 We're back. We're live. I'm Jay Fidel. This is Think Tech. It's a given Monday. Monday. Okay. And this is energy 808, the cutting edge. And we have the honor of Leo Ascension. The, are you still, still our youngest PUC member? I knew us in terms of term, but not in age. Okay. You know, and, and, and Marco. Hi, Marco. Listen, beyond, beyond, you know, the, the longevity issue. Can you actually introduce Leo? Absolutely. Thank you, Jay. Thank you so much, Leo, for joining us again. It's always a pleasure, always a pleasure to have you on the show. Always a pleasure to hear directly from the source of our good friends at the public utilities commission. And we already did the intro when we first had Leo on a number of months ago. So I'll keep it short. Leo's going on two years now, right? Two years at the PUC. You got yourself a full term last year. So if you were to serve that full term, you'd be in it for another more than five years. Wow, that's kind of mind blowing. And other than that, great to have you on. I think, you know, just kind of a personal question. So, you know, we all have expectations going into a new job, right? So you had some expectations and assumptions, I would think, coming as more on board as a commissioner assumptions with assumption. Yes, assumption has assumptions or had assumptions, continues to have assumptions, day of assumption. So how do the assumptions, how does the real world of Leo as a commissioner stack up against the assumptions of assumption prior to coming on board? Okay, I'm going to shut up. That makes a lot of sense, right, Leo? Absolutely. But first of all, thanks for having me out again. Absolutely. Glad to be here. Glad to be here. Getting to your question, Marco, I think, you know, my I remember when I came on board, right, part of my spiel to the Senate was when I'm bringing the big picture to the Public Utilities Commission. And in that being that we work on a lot of detailed stuff. But there's also, right, how does that impact others and other things that we're doing in the state? So I think that was one of the assumptions. And, you know, that is going well when we have discussions or when we look at different dockets, right, I'm always the guy saying, what if or what about X, right, how does it play into other goals of the state and the like? Other things were a little bit more detailed, right, wanted to get PBR done, and then we're going to take a moment to talk about that. We accomplished that last year. An ongoing thing that we're doing right now is updating our data management system to be a little bit more user-friendly. And in doing that, we're looking at our internal processes as well. So that is another one of my goals that I want to kind of take care of during my term. Other than that, right, it's to keep everything running smoothly at the commission, right? The commissioners all take different areas, if you will. I have the fortunate ability or what I took on was rate cases that come before the commission. And that's not only the utility, but right, like, you know, young brothers who we regulate, and that includes, you know, the private water and sewer systems that we regulate. So, right, when they come through, I want to make sure that their rate cases go as smooth as possible and that we, you know, take a hard look at it for the consumers and making sure that those rates are just a firewall. Other than that, it's been going well for two years, I think. I will say, even though we're working from home, I think I was talking earlier with Marco. It's coming up on a year of working at home, but I think we've been pretty productive. And I think that's the most we can ask for and not being in the office. But even when I was in the office, right, that productivity level was up there. And I don't think we've lost one bit. So credit to the staff and everyone else that works with us that we can maintain that level. The COVID has had a huge effect on so many organizations, including yours. It's nice to know that you've been flexible and nimble enough to keep on trucking. Ooh, I shouldn't use that term when you're talking about regulation. I keep on trucking right throughout the pandemic. But what interesting question is coming up now, and it's coming up for ThinkTech as well, is what's the path out of this? What's the path back to physical premises? What's the path back to, I hate to use the word normal, normal, or at least proceeding type of operation? Have you started down that path yet? Have you planned that path? Yeah, we're constantly looking at it. Jake Griffin, our chair, along with our administration staff, they keep looking at it. We're in a position where I think the most we've looked at it is how do we stagger our staff coming back? Even though we got basically two stories, two floors in the building, the basement in our upper first floor level. A lot of people are still, there's cubicles next to each other. The hard part on that is some of our divisions, like a butt each other. You got to think about not only within a division and how can they stagger, but also within the other divisions that your next door neighbor needs to be in the office or needs to be in certain times. How does all that work? The other part is making sure that for those areas, that they have the PPE or whatever you want to call it. I've seen everything from plastic paneling to just plastic sheets being draped from the ceiling. So do we do that? How do we get that done