 Energy 808, The Cutting Edge. This is Stink Tech. I'm Jay Fidel and the smiling young man is Leo Asuncion. He's our special guest and he is the new brand new PUC chair and my co-host is Marco Mangelsdorf. Marco, will you give an appropriate invitation? Can you give an appropriate introduction to Leo? We should know more about him than that. I'll do my best, Jay. Well, first, thank you, Jay, for us being together again. Thank you, Leo, so very much for being with us now in your new position as chair of the Hawaii Public Utilities Commission. I do so appreciate you coming on today and agreeing to talk about all sorts of hopefully interesting and juicy things. So, Leo is going on his third year. If I'm not mistaken, third year on the commission was named by Governor David E. Gay at the end of June to be the new chair taken over for Jay Griffin, who departed on the 30th of June. And we go from here. So, I'll just kind of lead it right up or tee it right up for you, Leo. As far as the topical question, Jay just let me know moments ago, point electrics announcement that there's going to be at least the hopes for and the planning for the moving forward for a 17 megawatt solar system, solar array with commensurate battery storage there on the island of Lanai. And I was rather surprised. Although I shouldn't have been surprised to see that the company behind it is next-door energy resources are near for short. It's a part of next-door energy, which is the company that tried and failed to buy one electric industry back in 2016. So, they are back. Next-door is back. So, what's your take? My take is we've been trying to get renewable resources specifically solar on Lanai for a while. It was part of the phase two RP. But we had a unique situation here in Lanai. One single landowner, majority landowner. And then we also had a site very near to the existing power plant that is owned by Pulama Lanai. So, working with them through different iterations. We got the site. It's okay. Everybody got, you know, everybody who bit into that particular RP for the island of Lanai got to see the site, ask the question and everything and the like and out pops, right? See the area of next-door energy as the one that's selected to do the project. So, terrific from that standpoint. I don't give any credence to who's behind, you know, the actual company that's doing it. That is all the selection of power and electric. They now need to get that power purchase agreement before that commission and make sure that we're okay with it, right? Do our due diligence and do our review on it. And, you know, the other one, the next one that I'm kind of looking forward to is hopefully Molokai comes in, right? We've allowed them to have a community kind of like energy plan if you will create it for the island. So, we were ready to go about the same time as the Lanai RFP and then the community came in and said, hold on. Let us have a say in what to do on the island. So, we're letting them go through that. I believe we gave kind of like a year for them to do it. They're doing the plan with HNEI and we'll see what pops out from there, right? And then the RFP process can start, right? As far as you'll see what the island residents want as far as renewable energy, then the RFP will take suit there. But for Lanai, I mean, it's a long time coming. It's one, right? It's one of the smaller loads on the island, but to get, you know, a solar project, right? Lanai is no stranger to other renewable resource projects in the past, but this go around, it's going to be solar and it's kind of in line with what we thought would happen. But then, right now, it's made that project a goal. No, that's great. Thank you so much for your take on that. So, I kind of take a step back. I'd like to ask you, what are your impressions and experiences so far taking over the bigger chair? I don't know if they actually gave you a bigger chair, but a bigger chair in terms of responsibility, right? I know it's kind of human to think you have an anticipation and kind of expectation about what a new position might be. I mean, it's new in the sense of you're a commissioner, you work a manager, you are a commissioner, but now you have a, you know, a more expanded portfolio. So, I'm always kind of curious, you know, how does your, the actual experience now that you're 25 days into it, how does that line up with what you expected? Well, I think, you know, the chair, the chair's position just like every other kind of head of agency in the state is pretty similar. What gets tacked on is more the administrative item, the day-to-day items. At the same time, we're fortunate here at the commission that we do have an executive officer on staff, so I can kind of delegate some of the day-to-day items to her and have her, you know, run the shop, if you will. And that actually opens up for the commissioners, myself and my other fellow commissioners, to really look at, right, the dockets, things that come before us, work with staff, as far as recommendations and the light, things we want to see. I can tell you, I'm sure in the near future, you have Naomi Kauai on your show, hopefully, and you'll see that it's a different take. She comes with different experiences and the light after about 30 years in private practice as an attorney from the land use and environmental side uniquely, but she also has dealt with what you see in the past, and that's actually something, if you will, to mostly talk about folks. She's got to bring that experience. And so we're taking a look, a hard look across our organization, right, including the commissioners, to see where best we can help. As commissioners help the staff develop, help to get the projects and the dockets through in a timely manner, and kind of take a look at our backlog and also to prepare for the future, right, the near term and the long term future. Going to maybe a Oahu specific, I mean, we are