 Energy 808, the cutting edge. We're here with Marco Mangelsdorf, our co-host, and Eric Gleason. Formally of Next Era. Is that the right way to put it, Eric? Formally of Next Era? Not to my knowledge, Jay. I'm still employed by Next Era. Okay, alright. Formally of Next Era, as it was in Hawaii. I remember the day I met you, as a matter of fact, at the Plaza Club. I don't know if you remember that. I do. So, we're going to have an introduction, if you don't mind, Eric. This may take, you know, maybe 40, 50 minutes. But Marco has been planning this for some time. So, Marco, why don't you introduce Eric Gleason. Well, thank you so much, Jay. And thank you, Eric, very much for being on with us today. I really appreciate it. Something I've looked forward to these past months. Eric and I go back a ways. We first met sometime mid-2015, when the attempt of Next Era to buy, when I like to get in the streets, was in full play. I met him at my favorite restaurant in Hilo, Hilo Bay Cafe, along with Jen Zelko, my friend from Helico. And I thought, who is this guy who's so much more handsome, so much better dressed than I? So, so just on top of things, I thought to myself, I got to get to know him. And we stayed in touch through the course of the attempts of Next Era to buy Helico and Electric. And we stayed in touch afterwards. And I'm great pleased that I've developed a friendship with Eric. I think we're highly up him. He's a really solid, good guy. And I'm glad that despite his company's, so we say, lack of success at buying more electric industries, that we've had a nice friendship. And I really appreciate Eric and what he does, what he's done, what he will do, past, present, and future. So thank you so much, Eric, for being with us. And I think my first question to you will be, what in the heck have you been doing with yourself since that fateful day, mid-July 2016, when the news came down and that our public utilities commission decided not to go with the acquisition? Well, thanks, Mark and Jay, first of all, for having me on the show. Marko, for the kind words. Well, the first thing we did, so my wife and my three kids were living with me in Hawaii at the time. And the first thing we did is I took two months off and the first month of it, we spent more time in Hawaii. We love Hawaii and we wanted to actually even spend a little more time in the island. So we did that, then packed the kids off and my wife and I spent a month in Japan. And with two months of having decompressed, I was ready to go back to work and went back to the next era in Florida and continued with a job really I've been doing for the last nine years, which is building a utility business around the country. It's focused on high voltage transmission. And you know, that's what I've been doing. Well, you know, I wanted to ask you to, I mean, you know, this was traumatic for a lot of people who wanted to see that deal done, including me, for example. I told you that before and I was traumatized by the way it went south. Not only it went south, but the way it went south, you know, the kind of things that people said it did and the way the community, if you will, handled it. And I've always wondered, we haven't talked in a couple of years, I've always wondered how you felt about that. How about a walk down memory lane? How do you feel about what happened? Is this my therapy? You know, it was tough. It was, to quote Dickens, it was the best of times. It was the worst of times. It was a year and a half that in some ways I'm so grateful that we had. Hawaii is an amazing place, as both of you know, as I have come to appreciate. And, you know, that part of it was fantastic just getting to know people from all walks of life and the different islands. And the support we had from people like yourself, less so Marco, but, you know, I've forgiven him. But, you know, then there was the other side of it, of dealing with politics and then frankly, for me personally, you know, I bore a lot of guilt. I felt really bad that I led my company in here. You know, some things were said about the company that weren't true and weren't nice. And, you know, I let down a lot of people. A lot of people, not everybody in the state, certainly, but a lot of people in the state supported us. And I was really disappointed that we couldn't get it done. So it was tough. And at the same time, we have, you know, just phenomenal memories of Hawaii. We still go back there. So, you know, with time, the sort of the pain has dissipated and I'm able to just appreciate what's great about Hawaii. That's great. That's great. I really enjoyed meeting you, Eric. And I felt this, that if somebody were going to come in as an executive to acquire a company, a large company, maybe the largest company in the state, it should be somebody like you. That's the way I felt about it. I still feel that way. And I wonder if there's any possibility that at some time in the future, this might all mount up again, either in, you know, for a next era or some utility company like next era or for some company that you lead. Well, thank you, Jay. And, you know, it's, it's a consolidating industry. There are probably half as many utilities today as there were 20 or 30 years ago. So, you know, I guess anything's possible. I think, you know, for ourselves in Hawaii Electric at this point, we're very much focused elsewhere. And I, you know, I don't see that in the carts. But who's to say, you know, forever