 Think Tech Hawaii, civil engagement lives here. Okay, we're so excited to be back. I'm Jay Fidel. This is Think Tech, and it's Monday. Ooh. Ooh. Another Manic Monday. And this is Energy 808, The Cutting Edge with Marco Mangosdorf, my co-host, joining us by phone from ProVision Solar in Hilo, Hawaii. Say hi, Marco. Hi, Marco. Very nicely done. And Jennifer Potter, really one of our favorite people. She's a commissioner, now six months in office at the PUC, and we are so happy to have her here. Hi, Jennifer. Hi, Jay. It's great to be here. Thank you, Marco, and Jay for having me. I appreciate it. Absolutely. Marco, I was asking you if you would please introduce Jennifer so that we can get a handle on those people who don't know who she is and can know more about who she is. Well, I don't want to gush too much, because I don't want Jenny to turn too red there on camera. But Jenny is a rock star, in my view, and brings so much to this commission since her appointment in the beginning of July. And I'm just so pleased to have you and Jay there, Dr. Jay Griffin, on the commission, and we look forward to who the able person will be to replace the irreplaceable Randy Awase. But Jenny, thank you so much for joining Jay and I, and it's a real pleasure to have you in the studio for the first time. We've done remotes with you before, and now Jay has you in the flesh, and I have you on the screen, so it's a great way to start off a somewhat manic Monday on this December 3rd of 2018, so thank you so much. December. Can you believe it? Yeah. The year is almost up. It started, isn't it? So we're calling this show Jenny Potter, six months after her appointment to the PUC, and the subtitle is, How Will Things Change with the Resignation of the Chair? So that's the four corners, but there's more to come. So I wanted to start with some of the questions we've talked about, and that is, how are things going for you, six months after your appointment, Jenny? Wow. Well, and one thing that I've noticed myself doing lately is saying we a lot, speaking in terms of the commission as a whole. So we at the commission decided in 2012, you know, and I wasn't there, of course, but I'm starting to embody a little bit more of the culture and taking responsibilities for my predecessors and the current actions of this commission, but in certainly trying to understand how decisions have been made previously and how they affect what we're doing currently. And so there's been a huge learning curve. Learning the revenue side of how we regulate the utilities and the rate making process has been acronym soup galore, and it's taken some time. But I'm beginning to get more comfortable with those concepts, definitely diving into some of the more recent dockets that have been introduced since I've come on board or shortly before I came on board, including performance-based regulation, microgrids. We just saw a decision come out on microgrids. Now we're opening that docket up to intervenors. We're also working diligently on the DER dockets, still continuing work on those, and getting to be part of some of the newer initiatives such as NIM Plus, which is something maybe we can talk about in the future. But allowing customers that have photovoltaics currently to add additional photovoltaics under the current rate structure, in particular if they add something like an electric vehicle that would demand additional load. So getting to know a lot of these terms, getting familiar with the docketing process, when I came in I was reading all the information requests and the responses and I didn't know kind of which way to focus my attention. And now I'm sort of sorting all that out. I've learned from Jay Griffin to be a reader. Definitely to sink our teeth into the material of the docket, not just wait for staff's recommendations, for example. So Dr. Griffin has been a huge influence on how I'm getting through these first couple of months and taking my position, essentially, sitting in my chair more comfortably. But you didn't come in without a lot of experience, without a degree in this subject, without having studied it in advance of the notion that you would ever sit. You came in already fairly well prepared, I think. And to some degree, yes. I don't know that there's ever, that you ever can prepare yourself for what a regulator, you know. For the mantle of responsibility, so to say. Absolutely. It is a tremendous responsibility and the decisions that we make, some of them have less gravity to them. Some of them feel very important and I think that it just depends on sort of your lens on the world of which ones have more importance. Early on, and I think within the first couple of months, I wrote a concurrence, which hadn't been done in the commission for years. But it was a very important docket to me and that I felt that I needed to put on notice to the utilities. That these are the types of things I'm going to be looking at in the future, when you make proposals that are waivers or projects that are outside of the competitive bidding process. And that was, I think everyone was a little surprised that I did that. But you know, that was fair. It's fair. It's absolutely fair. You have a view on things, you want as well express it. And we have these tools as commissioners to do things like that. It doesn't mean that I'm disagreeing per se, but it means I have additional information that I want to add to this docket that I think needs to be said. So definitely getting, pulling on my pants one leg at a time and like getting dressed in the morning and going to work. But trying to really be an independent commissioner in that hopefully that my decisions