 Hi, Energy 808, The Cutting Edge, here on the given Monday morning. I'm Jay Fidel, this is Think Tech, and a fellow on the other end of the phone is Marco Mangelstorff. Hi, Marco. Again, Jay, great to be back with you from the island. One of the principal restaurants in Molokai Close, how does that affect you? Which is one of the relatively few restos in Holden Island. Okay, all right, I'll expect you to. Let's talk about some energy things. What do you think? This is Energy 808, The Cutting Edge, and let's cut some edge. How about discussing first the Hawaii Supreme Court's decision on Hu Honua. This is a sort of groundbreaking decision, don't you think? It is of February, excuse me, 10th of May, a Supreme Court-ruled land in his law to approve a power purchase agreement between Hawaii Electric Light Company, Helco, and the Hu Honua power plant up in Pepticay, a little bit up along the Hamakua Coast from Hilo, or any type of state Supreme Court. State's goal of reducing greenhouse gases, which is required under state law. And you're working pretty much full-time for the past 20 years, and involved in Hawaii for over 40 Supreme Courts, effectively overturned the court would do, and that they probably be not until late this year, I'm going to guess, maybe early into next year, where what does it mean plant 20 plus megawatts worth is that, so I think, gone before. Well, some thoughts about that. I mean, don't you think they did consider, you know, the green aspect and the goals, but they found that this somehow fit within all of that? Don't you think they considered that? They're just as- I'd have to go back two years ago, and Randy, for Randy Wasser was the chair of the commission, from the part of commission two years ago, that it was insufficient, obviously insufficient as far as our court is concerned in terms of putting that in the mix, as far as- Well, now you said that the court remanded it to the commission, because it did not explicitly indicate the, you know, the effect, the environmental effect of this burning. But isn't it entirely possible that they had their reasons, and they just wrote a decision that didn't, for some reason, include a paragraph on that subject? I mean, was there anything in the Supreme Court opinion indicated that they wanted it remanded for further evidence, or could the commission, you know, simply say, yeah, we consider that. That is absolutely part of our reasoning, and here is our reasoning. They had a paragraph back in, end of story, problem solved. Isn't that a logical possibility? Theoretically, yes. Is it a logical possibility or a practical possibility? I don't- Do you think that this opinion by the Supreme Court requires them to take evidence? Yes, I do. I do. And you've got, of course, a new makeup on the court. I mean, Jay Griffin was just starting his term mid-2017 under Randy. Randy, of course, is a retired mission member, so I believe it's a new dynamic, and of course, bring different perspectives. So all that's said and done will be found to be not in the public interest, because my position when it comes to bringing new power generation online, not just in the state or on the big island, but in the world at large, we just have to do better. A different path, if we have the choice of burning something to produce power or not burning something to produce power, in virtually all cases, I would argue strongly that it has to be in the direction of not burning things to use to produce power. Well, let's assume they went out and looked for evidence that it wasn't a public interest on an environmental basis and that the burning was somehow consistent with the goal of achieving 100% renewables. Is there evidence they could find, or is that a dry hole anyway? I'm sorry, evidence to what effect, please? Evidence that it was consistent with the target of clean energy, 100% renewables, our state target, our state goal and mission. Is it possible that there is evidence out there? I mean, assuming for a moment that they need to go and look at that evidence, this is really an interesting position for new commissioners. Is it possible that there's evidence out there that would support that? We'll speak to that, but I think you're missing an important point here if I may be so bold, which is that the course decision makes explicit the value the court puts on environmental quality. And that, of course, goes beyond just meeting certain RPS or renewable portfolio standards or percentages, goals that are targets for 2030 or 2035, 2045 and so forth. So in my view, the courts is simply in terms of greenhouse gas and percentages of renewables by such and such a time, but looks at the broader environmental impact, which is Curtis and Life of the Land was arguing in terms of pursuing that case. Well, let me say that you can go out. I mean, there are different views on this, I think. You could go out and find somebody, maybe Hu Honua, to say that, no, no, we intended to put a cap on the smoke, that there's new technology out there that would seriously limit the smoke that would come out of this. So the burning is going to be condensed. I remember I visited a gas burning facility, which exists today in Kauai, and they have technology there that limits the amount of carbon that comes out of the burning. Well, they can do that kind of thing. Maybe it's even further advanced now in Hu Honua. You wouldn't even see the smoke. It would all be condensed into carbon blocks, which could be sold and