before everyone comes back? We did go into the office for certain things last year, but it was more a very skeleton crew that went in, and we had to totally social distance. We went in for a hearing and lucky for us, for the commissioners, we have our own offices, so we could be cooped up in the office for the whole day and hardly see each other or not see each other in passing. But other than that, we're going to have to figure out how we do that, and we constantly look at it. I think the only other thing right now is whether there's going to be something that says if everyone gets vaccinated, they can start coming in. But I think even then, I think the choice is on the employee. If they feel uncomfortable but they can still do the work, continue to work from home. But eventually, I think, God, I don't have a timetable if that's what we're looking for too. But that's one probably one thing I think, I don't know if your viewers have seen it today. CDC came out and said if you're vaccinated, you can start hanging out with each other. I read that and I can just imagine. Some guys are going to go to a store or go to a restaurant and start hanging out with each other even though the rules don't allow it. That's not saying here in Hawaii, but I can see that nationwide happening just because of this little guidance. But I think we need to constantly look at it, constantly track where we are. And I think in due time, we'll be all back in the office. Well, that's assuming the variants don't change things for us. There was a piece this morning about how Hawaii has another very troubling variants. Anyway, so the thing about strikes me and I want to mention it is that we have learned through COVID. It sort of reminds us, in fact, how fragile our society is and how it could be stopped and upended anytime for any reason you've never imagined. And that goes the whole question of sustainability and resilience and trying to build a state, including energy, that is sustainable and resilient and can resist, for example, extreme weather. Look what happened in Texas. Look what happened in Texas. That's pretty scary to everybody. I'm sure it's scary to you. At the same time, we're in these preceding predecessor, if you will, transitional experiences like PBR you mentioned. In that context, I wonder what your thoughts are about PBR and about the role of the PUC in dealing with these unknown but sometimes very difficult transitional issues, going for sustainability, going to keep the society happy and together and keep energy prices down and efficiency up and being resilient in the face of those changes. What do you think? Yeah, PBR, I think when I came in two years ago and they were halfway through, they had just completed the first phase of it and we're starting phase two, which was really to develop the framework itself. And that took the better part of probably 15 months total. I do give credit to the parties. I remember the first meeting I told them, I could probably come up with the framework if you locked me in a room for two hours, but I could guarantee that nobody would like the framework. Oh, maybe they would, Leo. You never know. Never know. But I think in hindsight, I think they took that too hard. The parties did, including the company, and they worked their tails off basically every month to sit down, look at different issues, and periodically share their ideas on what the framework should and should not look like or the elements thereof. Fast forward. In December, we issued the order. Right now, we're in a post-order mode, if you will. There are a couple of items that needed some clarification and mostly around the PIMs or the performance indicators, the metrics. And so there's a couple of those being done. There's also what the tariff will look like. So that's being submitted as we speak. And then the PIMs we're going to get them ready. We hope to have all of it ready for implementation in June. And I've always been, right, the devil's in the details. But until you get it going and actually implement the framework, you really never know. And that's what PBR is supposed to do. You're supposed to implement a framework and along the way, making sure that it works or doesn't work, and then what adjustments you need to make right after four or five years. So there's some risks on the company. But there's also these, I don't like to use the word off-ramp, but there's these off-ramps, if you will, for us to take a look and to examine and if it's dire. Like I think one of the things that was discussed, like what if, right, for whatever reason, you know, the credit agencies start to, right, lower our credit for how an electorate, right, that would be dire, especially where they are now. So we said, yes, okay, fine, let us know, right, because we're constantly tracking it as well. And before we even get there, right, then we need to take a look at what immediate adjustments might need to be made to the framework. But I think, you know, we were certainly being looked at by a number of states as far as PBR, right? I think if you look at other states, they have bits and portions of PBR, but not to the extent that we have an actual framework. I think the only examples we really saw of a total framework was in Alberta, Canada, right? So we actually brought that commissioner in, right, the chair of that commission said, how did you guys do it, right? Good idea. We got him in a room for a couple of days for a session along with