are reflect, truly do reflect how I, what I believe. Well, you bring a lot to the table. I hope so. But I love the notion of we, I love that. Yes. You know, that's really at the highest level of judicial thinking when you do that. It is, I'm loving that I'm using that. I'm like, wow, I'm saying we a lot, which is great. So you spoke of the culture and I wonder if you could give us kind of a snapshot of what is the culture these days? Can you describe it? Can you put it in words? I would, I would definitely say that there is a lot, you know, the first thing that I would note is that this commission is very humble. It is in a commission that has a lot of ego, a lot of posturing. These are, these are truly dedicated public servants that are working there, even though it's a young staff, which it, you know, in a recent audit, that was, that was criticized that people had only been there, you know, five years or less. But there's actually a lot of positives that come from that. You have young blood that are coming into the commission. They have new, new ideas that are coming from academia that, you know, that has taught them, you know, kind of on the new frontier of thinking about public policy and this, this group, although young and maybe not as practiced in sort of the quasi-judicial institution that we are in. You know, they, they bring so many new creative ideas and they're, they're humble in those. They work very collaboratively. I think some of the workshops that we've put on in the last couple of months, in particular, you're out there. The, yeah, the performance. Doing outreach, you're communicating with the public and the, and the industry. Absolutely. And I think that collaborative spirit is present in a lot of the dockets that we're looking at, including the DER docket. We're really relying on the joint parties and the different stakeholders to provide input that truly does become part of our rulemaking. And so it's, it's, it's a, it's a very open and collaborative commission. And the staff is absolutely out of this world. They're so smart. So it's, and between Jay and I, we, we really work well together. And so that's been wonderful. I think it's, it's just, yeah, I'm, I'm very excited to be part of that. So what's the other side? Having trouble with anything? Is it all perfectly swell? Or are there things that challenge you and make you get up at night? You know, I think one of the challenges, the biggest challenges for me personally is this leap from being a researcher and an analyst in a policy wonk where I would get up and I'd present, you know, here's all my findings on my latest research to now having this more open platform that's like commissioners address, and I'm like, what am I supposed to talk about? What do you guys want to know about? That's been really challenging. And stepping into some really big shoes of like, what's your vision? And what's your, you know, and yet I have to be constrained and sort of politically correct in that, that I can't get too far out there on open dockets and, you know, and so that's been, that's been something that's kept me up at night is, is trying to, how to approach a lot of those speaking opportunities that I have without, you know, as a leader, instead of as a researcher. And, and that's a, those are very different skill sets. And, you know, they, they, there's not a lot of training for that. But in terms of, of what's happening at the commission, I think, like, recently we, we, we, I think it's getting near the end of the year. And so staff just dumped a whole lot of stuff on our desk. And so we're reading, you know, constantly, we're trying to, I think we're trying to move a lot of dockets out right now. And the, the, the, you know, Jay's whole motto, motto is, you know, we're going to move quickly. We're going to make decisions quickly. We're going to, you know, we're going to get through this. Bless you for that. Yeah. And so, so we're, we are, we're working around the clock. And, you know, it's not unusual that I'm getting emails at 8 o'clock from staff or, and that Jay's responding at 9 p.m. And that we're, you know, so, so this job is not for the light-hearted. We are trying to move quickly and, and, and get decisions out in a timely manner. One thing, you know, we were talking before the show, and I just want to mention it, is that, you know, the, the PUC has changed from, you know, where it was a quasi-judicial organization, and that it was, you know, dedicated to regulation in the classic sense. Now, in a world where we have our goal, in a world where we have changing technology, an industry that tries to follow the changing, and a market that changes, and a global climate change effect on everything over the top. That puts you in a different spot than the PUC was years ago. You, you, by, by, with, with you, when you add all those elements into the pot, you must be in a leadership position. Absolutely. You must help us by leading us, yeah? Right. Absolutely. I would agree with that. One challenge is now in terms of where the PUC is limited by statute in what it can and cannot really consider under this, this, you know, docketed procedure, and, and I think that, that there are a lot of entities that are looking to us to take more of a leadership role in things like climate change, but as the statutes exist today, we're limited in evaluating different projects under those criteria. Under 269-6B, sorry to get a little bit, sorry, weird on you, of Hawaii statutes, revised statutes, it does say that the commission shall consider greenhouse gases and alongside of renewable energy reducing the, you know, reducing the amount of