 being terribly happy with what he's doing. Okay, here we are. We're back with Mina Merida, Marco Mangelsdorf, and me. Mina, Marco, and me on Monday here on Think Tech, our energy show that wake you up on a Monday morning. Wow, exciting. So, hi Mina, how are you? Hi, I'm fine and good. Good. And Marco, how about you? How are you? Oh, oh, oh, a very happy Monday to both of you. Oh, thank you. So let's talk about Richard Borreca's article entitled, Senator's Object to Ron Cochise's unilateral action on the PUC. What's brewing in the legislature here with all this? Well, I think that the article may be in this representation on how many senators may object, and I think the title was something like the Senator made a unilateral decision. Yes. You know, that might in itself be an exaggeration, but I can't speak for the Senate. But I think one thing that, you know, should be made clear that this is really a question of law, and it does affect the Senate authority to confirm a nominee. And so it's a question that can only be resolved by the court. So I'm really happy that the Senate is participating with an amicus brief. Yes. Well, Mina, let me ask you, this never happened when you were the chair of the PUC. The issue never came up in that, in that time anyway. Do you know if it ever has come up? Sorry, go ahead. No, because, because the appointments were proper. Every time that the governor Abercrombie made a vacancy appointment, there really was a vacancy that seat was empty because the previous commissioner had resigned. In this case, the Constitution says that the sitting, the fold over commissioner, shall remain in place until his successor is appointed and qualified. And I think any reasonable person would look at appointed and qualified to mean, you know, confirmation advice and consent by the Senate. So the state did file their statement of position, which was due on August 10th. And basically, they're just sticking to the argument that the governor has the authority to appoint, to fill a vacancy when the Senate is not in session. And I don't think anybody has a disagreement with that. The governor does have the authority to appoint, to a vacancy when the Senate is not in session. But in this case, I don't believe a vacancy occurred when Commissioner Champley's term ended on June 30th, because the law is clear that the incumbent commissioner remains as a fold over until his successor is appointed and qualified. And in the appointment process of the Constitution, the removal of a commissioner is prescribed by law, can be prescribed by law. And so in this case, you know, the law says the fold over commissioner doesn't get removed until his successor is appointed and qualified. Yeah. So I mean, your point is that the Senate has an interest in this because it wants to, it believes it may have authority to consent or not consent before the successor takes office. Has Commissioner Champley expressed a view on this at all? No. You know, as far as I know, and I think it's stipulated in the arguments that Commissioner Champley did not resign. Right. He has never resigned. Yeah. So, Marco, where does this fit on the landscape of the PUC? You know, we knew that next era was a traumatic experience for the PUC. It certainly took them away from their ordinary course of business for 18, 19 months. But how does this affect the PUC going forward? Actually, what I'd like to do, Jay, I mean, is kind of take a step back and put on my political science hat and looking at what's going on in the Senate in this matter. And I find it rather interesting just to kind of give a little bit of background. So we have 25 total senators in Hawaii, state senators and 24 of the 25 as of right now are Democrats with the lone Republican being good old Sam Slum from, I think it's Hawaii, Hawaii Kai area of Oahu. And it looks like he's under challenge now. So it's not out of the realm of possibility that come December 9th, the day after the election, general election, that the entire Hawaii state Senate, all 25 of them could very well be in the Democratic Party hands. But be that as it may, we have 24 Democrats and one Republican. And Ron Cochee is the president of the Senate. And he made the decision apparently to write an amicus brief as part of the lawsuit that Mina and Mark Bennett have brought on questioning, challenging Gorak's appointment or his right as legitimacy as PUC commissioner. And Richard Borreca's piece of a few days ago noted that there were four senators, including Donna Mercado Kim, who was the previous Senate president that was essentially deposed when Ron Cochee was able to achieve a majority of the 24 Democrats, which if you do the numbers, that's the minimum of 13, at least, 13 of his colleagues, including himself. So 12 of his colleagues, including himself, to be able to get a ruling majority and become Senate's president and also have appoint committee chairs to the people who go with them. So I find it kind of interesting playing with the numbers that four, four apparent, probably four of the senators on the losing side decided to challenge Cochee essentially by questioning his apparent intervention in this lawsuit that Mina has brought. So to what extent there is rumblings within the Senate to perhaps challenge Cochee. I mean, we won't know until after the election, but I just find that from a political perspective, interesting to note that all is not peaches and cream and mangoes and lily-coy in the Senate amongst the Democrats in terms of nor should it be necessarily as far as how to proceed in this particular matter with four of them, at least publicly challenging Cochee's intervention in this lawsuit. So that's kind of, to me, an interesting political question in terms of what's going on in the commission. I mean, as we've talked about before, so much is going on at the commission in terms of open dockets that I hope very much that now that they've been re supplied