 Okay, it's noon on the Monday. That means it's Energy 808, the cutting edge with Marco Mangelsdorf, and we're talking about a bunch of things that are happening here and elsewhere in energy. Welcome to the show, Marco. Nice to see your smile and face. Well, my friend Jay, I mean, could we ask for a more auspicious day the 2nd of November before, of course, the 3rd of November, which will portend to be quite a momentous day. So thank you so much for being my Monday buddy the day before the election. Well, of course, we need to talk about energy, but let's first talk about what's going on. Number one is the paper yesterday, Sunday, loaded with stories of violence and pranks around the country by Trump's army. And this is not a good thing, because it speaks of more to come today and tonight and tomorrow and so forth. I haven't seen a newspaper in the last few hours, but I think it's probably going to be a bad time. And that may or may not affect the vote, but then whatever happens in the vote, he's got things up his sleeve, and he's got these same people who respond to his dog whistles. So, you know, you wanted to talk about prognostications on how many electoral votes. And there's a lot of issues going back to the article in the Atlantic three weeks a month ago, and which has been repeated and reexamined since then about exactly what tricks Trump has up his sleeve. So whatever we decide here today, and we're going to decide actually, Marco, about the electoral votes, it's subject to some kind of crazy things. So whatever we prognosticate is only at this moment in time. What is your prognostication? Well, a couple interesting tidbits. Number one, you might recall that four years ago we had one guy, what was the guy's first name? Gary Johnson, I think, in Jill Stein. Gary Johnson and Jill Stein, if I remember correctly, who were two third party candidates. And they garnered somewhere a 3% or 4% of the vote, if not more, total. And this time, I challenge you to think of any third party candidate, nothing close to a Jill Stein or Gary Johnson. So my take is that there's going to be less than 1% of the entire vote for a president, less than 1% for third parties, that'll be a big difference between now and four years ago. And my second prognostication is I'm going to go out there with my number in terms of what the electoral college vote will be when all is said and done, hopefully sooner rather than later. And I'm relying on my friend Todd Belt, who is a professor of polyps here at UH Hila before he went to George Washington University in DC. And Todd and I keep in touch. And his prognostication of today, which he shared with me is 350 electoral college votes for Joe Biden and Kamala Harris and 188 votes for Donald Trump and Mike Pence. So that's going to be what I'm putting out there, 350 to 188 is going to be not even close to the electoral college. Okay, I bet that's because I'm basically a pessimist at this point in American history is less, I would say 325. But again, Biden wins. But who knows which one of us is right and who knows whether even if those votes are deserved, I mean, are appropriate, are the accurate reflection of, you know, the system. The system is being questioned. And there'll be all kinds of tricks to come. He's not giving up easy. But one more little tidbit before we move on to some seemingly more mundane energy matters is I learned that Florida, North Carolina, Georgia, all battleground states, all these three states count their early ballots early. In other words, they've already counted millions of ballots in these three states. So my go out on another limb here as of 6pm Hawaii time, 8pm West Coast time, one or more networks will call one or more of these three states, Florida, Georgia or North Carolina. And if one or more of them, especially Florida goes for Biden, it is game over for Trump and then and I think we'll have some early indications right when the polls close on the West Coast, 6pm Hawaii time tomorrow. Yeah, but announcing it is a matter of law. They mean even if they counted, they have to have to wait until a certain period of time, certain time to announce it. You can't announce it before Election Day. No, no, not before Election Day, Jay, but they will start making announcements upon the closing of the polls in those three states that I just mentioned. Yeah, okay. Well, from your lips, I tell you, but you know, I take it to the bank, take it to the bank. Thank you very much. So let me ask you this, let's assume for a minute that our prognostications are true and that that is the appropriate number of electoral votes that should be cast for Biden. And he wins at least technically. What happens then? That's a hard question, much harder. Well, I mean, I think I'm concerned and a lot of people are concerned, you know, this interregnum period, right, between Election Day and two and a half months later on the 20th of January 2021, the next president will be sworn in. So, you know, what happens in those subsequent, what, 75 days or so? I mean, this is the source of concern of a lot of people, including myself. Yeah. And then, of course, the next question, which