competitive bidding framework to try to get projects in the in the ground a lot quicker so they went out for a solicitation to get developers to Propose projects and they had to meet certain criteria and I thought the criteria was what they were pretty good At that time we were seeing power purchase agreement being priced at 22 cents or greater per kilowatt hour So Hawaiian Electric came in and said if you're going to propose a project and get a waiver from the competitive bidding framework You have to be priced no less than 17 cents a kilowatt hour You have to have site control or evidence of some site control You have to have an outline of a community benefits outreach program So there were a lot of good things in this solicitation and we were hoping that we were going to see a real price breakthrough because of it Instead what we saw was a long drawn-out process. So from 2013 to to the present We we have one project the the Eurus project the wine I sold a project 28 megawatt solar I think it just started commercial operations And and we have a number of unhappy developers who never got to first base with it Well, who's who got to first base and spent millions of dollars, but whose projects were not accepted and and that was a problem You know, it started out well in tension and but because of various things that went on And I think some of it is miscommunication with the developers I think some developers seem to have gone into this solicitation process with the idea that if they had proposed a project Their PPA was accepted by Hawaiian Electric that the consumer advocate and the PUC would then approve those projects So it came as a surprise to them when the consumer advocate when when you know We came out and said of the eight projects that ended up being proposed. We said no PUC we think only these four should be selected As it turned out and we didn't pick the Eurus project we picked the four problems cute We we picked the four projects that we that I thought would would give Short at least in the on the short term true benefits to to consumers All of the project showed long-term benefits But when you start projecting 10 15 20 years into the future, it's very difficult to predict what's going to happen It's very difficult to determine. Are these projects really going to be in the long-term beneficial to consumers? So we looked at the short term and we said these four these four projects And we picked the three son Edison projects and we picked a different one than yours As it turned out the three son Edison projects Went away because son Edison went into bankruptcy. That's why we ended up with only one about the other one Well, the other one was the end ended up as the Eurus project so 28 megawatts You know does remind me of the KIUC project. It's happening right now But you mentioned before before the show began that in the case of KIUC they they didn't have a problem with competitive billing Well, what was the difference between? You know the Hawaiian electric area and the KIUC area well Kauai island utility cooperative is a is a cooperative utility It's not investor owned They don't answer to shareholders. They answer to its members who are who are their its own customers So the PUC has determined KIUC doesn't need to go through a competitive bidding framework So when AES who ended up with this project that you're you're referring to came to KIUC KIUC didn't have to say well, wait a minute. We've got to go bid this out We have to do an RFP or request for a proposal get it approved by the commission Have all these interested developers come in bid on the project and said they can start negotiating right away with AES Which is what happened? Isn't that unfair? The KIUC could effectively do its own waivers I know these projects and he go ahead to go to the commission and go through all that process and delay Well, I don't think it's necessarily unfair because of the difference in the ownership structure of the two companies but We need to improve the competitive bidding framework for hawaiian electric. We need to get the process Smooth smooth out so that things can happen quicker so that we're not placing greater risk on developers as as what You know, that's what ended up happening in the in the waiver projects The developers were complaining that they took on a lot of risk They spent millions of dollars only to see their projects getting rejected Yeah, so looking at the thing comprehensively a we don't we're not doing lng anymore. That's pretty much off the table b solar is Under a handicap now because well, I mean it's it's declined It's declined rooftop solar rooftop solar. Sorry rooftop solar declined and nobody knows where it ends But a lot of companies have gone out of business or changed their business And so it's not a happy time for the solar installers And let's see wind has been subject to one of those one of those cases ray where whatever happened to wind You know wind is not doing very well the big, you know Projects for wind are all off the table. They're really done. They're not coming back Where are we? You know really jeff? I mean it seems to me that with all of the exuberance of october 2008 We're stuck in something. What do you think? Well, we we do have one one more wind project that is supposed to go in, you know possibly soon The napua makani wind wind farm out in kahuku, but that's being You know, there's significant community opposition to that project Having gone out to the kahuku community been to neighborhood board meetings out there You know, I I really doubt that we're going to see another wind project on oahu Napua Makani might be the last one assuming it gets built But the communities don't seem to want wind farms. They're aesthetically You know not appreciated by a number of people. So the community's the one wind If your thermal is under a kind of glass ceiling there in puna I mean it's a very strong glass ceilings. It's tempered glass that ceiling And it's political and cultural what have you We have solar That is solar on rooftops. I mean single family rooftops and all that has declined community solar has not really done very much Utility scale solar has not done very much the wave of projects have not been all that successful We're still, you know, what is it 80 plus percent? on fossil fuel and and must be near 100 percent on on transportation fuel And it's been eight years since we committed to this grand grand Dream, and then we said all last year and do it by 2045. I'm not sure if that's throwing it on the wall or what But here we are it seems to me that we're Kind of stuck now agree or disagree Well, I disagree jay. I don't think we're stuck You know, I think we're at a point where I think people need to understand that in order to incorporate Greater and greater amounts of rooftop solar and and you know, heco can do it But they need to They they need to upgrade their system and that that to