 Bingo, we're back. It's Monday. Wow. And here we are on energy. It's Marco Mangelsdorf and me on Monday. Meena can't make it today. So the two of us are charging ahead on energy here in Hawai'ine. Good morning, Marco. How are you? To paraphrase, I think it was Harry Belafonte, a beautiful bunch of ripe energy issues. Stay in energy. Showbiz is not the way for you yet. You're very kind. Thank you. Yeah, I am. I am very kind. I need all the discouragement I can get. Thank you. I'll help you. Okay, so let's talk about, let's see, DER. Let's talk about the state of play in the distributed energy resources docket where the PUC had issued an order stating that it's time to move to phase two. What does this all mean, Marco? Well, we had a decision, an order from the Public Utilities Commission last Monday, the third, and it was essentially opening the gate, the starting gate for what was described back October of last year, almost a year ago. And they're ruling a year ago when they decided to officially bring net energy metering to a close, that the new programs to follow net energy metering, customer grid supply, and customer self-supply were part of what they described as phase one. And now they are stating as of last week that they are requesting all the parties, the interveners on the docket, that they have 10 days. I'm not sure if their business days or calendar days, but 10 days to essentially tell the commission what their views are, their suggestions in terms of proceeding into phase two. So there are the usual suspects, the consumer advocates, the Hawaiian electric companies, of course, various energy stakeholders including the solar group, Ulupono, and Blue Planet amongst others who will have the chance to pipe up in their filings to becoming in the days to come as far as where to go. And the reason I think this is especially important right here and now is that the customer grid supply caps which were established by the commission a year ago under phase one, a cap of maximum 25 megawatts for Oahu, 5 megawatts each for Hawaii County and Maui County, that those caps have now all been reached on their respective islands. And we in the industry and those homeowners of which 80 or 80 more percent of those who owned single family homes who do not have solar PV, the options right now are much more limited based on the caps being reached, the option being, the main option being something known as customer self-supply which does not allow, does not allow for any export surplus PV power to be fed into the grid and instead essentially requires the use of battery storage and the battery storage according to mine. Deep dive into residential battery storage right now. The options are rather limited and they're rather expensive. So, you're very nearly double your expense by getting battery storage there. So it's not really an attractive option. On the other hand, it seems to me that getting out of NEM was probably a good idea. It was elements of fairness about it and elements of let's move ahead with this thing. But, you know, clearly, what is phase two? What is it supposed to be? And why is the PUC asking the crowd, if you will, the regular crowd, so to say, that you identified for ideas on it? Why don't you just come up with something and then feel that, you know, for comment? Are they asking them to come up with an idea here? That's no way to regulate, is it? Well, I mean, it's not just the crowd, so to speak. It is the officially approved interveners on the distributed energy resources docket who are very much part of the proceedings in terms of shaping what the next decision and order will be regarding phase two. And it really has to do with, it's one of the big four, as I call them, as far as the outstanding energy dockets before the commission right now, the big four being DER, distributed energy resources, the power supply improvement plan being number two. And that's also known as PSIP. For short, there's another docket that's regarding demand response. And then finally, there's decoupling. Decoupling being that, as of a number of years ago, utility profits were not tied to utility kilowatt-hour sales. So this is one of the big four, the DER docket. And the reason it's really very, very important to those of us in the industry and also to the buying public in Hawaii is because it's going to determine what options that home and business owners have as far as being able to install a renewable energy or affordable take system on their roof or in their yard or on their property, what type of options they will have in terms of being able to interconnect to their local utility company and what the interconnect agreement terms and conditions will be. So it's a very, very critical time right now. I won't argue that. Certainly it is very critical. But the PUC knocked off NEM a year ago. And it's been very quiet on that. And essentially nothing has happened for replacement of NEM. And I suppose you have to say, I think you said this at one time, NEM is dead, so long live NEM. There has to be a successor to NEM. And you know, like there's, you know, the sound of silence here for a year. And now they want the crowd, forgive me, but that crowd, the intervener crowd to come in with ideas. Why don't they come up with an idea? Why didn't they come up with an idea six months ago? Or more? Why did everything take so long? Forgive me for asking, but I'm sort of the John Q. Everyman. Why does everything take so long? I can't speak to that, Jay. That's something that Randy Owase, Tom Gorak and Lorraine Akiba are much more in a position to address that rather than me. But I think your overall point as far as how long things take sometimes is very well taken. And my concern is that it could easily be easily four, six, eight months, or perhaps even longer before a phase two roadmap is number