all the parties, right, so he could share how it goes. And then we also had at the same time, the credit agencies, and they're like, okay, what if we do this, right? What are you guys gonna do or not do, right? And you talk to him again, would you circle back with him, you know, after you have a certain experience back to run to your belt? I think so. We would continue to look for, but then I think what has now kind of taken the next step, if you will, is Nevada is probably the next one up, right? They're working on a framework. They were, by their statutes, were required to do to look at PBR. So they are now underway and they're using, right, we had one of our consultants was RMI. So, right, Rocky Mountain Institute who came in to facilitate among the parties and to lend some technical expertise, if you will, around the policy and they're helping Nevada, right? So we could see a lot of synergy there among the state commissions and, right, I'm hopeful, right? So you can have these off-ramps and these opportunities to adjust things, tune it up, as you say. And, you know, that and you'd have to, you have to act quickly. I mean, you couldn't wait five years for that. You might have to act more quickly than every five years. But what's, just so that people understand what is the best case analysis? You know, assuming it doesn't affect, you know, a line of electric ability to borrow money and stock price, whatever it might be, what is the best case? And how will you know when it when it works really well? What will the metrics be then? I think, right, in a nutshell, without getting too technical, I think one, you'll see lower costs, right, for electricity. At the same time, the company would become more profitable, right? They would, you know, get to their approved rate of return that they, you know, historically they have not met without, you know, here's an opportunity. And I think the key is it's based on performance, right? This is not your usual cost of service model that was historically used. Now it's like, here are some goals. And here are the metrics by which we're going to measure you for those goals. And if you do well, right, there's benefit to the company. If you don't do well, there's penalties to the company. So I think that's, that's the key. I mean, the one thing that we definitely wanted as well was to make sure in PBR that there was day one savings, right? So that's why I'm, you know, anxiously waiting June, right, when that day one comes. And we can see right off the bat, right, the savings that kind of a lot of it was from our audit that we did of Hawaiian Electric, our management audit, right? There's some savings there over the next, I believe, three or four years into five years. And it's a pretty good amount. And then on top of that, there's the PBR, right? If they can get going on that, meet some of the goals and the like, I think, you know, you'll see all around, right, both the savings to the customer, the consumer, and also, right, some rise to profitability for the company based on performance, which would then, right, they could probably borrow more or get better credit ratings, et cetera, et cetera. That's going to require more work on your fund. You're going to be proactive. You've got to mother this idea and keep tuning it and watching it. I certainly agree. There's one thing we wanted to discuss, but we're not sure that you can discuss it. How about that for a preface to a question? And this is the Huanua matter because it's in litigation now. And so, you know, Marco, why don't you frame the question or frame the answer? Sure. I mean, just to bring people up to speed, as I understand it, is there's a court case before the Hawaii Supreme Court. I believe the Huanua, Huanua, all of folks have submitted their legal briefs. I believe the state of Hawaii, as representing the public utilities commission, has submitted their legal briefs. And now we are waiting for the court to schedule oral arguments before the court, which we don't know when they will announce that. At some point, they will in the weeks, months to come. And then there will be oral arguments, and then there will be a number of months after that as we wait a decision. So, you know, my guess is that we're probably four, six, seven, eight months out from a decision from the Hawaii Supreme Court regarding this lawsuit filed against the commission in the state. So, that's where we're at with that. I wanted to make a prediction when you, Marco. No, thank you. No, thank you. I wouldn't be so presumptuous to step on the toes or feet of the five Hawaii Supreme Court justices. They can decide for their own. We can easily spend, you know, hours on PBR. If I want to shift gears to something else that I've been tracking, and I'd like to ask you all about last month, the commission opened a new docket, believe it was February 11th, where this docket will essentially look at how Hawaiian Electric is doing regarding interconnecting large PV systems, which are in the pipeline as well. If I'm not mistaken, you know, I think that there was also a CVRE or community-based renewable energy aspect in that. And that strikes me. This docket strikes me as important for a number of reasons. And why did the commission open this docket? And why is it important? Why is it an important docket for us to track? Oh, you know, we, right, from the start, and this is even before I got to the commission, we are, right, wanting to make sure that we