fossil fuels that are used on the island, but in that, when it says greenhouse gas emissions, there's not much additional detail. Like what do you mean consider? Like at what do we, do we consider it as a life cycle? Are we looking at the societal cost? Do we, how is it that we are supposed to consider greenhouse gas emissions? And so these are real questions within our regulatory purview of how it is we, we go about considering all of these forces that you just brought up in, in the decisions that we make as commissioners and as the commission. So... Absolutely. And I feel certain that over time you will define that in a way that works. I hope so. And I think that, you know, one thing we talked about earlier is a lot of things are going to be incremental. You know, as we move through decisions and we consider greenhouse gases in an incremental way, then we slowly build a record, right, of how we've addressed this within decisions. And that's one way that we can start to expand the role at the commission is to incrementally address these types of topics. So unless the legislature does us, you know, the favor of saying, here's what we meant by that, and here's very clearly how you're supposed to go about, you know, evaluating these things within this criteria. By all means, please go ahead and elaborate on what you meant by considering greenhouse gas emissions in, you know, in our decisions regarding renewable energy. So that would be helpful. Yeah, okay. All right. Marco, you had questions and I want to include you in this conversation. Thank you. Jay, I have a two-part question for you, Jenny, and they're both kind of interrelated. First part of the question is, what does the departure of Randy Oase mean to you and to the commission, of which he's been obviously an integral part of over the past four years or so, and what advice would you give to people thinking about applying for Randy's job, not necessarily the chair position, but to become the next PUC commissioner? Yeah, and thanks for bringing up that distinction, Marco, because, yeah, ultimately this person that will apply will be evaluated for the two years of left of Randy's tenure. So it will be a commissioned position that will fulfill those two years and then potentially be up for, you know, for renomination at the end of that period, and it doesn't mean that they'll be chairs. So there's still some question and uncertainty about who will be chair. If the chair could just as easily be you or Jay. Correct. Absolutely. By the way. No, from a legal point of view, the governor can pick existing commissioners as well as a new commissioner. That's right. Designate that person chair. That's right. And I think, you know, that as of right now, there's a great deal of uncertainty at the commission in terms of, when you lose a strong leader and a person that's really changed the culture of an organization such as what Randy's done for the commission, he really did come in and make some sweeping changes by hiring people, giving them confidence and powering them and really allowing staff to research and conduct analysis and work independently without having a whole lot of micro management. And that deviates, I think, from what I understand previous commissioners and chairs have had in the past. Not entirely sure. But what I do know is that he came in and he really was a change agent. And so now, without, you know, without Randy taking the lead, when I first found out, I was like, I thought, oh, no, I mean, we had, the chemistry was phenomenal. But I just got here. I just got here. I was like, what does this mean? And then the first thought that went through my head is, maybe you don't want to be here. You know, because the chemistry was so wonderful between the three of us. Randy having this legal expertise and, you know, having worked with administrative law in the past and filling in this perspective of really the legal issues within the dockets. And then Jay and I bringing along some technical expertise from similar viewpoints, but different kind of perspectives of, you know, where areas of expertise kind of came from. And then with Randy's departure, there's this void of, well, what if they appoint a policy wonk? You know, then we have three policy wonks and no legal expertise, you know. And then the personality is really the one thing that I have greater concerns about is, how well are they going to play with us in the sandbox, you know? After all, there's a we, isn't it? Yes. Yes. There is a we. There that dynamic that the three C's make and ripples through the entire organization. And the chair has a very important role of overseeing, you know, pretty much all of the personnel matters, the appointment of the chiefs and their staffs and, you know, signing, letting me go on vacation, you know. So for me, Randy's departure is really significant. And that I think I can speak for the commission and that there's a great deal of uncertainty right now. And we look forward to, you know, a decision or some, something from, you know, the governor's office that will indicate, you know, potential candidates in the future. That will be helpful so that we can kind of ease our, ease our worries. What do you think should apply? I think, like not naming names, but I think, I think, I think, I think, I think I definitely think that that an individual that is a collaborator and that they can, you know, that, as I mentioned before, the commission is a very humble commission right now. So we don't need a lot of ego to come in. I think that if we can maintain sort of the status quo of this humility, let's collaborate, let's, you know, each of us has a very