one decided on amongst the parties, and two, a phase two is actually implemented. And in the course of four, six, eight or longer months, a lot can happen. A photovoltaic industry can live and die in that period unless we were to be given some type of what I'll describe as interim relief. The interim relief being an interim order, which is what I would wish for if I had my druthers, for an increase in the customer-grit supply cap that would be essentially implemented immediately. Well, I think you're absolutely right. And that would have been the same segue I would have made, that in this period you've had installers going bankrupt. And the whole industry, I mean, I saw a chart on Oahu PV permits issued. Oh, it's way down. And that must mean the installers are eating grass already, or eating stones, as the case may be in the Bible. They've got nothing going on because there is no nem too. And so, you know, this is not without effect this kind of delay. It's costing some guys their business and their livelihood. Let me ask you this, Marco. If I made you a queen for the day, and I made you an intervener with the power to make some very influential statement on what to do for phase two, what would you do? Did you say if you made me queen for a day, Jay? Yeah. That was the old TV show. I don't think I would fit in those tight shoes with the stiletto heel, so I think I would be much more comfortable being prince for a day. Okay, I just want to get that straight, Your Honor. My first decree as prince energy prince of the realm would be to issue more or less immediate order that would, number one, increase the existing nem caps for Hiko, Helco, and Miko, which as I said earlier have already been reached, the most recent one being for Oahu, which was reached a couple of weeks ago. I would increase those caps, number one and second, I would reduce or lower the credit value for those surplus kilowatt hours, those exported solar kilowatt hours from the existing rate of 17 cents and change for the Big Island and for Maui and 15 cents and change for Oahu. I would reduce that by some type of reasonably defensible amount of several pennies to more, get closer to what is the avoided cost rate, a kilowatt hour rate, which is tied to, typically tied to the price of oil, which is still somewhere in the right around sub-50 dollar a barrel range. So, if you were to give me princely powers to do that, Jay, that would be my first decree. Okay, well, I think that's good. But, you know, how do you justify establishing these caps based, I assume, on legitimate analytics where we take our best technology and we establish the cap and it's serious because it affects people's livelihoods and all that. And everybody was so ticked off, so you established the cap. And then a few months later, whoops, we were only kidding, that's not the cap at all, we're going to move the cap. How, you know, how does that work? I mean, if I was looking at it from the outside, I would wonder how real the cap was in the first place. It's an excellent question, Jay, and the question begs, following question, which is how much additional PV generating capacity can our isolated islands accommodate? What I mean by that is how much additional PV generating capacity that can export to the grid versus additional capacity that is only supplying power to that individual load, the load being at a home, the load being at a business. So how much more exportable PV capacity can the Helco, Hiko, Miko, and KIUC grids, for that matter, how much more can they accommodate in today's grid of 2016, not the grid of tomorrow, not the smart grid of X years from now, but today's grid and the near term grid? And the answer to that question, in terms of a precise numerical value, is not knowable, as far as I know, not being a utility engineer or electrical engineer, but my utility friends tell me that they have some general ideas, not to the K-dub, not to the single watch basis, not to the nth degree and decimal point, but have a general idea that Oahu can handle X number of more megawatts, and I don't know what that is up top of my head. The Maui grid can handle additional X more megawatts. Big Island can handle X more megawatts. So that should be used as a guide in terms of whatever additional cap room were to be provided by the commission. And again, I'm not into the devilish details on this, because it's not easy, necessarily easy to do, but come up with some type of interim number, whether it's another five megawatts for this island, another five megawatts for Maui, another 25 for Oahu, I don't know. But my intuitive hit, Jay, based on what I do know, is that if those caps were to be in effect doubled to go for an additional five here, an additional five for Maui County, additional 25 for Oahu, I believe that those numbers would not be pushing the grid system-wide for those islands into what I'll call the red zone. I believe that should be the case, but I don't have the data in front of me to necessarily support that. I'd sure like to see the algorithms on the basis of which the caps were established and to update them for changes in circumstances and use and who knows what. And then find a formula to say what they should be from all that we know and then share the formula. That's what I would do. But on the other hand, I am neither queen nor king nor prince in this department. And with that in mind, we're going to take a short break. We'll be right back. That's Marco Mangelsdorf and me, Jay Feidel, here on The Monday, talking about energy. We'll be right back. Good afternoon, Howard Wigg, CodeGreenThinkTechHawaii.com. I appear on Mondays at three o'clock and my gig is energy efficiency doing more with less. It's the most cost effective way that we in Hawaii are going to achieve 100% clean energy by the year 2045. I look forward to being with