 brave new worlds of wine electric. And we have the senior vice president that'll get that right and the chief operating officer of wine electric, Jim Alberts. Thank you so much for joining us, Jim. Yeah, it's great to be here, Jay. It's been a while, so thanks for having me back. Yeah, well, let's try to catch up. The first thing is, you know, it was about a year ago and Scott's view went to HCI and Shelly Kimura became the CEO of wine electric and was that when you became the senior vice president and chief operating officer too? It was as part of a overall transition for the whole company and it turned out to be a really great transition with all the continuity we had inside the company. So I think it worked out really well that Scott got to be the CEO at HCI and Shelly got promoted to be the CEO of wine electric. So a lot of strong continuity, we all got to work together on our strategic plan that we had implemented right before this transition. So it worked out really well. I mean, the people are connected and the thought process is connected at the same time. Then all this in the face of COVID and gee, where's all the fallout, may I say from COVID in terms of recruiting and employment and the change of office systems and the like, how has that been for you for wine electric? Yeah, most of a lot of our workforce has been working from home over the past two years. Now much of our workforce in the operations area has been working just as they always have because they have to show up on site to do their jobs. But for everybody else, we're gonna start coming back slightly in a hybrid work environment in September and test that process out. And part of that, as you mentioned, Jay, is moving into a new building at the same time. So we're combining consolidating square footage in downtown to reduce our rents and get everybody into one building. So everybody's been busy meeting with their teams trying to indoctrinate them on coming back to work, at least part of the time. And then we'll take it from there once we get through the hybrid process. Yeah, these are interesting times, honestly. The new building, which is the new building and what is happening to the old building? Well, that's the Ili'i Tower right there on Alakaya Street. So it's just up the street from where we're at in the ASB tower now, at least many of us. There's a bunch of people in the Central Pacific Bank Tower as well. So this was an opportunity for us to just consolidate and get everybody together. Great idea. What are you gonna do with the old one? I mean, it's a historic building for sure. Right, well, we don't own that. Surprisingly, people don't know we don't own that building. Kamehameh Schools owns the building. So when we moved out, they took that building back and they're working on its next life. Okay, well, I hope they preserve it from an historical point of view because it really is deeply embedded in the history of Hawaii. I'll never forget there's a little doorway on the King Street side where you can line up and pay your electric bill. You know, through decades, through millennia, people have lined up at that little doorway to pay physically, personally, pay their electric bill, right? They have. And that's where I started when I came to work for Hawaii Electric 10 years ago. It's a very historic building. It's got a lot of nice charisma to it. So a beautiful old building, part of the history. I hope it gets to be utilized going forward. But now, speaking of payments, so many people now today pay online or remotely. There aren't nearly as many people that wanna walk into Panymore. There are still a few, and we have options for people to do that. But those numbers are down a lot compared to what they used to be. Yeah, speaking of payment, I recall that early on in COVID, there were problems. People were losing their jobs. They didn't have the same kind of income. They weren't able to pay the electric bill. You guys gave them a break. You gave them installment payments to a deep burrow. And I guess that was, you know, part of the utility community doing that. But where are you on that now? Were you able to recover? Was one electric able to catch up on what people owed to it for electrical service? And what are you doing about that now? You know, we're still working with people that are behind, you know, really don't want to disconnect service, but we have started that process up again. So the process we go through, and this has been in place for a long time, we would contact people, let them know, and try and line them up with other agencies, whether it's third party assistance, federal assistance, any kind of assistance to make sure that they get the help they need to pay their bills. And then if that doesn't work out, put them on a payment plan and make sure that we help keep their lights on because we know that that does have an impact on families and lifestyles. So that's our ultimate goal, is to help get the bill paid, but keep the lights on. Yeah, and small businesses, the same kind of thing. Yes, Larry. You know, I mean, all this makes me, it reminds me of something that I was thinking a few years ago, and I mentioned it on our show, is I think Hawaiian Electric, go to change its name to Hawaii's Electric Company, Hawaii's Electric Company, because it is so deeply embedded in the history of Hawaii, it goes back to 1910 or so, and it has made the state what the state is. It has come through all these periods of history, but that didn't catch on though. I noticed you have not changed your name to that yet. No, we haven't, but we have been busy in what we call our one company process, trying to move toward the consolidated Hawaiian Electric team across all the islands. So in a lot of cases, you'll see, in the press, you'll see us calling ourselves Hawaiian Electric instead of Hawaiian Electric, Maui Electric, Hawaii Electric Light, just to try and get everybody used to making that step that we are Hawaiian Electric. No, I think that's great. I mean, this is a, we are one state and we should not see the islands as different. For a time there