responsible and reasonable perspective on how to accomplish goals. That's the kind of person that we need to come in. If we don't have that, you know, I also need, we need somebody that's, the electric industry right now is so critical and it's so much a part of the, all of a lot of the decisions that we're going to address here in Hawaii, whether it's climate change, it's resilience, it's the renewable portfolio standards, it's the energy efficiency portfolio standards, whether it's a host of those, the electricity industry itself is such a giant portion of our attention right now. So we really do need somebody that's well-versed in how that industry operates and how our companies are organized and not maybe so much in the minutiae, but just in general of, you know, what is Nyland Grid and what's it like to serve a population on a Nyland Grid with high penetration of renewable? Anybody that can answer those questions, thumbs up. Well, if I could interject, I want to kind of channel and paraphrase what you said, Jenny. If that person, as in the next commissioner, could have a strong policy kind of techno background and be a lawyer and have substantial cred and depth in terms of utilities, electric utilities, that would sound to me kind of to be the ideal candidate, would you agree? I would absolutely agree. Yeah, nailed it. All right, so you guys out there, keep that in mind. So one thing that comes up in the course of this is what exactly does the chair do? What makes the chair different from the other two commissioners? And, you know, the daily grind, the power, if there is distinctive power, the administrative burdens, talk about it. So so there's certainly a great, there's greater administrative burdens for the chair. They definitely see a lot of paperwork that we don't see. I do think that there's a there's they. So from what I've observed so far is the chair deals with more politics than the commissioners do. So I think that they're interfacing more with the governor's staff, probably with with our senators and House of Representative folks. I think that they also are they are seen as they it's not as though they're like above us, perhaps, but they are, you know, their chair. So so we kind of, you know, what they say goes, you know, there's definitely there there's more power with certain I would certainly say. I think that if you can get, you know, a chair in the room versus a commissioner, you're probably going to want the chair. So, you know, just so I do think that that Randy had a tremendous ability to be in the political space and to manage that and to work within that. He had years and decades of experience exactly. And so that precedence that he set and that I've observed may not speak for what a future chair would need to do. So, you know, he he set the bar really high. You know, but this is all of this suggests to me that we're in a new we're in a new world of regulatory leadership. You guys, you and Jay represent a new generation, if you will, of regulatory and it gives me comfort and confidence going forward that you'll be there. You know, and that your your your we concept and your culture, as you described it, will prevail at the PUC. I think that's that's a really new world and that's a world that can take us to our goals. That's right. That's right. Yeah. As long as we don't pretend like we have all the answers, we're going to do OK. You know, we're going to do OK. So, Marco, you have more because otherwise maybe you should ask about some of those areas of docket activity and the issues that are coming down the pike and how important how do they play? Sure. And in all of the what I call the continuum to 100 percent clean energy. But which, Jenny, which currents which current which current dockets open dockets without getting into you guys tipping your hand? But which current dockets do you find to be the most juicy and interesting and the most challenging at present? So I would I would definitely state the performance based regulation docket. We we just had a workshop, as I think you're aware of. It was on Wednesday, which was the third workshop that we held with stakeholders. And that that workshop was intended to to match metrics based to outcomes that we would like to see fulfilled. So the whole effort or idea behind performance based regulation not to be confused with performance based rate making. I find people make that distinction. We actually have a lot of performance based rate making in our current regulatory structure. We use a host of different mechanisms that are intended to to motivate the utility to move away from high O&M expenditures to help contain costs to provide opportunities for return on investment that that may be minimized if we if we, for example, didn't institute decoupling. So we decoupled revenues from sales at that time. But one of the reasons was for energy efficiency initiatives and also DER interconnections. And then also because fossil fuel prices and the fluctuations of those were so they could be so detrimental to the stability of the utility that there was an interest in basically moving away from that. So that would be considered performance based rate making. So we wanted to send the right signals to the utility to be successful and then also send some signals to them to to contain costs. So incentives, disincentives, encouragement, maybe just discouragement sometimes. Yes, sort of tune it and point them in the right direction. Right, right. Exactly. So under performance based rate making, this is different. I'm sorry, regulation. Oh, look, I did it. So regulation, the idea is really to focus on outcomes, not inputs, but outcomes. So