people are not ready to ask is what happens, assuming it all sort of works out and Biden gets to be the president on January 20th. What happens then? I mean, he's got a lot of problems to deal with. And he's talked about making commissions of blue ribbon members, you know, who can address all kinds of issues that need to be addressed. But they're hard issues. And what I offer you is the notion that even if the supporters of Trump lose the election, they don't lose their voices. And they'll be making plenty of trouble for those commissions and for Biden going forward on every single issue that Trump has spoken about. And he will be speaking. And his right wing radio and media people, they'll be speaking too. And so the contention will continue. That's my prediction about what happens after January 10th. To which I respond, lucky we live in Hawaii. You bet your bippy. On to other perhaps more pleasant things, perhaps. We have a bunch of issues to discuss today. One is PGV. What's going on with PGV in the Big Island? And so interested in seeing how kind of progress they're making, you know, because everything is sort of in a cocked hat lately. How are they doing? Well, Mike Calachini had dude over there, a good guy, definitely good guy. I think what on the record not too long ago said that they could conceivably start producing power, I assume for sale as early as this week or soon thereafter. Because right now they're they would be under the power purchase agreement of long ago, because the amended one has yet to be ruled on by the commission. So kind of by default, it's the existing power purchase agreement, which is a blend of both selling the first 25 megawatts at the so-called avoided cost price, and then the next 13 or 14 megawatts at a set price. So the news is in the past handful of days is that not one, not two, but there are three parties that are suing PGV to essentially stop coming back online. Two of them are alleging that, hey, the last environmental impact report or environmental impact assessment was 33 years ago, 1987, 33 years ago, and there needs to be another one done. This in the face of former health director Bruce Anderson several months ago stating for the record that, no, there's no need to do another one. Well, a number of parties respectfully disagree and are suing PGV for not having a more recent environmental impact statement. And then the third lawsuit. Wait, on that one, what's the law? What's the trigger? You always have to have a trigger for environmental impact statement. Is there a trigger? Well, that seems to be a matter of interpretation, my friend. I mean, PGV and ORMAT's position is we do not need another environmental impact assessment. The one that we had done years ago is just fine. Others respectfully or not respectfully disagree and believe that another one, more recent one now needs to be done. Well, whenever you hear lawsuits about environmental impact statements that it sounds, of course, in environmental issues. So I guess that people who are opposing the project of concerns about the environmental impact. Well, I mean, since the 19th, Jay, ever since there was discussion going back to the 1980s about a geothermal power plant in lower Puna, there has been concern, sometimes great concern over what could happen and what has happened in terms of emissions from these deep wells, right? And that concern has not gone away. The third lawsuit is an interesting one. It is claiming that PGV has engaged in fracking. Has engaged in fracking when they've had no rights supposedly to engage in fracking. And that this fracking led partially to or contributed to the 2018, May 2018, June, July, August eruptions there. And of course, far be it from me to make a determination on that. But the takeaway is that it was PGV inches closer two and a half years later after being shut down, inch closer to going back online after having spent how many millions of dollars, right? That they're now being challenged in court regarding what is the impact and the environmental impact of the power plant going back online. Well, what is fracking? Can you make a reasonable argument that what they're doing is fracking? I'm not up enough in the exactly. I mean, I understand fracking, hydraulic fracturing, I believe I do. And from what I understand as a layman in terms of drilling these bore holes, which there are a dozen or more in and around the PGV territory, that it is, you know, that they drill straight down for thousands of feet. And that to me, at least, that to me does not jive with what I think of as fracking, which is drilling down and purposely trying to break up hard substances and rock in an effort to try to tap into veins, essentially, of crew. No, there's something about putting material down into the drill hole, but I don't know much about it either. But I come out the same way you do. I don't easily make that connection. I never heard that connection before. And nobody's raised that argument before either. And I would add this thought that there's fracking and then there's fracking. There's fracking, you know, that does do damage on the mainland, Oklahoma, I