were people who said, well, every island has its own personality and its own character, and we have to keep them different. Well, I don't know if that really works. We are one state and we will always do better when we see it that way. I'm glad you're doing that actually. Okay, the other thing that's come up and we would be remiss if we didn't mention it is that in a few days, ooh, gee whiz, in a few days we're gonna be out of coal, no more coal, N-M-C, no more coal, by virtue of a statute already, a statute that says that. So, we've talked to other people like Jim Kelly from Hawaiian Electric about this, and I wonder, your take, how do you feel about it? What are the challenges for the company? What are the challenges for you as Senior Vice President and Chief Operating Officer to make sure there's no gap, there's no blackout or brownout, what have you? Right, so the good news is we've been planning for this for a while. We knew even before the law was passed that this contract with AES was gonna expire and there would be a chance that it wouldn't be continued. So, we've been planning for this for a long time, which also includes a lot of the RFP processes for the renewable projects that are in flight. Now, if anybody's ever interested, they can go to our website on the Hawaiian Electric Renewable Status Board and see the status of all the projects. There are a bunch out there, right? So, the process is to bring these projects on as a replacement for that AES coal plant. Now, the goal at the end of the day is to create stability and energy security here in the state for Hawaii. So, I wanna see stable bills, not all this crazy volatility that happens with oil prices, but that's gonna happen with time. Yeah, well, I think we all have to be sympathetic. I imagine that when we get to the end of COVID, I don't wanna use the word normal because I don't think normal fits anymore, but when we get back to some degree of normality, normalcy, some of these projects are gonna go like a coiled spring. They've been held back, but when we get to normalcy, tell me if I'm right. When we get to normalcy, they're gonna charge ahead and we're gonna have a lot of projects that have been in the pipeline getting realized, am I right? Yeah, I'm hopeful for that scene, Vue J. We've got a couple of developers that have multiple projects. So, the first time through in the second project now, they're using the same or very similar equipment. So, that should speed up a lot of the testing, the permitting, all the processing because it's not new anymore at that point. It's just another one of the same thing. So, I'm very optimistic that that process can move quicker and more timely. Now, I do think this is one of the big issues for the state that it has to tackle and wrestle with is, how do we get aligned around what that end state looks like? Because there's a lot of ways that these projects can take on different terms. And we just have to stay focused on these, not just us, but the state agencies, the federal agencies and our local counties and cities helping get these projects through the process. And the more we stay focused on that as the outcome, the better off we are. So, what is the tax reduction bill from Joe Biden? How does that affect utilities in general and how does it affect Hawaiian Electric in terms of development of renewables and any other effect you may see coming down the pipe? Yeah, we think it creates some significant opportunity for all utilities, really. For us, we're excited about it because it can create some new tax credit benefits. It can share those kind of benefits across the whole value chain, not just with us, but everybody who's doing a project. So, we saw what the tax credits and the tax benefits did for rooftop solar in the first couple of rounds when prices were high, right? You remember those days, don't you, Jay? Yeah, I haven't forgotten them yet. So, if we get the process worked out and the tax credits come through, all those things are enablers for a brighter renewable future. So, we're very optimistic in the same vein for electrification. We think there's some big opportunities there for things like charging infrastructure. You know, one thing that's really odd is that this inflation reduction bill is intended to reduce inflation. And in fact, the president or the administration has had some effect on reducing gas prices at the pump. And I'm saying, that was one great incentive to go electric and now the price of gas is going down. I mean, are you losing the power of your built-in incentive, Jim? No, I think, you know, once we get past just to focus on renewables and we get everybody looking at decarbonization as the long-term end game, which is where we have to go. If we want to have an impact on the planet is to decarbonize, which means we need everybody to get an electric vehicle at some point. Now, I drive an electric vehicle. I don't miss stopping at the gas station at all. I've been driving one for three years now. And throughout the whole pandemic, you know, it's just a seamless process from a safety and a cost standpoint. Yeah. The other thing that just strikes me, and I don't know exactly what the current status of it is, but for a time there during COVID, we were having trouble with the supply of chips. And chips are going to be involved in the, you know, the newer technologies for renewables. For solar especially, inverters and the like. And if we can't get the chips, we have to, you know, I don't know what we do. But is that having an effect on the ability of your developers to do these, you know, cutting-edge projects? Well, the chipsets are really affecting everything, not just us, but, you know, you read about it in the papers, automobiles, everything that requires computer technology is being affected by this. So the developers are working hard to line up their supplies far in advance so that they won't be set back by this, just like we are. But we also are realists. We know that those kind of things can change pretty quickly. So we have to make sure we always have contingencies and options