we're really focusing on how to break the capital expenditure reward for I spend a dollar, I get a return on that investment and therefore I want to continue spending more and more money in into infrastructure that may or may not be needed. Right. And the idea behind performance based regulation is now let's focus on outcomes. What do we want to see the utility do and what they provide as services? And how the customer experiences the services that are provided from the utility. And so that's a really big shift. And we've seen some of this work done in Europe. It's been done in Great Britain. There's been dabblings of it in other areas. A lot of them focus on what's called performance incentive mechanisms, which are typically like adders on to like if you behave well, then we'll give you a nice little kicker on top of it. And so so those are being explored as potential metrics or that we can use to incentivize the utilities. But of the potential outcomes that we've identified within this, it has been greenhouse gas reduction. It has been improved the interconnection experience. It has been customer engagement. It has been cost control and financial integrity for the utility. So some of these things being those are those are really more outcomes. But how do we get to them and how do we measure them? Those are the metrics component that we just focused on in this last workshop. And it's it's been really helpful to have the stakeholders provide input to us and describe how it is they would go about designing metrics, whether it's a scorecard that doesn't have any financial incentives to it or whether it is an incentive mechanism that we utilize, whether maybe it we can use the existing regulatory framework in order to incentivize or motivate the customer to provide these types of outcomes of the customer, the companies to provide these types of outcomes. So I think that is it's just it's such a complex topic. But one thing that I'm learning as we move along is that this has truly got to be a very incremental approach. We can't just go gangbusters and decide that, OK, here's all the performance incentive mechanisms and the scorecards and everything that we're going to utilize in order to try and break this link between cost of service regulation and performance based regulation. We have to do this gradually and incrementally. And so that we we we set boundaries and and and that we don't allow anything to be too punitive or for the incentives to be too great and borne by ratepayers. And so that means that we're probably going to make some mistakes along the way and that we're going to have to move slower than what people might like us to. So if we in the phase two are able to go about, you know, examining the types of metrics that we can put in place almost immediately, maybe those are going to be on the revenue side, for example. And then we have more of the operational side tied in with something like grid modernization, because we need to collect data on how operations are conducted in the field. So that would really be something that you can see spreading out over time because a lot of what we want to accomplish, we don't quite have all the data and the information yet. And so we have to go about collecting that and making sure that we're making informed decisions based on actual data that we can get from the utility or from the field or in what are our customers. So it's going to be it's going to be a process. Yeah, that's definitely what they're paying you, the big bucks for. Yeah, your skills will come in so handy on this, because what you're describing is an interactive kind of relief. And I know the statute governing the PUC permits you to do this. I don't think it's been done all that much in the past, but to have the workshops, to talk about outcomes, to get advice from the industry on how to achieve those outcomes. This is interactive collaborative regulation. Absolutely. It's a new idea, really. It really is. It really is. And that's one thing that's so amazing about this staff is their ability to bring people in and to set up the right kind of activities with the right kind of questions to really target what it is we're trying to accomplish with this stock it. And so it's it's been it's been outstanding. And they've been very, the staff has been very public with their reports, with their recommendations. They've been very innovative. The stakeholders have put a lot out there on the line in terms of putting a line in the sand and saying, here are some of the mechanisms that we think would be valuable. And to see the commonalities formed among the different stakeholder entities has been astounding, where we thought maybe people would be throwing mud in these workshops. People have really been working together collaboratively. That's great, Ginny. This is such a good feeling, really. It is a great feeling. It's such a smart idea, reasonable leadership kind of things. I'm so I'm so pleased to hear this. Marco, would you would you comment and close? We're about out of time. Oh, so much to talk about, my friends, so little time. I'm afraid I throw out some more juicy questions there. We're going to go on and on to you on Thursday at the beautiful Nelha. Sounds wonderful. And thank you so much for being on with us. And yeah, I think we're in for some interesting times on multiple multiple fronts in the weeks and months to come. I hope there's a good pool of the open commissioner position. And I hope someone who plays well with others and the fill in the blank person. Thank you, Marco. Thank you, Marco. Thank you, Jenny. Yes, my pleasure. Aloha, all the best to you. Thank you so much. Yeah.