want to say. But there are other fracking, more modern tech kind of fracking that doesn't. So fracking is a moving target. Well, and, you know, to go to the first two lawsuits, I would think, you know, they're going to the court for a remedy, right? The remedy is to try to stop PGV from going back online and selling megawatts worth of electricity to Hawaii Electric Light Company. And not being a lawyer, the only thing I can think of is that they're hoping that there will be some type of, what, injunction from an appropriate Hawaii court that would stop PGV from going online and selling power to Helco. Yeah, it all sounds a little, you can argue with me, but it all sounds a little like the 30-meter telescope, which just keeps on going and going. It doesn't matter what the result is, there'll be another lawsuit soon enough. This controversy that you mentioned going on since the 80s, certainly the 90s, you know, is going to continue no matter what happens in these proceedings. And it's too bad because if, I think if PGV goes down, if it gets tired of dealing with this, sort of the way TMT has gotten tired of dealing with this, and the way the Superferry is tired of dealing with what they were dealing with, and the way, you know, the cable that was supposed to string power between the islands, they got tired also. So after all of that, there will be no geothermal. Geothermal in these islands will be over if they go down, don't you agree? I think it could be a mortal blow. Yeah, I mean, at least for your lifetime and my lifetime, because of the reasons you stated, I mean, as I've said so many times, and I'll say it again, no energy sources constitute a free bento box lunch. There are always costs involved on multiple levels, whether it's environmental, whether it's, you know, burning down trees, whether it's putting greenhouse gases in the atmosphere, whether it's this, whether it's that, there's no such thing as a pure, clean, no cost energy source, you know, whether it's people who don't want wind turbines within their view plane, people who don't want to see big solar farms within their view plane. And it just goes on and on and on. So the thing is, of course, as you I'm sure would agree, we can't just keep on saying kind of need jerk. No, we won't do that. No, we won't do that. No, we won't do that. Because we just paint ourselves in a corner more and more and more and more. So, you know, we have more renewable energy sources on this island, more potential than any other island in the chain. And to what extent geothermal comes back online and plays a big part, I think, you know, we should know, we should know within the months to come, not years to come, hopefully, but in the months to come, whether PGV is able to start pumping out their 35, 38, 40 megawatts, which is not a small percentage, really, in terms of contribution to the power people consume on this island. Yeah, but it is a small percentage of what could be taken out of Pune and any other geothermal facilities that are possible. The total is 38 percent. It's been 38 percent, I'm sorry, 38 megawatts, right, for gee, as long as I've followed it. And the story has always been pretty much the same. They could go way higher than that, but it's either a gentleman's agreement or, I don't think it's a legal agreement, but maybe it's a PUC agreement. They're not going to allow, they're not going to even try for more than 38 megawatts, which is too bad, because they could do a lot more than that, and they could service, provide significant percentage of the energy on the big island, for sure. Jay, just point of fact, point of fact, a number of years ago, there was a request for proposals that went out from Hawaiian Electric for more geothermal on the island. And they got a number of proposals from a number of different proposers. And one of them was for if I'm not mistaken, as much as 60 additional megawatts in and around lower Punas, roughly same area of our PGV is. And Hawaiian Electric chose a winner. And full speed ahead, green light. And then it turned out, if I'm not mistaken, that the winner thought about us some more, did more numbers crunching and said, we can't do it for what we proposed. And they essentially pulled out. And that was it. And I have heard no discussion of doing another RFP for geothermal on this island. So I think for the for the time being, more geothermal on the only island really that makes sense is not in the cards in the near term, if not longer. Yeah. Well, it's been that way for 20 years. 