with the new oxygen, so to speak, after the next year decision was announced a month or so ago, that they can move with alacrity to issue some decisions sooner rather than later. Yeah, I just want to go kind of touch on the political aspects of this. And this is where we get into trouble when we, you know, just kind of look at the political ramifications in this, you know, I think the Senate president is moving forward because this really is a question of law and the balance of power issues here. You know, if this practice is allowed to stand, you know, it would be real easy for a governor to manipulate the nomination process to boards and commissions and to hold to not put in a controversial candidate that might not gain Senate approval and wait until the Senate adjourns to put somebody in. And, you know, if it's key decisions, they have like about nine months to possibly wreak havoc within a board or commission without that advice and consent from the Senate on that candidate. So, you know, this could be a real abuse of power. So it goes beyond this one issue, but it really holds the executive's feet to the fire to make timely appointments that can be reviewed by the Senate so they can give their advice and consent to a prospective candidate for a board or commission. Yeah, I mean, it is certainly a balance of powers question. You have all three, you know, elements here. You have the executive made the appointment. You have the legislature, you know, who is concerned. I guess the Senate is concerned about its authority. And query, by the way, what will happen when this comes up for consent in the regular session? Right. And finally, you have the regulator. And the backdrop for all of this is that it had a profound effect on the decision of the PUC. The decision of the PUC would have gone the other way. A $4.3 billion deal would have gone the other way. So it's really important. It's not just technical. Yes. I agree with that. Even though it came down to a two to one vote without Gorak participating, you know, from indication, there appears to have been a majority decision to approve, but apparently that majority decision was never written up when Commissioner Champley was seated. And so, you know, but just putting next to that, you remove the politics away from it and the merger decision, you know, really comes down to a question of law that needs to be reviewed by the court and interpreted by the court. Well, if I could ask you a question, Mina, because you, of course, are much more knowledgeable about ways of legislature than I am. But do you believe that Senator Ron Cochia is president of the Senate essentially was within his prerogative to do what he did without say convening the Democratic caucus there in the Senate to get discussion and whether this is something that there was a majority that wanted to do because apparently one or more senators have essentially said that they're uncomfortable watching the Senate put forth a legal position that was never discussed and agreed upon. Well, I mean, you know, I can't speak for the Senate president and what did or did not occur amongst the members. But I think as the head of an institution like the Senate, that it would be concerned about the powers of that institution. And so again, you know, this would have ramifications way beyond his term in office. I mean, it's an interpretation of the Constitution of specific statues and the Senate's role in advice and consent. And and so, um, you know, definitely what happened. The actions of the governor contradicted prior attorney general opinions that have dated back more than 40 years. It contrary to well settled principles in jurisprudence, you know, I mean, I'm not a lawyer, but, you know, I don't think I mean, you know, when you read it, and just on its face, it's sort of like something's wrong. Well, strikes me, there must be plenty of law national law on interim appointments and when they're good and when they're not good. And what happens if they are later undone? I don't have an answer. But just suppose we go to January now that the session comes up, that the administration promptly submits Tom Gorak's name for confirmation. And the Senate refuses to confirm a query, whether they would be justified in doing that, whether it's, you know, because they were ticked off about what happened here in the summer, whether they can, you know, refuse to confirm in January. And if they do refuse to confirm, what happens to the decision? It's not devoted on the decision. He really abstained on the decision. What happens to all the other decisions between now and January? I mean, there's a million issues coming up here. I think this is why this issue needs to be settled as soon as possible. And it looks like it's moving towards in the court pretty quickly because we have a hearing schedule on August 25th. But, you know, any decision that Tom Gorak participates in, any discussion he participates in as a commission, commissioner is questionable at this time until he proves that he is legally entitled to that position. Any further thoughts on this, Marco? Otherwise, we'll move on to other subjects. I was going to ask Meena whether you know of any other amicus briefs, front of the court briefs that have been submitted to date beyond Ron Coche's brief. Do you know of any others by other parties? No, I don't. Well, I guess we'll know soon enough, right, a week from Thursday. Yeah, I follow this. I hope we can regroup shortly thereafter on Meena, Marco and me and find out what happened. Yeah. And I believe the court has to approve the filing of an amicus brief. I'm not sure. So, they will state, I would think, as of next Thursday, Thursday of next week, who or which amicus brief that they're willing to essentially give standing to, right? Yeah. I think the, I think they already approved the Senate participation, but I haven't heard of any other participants. I wonder if