available to us. You know, I always said that the transformation of Hawaii is the energy landscape costs money because you have to put money into infrastructure. If you use the old infrastructure, then it doesn't cost you as much as buying and installing, you know, learning about, employing, deploying, you know, new technology. And here we are, you know, in the September 1st cold deadline and so forth. And you guys came out with a, you know, a press release a couple of weeks ago indicating that prices would go up. And I know that's a very important point for you because you've been, you know, in charge of customer satisfaction for many years in your stint at the Hawaiian Electric. So can you talk about the price increases? What makes the price go up? What can you do about it going forward? Yeah, the big driver Jay is the oil prices. And we've seen over a long history the volatility of oil and the impact that can happen and that it can have on the economy. So this is the time to just, in my opinion, to just stay the course, keep investing in these renewable projects because these renewable projects will sign, will have 20 year fixed term pricing in them. We won't see that volatility, they're not tied to an index, it's just fixed pricing. Now that's a great thing because it allows people to plan and budget more effectively. And that's the end goal for the state to really help the business environment and each homeowner be able to put their budget together. And, you know, a couple of things I might add to this. You know, one is a partnership with Hawaii Energy and being able to think about energy efficiency is kind of our first step to use less energy because as we look forward to electrification, we're gonna have to make sure we're as efficient as we can be. And when I look from an operation standpoint, the way our load curve works today, which you've seen us talk about, you know, it ramps up in the morning and then it drops in the day when solar comes on and then it has to ramp up really fast in the evening. So getting storage on like the KES, battery energy storage system in early to mid 2023 is gonna be a huge help for us. So all those technologies, including the batteries, battery storage, the renewables and energy efficiency all have to play a part in that process to help stabilize those costs and drive them down. What is the oil prices they're doing it now and we wanna get off oil? Where does that very high tech plant you have in Kapolei that one runs on LNG, the ramp, I forget the name for it, the peaking plant, the peaking plant, where does that fit in this picture? Well, we don't have anything that runs on LNG. Everything today runs on oil, just different kinds of oil. So the CIP, Camel Industrial Park unit that we have is one of those peaking units. Now, the nice thing about that, it starts and ramps up very quickly, which is what we need in the future. If you think about some of our old power plants we have today, they're just not designed to operate in this environment where things have to come on and off. They were designed for a day when you would turn them on and you just leave them on at a certain level and they're very efficient at that. So part of this grid modernization plan and power plant modernization plan is to slowly phase those old plants out and add new firm generation that can enable more renewables to be installed on the grid. That's the goal. Okay, you talk about grid equity just for a moment. And one of the things that strikes me about grid equity is that if you incentivize single family residences, you're incentivizing just people who have the buck because they're the ones who got to spend tax credit or not, they're gonna have to spend the money. But if you do a utility operated solar farm and a utility operated battery facility, that benefits everyone. And to me, I mean, maybe I'm old fashioned in my view here but to me, that's equity because everybody has the benefit of that rather than a few people with a big bankroll. Are you moving in that direction? How are you trying to achieve or achieving grid equity? Right, well, it's a great question, Jay. So the first push of renewables, you're right, was all rooftop solar per single family homes. So that benefits a more limited group of people that have access to money to invest in their homes. Now lately, we've been super busy focused on these utility scale projects and these projects are gonna benefit everybody. So again, if you go to that, if anybody wants to look at it, go to our project status board on our website. And you'll see that. What's the name of your website? It's Hawaiianelectric.com. And if you just click on the tab that's on the front page there that talks about the Hawaiian Electric Renewable Project Status Board, click on that tab and it'll take you right to the status board. It'll show you the list of all the projects we're working on when they're expected to come online. And there's a lot of them. So I think we, as a state in the community, we should be excited about all of these projects coming online at some point and setting aside a lot of these oil-based operations to incorporate more renewables. Yeah, it's really an exciting time for the whole industry to think about bringing more renewables onto the system and providing stable pricing and energy security for the state. Yeah, is that your drift? Is that your priority to do this on a community-based solar and on a utility-scale solar, utility-scale battery facility? I mean, is that where we're going here? Is that your preference? I don't know if it's a preference, but there has to be balance. So when I think about a balanced system, there's room for utility-scale systems, like the big ones that we're doing with all our IPP development partners and the batteries. We also want customers to have their own option. So if they wanna continue to put on a rooftop solar, we have another new program called the Battery Bonus Program if somebody wants to install a battery even on an existing net energy metering contract, we can. And through technology, give us access to that battery. So