used for other productive things. So it's not a fit to complete, is it? The project these guys have in mind is by necessity going to have carbon and smoke coming out into the atmosphere, and thus affecting our environment, right? Well, I mean, burning anything. You can do carbon sequestration. You could put scrubbers on. You can scrub it to 90x percent in terms of stuff not going to the atmosphere. But as far as I know, there's no way to get to 100%. I mean, burning any type of organic material is going to release carbon dioxide and other greenhouse gases into the atmosphere, and there's no way of getting around that. So I just remain firmly committed that we must, and we can, we must do better than burning anything when it comes to producing new power generation. And let me also bring up another point, which I think is also very important. This PPA was going to be enforced for 30 years, 30 years, at a remuneration rate of somewhere over 20 cents a kilowatt hour for burning not just the results of specific provisions in that PPA, but only to bring trees or other organic from wherever they so chose in order to... 20 cents. 20 cents is too high. Yeah, exactly. Exactly. So it was an atrocious deal from the get-go, and the Hula Nule folks said, well, we're going to be planting saplings, and that's going to offset, or more than offset the trees we're cutting down. And, you know, let's call that what it is. And since we're a family-oriented show here, we won't get into profanity, but that's a bit hard to swallow, that the notion that saplings in the near term are going to take the place in terms of carbon consumption that we said are decades old. I mean, that just to me is absurd on its face. Well, let me give you another logical possibility. I'm loaded with logical possibilities. And that is the, you know, the PUC has newly constituted effectively since then. Reads this opinion, and they say, hmm, you know, this wasn't, this didn't work out. We're going to take a fresh look at this, you know, right on its face, and we're going to say, hey, times have changed. We are more concerned about the environment, perhaps than we were at the time the PUC wrote this, thanks to the Supreme Court for reminding us. And yes, that is the law, there's nothing in the record, and we're not going to waste any more time on this. And furthermore, you know, to us, this is too high a price. So we're going to, we're going to, you know, what, disapprove it right now. End of story. You know, one page per curium decision, end of case, no approval. Isn't that a logical possibility? I can't speak to that panel exactly what the commission is going to do in the months to come, Jay, but I would think that it's going to be more than just a one or two page quick and, you know, kind of down a dirty decision. I think it's going to be substantially more, more pros up with justification for, for whatever decision that they're going to make. Yeah, here we go. In the meantime, I take it that a whole new is not doing anything. No, I mean, they would be rather foolish to, I mean, they've been trying to convince Helco these past months to please let us start selling you power, to which Helco said, no, we're not going to do that. So, you know, by their own account, they've got somewhere around 200 million plus dollars sunk into that facility. Already. And so it's kind of hurry up and wait, you know, and my friend Warren, it's in that Warren, you know, my gut tells me that some. Yeah. So, you know, one, one other question just to clarify. So you have the PUC makes this ruling a couple of years ago. Now Supreme Court, you know, you have the full of promises or remands back to PUC. Who brought it up to the Supreme Court? Who appealed the ruling? It wasn't who knew it. Was it Henry Curtis? I give full kudos and respect and great admiration to our friend Henry Curtis at Life's Bland for, for decades now being kind of a, I'm sure, you know, by Henry's admission, he's lost his fair share of battles as well. He prevailed spectacularly. Now a great amount of appreciation for Henry for doing this. Yeah. Yeah. Well, that's really interesting. That's a clear win for him and for others who take similar positions going forward. We're going to take a short break, Marco. When we come back, I want to talk about PGV, Pune Geothermal Venture and see where that is, given, you know, the work that's being done to try to restore Pune. We'll be right back. Aloha. I'm Cynthia Sinclair. And I'm Tim Appachella. We are hosts here at Think Tech Hawaii, a digital media company serving the people of Hawaii. We provide a video platform for citizen journalists to raise public awareness in Hawaii. We are a Hawaii nonprofit that depends on the generosity of its supporters to keep on going. We'd be grateful if you'd go to thinktechhawaii.com and make a donation to support us now. Thanks so much. Thanks so much. Aloha. This is Winston Welch. I am your host of Out and About where every other week, Mondays at 3, we explore a variety of topics in our city, state, nation, and world, and events, organizations, the people that fuel them. It's a really interesting show. We welcome you to tune in, and we welcome your suggestions for shows. You got a lot of them out there, and we have an awesome studio here where we can get your ideas out as well. So I look forward to you tuning in every other week where we've got some great guests and great topics. You're going to learn a lot. You're going to come away