that, you know, nothing can happen. My own experience was, you know, one of the things I learned is, you know, Hawaii likes local businesses and Hawaii, you know, people in Hawaii, really the majority of people in Hawaii, as you know, as you both know, they really mistrust mainland corporations. And so when you're coming from the mainland, you're starting in a whole and, and the utility is super important to the state. And people know that, right? It's the most essential of essential infrastructure. You know, I wouldn't say, I'm not talking about for myself or next era, I think we've all moved on, but, but I wouldn't say nothing could ever happen with Hawaii Electric. But I think there's a very good chance that they're going to be an independent company for a very long time. Well, query, you know, you know, that's, that's kind of an uphill thing in the national consolidation process. I mean, as I see it, and I'm interested in your comment on it is, you know, we're in a national consolidation, as you said, of utilities, a transformation in some ways. And we're also, you know, in a time when the technology is changing, I guess that's part of the transformation. And in a time, in a time when COVID is transforming our society in general. So there must be all kinds of changes going on nationally that bear on this, on this kind of issue that your business is in, in change, it's, it's changing right now as we speak. Can you talk about that? I mean, that's certainly true, you know, utilities, as essential infrastructure, we've all continued to operate throughout. And so like for myself, I, while I work from home, a lot of people from our company work at home most of the time, we have a lot of employees who need to be out in the industry or need to be at their jobs and the safety, you know, keeping those employees safety, safest paramount and more difficult. And so, like any business, or like any family right now, we're all very focused on safety. But that said, I think utilities are very robust to different economic environments. And I think the utility sector overall, and this is, you know, is true of point electric or next era as it, as it is of any of them, you know, have held up very well. So, so I don't think, you know, that alone is not, I don't think changing the dynamics of, you know, strategic outlook for the utility sector so much. It's just a challenge we need to work through now. Well, you know, the economy is, I mean, it's still teetototter, we don't know which way it's going to go. Powell the other day said, oh, it'll bounce back, but you know, there are those economists that say we're in line for a serious depression. And depressions are not good for utility companies, nor are they good for the price of oil, for that matter. And I wonder, you know, how a utility company, how the industry plans to deal with right now an unknown level of recession or depression, because if, if, you know, if we go into a depression, people are not going to turn the light switch on. And so you don't need, you don't need to have that much generating power, and you will have less revenue. And that sounds like it's a challenge. How does the industry deal with that? Well, I'm glad you're not talking to our stockholders because they don't do it quite that bearishly. But, you know, I think, first of all, I think it's probably true that electricity consumption was growing during the Great Depression. But that's just a quirk of the time that the electricity business was in its infancy and, you know, electrical penetration was happening in our society. But I think more broadly, you know, I think the last thing, or near the last thing people are going to not buy in an economic downturn is electricity. They may have trouble paying their bills, and a lot of customers are having trouble paying their bills right now, that's a concern. But ultimately, I think what you typically find is that the regulators ensure that that does not jeopardize the financial health of the utility because that would be, you know, against the best interest of everyone. And so I think it's quite a recession or even depression resistant business. And I think, you know, really, if you look at how investors look at it, it supports that. Utility valuations have come off a bit, but they've held up better than other sectors. You know, utility earnings revisions in terms of, you know, their outlooks going down has been less than other sectors. And also the debt markets are open to utilities. So one of the ways that utilities have responded to this environment and thinking about some of the worst case scenarios that you're describing is actually to tap into the bond markets. These are typically investment grade rated companies. And they have, you know, preserved that access to the bond markets, even when, you know, those bond markets have been quite volatile for others. So, you know, it's, it's I won't say it's this is nothing from a financial point of view or an economic point of view. Of course, it's not this is a big deal. Not to mention the health aspects of it, but I think the utility business is holding up pretty well. And Peter Rossick of Align Electric, you must have dealt with him while you were there. Good guy on the show last week. And one of the subjects of discussion was, you know, how, how people, how lifestyles have changed. And what are people doing? Well, you know, they're on the internet more at home, and they're watching