modernize grid as we've been talking about It's going to be costly It it might be billions of dollars to do it. Who's going to pay that? What ratepayers are going to they're going to fund the bulk of it, but we're sensitive We're real sensitive on rates Some people are going to they're going to squawk about wind, but they're also going to squawk about race Is the public on board here because the public is not on board This is a troubled a troubled course of action Yeah, the the trajectory for for rates into the future is going to be an upward trajectory We you'd like to we are hoping that there's going to be offsets because of Cost savings, you know, we will use less oil. We'll save on oil You know, we'll incorporate greater amounts of renewable energy that renewable energy prices have come down the cost to install solar The cost to install wind farms have come come down significantly And we're hoping to be able to capture some of those savings and put those savings into into bills so that the The cost to modernize the grid will will partially be absorbed by by cost savings But the reality of it is that bills will will are likely to go up as we modernize the grid Yeah, no surprise Right, we were saying that a long time ago if you want to put new infrastructure in you want to put new technology in It costs money and somebody has to pay And that means the red pair. That's right. We're going to take a short break. Jeff Ono former consumer advocate opining on exactly where we are in this difficult navigation of ours toward clean energy And we're going to come back in one minute and Ray is going to ask him a cliffhanger question You'll see Angus mctec Wishing you to welcome and join us to see us on hibachi talk on think tech Hawaii Joe my co-hosts corridor the tags out and enter the security guy every friday from 1300 to 1345 we look forward to see it. We'll talk tech and we'll have some weave in a fund And remember let your wing gang free. Where are you be? Hello? I'm standing as a man and I want you to be here every friday noon think tech Hawaii calm watch the show be there I pity the fool who ain't my name is richard emory and I host condo insider We talk about issues facing the condo association throughout hawaii and talk about solutions When you think about it about one third of our population lives in some form of common interest real estate We broadcast every thursday at 3 p.m. Please tune in tune in and thank you. Aloha We're back. We're alive and we are so happy to be talking to our old friend jeff ono former consumer african state of hawaii And we're talking about it. You know his his jeff ono speaks out And what does the former you know consumer advocate of the state of hawaii have to say about our situation? And and we've covered a little bit of that the situation Where it stands today and now we're going to now we're going to go down the constructive part of this discussion So rey what is your question? Well, you know, I uh, we've got this one good example, but you were talking before The show there were many examples of things that uh that and we've explored some of them this month On other shows that uh, didn't pan out That didn't happen the way we thought it would it had such promise in the beginning So I guess if From your experience as the consumer advocate right in the middle of all of this What do you see that we could do differently? That would help Some of the things that we thought would make it through make it through now We talked about the the specific example That you gave us today, but do you have other things? Are we structured right? Are the right entities involved in making the decisions? And I asked this because we've we've sort of Taken an inherited group of Regulations and so forth to make to that have worked well for a hundred years We've tried to bring those together and move it into this clean energy world And I think that's different from what we've been doing So do you have some ideas that you can toss out on the table and we can talk about? So you you've asked so many questions in there Ray. I'm just gonna I'm just gonna say what I want You always do that That's right Well, you know the first thing you know, we need better planning from from uh, hawaiian electric You know the we had the integrated resource planning docket That's where we're supposed to lay out the plan for the the the appropriate generation mix for hawaiian electric now And and going into the future short term long term And that that was rejected by by the commission and it was unanimous all the parties that participated in the irp You know suggested to the commission to reject that irp plan Then there was the power supply improvement plan that was that was rejected So now we're on the the second or if you want to call it the third iteration We're of the power supply improved four years down the road with this that's right and We need to have an approved plan The I think the solicitation for the waiver projects would have gone a lot better And a lot smoother had we had a an irp or some kind of plan that was in place So that we could put those projects into context so that all of us knew How much curtailment would there be on these projects? Um, you know, would would HECO be able to accept 100 percent of the the energy they produce or was it going to be 90 percent? That was something that was you know, we just couldn't get a good handle on because we didn't have an approved irp Um, so we you know and and this is my message to my friends at the at the puc We you know, we really would like to see at least a short term plan that gets approved coming out of this Last psip we we just can't keep going on rejecting plan rejecting plan and not having the context by which to consider Each power purchase agreement that comes before the commission. So that's number one, you know, what I what I hear Well, it's number two Number two is you know, I you know, we need better coordination and leadership and and that's that's been a problem you know in hawaii and You know and I'll start with me You know, I mean I could have done a much better job going out talking to developers making sure developers understood that Just because hawaii and electric Agreed to a power purchase agreement with with those developers That the consumer advocate was still going to scrutinize that ppa that there was no guarantee that their project was going to be approved by the PUC if and maybe it would have gone a lot better had had they understood that but you know when After we had done our our statement of position on some of those projects and said well, you know We don't like this one and we don't like that one Then the developers came in and started saying, well, you know, what's wrong with my project? What is it that you don't like? And and it was too late Let me ask one question to That comes out of all this out of both of those points Seems to me that You know, we the state