a little more than a month away as I count the days from the AES coal power plant going offline for good, which is one of the largest in terms of generation capacity power plants on Oahu. And I'm wondering, you know, what is your level of concern, if any, for that manner, about Hawaiian electric's ability to be able to have an adequate reserve margin post AES, especially as we're getting into typically the peak demand at times of the year, which is, you know, December, January, and so forth. Yeah, I mean, we continue to work with Hawaiian Electric, make sure that they will meet the minimum reserve that they are required to meet, to meet. They have set standards at the utility as well, which is pretty much a little bit higher than what minimum is, right, and what is adequate. They have shown that when we did, when we had HNAI take a look at the reliability, through the end of this year with AES shutting down, what we needed to find was 38 megawatts of power, right. And most of that is going to come for the rest of this year from Mililani One, right, which is a project that's ought to come online. I believe they're shooting for November. I heard last week that they kind of checked the last box on the testing of the resource, and they're online, or they're on untracked, come online November or earlier, right. It just depends on the validation of all of those tests and the like. So we have that. All right, now the next part is going to be next summer, right. That's another part when we're going to see the reliability dip again, right. In the meanwhile, right, we do have two more, five more projects, renewable solar projects coming online in 2023 at various times. So some of them will come in the first, second quarter, I believe a couple of energy systems, which is the largest solar battery project on Wahoo will come online in the first or second from the year. So that should tide us over, and then there's a few other renewable resource projects that are coming online as well. So what I've seen from Hawaiian Electric is they continually try to look at how they maintain their existing resources, right. And if they did nothing and AS went down, you would see a very slim margin somewhere on the lines of 38 to 40 megawatts. That's where the reserve would be. And they've shown us that if they kind of extend or defer some maintenance for like about three to four months of some of the units that plan, they can get up to 120 megawatts in reserve, right. So it's all about at this point, not going to get any more renewable resource projects in running operational by the end of the year. So we're looking at how can we now defer some maintenance. I take these certain units online, the maintenance, and you get them back online. I look at those charts and it's kind of like Tetris, right. You kind of kind of fit whatever shape kind in order to keep it below the minimum reserve, right. If you got to 32, if like every other generator goes down in the meantime, yeah, I would lose sleep. But right now it's going to be, right, how do you defer it for how many months can you push stuff up. I will say also, right, Kalei Law Partners, they kind of move their their usual annual maintenance up a couple of months, right. So they're actually, I believe like last month, they went right and did their, you know, take a look at their annual maintenance and they did that. So they're ready to go, right, come the day EES goes down. So if some of these IPPs also looked at their particular generator and look at a maintenance schedule to kind of make sure that they be there. So that allows very HIKO to kind of move their maintenance plans off. Let me let me ask you a follow-up question as well. In terms of Maui, there was that letter that came that was published, publicized from, I believe it was Mitsubishi to Maui Electric regarding the Malaya power plant, essentially telling Maui Electric that as far as getting replacement components for equipment there, they weren't going to be able to do that anymore, which puts that plant in a greater risk, I guess, as far as possible breakdowns and being able to keep it online. And then you've got Kalei that is scheduled to go down off for good if we're not mistaken in 2024. So it seems it's not just a while specific in terms of perhaps type reserve margins, but also on Maui. Is there any wiggle room, let's say, for the Kalei plant to not be shut down decommission in 2024? My understanding is that their permits operate, permits they got from the Department of Health and also the county actually goes beyond 2024. So it's going to be the decision that Maui Electric, Hawaiian Electric needs to do, needs to make is do you go for an extension on those or allow it to go, I believe it's one permit allows them to go to 2025, right? And one other permit allows them to go to 2026. Let's just take 2025 as really the drop dead date for Kahalui should they want to continue operation. The question is, do you go up to 2025 or do you seek an extension on those permits just in case you could go beyond that? So that's more Hawaiian Electric that needs to take a look at that. Likewise on Maui, we have a couple of new projects that are slated to come online. Some of them are facing some opposition from communities that do not want to object in their backyard. At the same time, if you don't remember one of the arguments that particular community made was that Maui doesn't need the renewable generation, right? They did their numbers and that was their argument, here are two. Now granted, that was pre-pandemic, right? Pre-announcement by Mitsubishi and the like. The only thing we knew at that time was Kahalui was going to shut down in 2024. So they made that argument and they keep fighting opposed to the project now in the court system, really at county level for permitting. But right, there's a number of other projects that are supposed to come online. So can those