Hawaiian Electric or the gas company would chime in. I would think that they wouldn't. I think that's that's too radioactive a subject for them to opine on. Yeah, radioactive is the right word. Well, I don't want to take a break because I want to move on to other subjects. Let me just say that we're here on energy, Meena Merida and Marco Mangelsdorf and me for our Monday show on energy. Let's, let's go to another issue. And that is all the events that have taken place around photovoltaic these days. One of the things I gather from you, Marco, is that the photovoltaic industry continues to be in trouble on the mainland. Can you describe the trouble and can you give us a handle on how that might affect things in Hawaii? Well, in fact, some of the data that I provided to the two of you in the past day or two is actually focused on the two two of the markets here in Hawaii, which are Oahu, which is the biggest market in the state and the big island. They're the two counties of the four counties in Hawaii that I have the most visibility into in terms of publicly available data as far as PV permits. And it's it's rather scary right now to be in this business. Because the the numbers for the first seven months of this year, January to July are substantially down compared to the first seven months of last year. And what I mean by substantially is roughly 50% fewer permits here on the big island photovoltaic system permits for seven months of this year compared to the same period last year. And it's not quite as dire yet on Oahu. But last month, the permit numbers for July of 2016 were down more than 50% more than 50% compared to July of 2015. And I think it's quite possible that by the end of the year, Oahu will be down close to the 45 50% level as well. So the takeaway is that there are fewer photovoltaic systems being permitted and therefore fewer photovoltaic systems being installed. And that's that's of course, be concerned to me and my company and many others in the same business, because we've you depend on a certain level of volume in terms of sale and revenue sales and revenue in order to to make a go of things profitability. And with the decreases of that nature of that magnitude, it's certainly a concern. So that's kind of one part of the piece of the puzzle. The other piece is that we are reaching across the HECO territories, the HECO El Comico reaching the customer grid supply cap, respective caps that were established by the Public Utilities Commission back in October of last year. That cap was already reached to five megawatts for MECO for Maui County. About five or six weeks ago, we are within days within days of reaching it here for Hawaii County. And the Oahu will probably be a week or two or three after we hit the cap. And the next step, as outlined by the Commission in their decision in order of October last year, would be that we move to what's known as customer self supply, which is an interconnect agreement where any exports that were no exported solar power is essentially allowed to feedback into the grid, which requires battery storage, battery storage. And I've taken the rather deep dive as of late into what is available at what price for homeowners to have batteries as part of their PV systems. And my conclusion at this point is that there are limited options right now and they are expensive options. So I'm very concerned that if we, the industry and more importantly, homeowners who still want to go solar who have not yet gone solar that under the customer self supply option, it'll lead to a further dramatic possibly, probably decline in adoption of PV, which I think everybody would agree is not what we want to see collectively. The Commission has been clear, HECO has been clear that they see the benefit of a lot more distributed rooftop solar. I don't understand one major point here though. You say that if you have self supply, you have to have batteries. But what about just buying power from the utility? Why can't I have? I mean, isn't that the self supply arrangement that they recently announced allow you to buy power? So you can have self supply, except that you have to buy power during the evening. This is, you know, the entirely workable option, isn't it? Well, it's in theory, yes, Jay, but in practicality, the cost of a self supply system when batteries are required, the cost to the homeowner with any system with appreciable, with appreciable battery storage is significantly dramatically higher compared to a battery less system. So it's going to be a harder sell. It's definitely going to be a harder sell. Definitely a harder sell, but you don't have to, you don't have to have batteries to do self supply. And that means you don't have batteries to have photovoltaic on your roof. You can just, you can use the photovoltaic during the day and at night you can buy electric like everybody else. Which means it's a matter of properly designing the system, though that there is no export. Well, if you do, as Jay just suggested, Mina, that means that that given the typical usage pattern for a Hawaii home, which is less during the day more when the sun goes down, that the PV system size, if you don't have batteries and it's customer self supply, is going to be very small, incredibly manini and is not going to provide much in terms of bill savings to to the homeowner. So, yeah, we could install a, you know, a 1.2 kW system that has no batteries that will not export much during the day, but there's not going to be much of a big whoop factor to the homeowner in terms of bill savings. It's only going to take care of a small, a small percentage of their overall power needs. Well, let me, let me ask this though. I mean, you, you have a situation where, I guess, and the PUC is in on it, I mean, where you, you, you have a cap and the cap is there for a good reason. The cap is there on the basis of existing technology. But if, if the technology changes, if