38 megawatts is what they were generating she 20 years ago. So no big. And I think that part of the just a speculation that part of the reason why that other bitter other developer didn't get, you know, didn't stopped early was not just because it didn't pencil out, but because he started a factor in the community resistance. Because that's part of the part of the evaluation isn't it's part of, you know, oh yeah. And if in the case of PGV, there were all these threats and sabotage incidents that happened back in the 90s. So if if if that other developer became aware or became the target of that kind of resistance, he might very well have made the choice at least with with regard to that factor. Yeah. So let's talk about let's talk about energy in general. I mean, the the COVID thing and the economy have driven, you know, usage down. Demand is not what it was. The economy is not what it was. And the economy and the amount of energy people use directly connected directly. And so this has to have an effect on the utilities, not only in Oahu, Maui and the big island, but also in Kauai for that matter. So what what is what is happening? Can you talk about it? Well, I'd be very happy to talk about that, Jay. But before we go before we go, I just like to bring an update to the continuing saga of the coaster of Pepe Kau, Honua, who Honua, aka Honula, I stumble over this all the time, Honua Ola bioenergy. There I got it out. The recent development is of course that the Public Utilities Commission responded as well as other parties to who Honua's request to the Hawaii Supreme Court. And then make sure I get it right here. They were asking for judicial relief by asking the court, the Supreme Court, to force the PUC to vacate the July 9th decision to nullify the amended power purchase agreement between who Honua and Helco and and they were seeking a court order to direct the commission to hold evidentiary hearings because the commission, you know, FYI, the commission has formally closed the docket. The docket as far as the PUC is closed and it closed without the commission allowing or decided the commission decided that there was no need for evidentiary hearings because fundamentally this amendment that the power purchase agreement approved in 2017 should not have been approved because of a lack of competitive bidding. So those are the two things that the that who Honua is asking the court and we're still waiting to hear from the court, right, waiting to hear from the court regarding this request for a writ of mandamus. This is a scorched earth. This is scorched earth. Well, and and you probably heard the folks at who Honua, my goodness, they are they are busy. They're busy a week or so ago. They reached out evidently reached out to one George Arayoshi. They reached out to one John Wahey. They reached out to one Ben Cayetano. They reached out to one Neil Abercrombie. And they got all four former governors to sign essentially a letter saying, you know, addressed to the court saying, we need this. This is a good thing. So I'm just, you know, if I had my hat, I would take it off to the folks at who Honua for being dedicated and relentless. I mean, in terms of, you know, whether the the lady has sung, you know, finally, finally, finally, we don't know yet, but didn't stop them from from going to four former governors. So I would just wanted to read briefly the response from the commission to, to who Honua's request of the things I just mentioned. And they say, quote, who Honua has failed to meet its burden of establishing any of the elements required for a writ of mandamus to issue a claim that is clear and certain the existence of a ministerial duty owed to the petitioner and the lack of another available remedy. Oh, that's kind of legalese a little bit over my head. But clearly the commission is pushing back, right, legally and trying to, you know, argue their side to the, the Hawaii Supreme Court, which is of course what I would expect. And then additionally, finally, to weary power, which is the owner of the wind farm, about 20 megawatts on the South Point area, they've been there for years to weary and Henry Curtis and life of the land joined the PUC and asking the court to deny who Honua's petition. So that's where we're at now. And it's, you know, when is the Hawaii Supreme Court going to rule on the request for writ of mandamus or rule on the request to force the commission to reopen the docket and to, to have evidentiary hearings, you know, I don't my crystal ball is not very good in that regard. I guess if I had to come up with something I would say within the next several months, you would think and remember who Honua claimed that they were going to be having to let people off back in September. They've been very quiet about that. I don't know if they have let people off or what they're doing really, but they certainly have not have not pulled the plug on trying to get this process and shine. Yeah, I find it extraordinary that four governors got involved in this. Can you remember any issue like this, any land use issue or energy issue that where four governors got together? I mean, what drives them is extraordinary. We have active legal process going on. And they're, you know, like ignoring the active legal process. They're saying, well, we don't really care what the PUC thinks. And for that matter, we're going to, we're going to shortstop the Supreme Court. We're going to tell you what to do. Extraordinary. Well, and, you know, let me ask you this, my friend, who's an attorney in the past or previous life or current life. I mean, you've got these five justices on the white Supreme Court. What extent, if any, do you think the the pleadings or the testimony of four former governors is going to have any effects