television a lot. And to do that, you really have to have electricity in your house. And if you didn't have electricity in your house, your life would really be, you know, troublesome. You wouldn't be able to do the things that the, the remaining things you can still do. So I think, I think that must be part of this whole formula going forward. But I wanted to ask you, you know, there was talk, I'm afraid I don't know the answer that was talk about the federal government as part of the CARES Act giving, giving support aid to the utility industry. Has that happened? Should it happen? What's, what's the need? What's the, what's the fact? I think you asked Commissioner Potter that last week and I have to say I have not heard that. I don't think there's anything that's applicable to our company. I don't want to say that shouldn't happen because there may be some good ideas people have, but I would say overall the, you know, the utility business is a pretty robust business. You know, I think most utilities are, you know, are struggling through, you know, with safety and worry, you know, worry about not just employees, but employees worrying about their families. So, you know, we're not immune to what's going on, but I think, you know, economically we're fine. Good. Marco, you have questions? Always. I knew that. Eric, if someone, let's say that our folks at D-Bed, Department of Business, Economic Development and Tourism were to find a not previously unknown stash of money to commission a manual, a primer, and they were to go to, to you Eric Leeson and say, you've had quite the experience in your efforts with Next Era to buy one of the oldest, most vulnerable companies in the state. And commissioned you to write a manual in terms of dos and don'ts. Now that you have had the years and the trenches in Hawaii, now you've had several years to recuperate, so to speak. What are some of the top-brow, high priority bullet points that would make up your executive summary for that manual for those who foolishly or bravely, something in between, want to try again at some point, which they will, sooner or later, something from outside will want to go after one of the jewels in the Hawaiian business crown, so what comes to mind? Yeah, so this is a manual on buying a utility in Hawaii? Well, not necessarily just the utility, but... I'm not sure anyone would buy that book from me. I would. Oh, you'd be surprised Eric. And if they would, I'd probably have some other things I want to sell them. Well, you know, I actually thought about writing a book. It wasn't serious. It was playful. The fun part was to think about what the title would be. You know, how not to buy a utility. So, look, clearly I am not someone to give any lessons or dispense any wisdom on that. But you have wounds, Eric. I do have wounds. You've learned. You're a bright guy. Come on. I'm trying to decide what to say and what not to say. Listen, I do have a lot of thoughts on this subject. You know, honestly, I come back to, I think you have to start by why didn't the merger happen? And, you know, there were a lot of things that were talked about and a lot of issues people raised. I think in the end, you know, 80 20, I think for most people, it was about it was about two issues. It was a trade off two issues. One is I think people really do and I know this I've seen the polling majority of people in Hawaii, don't trust manly corporations and they would prefer for the, you know, the utility to be as much as possible locally owned control. I think that's just an inherent feeling in Hawaii. And by the way, I, you know, I have a lot of sympathy for that because, you know, I have some familiarity with the history here in Hawaii, so in Hawaii. So that's one side of it. And that was clearly there was something that was going to be given up there. And then, you know, the other side of it is, at least in this particular case, there was the prospect of, you know, of saving some money off your bill. And I think, while, you know, people in Hawaii when they're polled about what's important for them about about energy they cite cost is the number one thing or at least they used to now. You know, when it came down to it, the cost thing and this is me rationalizing because I don't really know we didn't really poll like how do you view this trade off between cost and local but I think in the end, people knew they would be giving up some local ownership and control and they couldn't really trust some mainland corporation to give many cost savings. And so they were happy for it not to happen. I think that's the reality for the, you know, for the man in the street. And so I think that's a very difficult thing to overcome. Unless you have strong political leadership that sees past that and of course in this case the political leadership actually was more concerned about the local ownership and control and so it's very very difficult to overcome that so probably my advice would be unless you have very strong political leadership behind a transaction that fundamentally, you know can deliver some good things for Hawaii. Don't try it, not in the utility business it's too sensitive. The leadership is going the other way. You know, for example, want to correct me if I'm wrong or one of the elements that you saw that next era saw was the possibility of LNG at least as a bridge bridge fuel, at least, and indeed that's happening all around the country. It's happening all around