get as much renewables online in order to meet, right, our state goal of 100 percent, renewable energy sales coming from renewable or energy sales coming from renewable resources. And so, right, there are a number of efforts, two RFPs to date, the second one probably being the largest statewide in Hawaiian Electric's territories. And we, right there, we expect those things to come online. I think part of it is the process, even for those projects. They get selected, they are awarded, and then they go and negotiate, right? They have the PPA already kind of squared away that comes to us. And that's actually what we approve or disapprove. But mostly it's been approval because we want those projects to come online. And then they go back and, you know, work with Hawaiian Electric. And then that's the interconnection part. And there might be some other steps in between, but the main part is how do you get these renewable resources connected to the grid? And that has proven to be a challenge, right? And you could talk about DER, you could talk about CBERE, you could talk about, right, a PPA or a solar farm coming up. It could be a wind farm, it could be whatever. That interconnection process is the key, right, to getting these things online and operational. Because until then, we still have to rely on our fossil fuel units and, and, you know, or be at a certain level of renewable. Yes, we are ahead, or Hawaiian Electric is ahead. But we want to accelerate that. And that's been kind of like the focus of the commission. So we're looking at interconnection now because it's been an issue. But then also, to add Marco, I think the other part we're looking at is right on Oahu and on Maui, right, there has been announcements of, right, closing our fossil fuel units, right, AES on Oahu and Kahlua Parkland on Maui. And those dates are coming up, right? Right, it's like September 30th next year, 2022 is AES, right? And are we ready, right, to replace that load with X, right, which renewable resources were to be a part of. And, right, that's coming up. I think Kahlua is 2024, I believe, right? That's right around the corner as well. But then we're having all of these interconnection issues that the commission wants to investigate. And how can we make that interconnection process, right, a little smoother and not only for developers, but also for the company, right? I mean, there's something in there that, right, either be more upfront on the requirements or, you know, where do we do the studies that need to be done? Who does the studies? Do you do it upfront so that you know going in? More so who pays for those studies, right? I think right now, right, you go in and Marco, you can correct me, you're probably closer to the different types of projects. But, right, they go in and then you try to interconnect and then it might not be the right point, right? Or you might not have, right, the grid can't take it. So what improvements need to be made? And that's a cost that goes right back to the developer at this point, which eventually, right, kind of translates itself to rates as well at some point in time. But I think that that's the main reason, right? We wanted to I'm glad you're thinking about this, but I'm glad the commission is thinking over the horizon this way. You know, it goes to, you know, the whole sustainable resilience thing. But, you know, it raises for me the question of interconnection like outside the state or between all the island elements of the state. You know, we saw what happened in Texas where they were not connected to any other part of the national grid. And then you had a weather event, which, you know, we are probably going to have. And, you know, right now we've had a bit of a respite from climate change because of COVID actually, less economic activity and so forth. We're going to be back to economic activity, you know, maybe at the end of this year, next year. And my guess is that we'll have more climate change events, including weather events that come and surprise us and maybe do what would happen in Texas. So, you know, looking over the horizon the way you are, but recognizing also that we do not have interconnect between the islands. No cables. In fact, there's no movement of energy, if you will, between the islands. What is your view of that, Leo? I mean, are we are we safe? You know, it's like that line from the marathon man. Is it safe? Is it safe out there? Are we going to have a Texas here? Do we have, how do we know we're not going to have a Texas here? Yeah. If everybody would give me a dollar for the answer, that might be like $10 richer. But, you know, I think the interconnection between the islands, I think that's a topic in itself, right? It involves so much other things. Yes, we did have, right, in the past, right, the wanting, if you will, for a cable, right, that would join the islands. But then whole slew of environmental issues, whole slew of really nimbyism, if you will, right, around that kind of things happening. So that's a little tougher to do. Given that, right, I think we have to do the best on each island to be kind of self-sustaining, if you will, right, making sure the grid on each island is resilient, making sure that kind, I mean, in that, that goes towards, right, even our smaller islands like Linai and Molokai, right? How can we make sure that they cut? And then more so, you know, on another scale is the big island, just because of its large magnitude, right? How