everyone sees developers as And this goes for real estate developers too, by the way Developers guys who put their own money and who take risks who sometimes, you know cannot succeed Guys who sometimes get wealthy, but sometimes they get poor too That's the nature of being a developer I don't think we see the need to make a path for them We don't make it easy for them And in not making it easy we We cut down the class of people the group of people the subset of people who are willing to take the risk So we get fewer people making proposals fewer people actually doing development And in so doing we hurt ourselves. So what I hear out of both points one and two Is that we've got to tell them we love them We want developers. We want development It's not a bad thing and we will be mindful of the risks they take and not enhance those risks I agree completely, you know the and what people will need to understand is as we put greater risk on developers That gets reflected in the prices that they propose on these projects. The more risk they undertake the greater the price That's just the nature of the beast But but you know action speaks louder than words. I mean we can tell them that we love them all All day long, but at the end of the day They need to see that we've gotten our act together And are able to push things through in a Reasonable time because time does hurt Uh developers or they can't stick stick around for You know too much time before they run out of money And so I'm I'm still wondering are we are we structured The right way. I mean I've started looking at like what california is doing Now and they're they're in a different situation, but they seem to be Moving along and you feel like if you're a if you're a developer Uh, you could go to california and make some money But I think we ought to make it so that people can Expect to our developers can expect to make some money here in the energy business So I guess I'm asking Do you does anything come to mind that you that we're doing wrong now or that we should Change in terms of structure Well, when I go back to the competitive bidding framework that really has to change We need to be able to evaluate projects Um that are are cited in the same location That you it's like evaluating You know bids on a construction project you have a site you have a A plan in mind and then you you go to the contractors and you say hey This is what we want come on and bid you get the best price everybody knows what the rules are everybody knows that the The developer Who puts in the low bid is going to be the winner And that's that's how the the process should work You know, so what we need to do, you know, and and I'll give credit where credit is due This Dean Nishinam who is my my the successor to to the consumer advocate. He's the current consumer here This is his idea, you know, you you have Hawaiian electric should find a parcel of land and say okay. We want a 25 megawatt solar farm in this location Come on and bid on this We want you know, this is what do we want a battery? No, yes battery That sounds so simple and take a little bit. I mean you gotta take the low bit exactly But how long could that take? I mean is that is that you know, two years? How long could that take to do that? To to change the competitive bidding framework that way to do it that you you could have a project in a couple of years That's what I including construction including construction We got to do that That's what I think. Yeah, Ray's not disagreeing I yeah, I think we do have to do that and and some more So I guess my my question also is Are are the The structures are set up the way they are now Would you add any structures? Would you take away structures in terms of Sort of how we manage the planning and then the regulation And and then making sure that the consumer Interest is is uh taken care of as well Are we set up right to do it? I think the setup I think the general structure is there I think we can work with it. It needs improvement. That's there's no question about that A lot of people want to see you know, uh performance based rate making for Hawaiian electric for example You know, would we get better performance if Hawaiian electrics rate of return their their return on equity was dependent upon how they actually perform And and I'm all in favor of that. I you know performance based rate making I say yes I think that's a great idea But we need to move cautiously with it because there are unintended consequences that come with it And you know, we we we have cost of service regulation right now And that is a form of incentive based regulation It can be improved so we can add in performance metrics that HIKO needs to meet beyond just the the usual Sadie katie, um, you know metrics that that we talk about, you know, the the interruption Metrics so we can we can put in things like one of the things we suggested in the decoupling investigation was a planning metric You know HIKO if you do good planning planning, yeah, that's right If you do good planning to be decided by a committee of two or three individuals Um, you can get a 25 50 basis point, you know boost in your return on equity If you do poor planning, maybe we're gonna have to penalize you Um, that didn't seem to gain any traction with the the the puc. No, but I think that goes to you know Really that goes to raise question about what can we do to shape an otherwise unruly situation Where people are, you know into self-interest and they're into silos. They don't talk to each other. They don't help each other out Um, and you know the the result of course is that we we haven't moved nearly as fast as we wanted So what should the legislature do? Should we talk about credits or you know, or disincentives? Should we should we change the way these decisions are made? The puc should we how can we speed it up? How can we keep it equitable? How can we preserve, you know, for example good rates? How can we come into the 21st century? If I knew those answers I'd be governor I you know, I mean those are difficult questions. Yeah, you know, I'm not sure I know how to answer that Well, then you'll have to come back Okay, we're at a time rake and you summarize and And put it where it belongs. Well, I I think what from the discussions today. I think That things are are moving forward, but not nearly as quickly as they could and It takes too long to get things done, especially when you have to bit them out So maybe the maybe the process needs to be looked at and and Some things changed about the process and Obviously now that you're not the consumer advocate anymore You can you can pound the table and say say things maybe even stronger than you could as a consumer advocate So we'd like to make sure you come back to see us in the near future unless continue the conversation I would love to amen to that. Thank you. Thank you. Thank you. Thank you here. Thank you, Ray. Thank you, Ray