the world. But the governor, the governor said no on both counts and that that that's not the kind of leadership that can that can allow for a deal. Yeah, I mean the LNG wasn't our idea we we you know was, you know, Hawaiian Electric actually originated that but we could have helped them do it. Well, obviously the governor wasn't interested and so that wasn't going to happen but you know I think the merger was more was about more than that. But I think at the end of the day that my sense is and it's hard to know for sure exactly, you know, Governor Igay's issues because, you know, he said different things at different times I'm not sure we really know exactly what his thinking was but you know the fact that we weren't the fact that we were a mainland corporation did did seem to factor into it based on some things he said. Marco. Over the past, she is I don't know, 10 or 20 years I've been what you know full time by 20 years. There's been discussion from time to time about interlinking the islands with a submarine cable power cable, so that you can conceivably have a big wind farm on Lenai mobile Chi geothermal on the big island and essentially interconnect all the islands and there's been a million spent on studies and so forth. First glance it would seem that it would make sense. Practically speaking, over time to have an interconnected state, electrically, as you have an interconnected US mainland east, east, west, north, south transmission distribution. What's your take Eric in terms of the feasibility do ability possibility of said submarine power cable. Well, first of all, I have to Jay, I think doesn't remember but actually the first time we ever spoke was in 2013. And he called me and wanted to get me on the show and I think it was Skype at that time and I was a technophobe so you know I'm like I don't know about that. But that was a while ago so actually the idea goes, you know where the idea really is Marco. Well, you're close in time, it was actually King David Calakawa and Thomas Edison at a meeting in New York in 1870 something I think. Maybe the 80s. So, is it is it a is it a technically viable thing. Yes. Could it make economic sense. Yes. Do I think it will ever happen. No. The reason for that is, you know, it would be controversial. And I think it's very difficult to get multi year capital projects done in Hawaii if they're controversial. There's an element on that. Yeah, we talked and I supported that also out of Lenai, but that, you know, it's a subculture point in Hawaii, each island has its own subculture. It has its own identity and there's not there's not really a lot of collaboration between the islands. Yes, it's a state, but it's a state of islands rather than an island state. And so, for example, and this is so close in concept that those forces stopped the super ferry from coming here. Those forces have have prevented the islands from collaborating on so many things, which would happen if they were, you know, all one one piece of land. And I think I totally agree I don't know if that's what you're saying Marco but I, I totally agree that it's doable, and it should be done, but then it won't be done, because of those political cultural considerations. In the mainland, there are cables everywhere, isn't it? Well, I wouldn't say that we so actually my business, we own one which is a 53 mile undersea cable that that supplies 40% of the power in San Francisco. So I'm very familiar with with you know how they work. There's not only one of its type on the West Coast, the type of cable that if you were going to do one in Hawaii you would have done is very similar to this cable we call Trans Bay in California. And then there are several on the East Coast that are comparable and then many in Europe, and as well as Asia, I have some as well. But many in Europe to, you know, to interconnect across the various seas, different countries. I've seen or heard of Michael Moore's new and less than wonderful movie about the environment and and energy it's called the planet of the humans. And it runs, it runs renewable energy down in every way you can think of it's very interesting. Well, like I don't know if I can watch that but maybe maybe watch the trailer. Marco, have you seen it? I have and once we've all seen it maybe we can discuss it then but in a minute we have. I wanted to ask you, Eric. What do you think are the biggest juiciest challenges that we face in Hawaii regarding our energy present in our energy future what do you think distill it down to to less than a handful or even two or three points. What do you think the biggest challenges are that we face and do we have much hope should we have much hope of doing a better job with these challenges. Yeah, I don't know if I'm probably not the right person to speak to challenges today. You know, I think over the long term over the next couple of decades I think there are to me there are probably three big challenges. One is high renewables penetration. It's easy to contract to buy or build renewables. But when you get to a higher and higher percentage once you get over about 50%, it gets increasingly difficult to manage and more expensive. And so, you know in the years to come not now but you know, 10 years or so from now it'll be interesting to see how Hawaii how Hawaiian Electric deals with that. And another one is hurricanes. You know, I live in Florida, our company Florida Power Light deals with hurricanes I, you know, how