the grid gets smarter and hopefully it will soon, then the cap could come off, the cap could be modified. There's not a, there's not a permanent limitation here. It's just that for now, you know, you, you can't go beyond the cap. I, I don't see this as the end of the world. As the technology improves, we can have more portable tech. But even, you know, even if it was the end of the world, you know, it's not the end of electrical power. It's not the end of renewables. It's just the end of the solar installation, you know, the high time for the solar installation industry, right? That's what it is. Well, and, and I think, you know, it would be ludicrous for any of us to think that you could continue with exponential growth, knowing that, you know, there's a finite capacity within the grid as we move forward. So it really becomes, really, really becomes customer choice now on how a customer would proceed given the market, things like the cost, the cost of, of, of bulk storage, any kind of bulk storage. Well, bulk storage may get cheaper. I mean, right now, my sense of it is that bulk storage is going to, bulk storage for a given residence is going to be almost as expensive as the PV in the first place, even though there are, you know, good technologies coming on the market. And this, this creates a problem because the spreadsheets that the installers, you know, sell on the basis of, you know, they won't look so good. And, and, and furthermore, I'm not sure about this, but you get the same tax credits for bulk storage equipment as you do for PV. If not, that makes it even harder. Well, my understanding is that the federal investment tax credit, the ITC, which is 30%, does cover the cost of storage. It does cover the cost of storage. There was an attempt last legislative session to have a tax credit, a specific state tax credit that would have been able to be applied towards the purchase of storage that would be partially offset by the state tax credit. That bill did not get out of conference committee because of a disagreement between the House Rep Chrisley, the chair of the House Energy and Environment Committee and his counterpart of the Senate side, Lorraine Inouye. So there was an attempt to carve out essentially or make for a specific tax credit for battery storage here that died, unfortunately, at the end of the session. But the, to go back to, I think, something you mentioned, Jay, in terms of when the commission established these CGS caps, the customer-grit-supply caps, no one can plausibly argue they did it. They came up with these numbers based on the capacity of the grid to accept more PV. They came up with five megawatts for Helco, five megawatts for HECO, excuse me, five megawatts for MECO, 25 megawatts for HECO. These were not arrived at scientifically in terms of what the grid can handle. They were somewhat arbitrary and they were what the numbers they came up with for so-called phase one, phase one. So we are waiting very eagerly for the commission to issue some type of decision and order on the DER docket, Distributed Energy Resources docket, which will either be, I think, narrowly tailored to perhaps address the CGS issue because they have been lobbied directly by the industry, the PV industry, to increase the caps. Or I expect a more kind of global and comprehensive DER decision and order, which will also cover CGS, time of use metering and other matters. So I can only say that I hope, I really hope that something is forthcoming soon because there's a lot of anxiety and uncertainty and yes, I mean, I certainly have a narrow selfish interest based on my company and based on our industry. But more importantly, for consumers, what we have available now, what we can offer right now under customer self-supply, the options are limited and it's very expensive. That doesn't seem to me what we want to see. Well, you know, we're going to talk about this tomorrow in Hawaii Clean Energy Day at the Laniakea, which begins at nine o'clock in the morning and runs all day. And one of the panels chaired by John Cole, former PUC commissioner now with HNEI and others is going to be about storage. So if you're interested in hearing more about that, come down or check it out on our live stream. We're going to live stream the program too. Mina, you wanted to say something? Yeah, I mean, you know, one of the things that we're not looking at here is the impact on the customers that do not have access to rooftop systems. And so, you know, while technically there might be some room for greater capacity on the grid for PV, you know, I have to assume that one of the things that the commission also looked at was the subsidization of PV by the non-PV customers. You know, and that's something that doesn't get mentioned very often. And that needs to be considered the cross subsidization and not only by the rate payers, non-PV rate payers, but also by the tax payers. So, you know, if you're looking at energy storage and having a similar tax credit for energy storage, you're talking about the same people that benefit from rooftop PV getting the same benefit again. And what about the 75% of other customers that just, you know, physically or financially do not have access to these kinds of systems? Yeah, there are so many issues and considerations and it's changing so much. And the way the parties react between the legislature and the PUC and the executive, it's all changing. I would not have expected these, you know, these fine technical decisions to be made by the PUC. I think in the past, a lot of them were made simply by the utility. So, I mean, we've got everybody in the mix now and more issues every time, and that's why this show is so useful and valuable. But unfortunately, we're out of time. We're gonna have to come back to continue our discussion two weeks hence. Thank you both. Thank you, Mina. Thank you, Marco. I love you guys. Thank you. I love you both. I love you.