in those evening peak hours, that one hour every night, we have a peak. We can access those batteries to help shave that peak for the whole system. So in a sense, people that are investing in those systems are giving benefit back to the greater good in addition to all those big utility-scale projects that are being worked on. You know, the sort of the confluence of the development of these things and the date in your press release where you indicate that you think the prices are gonna be a little higher than before through sometime in 2024. Can you talk to me about how that line, how you predict that line will go and what will happen at and after 2024 in terms of the expense to consumers? Well, it's just, I'll just give it to you in my terms. So the way I think about it is those prices over time will still be volatile because of oil because many of these projects when you look at the timelines on them, that's about the timeframe they're starting to come on. So these fixed price contracts will start to have an effect after 2024 when they all come online. Now, that's the, for me, that's probably the most important thing we can't lose sight on is how do we keep driving projects to completion on each island to stabilize pricing and provide that energy security for the state and for each island? Because if we can accomplish that, we provide a lot of stability. That does a lot of great things for the whole state. Yeah, you talk about each island. Gee, I'm old enough to remember the day when interconnection was all the rage. And I thought, oh, it's coming, it's coming. I don't think it's coming anymore, but I'd like to see it because as we discussed earlier, this is one state. And the more we can connect the islands, the better. And maybe just maybe the technology going forward, especially in the channel between Maui and the Big Island where it's very deep in that channel. Make the technology would allow for that easier, deeper in the future than it was when we considered the possibility before. I'm assuming for a moment, Jim, that the technology would allow that easier, cheaper. Would it be beneficial, you think, to reconsider the notion of interconnection between the islands? Yeah, maybe someday. But I think the technology to deploy things locally is probably gonna outpace that. So I'll give you an example. Now, this is futuristic, but say the Big Island has excess renewable capacity and it's now cost effective to electrolyze hydrogen, that hydrogen could be shipped to the other islands without having to have an inter-island cable. And now that looks like bulk storage. So those kind of things that are renewable oriented that create new industries here in Hawaii are extremely beneficial because it helps keep the dollars here also, creates that circular economy. Yeah, that would be great. And there was discussion about that in the context of Pune geothermal venture a couple, three years ago. And H&EI was working on it to try to figure out a system to generate hydrogen out of the geothermal and then ship those tanks everywhere. Of course, you've gotta have a receiving end also that can actually burn the hydrogen and make the power. One thing I might add here just real quick is, diversity on an island is critical. So it's talking to a friend of mine late last week and they had a power crunch in their area and they have the luxury of being able to go out and buy power on the bulk power system if something happens, we don't have that luxury. So from a risk perspective, making sure we've got great diversification from generating resources all the way to the grid itself has multiple paths to get to a home and in a resilient way, it's all that diversity, the technology, the timing of it. Just don't put everything into one technology and in one timeframe to help manage the risk. And if we do that right, we create a really sustainable economy over the long period of time to create more jobs here. But you get all this diversity, it creates a lot of pocket industries for people to participate. Yeah, amen to that. So energy is an industry and it should be an industry that includes a lot of different players and companies and technologies and so forth, which reminds me it's only a day or two ago that I saw a piece about PGV and they had an open meeting on the big island and they wanna raise their production to, I wanna say 60 megawatts from something over 40. What is happening with that? Where does that fit in the bigger picture? Well, we gotta get them first to get their output to the contracted amount they have now. And if there is the potential for increasing capacity, we would negotiate that to benefit customers. If it's not a good price, then we would have to see where that goes. But in the long run for an existing project to create more capacity, that would be pretty efficient. So they should be able to offer some pretty lucrative pricing to us. Yeah, their old contract was way too high, as I recall. And this is an inflection point for you to bring that price down. Because if you think about the old days, when renewables first started coming on, people did not apprice them. So they were indexed to avoid a cost of energy. Now the new projects are all just based on a competitive market cost. And then it's flat for the period of contract. So the new contracting process that was created by the company is proving out to be very beneficial for customers. Well, that's important. I don't know what the current thinking of Leo and the new chair of the PUC is on that. But I know that in the past, the PUC has been very interested in holding prices down. And I wonder your thoughts. We have effectively a new PUC. We have a new member, Naomi, and then we have Leo as the chair and all of a sudden it's musical chairs. How does that affect all of this? Well, I really look forward to it. And I think back to one of my earlier comments I gave is the more alignment we have around kind of a common outcome, the better off we're gonna be because time is of the essence. 