projects come online sooner than later, if you will. It's interesting to note, and I'm just thinking that this is your talking, Leo, that the two main islands in the chain that have the highest percentage of renewables, Kauai being number one, Kauai Island being number two, that there is no talk, there is no concern at this point. And in near term, regarding reserve margin, there seems to be more than enough that compared especially to Maui and Oahu. So I just find that kind of interesting. I'm not saying it's necessarily causation there, but certainly an interesting thing to note. So how about you, Jay? I'll pass the baton, the talking stick to you. I do have some questions, Leo. Sure. So Jay is gone. We all miss him. He's a great guy. And now we have a new member of the commission. So that's two significant changes all around the same time. So I wonder how you see things changing in terms of attitude, in terms of the way it works, in terms of your administration, Leo? One of the things is, kind of get back to just, I'm a little bit old school, you don't I'm old school. I would rather have the hottest discussions informally at first, that everyone, what page are we all on? And then includes the utilities, the energy utilities. But I'd like to also do that across the board on the utilities that we regulate. What's going on with the water carriers? What's going on with the motor carriers? It's even the private water and wastewater. What do we see? What are their goals? What do we want them to do? Of course, to ensure that they provide their services. But you know, down the line, one of the things that I see coming down the pipe is, what'll do all of these private water fares? Their rates have been changing the last decade. And they have to maintain, same like the energy utility, they have to maintain all that infrastructure. But when your rates don't change, what we're starting to see, and this is not only in Hawaii, we're seeing it actually on the mainland as well. Private water companies coming in for 1,000% increases in their rates for their customers. It's just because they haven't adjusted. So that's one of the things I want to try to talk to them about is like, how can you come in more periodically to kind of reduce that shock of rates going up that much? We have to deal with a couple already. And they're not fun cases to go to to smaller communities because they are smaller groups of customers because they only provide service to certain areas. But still, I mean, if you're at a consumer, and suddenly your bill went up 1,000%, that's not fun to deal with. So I think that's what I want to kind of get that. How can we, and it's even to the point of divide and conquer, right? I mean, I want to talk to the solar industry as well, right? All of the developers, like what happened, right? Jenny, Commissioner Potter, right, is very good with that kind of, with that group, if you will, right? How can we take all of that information and kind of come back, right? To kind of come back and, you know, share that information among not only the commissioners, but even our staff. Well, you know, it's interesting you raise that because I think that's a great idea. You know, we haven't had the same degree of affable, of all public conversation, you know, in recent years, for a lot of reasons, the Hawaii Energy Policy Forum has not been as active, you know. And, you know, there are people who grumble about the boss, and they're not satisfied with the progress and all that. There's some hard litigation going, where, you know, the decisions of the PSD have been bouncing back and forth with the Supreme Court, you know. And that really touches me personally, Leo, for you to say that, because I think we need more affable public conversation about this. I think that's what you're talking about. So that's a good thing. And if you can pull that off, it'll be very good for everyone. Let me go to another question, though. What about, and this is part of that litigation, what about wood-burning energy in Hawaii? Do you think there's a future for that? You know, we have it on Hawaii, right? I think it really depends on where it is and in what manner, right? I mean, you can nitpick the thing. My thing on, you know, any type of renewable energy has been until, right, someone can say, no, it's never going to happen, right? And the only thing we got going for us now is we can't have nuclear, right? You need the act of God, which is the, right, supermajority vote of the legislature to even make that happen, right? But look at the technology, nuclear, right? I mean, I just spent last week at the National Association of Regulatory Commissioners, right? Their summer meeting. And nuclear was the hottest topic, right? Small nuclear, right, that you can put and can service 20,000, 30,000 homes, right, in the space of basically a transformer that we have today, right? Granted, I'm not up on all the environmental issues that something like that could bring. But, right, anytime Hawaii's in the room, they're like, well, you know, that's not for us, right? Yeah, well, it'll take, what is it, a two-thirds majority of the state legislation to do that. And it's one of those, may I say, this is funny, it's one of those radioactive issues. But I would rather say, right, kind of like a more balanced portfolio, if you will. I wouldn't go so far as what Senate Bill 2510 did, you know, to put limits. That I think is let the market decide. But, right, I think from the state side and also from the utility side, you know, what are the signals, right, that we send, right? So if we're going to say no to something, right, take it completely off the table, right? That means, you know, don't expect any economic impacts from it, don't expect anything else from it, right? Let's do that so that we can move on, right? But in my book, right, until somebody says that, you know, it's on the table, right? I