whatsoever on the four justices coming to a decision? My reaction to that, Marco, just to tell you short briefly, is, you know, I think the state took a hit, has taken a hit on TMT. The state may well take a hit on the PGV. Who would invest money in energy in this state? You never know what you're going to get. You never know. And you never know how long it's going to take you to find out that you got shafted. Who would, who would invest? Who would invest in a super ferry? And so, you know, we got to have the rule of law, whatever it is, good, bad, or otherwise, it's got to be the rule of law. That's what we have to go by. That's what we have to sell ourselves on for investors everywhere. Now, what happened is not, not great for investors, because these guys at Hohonoa, you know, they put in what, $400 million, they say, and would lose it, you know, if the PUC prevails. But the PUC has made a case. I mean, it's ruled a couple of times. And the Supreme Court, you know, is now going to be called to rule. So if the Supreme Court, any suggestion the Supreme Court has affected by this obviously political maneuver with the four governors, that undermines, in my view, undermines the rule of law. You can't have that happen. You got to have it, you know, done by way of the legal process, whatever that may be. And if you don't like the legal process, then change it. But you can't, you can't just have people popping up out of the woodwork and doing that. So, and if I, if I were on the court, or if I had the ear of the court, I would tell them, don't, don't listen to that stuff. You make up your mind, don't worry about it. Don't worry about any political influence like this. It's a legal matter. It's a public, it's a land use matter. It's an energy matter, but it is not a political matter. That's what I say. Well, as we both know, politics sure intersects with land use, water use, energy, and on and on and on. But I agree with you. I think the court will be, will be driven to rule, not from political, political economic factors, but from the law as they interpret it right. Well, you know, it's a test of the court, but I have confidence, I don't think the court will exceed to that kind of pressure. Okay. Now, can we talk about, that was a worthy digression, Marco. I'm so glad you brought that up. We really have to follow it and to be more to follow. But what about, you know, this, this, this world of an economic failure that we live in? What about this world of, you know, reducing demand and the effect on both of the utilities of the state? You want to talk about that? Yeah, sure. And we're going to be cut short, unfortunately. So we're trying to, you know, we can always pick up on another show. But I mean, the long and the short of it is, as we both know, that the economy in the state of Hawaii since the pandemic, you know, let's trace it back to March has been, of course, way down. So much of that has been tourist based as in lack thereof tourists come, they spend money, they eat out in restaurants, they, they rent hotel rooms, they rent BNBs, they go vacation rental. And the energy, the drop in energy consumption across the state is, is significant. And when all of a sudden done, by the end of this year, as in 2020, there's going to be most likely a double digit drop in kilowatt hour sales for Hawaiian Electric Company, Siko Halkomiko and for KIUC. How high is going to be double digit? It's going to be less than 20%. It's going to be more than 10%. That's what I feel safe in prognosticating. And that's not chump change. For example, last year, if I have my number correctly, Hawaiian Electric, Hawaiian Electric Companies in 2019 sold about $2.5 billion, that's what it'd be, $2.5 billion worth of kilowatt hours across their five, five islands, three service territories. If let's make the math really easy, if they're down this year by 10%, which I think is a little bit on the low side, okay, a little bit, they're down by 10% through the math, 10% of $2.5 billion, that's $250 million less in sales, $250 million. Now, it's not as bad as it sounds because when they sell less, they buy less oil, they produce less power, right? But there is this thing called lost gross margin based on lower sales that will inevitably be a significant hit for Hawaiian Electric and also for KIUC, although KIUC being a co-op is a little bit different category. But there will be a significant hit in the financials for these companies. And the really juicy question is, which we don't have any answer to and this is something we can talk about more, is when all is said and done, we're the company like Hawaiian Electric that provides a monopoly of electrical service gross from their own generation and also from other producers. So they have a captive market, right? And they produce a public good in terms of utility, infrastructure, transmission distribution generation and being able to provide people power for their things to go on when they want them to in their homes and their businesses. So of that hit of X amount, which is going to be a hit not only on gross revenue, but a hit on call it profitability or return on equity, who