you. Aloha. Hi, I'm Ethan Allen, host of Lakeable Science on ThinkTech Hawaii. I hope you'll join me each Friday afternoon as we explore the amazing world of science. We bring on interesting guests, scientists from all walks of life, from all walks of science, to talk about the work they do, why they do it, and moreover why it's interesting to you. What the science really means to your life, its impacts on you, how it's shaping the world around you, and why you should care about it. I do hope you'll join me every Friday at 2 p.m. for Lakeable Science. We're back, we're live, and I can only think after our discussion during the break that what Hillary should have said to Donald Trump last night is, Donald, you're no Abe Lincoln. You see, I knew Abe Lincoln. Abe Lincoln was a friend of mine. I've had tea with Abe Lincoln and Donald, you're no Abe Lincoln. You're Donald, you're no Abe Lincoln. Well, moving on to PSIP, what does that stand for? What is it? And how long, that's been around for a long time too, hasn't it? What does it mean to us? What does it mean to the DER issues we've been talking about? Well, you threw in a whole bunch of questions there. Jay, so let me try to pick them off one at a time. So the Power Supply Improvement Plan, or PLAN, go back to their predecessors known as IRP, or Integrated Resource Planning, IRP, and this has been going on for years and years, at least ever since I've been doing solar pretty much full time here in Hawaii for more than 16 years now, that the utilities had regular IRP rounds, Integrated Resource Planning rounds, in terms of trying to come up with how all the pieces of their electric grid were supposed to play nicely together and take into account putting out to pasture, so to speak, generation, which was eventually cost ineffective and too expensive and bringing on a new cheaper generation, right, and trying to keep costs down for ratepayers and if not lower costs ideally, which we, of course, haven't seen really many of that. So a number of years ago, the IRP process essentially morphed into a new acronym known as the Power Supply Improvement Plan, or PSIP, or PSIP for short. What is the same general idea, isn't it, as the portfolio? Yes, yes, it's essentially a rather important, if not critical roadmap, that the utility, the Hawaiian Electric Utilities, come up with as far as this is how we see the future developing on each of our five islands where we have these isolated electric grids, the future developing as far as greater reliability, better performance in terms, well, reliability is high in general, isn't quite high overall, but shifting over to more renewable generation, cost effective renewable generation and just moving forward to where everybody in the state pretty much agrees that we need to move forward to, which is more renewables, cheaper power, and have that, of course, be reflected in rate payer rates, stabilizing, if not going down. So the commission under the PUC, under former chair Minna Merida, and Mike Champley, who's no longer there, and Lorena Keeba, who's still there, I mean, they were very activist, I would describe them as a commission under Minna's tenure, to try to provide a roadmap themselves as far as where they thought the Hawaiian Electric Companies needed to go. So just to kind of bring us up to the present time, the Hawaiian Electric Companies are now working on what I call Rev 3, the third revision of the PCEPS, because Revs 1 and Revs 2 submitted to the commission and to the other stakeholders were found essentially to be inadequate, and the commission gave feedback and said you need to essentially do a better job, and now all eyes are on the Rev 3 submission of the power supply improvement plans for HIKO-HELCO MIKO, which are due to the commission by the 1st of December, and I know... There's been some extensions on that, right? It was supposedly in August originally, I think, wasn't it? That could be the case, but this is something I know that the Hawaiian Electric folks, the teams there at HIKO-HELCO MIKO are putting a fair amount of time and effort into right now, trying to come up with the third Rev of the PCEPS that they have to submit not too many weeks from now to the commission, and hoping, of course, very much that this next submission is going to find, shall we say, better favor by the commission, and that remains to be seen, of course, until they submit something. And now what we do know for sure is that the folks from Juno Beach, Florida, and otherwise known as Nextera, they are gone in a big way after having been denied the keys to the kingdom, queen, and princessdom back on July 15th. So they're gone, and they were, of course, very much in the mix over the year or year and a half, two years that they were involved, and also we know what's going to happen with LNG, because part of the acquisition between or the acquisition of HCI from Nextera very much involved liquefied natural gas, which, of course, is opposed by the governor, opposed by a number of the energy stakeholders, and I'd be very surprised if the third iteration of the piece from one electric was doubling down on LNG. I think that's most likely off the table. The LNG is gone, gone, gone, at least for now, now, now. So there have been a number of new twists since the last PCEPS submission, PCEPS number two. So what are they going to come up with in PCEPS number three now that Nextera has been sent away and now that LNG most likely has been sent away as well? I mean, again, the focus has to be on making us more energy independent and at a cost-effective rate, not renewables at any cost, but cost-effective renewables, to be able to go where everyone says we need to go. And there are many ways to that promised land, to the land of Oz, right, Jay? You get a number of energy stakeholders in the room and try to ask