mean, everything is, to me is, right, you could do it. I mean, maybe the technology is not there as far as like solar and the like or the type of stuff we can be doing with solar and or wind. So, right, I wore, let's make sure we exhaust everything before we start saying no, because that's going to be, right, going to be it, and we got to move on, right? And like for me, yeah, I, you know, I like to learn about what's happening in nuclear, but realistically, I can't like, I would never say, yeah, try to bring it to Hawaii. Well, who knows? I mean, it depends on where all of this goes. And going back to, you know, the point about how fast we move. I mean, there are people out there, Marco knows some of them, and I know some of them who don't think that the state is moving fast enough. You know, we had these dreams, if you will, back in the 90s and the ought years about, you know, really moving along on this, and there are those who feel we're not moving fast enough. On the other hand, they have so many agencies and officials in the energy sector, it's hard to see exactly where the quote leadership would come from when governor, state energy office, the chairs of the energy committees, probably missing a few, and of course, the PUC. So, you know, what do you say to them when they say, gee whiz, you know, what's the real long plan? Are we going to make it to 2045? Are we moving fast enough? And inherent in that, Leo, is what can the PUC do, possibly under your administration, to move the needle faster? Yeah, I think, you know, part of me is, right, we have we have existing, and we've set up as well, right, kind of like these procedures, if you will, right, to take care of certain things. And I think sometimes we kind of lost sight of, you know, what are we really trying to achieve, right, where we're, you know, part of these policies have been more protectionary, if you will, right, but that does at times. So it's one of those, what do you do, right, you, we, we were moving at a good clip, right, and then somebody says, hold on, right, you're moving too fast, right, and then you put in a policy or you put in a statute, which, right, really extends the, extends it, right, and I'm looking at it from a policy aspect in this regard, right. So how do we now kind of look at or work with the process we got, right, to expedite it here and there, right, and we're trying different things, right, and then they sent this to HECO, right, kind of like working with the counties as far as permitting, right, can we, can we, you know, make sure that we were all on the same page on that, right, is it a priority for the county as well, right, or, or are we playing the game of, well, that's really a state priority. So let the state figure it out, right, but we can only figure it out to a point, right, without being, I don't know, I mean, like taking over everything, right, and like declaring martial law on everything. We're not ready for that, no. So I think what we need to do is really kind of work with what we got now, right, improve processes, right, we're looking at even within the commission, right, how do we kind of move these dockets a little quicker through it, right, we, we have already instituted kind of like a two tier system. So if somebody comes in, you know, under an RFP, right, with a PPA and these, and we look at it and the triad says there's no real problems, right, there's no environmental, they took care of that, there's no whatever, right, those guys can get out in about 46 months out of the commission. Now, the other ones, right, the other level is, right, there's a call for an environmental impact statement, right, and that already takes a year in itself, right, especially if you're going to do a full blown one. So when you do that, right, you're looking at at least a year, right, plus, right, to get out of the commission. So, so, right, we put a lot of effort into the ones that we can expedite real quickly, right, and the ones that have to go kind of into the process if you will, right, we just kind of work on those over time, right, because we know we have to, right, we have to wait for something else to be done until we can actually act, right, or do our process, right. There's one other thing I wanted to ask you about before Marco resumes, and that is this, a lot of people feel, a lot of people notice that we're still paying way high than other states, even in a time when, you know, the federal government hasn't been able to execute clean energy in the way that Joe Biden wants to, and we are still way high in terms of our pricing. And I know, you know, the commission has often said, we're going to try to lower that, we're going to lower those prices. But, you know, how does that look at this point in time? What's your perspective on that? There was one commentator recently said, oh, if we do it right, we use the technology, we can get energy to be free. Free, he said. I'm not sure that's really possible in our world today, but maybe someday, maybe who knows what. What do you think the prospects are knocking down these 50 cents per kilowatt hour rates to, you know, way lower for everyone in the state? I think it's doable. In my book, it's going to take time. And, you know, the one I look to is really care you see, right? 