2045 doesn't move anymore. We've set that end date. So we've got to start actively thinking about what projects need to drop in when in order to achieve that goal. And then it comes down to execution risk. I don't want us, I would hate for the state and all of us to be in a position where we got to make it happen in the last five years because we haven't been able to agree on something yet. So getting that alignment so we can start moving and doing it incrementally. To me, it's like dollar cost averaging in a retirement plan. It may never be the perfect time, but over time it's a good plan. So we just have to keep working on it. Yeah, I keep thinking about wind. When we first started, when you and I first met, first wind was there in Maui. We were all so proud of them if we're going up on the hillside. And I went there a couple of times and reported on it and everything. Now you don't hear too much. Ulapalacua has a wind farm that's impressive and some of the North Shore, although on the North Shore there's been, what do you want to call it, NIMBY effect. But I wonder what you think about the future of wind and especially, and I haven't heard much about it lately, maybe there have been developments or resistance to developments I'm not aware of, but what do you think about ocean wind, offshore wind as they have all over the North Sea and Europe? Yeah, I'm optimistic on that too. I know there are quite a few people looking at it here in Hawaii on what the right locations are, what the right sites are. Wind has a really good profile to it. It can run 24 hours a day. So I think it really helps the system. If we can find a way to get it in, that we can get aligned around as a state and just move on and get it done, then that starts to fill in those big blocks. You can get a 400 megawatt offshore wind farm and now that takes care of a big chunk of what we're after and you can start to work on other parts that you need to fit into that puzzle. So it's piece by piece, we just keep working at it, but I really am optimistic for wind. Good, I'm happy to hear that because I like wind. I believe it's poetic, that's just me now. I like the sound of those blades. I like to hear the engagement of the turbine against the environment that's just wonderful. It's musical too. But I wanted to ask, this all sort of raises the question of big wind, really, really big wind, extreme weather wind, which the scientists tell us, including scientists right here in Hawaii, they tell us it's just a matter of time before we have extreme weather. And of course, one of the things extreme weather does is it brings the grid down. I recall we did a show about Puerto Rico after the big storm in Puerto Rico, they looked at one solar farm which had a certain kind of connector on it and another solar farm which had a different kind of connector on it and the one solar farm with the, I guess, the better connector, nothing moved. The other farm came apart and it was over. So there are important choices to be made to be resilient against that kind of weather. How much are you worried about that? How much did I be worried about that? Well, we think about it all the time, Jay. So I know our contracting team and engineering team have put standards into our contracts. So when we go to implement those, they have to exceed a certain wind rating from a design perspective. And then we go through the inspection process. So there's a lot of checks and balances in that process to make sure that it gives it the best chance of survival in the event we do get a hurricane. So here we are. We are at an inflection point. Just summarizing some of the things you and I have talked about, we've talked about changing the management arrangement at Hawaiian Electric and HEI. We've talked about the COVID effect. We've talked about new technology and geopolitical issues around fuel and technology. We've talked about the new configuration of the PUC. Gee whiz, we've talked about a lot. I'm sure I missed two or three things in there. But my question is what would you lead with our audience about where we are on this inflection point and where we're going and how they should feel? Because we're going to be in a different place. I don't know how different it's gonna be or in what ways, but you probably do. And I wonder if you could tell us how it's gonna be different and what we should expect going forward. Well, this is an inflection point, Jay. I think as we look around, we see the impact of what's happening with the world energy markets on everybody in Hawaii. So we have to pay close attention to that. And we know that what's happening to people today is not sustainable. So what I would encourage everybody to do is work with us, whole community on how we can move as quickly as we can to this decarbonized future. And that's the one way in the long run to really get to firm stable pricing and energy security for the state. Can you imagine a day where we don't have to import anything and we're self-sustaining here in Hawaii and we've created our own energy industry, self-sustaining industry here in Hawaii that provides a lot of good paying jobs. So for me, that's a ways out there. In the near term, we really have to pay attention to what's happening locally with our economy and help out however we can. Yeah, and by the way, you guys, he's not only talking to you, he's talking to government with a new governor coming soon and lieutenant governor, he's talking to the legislature, which will have a lot of new people and appointments within the committees. He's talking to the rest of the industry, the entrepreneurs here and from the mainland who would come and participate in our new chapter of energy here in Hawaii. So it's everybody. Thank you, Jim. Jim Albert says, senior vice president and chief operating officer of Hawaiian Electric, Hawaii's electric bill. Thank you, Jay. Good to see you again. Same here, aloha. Thank you so much for watching Think Tech Hawaii. If you like what we do, please like us and click the subscribe button on YouTube and the follow button on Vimeo. You can also follow us on Facebook, Instagram, Twitter and LinkedIn and donate to us at thinktechhawaii.com. Mahalo.