inspired like I do. So I'll see you every other week here at 3 o'clock on Monday afternoon. Aloha. Energy 808. We're here. We're live with Marco Mangostoff. He joins us from Molokai. And now we're going to talk about PGV, another big issue on the Big Island, having to do a geothermal. So what's the status, Marco? Let me do a little kind of preamble to kind of set the stage. So a geothermal venture has been a power plant operating in the lower Puna, east Puna for going back to 1992-1990 through a successful run in terms of producing a substantial amount of renewable energy for a quarter of a century. If they were setting PGV down, I would have said no, no. That doesn't make sense. It's an operating power plant. I may have some issues with it on a number of levels in terms of pricing, some risks involved, but I was not one of these people who was anti-geothermal from the get-go. Then, of course, May typically comes after April and the calendar sequence and the beginning of May of last year. 24 fishers I think we ended up with, with the power plant back online. This is even after the plant was physically isolated from road access due to the lava flow. This is after a number of wells were overrun by lava. After several thousand gallons of eruption because there was a fear of the plant being completely inundated and that pentane going up in a fireball with people saying both yes it is, including our friend Mike Calachini, who's the general manager there, other people who approach geothermal, and then on the opposite side of the fence are people like Senator Russell Ruderman. They put a point on the line area in a geothermal plant, at least. So reconstructed power poles back in place, which are required to bring the power plant back online, including the Department of Health, including the Department of Land and Natural Resources, entities and more and more people in the public interest for it to come back online. Horses like this and just, I'll say one more thing before I stop talking for now. One of the more recent letters from there was a so-called emergency event that took place recently at the power plant. I believe it was four wooden power poles on PGV property become toasted because of so-called activity in that part of the island. I have three reactions to that. One is there's a purchase power agreement out there, and I guess that's really not standing in the way. PGV is entitled to resume under the purchase power agreement. Two is you said that they have successfully delivered power to the big island for 25 years, but there's always been resistance all the way through. And including now, and sometimes at some points in the 90s, that resistance was humongous. I mean, there were death threats about Pele's breast all that way back when, and it never really stopped. So there's always been a fuming fight about this all the way through. And the third is, well, gee whiz. Yeah, there's still some volcanic action going on, but that doesn't mean that what happened a year ago is going to happen all the time. They managed to get through 25 years without a problem, I mean, volcanically. So I'm not sure that a couple of poles with residual heat are an indicator that this is an ongoing volcanic problem. The likelihood, the probability is it's going to be OK, at least for a long time. There are two questions that come out of that, though. One is, is the cultural fight over? No, it's not over. And maybe this all reflects, like with Senator Ruderman. Is he still the Senator? Russell Ruderman? Yes, he is. With Senator Ruderman, you know, he's reflecting community concerns and they are largely cultural, and that's a reality. That's not the law, simply not, but that's a reality. And the other reality is that the cost of delivering electrical power from PGV is also probably too high, like who, who know? You know, you've got to get back to a more current marketplace type value, and we don't have that under the, you know, under the reality of the purchase power agreement. And these are practical points, not necessarily legally one, legal ones, or scientific ones. And that's what's standing in the way of this. I mean, I think you had the cultural thing standing away, and although it's unspoken, you have the high price standing in the way. And that's what we're really dealing with. So, yeah, there's so much resistance. You know, I'm afraid to say that PGV may be history, but not for the reasons that are specifically, you know, legally indicated. What do you think? Well, let me respond a couple of ways. One is, if you had asked all the bright minds at the U.S. Geological Survey, U.S.GS, and I don't mean to disparage them in any way you should perform, if you'd asked those people April 1st of last year, okay, April Fool's Day, tell us what the likelihood is within 30 or so days' time. There's going to be the largest eruption in the Lower East Rift Zone that we've seen for more than a hundred years. How do you think they would have responded? I don't think you would have found one of them that would have said, yes, I think that probability is extremely high. My point being is that mother nature, Madam Pele, is by their very nature, or her very nature, destined to be surprising and to be unpredictable. Oh, absolutely, Marco, but let me add that we are in a time of climate change, the kind of climate change that could bite us all in no time, any time. In fact, it is predictable. This is an El Nino year. These islands have managed to escape