them to come up with a consensus, at least my experience here in the state is that that's like herding kitty cats, you know, without having adequate meow mix. No, it hasn't worked. I mean, it's cost so much time. And this current, you know, process on PSIP reminds me of a kind of negotiation in business where you say, how much do you want for your business? And they say, how much are you willing to pay for your business? And they say, we're willing to pay $100 million. And so, well, that's not enough. What's your next offer? And then it's, well, we're willing to pay $150 million. Well, that's not enough either. What's your next offer? And it's like, you know, serial offers with not acceptances. And the fellow who makes serial offers is usually wasting his time. And from a legal point of view and a strategic point of view, it's a bad idea to get involved in a process with serial offers. You know, for example, why doesn't the PUC say, here are the parameters and no, you can't include LNG. You've made a substantive policy decision about that. So don't waste your time on LNG, or do waste your time, whatever it is, you know, and give them hard parameters to follow so they don't wind up making serial offers into the blind. And I think that's what's happened. It takes a long time to do that because, you know, it's like, keep coming, keep offering more, keep coming, and that ultimately will let you know when it's enough. You know, somebody was talking about it. We often speak of the utility of the future and what it would look like. You know, I'm sure you thought about that as being part of HIEC. And, you know, I wonder, shouldn't the question be turned also on the PUC? What does the PUC of the future look like? Have we compared our PUC with other PUCs? Is there a better way to do this? Well, I mean, I think a lot of people would go back to the so-called inclination paper from the commission back in 2014 where they really provided a vision and a roadmap of where they saw, this is they being Mina, Mike Champley, and Lorena Kiva, where they saw the need or the direction that the Hawaiian Electric companies needed to go in. So, I mean, they provided a rather bold and ambitious roadmap in terms of the inclination paper and to what extent, with a new makeup of the commission now with Randy being there, not Mina, with Tom Gorek being there, not Mike Champley, to what extent this commission feels bound or attached to the inclination paper. I don't know, but I know Chair Randy Wasse has made reference to the inclination paper. Yes, he has. He made reference to that when he appeared in our show a few weeks ago, yeah. Well, with the implication that I got from Mr. Wasse being that he still sees a substantial amount of value and importance in the inclination paper. So, I mean, but you know, you like to use the too many cooks in the kitchen metaphor, Jay, and you know whether it's cooks in the kitchen or captains on the deck, I mean, we truly have a number of, you know, heavyweight energy players in this state that most of the time or a lot of the time are not on the same deck and not on the same sheet music or on the same, you know, cookbook. They have different cookbooks. So, realistically, as a political scientist and an energy player as well or in a small way from Little O'Hilo, I see intrinsically substantial challenges in our state to try to get enough of the important stakeholders on the same plane, the same page to be able to move forward, number one, and move forward in an expeditious way. Well, kind of forget about it. It's just kind of the nature of the game that trying to get things done quickly here. It's just, you know, takes a long, long time. I mean, it was again December 3rd, 2014 when Hawaiian Electric and Next Year announced they were going to move forward. And then the next month, they submitted their 300-plus-page document to the commission, the merger agreement, the acquisition agreement, and then it took a year and a half after that for a decision to be made. I don't think we can afford to move this way. I really don't agree. You know, and there are provisions in the law that allow the PUC to sit or have, you know, mediators or facilitators or masters, special masters, sit with the stakeholders, whoever they may be, on a given issue, and work it out, get in a room, close a door, and find a solution. And I think the whole quasi-judicial notion that was generated back in 1910, no longer applicable. This thing moves too fast. And frankly, there was a time when we were ahead of the game on this, maybe ahead of the world on it. I don't think you can say that anymore. We're stuck in our own juices, and we have to find a way procedurally to make this happen. Whatever happens, we have to take the chance, make it happen. And, you know, 18-month iterations are simply too long. Comment, and then we'll have to close. Yeah, I wish I saw way of fast-tracking things, Jay, but it just doesn't seem to be the nature of our particular these. It seems to be kind of our lot that things grind on and take longer than they should. In the meantime, consumer choices are limited. TV companies go out of business, and I hope that doesn't happen, but it certainly is a concern of mine. So on that cheery note, my friend... Marco, it's wonderful having these discussions with you every other Monday. We learn so much. I learn so much from you. And together, we seem to come up with new thoughts all the time. So I hope some of these are listening. I hope you're listening out there. If you are, call us at 415-871-2474 any other Monday at noon, and we'll tell you everything you need to know. Thank you so much, Marco. Here, here, my friend, until the next time, and we will illuminate the darkness or make it even more darker depending on your point of view. Think back on energy, illuminating the darkness.