is responsible for taking the hit, Jay? Who's responsible? Is it the owners of Hawaiian Electric Industries, which happens to be an investor on utility or IOU, created on the New York Stock Exchange? Is it the owners, aka the shareholders, that are going to take a hit in sales and a hit in margin and profitability? Or will that hit be borne by the ratepayers? It's a good question. Who decides? If it's hit, if it's, if it's borne by the ratepayers just to be clear here, then that pretty much inevitably means an increase in the base rate of power that people in their service territories will pay. Who decides? Come on man, you have one guess on this. The PUC. That would be a very important decision. With the input of one Dean Nishina and his fine people at the consumer advocate. This is not a docket that is open to any and all. It is a matter essentially of Hawaiian Electric. At some point early next year, once they, they will know what they sold total in 2020 and it'll compare to 2019 and the numbers in 2020, I guarantee you will be significantly less than 2019. So there will be that difference between sales and lost, lost growth margin. Very hard decision. And they'll report this to the commission and at some point they will go to the commission and say, this is what we need. This is what we are asking for. And the consumer advocate is going to chime in on that. They were going to say, yes, no, maybe part of it. I feel confident saying that probably the consumer advocate is not going to go for the whole amount. However much that whole amount is, from Hawaiian Electric and their ask. So it'll be Hawaiian Electric asking for X, the consumer advocate making their determination as to X or less than X. And then it'll be the commission deciding how to move forward with this ask. Do they put the burden more so on Hawaiian Electric industry shareholders in the company itself, or do they put the burden on rate payers? And if there's any indication, reading the tea leaves, because they're both, I believe for, oh, was it for Miko and Helco or Helco and Hiko, I get them except sometimes that Hawaiian Electric essentially pulled their, their ask for base rate increases over this, the past months of this year, because they knew or they were told that there was no way a base rate increase was going to fly with this commission. It falls in the same category as their willingness to their stated and repeated assurance that if you're not, if you're not paying your electric bill, then they're not going to turn you off, which is very nice of them. But I think they're in a, as we all are, a transitional situation here. And the question I put to you about this is, there must be utility companies all around the country that are experiencing the same dilemma. What are they doing? And what are the PUCs in those states doing to share the burden or, or whatever, solve the problem? It sounds like this is a national, at least a number of states are involved in this problem. We are absolutely right, Jay. And at the same time, we're in a kind of uniquely, unique pain point here in the state, because we are so dependent on a single industry. So you look at other states in the country that are more diversified in terms of the economy. So they have not, and I haven't done a comparative analysis of all 50 states, but my strong belief is that Hawaii is in a, at a unique pain point here because of our strong dependence on tourism. If I'm not mistaken, Hawaiian Electric has extended the, the moratorium on disconnects through the, through this year, which takes us this month and the next month, right? As of January 1st, and again, I could be mistaken here, you know, they're going to have to revisit that, but I can tell you, man, I can tell you on the mainland, a whole bunch of utilities, there is no longer a moratorium on disconnecting people. So you are having, and we will continue to see, more households and businesses, but especially I'm concerned about low-income households, whose power will be turned off. And then what? Well, we got some very difficult problems as a result of COVID. And gee whiz, it's not just this, it's like everything. The economy has affected us in so many ways. And some of the ways we understand, some of the ways we don't, but that doesn't mean it's not going to affect us later. So anyway, I think we're out of time, Marco, a very interesting discussion. And I hope we can follow this, not only this, but, you know, the national issues that will emerge when Joe Biden is elected, knock wood, because at that time, he's going to have to repair all the damage, including the damage to environmental initiatives and energy initiatives and the economy, of course. Marco, say goodbye to the folks. Well, remember I was in Orson Wells, Citizen Kane, he would be whisper on his deathbed, Rose, but in this case, I'm going to whisper to you three words. Are you ready for him today? Green New Deal. We'll have more to talk about in two weeks. Green New Deal. Yes, we will. It gets more and more interesting. Thank you, Marco. Marco Mangelsdorf. Great to have you on the show. Talk to you. Rock, my friend. Mahalo Nui. Bye-bye.