10 years ago, they started on this, right? Kind of try to go to 100% RPS much quicker than anyone, right? Very, you know, at that time, if you ask the board, they're probably like, wow, we're really shooting for the stars, right? But then, when you take a look at it, right, they were, if memory serves me correct, and I wasn't in the energy area 10 years ago, right? More on the planting side, but I understand that it was like somewhere around 48 cents per kilowatt hour for residential, right? That was their rate. 10 years later, right? Two solar projects in, they have a small biomass, right? Wood burning plant there, and other things that they're doing, right? And so this is pre-pump storage hydra, right? Kind of pre-next level of renewable resources for the island. And over the years, I still remember when that first farm went in, right? A friend of mine from the island called me like, why isn't my rates going down? Like, well, you can't expect, it's not going to happen the day they turn on that solar plant. But 10 years later now, right, they've reduced it 10 cents. They're around 38, right? And they keep trying to push it down lower and lower. So to me, I think it's going to happen. You're going to see a certain level come 2030. You're going to see another level 2040, 2045. And then from there, right? It's how much more as you have all these systems on, right? And it's coming from renewable energy, which is supposedly cheaper, right? It depends what it's, what you're relating it to. But then, right, then you're really going to see, right? I don't know how low it's going to go. I'm hoping for at least getting it down into the teens. But you're talking, right, 20 years from now. We should all live so long, right? Okay, Marco, you're time to resume. We don't have much time left, but go for it. Thank you. Thank you, Jay. So just to riff off what you said regarding KIUC, Leo. So I believe it was back in May a couple months ago that for the first time ever, the first time ever, the residential rate on Kauai dropped below the residential rate on Oahu. That was a major pretty darn big thing. And it goes to David Bissell at KIUC's progressive, aggressive pursuit of cost effective renewables. So I think my last question to you is the commission ordered Hawaiian Electric to roll out this battery bonus program on Oahu last year. And then earlier this year, ordered Maui Electric to roll it out for Maui proper. And so my quick question to you is, hey, what about us guys here on the big island? Is there a battery bonus program in our future? Well, you got to take a look at why we did those battery bonus program, right? It was all around the whole reliability item, right? Oahu, AES was going to go down, there was reliability issue there, right? So what could we stand up quickly? And actually Hawaiian Electric had proposed it in one of the dockets. So we took a look at that. And yes, we could do it hindsight. But one item that we didn't really take a look at is the permitting, right? How it would overwhelm the Department of Planning and permitting as far as the volume of permits that are coming in. And then given, right, they had some staff issues as well. You've always had a shortage of staff from at least, at least from my knowledge, right, in the last administration, right, on the Caldwell. So, right, not the best thing. So on Maui, same thing, right? We're seeing the possibility of, right, Kahului shutting down, solar projects getting delayed, and the light. So we said, okay, that's the next, the next era that probably wants a battery bonus program. This one lessons learned, we're actually talking to the county making sure that, right, I think they just, it rolled out in June, HECO and the solar developers reported to us that there was only five applications on Maui that have come in. And then, so, but we're, right now, we're talking to the planning department there and making sure that, right, they're ready, because there may be an influx of people wanting to get their battery bonus and get their battery and our solar panels permitted. So we're kind of working through all of that. Now, Big Island, is there any chance of, you know, reliability issues? You noted earlier, right, you guys do not. So, right, those, that was the premise around instituting the battery bonus program. Remember, too, right, the whole thing about battery bonus is, right, that the utility gets to tap your, your battery, your battery serves, right, certain periods of time for X amount of price, right. So there's the other, that's the other part of it. So, right, you got to have willing customers, not only that do they want the battery, but they also need to, right, for the next, I believe it's like the next five years or so that they need to allow the utility to tap that power should they need it. Well, thank you for, for updating me on that, Leo, and I'm just going to put a plug in directly to you, perhaps tell you something you already know. I think, you know, the, the virtual power plants notion is not just something, you know, in the land of the Jetsons in the future. I mean, it's actually happening more and more. It will be happening this state will be happening in various parts of the mainland. And I happen to believe that in order to accelerate that, which I think is a good thing, virtual power plant and having both solar and storage distributed across wide territories rather than centralized generation, that that is a good thing. And, and, and is deserving of incentives, which obviously is being done on Oahu is being done on Maui. So I hope that it's not just seen kind of in the narrower lens of having adequate reserve margin, but also kind of the bigger scheme of things, which is we really do need to go kind of all in as far as virtual power plants, more solar on rooftops and more storage distributed. Yeah, okay. Just about out of time, Leo. But that's just another way of saying we'd like to have you back on a regular basis. We'd like to you to see ThinkTech as a way where you can express your views about, you know, things that are happening at the PUC. Marco and I have an infinite number of questions we want to ask you, and dynamic number always growing, always changing. So thank you so much for coming down, Leo, Leo Asuncion, the brand new chair of the PUC. And thank you, Marco, a co-host on this show. We really appreciate your input and your expertise. Thank you both. Aloha. Thanks very much, guys. Thank you so much for watching ThinkTech 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.