severe weather, I mean really severe weather for a long time, but it's on the way, it's coming. And we could, you know, and that's different, of course, because of volcanic action. That's the kind of weather that would tear apart any solar structure and who knows what else in the grid. So, you know, I'm harkening back to the thought about diversity and having a portfolio that includes many diverse sources. So wouldn't diversity be good? Because we have unpredictable things happening as a result of climate change that we can't, we can predict them actually. We know they're going to happen. We just don't know exactly when. I'm certainly not arguing, and I wouldn't argue against diversity per se. What I'm arguing for is that there are better alternatives, cheaper alternatives, safer alternatives than bringing that plant back online. And you mentioned costs, that's an important factor. So let me address that for a moment. We have heard for months that Helco and PGV have been negotiating the possibility of a lower price for the first 25 megawatts from that power plant, which since 1992-93 when that power plant first came online, the first 25 megawatts have been compensated at the so-called avoided cost rate, which tracks the price of petroleum. Okay, so as oil goes up, and it's been around 60 bucks a barrel for a number of months, as oil goes up more likely than going down over time, essentially you've got power plant operators like PGV and ORMAT, which are making windfall profits because their expenses don't go up commensurably as they get rewarded more handsomely. Back in 2010 and 2011, as Helco and PGV were negotiating for an additional 13-14 megawatts on top of the 25 megawatts, the 13 or so megawatts, the new megawatts we'll call them, were at a fixed price, seemed more advantageous and also mandated by law by a legislative act signed by the governor or Lingle back in 2006 that banned avoided cost contracts all together across the state. Back in 2010 and 2011, ORMAT could have agreed to have the entire output of that power plant at a fixed to lower cost. They chose not to. They chose to keep the first 25 megawatts at avoided cost. Because it was more profitable for them to do so. Would you change your mind on this? Would it soften your position if they came forward and said that they would change it now? They would reduce the price now? That's a great question. My answer is not to the point of me saying, well, I guess it's okay because they're willing to sell it cheaper. I'd still fall back on we can do better. We must do better. This is inherently not a safe bet when there are better alternatives in that solar and storage is coming down. House come down significantly in the past several years alone. And yet, even though it is not considered 100% base load for power, we are getting there. We are getting there. And renewables that don't drill into the earth in a highly hot active seismic lava zone, we can do better than we're doing those. Everybody was so hot about geothermal now. It's not really happening. So what I get out of this is that ORMAT has spent a lot of money trying to rebuild its system, trying to get back online. I think they actually put in money for a roadway. They've been as ardent as they could be, I think, aside from changing the price to get back online. But they're not back online. And now the government is going to be looking at some multiple points of view and delaying, again, delaying the possibility of them getting back online. So it could be just by, you know, the facto delay, it could be the end for ORMAT. If I were in New York Bank, I'm not so sure I'd invest a lot of money right now. They've already spent a lot of money getting to where they are. But they're going to have to spend a lot more money after that to get back online. When you say they, I'm not privy to this confidential information, but there's no doubt in my mind that their insurance company or companies have ponied up substantial amounts of money in the millions and millions range most likely for business interruption, which obviously for the past year they haven't been able to sell any power, which my rough calculation is somewhere in the two to three million dollars a month in terms of what they sell to Helco. How much of it is coming out of ORMAT's pocket versus the insurance pocket? We don't know. That's, you know, private information. But, you know, insurance companies typically don't like to keep on paying and paying and paying with no one in sight. So, you know, the juicy question for me is how long instead of insurance companies going to continue to pay these millions of dollars for trying to bring the plant back online? I'm sure that's a matter of contract. Yeah, whatever it is, that's going to be what's in the insurance policy, which as you said, we don't know. Marco, it's time to say goodbye. I'd like to hand the honors to you. Could you say goodbye to our viewers and listeners? Well, I don't want to say goodbye, Jay. We didn't get to public benefits regulation, which is so hot and juicy, but hopefully we'll be able to get one of our PUC friends on next time or the time after that or we can take a dive into PBR, which is lots of good stuff. So, thanks so much for having me on. It's been great to be back with you. Yeah, next time, Performance Space Regulation. We'll go into that in detail. Marco Manglestorf, Energy 808, The Cutting Edge. Thank you so much, Marco. Talk soon. You rock, my friend. Thank you. Aloha.