to catfire hurricane coming my way. Last year, it was, you know, get you know supposed to impact us and then, you know, fortunately turn north. This is scary time it seems like storms are becoming bigger and more common. And, you know, I've kind of from from what I watch in Hawaii it's kind of a similar story and so, you know, think about what Aniki did to Hawaii it's very scary what what could happen from a hurricane. So that's one I just think that problem is not is not getting better. And I think the other thing is costs, you know, integrating those renewables, preparing for hurricanes hardening your system for hurricanes, and then keeping the costs down or three are going to be three big challenges for Hawaii and Hawaiian Electric and, you know, I'm a big fan of that company and the team they have there and, you know, I know they're doing a lot of the right things and, you know, I expect the best, you know, from them and for Hawaii but I think those are the challenges. And I think there's probably, you know, if you compare the level of the degree of difficulty that Hawaiian Electric has on those three issues. Really, I think there's no one else in the industry that has the challenge that they have so they've got a lot on their shoulders. What about national national policy national trends and renewables seems to me there was a time when when people and I mean everyone were more excited about renewables than they are now maybe it's the administration, maybe it's Congress. And I just wonder how you feel about whether the federal government could do more should do more to encourage to incentivize to move us further faster on renewables. You know, this might surprise you. I mean, we're, you know, we're, as you probably know, we're a very big renewable energy company. I mean, we're the largest one in the world. It's a big business for us. But even with that, we are fine with, you know, tax credits being phased out as scheduled. Our view is renewable energy is has become extremely cost competitive with, you know, conventional fossil and nuclear fuel plants, and we're ready for for renewables to compete without without the tax credits, and which are all going to roll off by the middle of this decade. And we were there so, you know, they're they're getting so low cost and, you know, in more competitive markets I mean Hawaii is a vertically integrated market it doesn't quite work this way but, you know, in other markets in North America we're able to actually compete head to head with with these older plants and, you know, they're having trouble staying viable so so we feel really good about the future just based on economics. You know, then obviously there's individual states that have policies that support like like Hawaii have policies that support even more renewables and you know economics might might dictate. We're fine with us with, you know, if there if there's a Biden administration might we have that at the national level, you know, we may or at some point we may I think. I don't know if I don't know if I would agree that, you know, aside from the Trump administration clearly clearly the President has it is not a huge fan of renewables but I think aside from him. The national politic politics have really gone against renewables but I feel like one thing that has happened is there's more consensus around climate change and that we need to address it, even amongst many Republicans. And so that leads me to be optimistic that you know maybe over time there'll be some helpful federal policies as well. Thank you, Eric. Okay, we're almost out of time. Marco so it's it's for you to ask a last and very important profound question and then summarize. Can you handle it Eric. Probably not but let's go for it. Thank you to note that I remember one of the criticisms against Florida power and light and next year back in 2015 2016 was somehow they hadn't gone for far enough for fast enough with renewables. And I want to do a shout out to Eric and Jim Robo and everybody there to your companies that from what I can tell over the past handful of years that it's significantly accelerated I mean it's not that you weren't doing nothing so to speak, prior to to the dance with Patrick, but from what I can tell me and one of the things you guys were saying hey look at what look at everything that we're going to do look at everything on our board so to speak. And you in fact, you collectively followed through with that which I think is, you know, kudos to you all for doing that in terms of pioneering lower and lower costs with both solar battery storage and so forth so well done routine there Eric and Yeah, I mean, lots of other questions to ask but I think I'll just close by expressing my my thanks and gratitude for you being on the show with us today and and whenever and Eric and I talk whether it's on the phone, the text email we meet sometimes in San Francisco we meet in Wackaloa on the Big Island and it's always a great pleasure for me to spend time with you Eric in whatever medium, whether remote electronic or in person so I hope to see you and and before too long on your favorite of the Hawaii Island chain. It's true. Thanks Mark. Thanks Jay. Thank you Eric. Eric Gleason next era energy thank you so much for joining us today. Aloha, stay well. And you know when you're not eating and drinking in the restaurant. Yeah, you can wear your mask. But I'd like to be there. I'd like to be there. Aloha Eric.