can you make sure that it's resilient, right, for the entire island? I don't know what the answer is, Jay. I wish I did. Then we would be marching towards that. But I think at this point, right, we want to make sure there are certain goals at hand. Yes, in all of that, in all the goals, we need to ensure resiliency in there. You know, the, I will say that the company is doing its best around that, right? They're doing the right things to make sure. But of course, right, there's always the fact that they could probably do more, right? But, yeah, for my crystal ball, or my lucky eight ball, if you will, basically says, you know, we're going to have to look within ourselves, right? Yeah, we appreciate you thinking about it. We appreciate you thinking about it because, you know, you're the one agency in my mind anyway, that's out there looking over the horizon like that and thinking about issues like this, you know, long-term planning, maybe not so long-term, but planning for surprises. Marco, you know, we also wanted to talk about, you know, PGV, but I don't know if it's time. You want to cover that a little bit, Marco? Oh, I'll just ask the question of Leo, our friends at PGV, Mike Alakini and his bunch, they submitted to the commission December of 2019, a revised and amended power purchase agreement. And we're now in March of 2021. And we had Mike on during this energy sustainability summit that I attended. I was on as well last Thursday. And Mike shared with us that PGV is now 20 megawatts, and they're working their way up to 46 megawatts, which will be a big deal in terms of, you know, Colton Ching and Huan Electric mentioned that after the first full year of PGV at 46 megs, Helco will be somewhere over 70%, 70% renewable, which is pretty darn impressive. And you throw in utility-scale solar, you know, we're going to be well over 80. So, but going back to the PGV PPA for our BFF Leo, where are things at with that particular PPA, my friend? Yeah, that, you know, that is still pending before the commission. We're trying to work out some items around an environmental impact statement or a supplemental that might be needed where we're kind of working with our other, you know, sister state agencies that probably have more expertise around that topic. I think right now, I think that the way it's looking and the way it's been interpreted is it's before the commission, right? And are we now the accepting authority around, you know, well, first of all, we need to determine whether or not a supplemental is needed, right? That's the first step. And if we do determine that, then, you know, we're going to start to be in a realm that my understanding is the commission has never been, right? Because of what they look at, right? Because they're not examining the project per se. I will say, right, that to my knowledge, right, this expansion was always in the plans, right? I think way back when, I got to say, I don't know, the 80s or 90s, right? They always knew that there was going to start at some megawatt, build the way up to that megawatt and then there would be an expansion, right? And then whatever needed to be done around that, we did do, right? I think the one thing, the key thing that we did around PGV, along with that application for new or amended PPA was to rebuild some of the lines, right, that connected PGV to the rest of the world after the lava flow, right? So we got that out of the way, right, that Helco came to us. The one probably twist to that was that they had to reroute it, right? So it wasn't a straight build it where it was because it was now covered with different depths of lava, right? So they did come close to a subdivision, which then required a public hearing. So that was a little twist that we had to go on that because our statute say if you come within X amount of a subdivision, you need to have a public hearing. And we did that just before the shutdown happened last year. I remember that was like one of my last neighborhood trips that I could do, right, without having to worry about quarantining when I came back. We got that public hearing out of the way and then we got that decision out of the way so they can start doing that. And to my understanding too, right, I think PGV has other items that they can do without the commission's approval, right? It's all hopefully that, you know, they're underway doing those things that it's not just stemming on our decision. I can't give you a time frame on when we might make that determination, but like I said, right, it's the issue of the potential that there would be a supplemental environmental impact. Thank you, Leo. Leo Asuncion, the Commissioner of the Public Utilities Commission and Marco Mangelstorff. Marco, we're out of time, but why don't you take a moment and close? Ah, I bask in the warmth of Leo and Jay and so much interesting stuff to talk about, so little time, but just as means that we're going to kindly ask you to come back, Leo, before too, too long. I got to reach out to Professor Dr. Griffin as well. We don't want him to feel ignored or slighted in any way. It's always good to have him on you and Jay and the three of you. It's just great. And one of these days, one of these days, let's have a marathon session. You and I, Jay, were the three commissioners at once. Whoa, let's try do that. Okay. That's a great idea, Marco. Yes, let's do that. Thank you, Marco. Thank you, Leo. We'll see you next time. Thank you so much. Bye-bye.