 Alright, Energy 808, The Cutting Edge. I'm Jay Fiedel and the handsome guy is Marco Mangelsorf. Hi, handsome. You're too kind, you're too kind. I don't know if that's the pot calling the kettle black or the other way around, Jay, but it's great to be back with you as always. Thank you. Marco is the president and CEO of Provision Solar in Hilo. He joins us by Zoom from Hilo and we meet every couple of weeks to get a beat on energy in Hawaii. And today we've got plenty of action. And what's remarkable about that is that, you know, America is burning with COVID. And in fact, to a certain degree, so is Hawaii. And still there's developments in action and energy. And so we made a list of things we want to report to you on. This is not everything, but there's a number of things of interest. So, Marco, let's see, where will we begin? Let's see where we will begin. There are several things that I can't find them now. Where will we begin? Let's talk about solar. Always near and dear to my heart. Yeah. Yeah, sure. That's your business. The last thing I remember is that solar was going up. And I heard that from somebody else in the industry. Solar is going up. Installations are going up. Well, it's an interesting contrast, Jay, because not too many months ago, the so-called solar parties on Wahoo essentially started ringing the alarm bell with the public utilities commission and point electric, saying that the sky was falling, the jobs were being lost, that the industry was in danger of devastation. And lo and behold, you know, the data over the first six months of the year across the state, PV permits overall are up 40, 40%, 40% across four counties. So it's hard to jive lamentations about the sky is falling with the 40% increase. Yes, but why? Why, why what? Well, people are getting into contracts for installation of solar at a time when everybody is like hiding at home in hermit fashion. Why are they doing that? Is it because they're focusing on, it's the same reason that Home Depot is active these days? I think there's something of kind of a safe harbor attitude, tens of thousands of dollars, 75% of all new systems being permitted have battery storage. And that's been pretty steady from last year to this year, about three quarters. So battery storage equals resiliency and backup in case the grid goes down. And the reality as well is that the federal tax credit for solar is 26% this year and as of next January one, it goes to 22%. So we've we've known over the years over the decades that one way to motivate people to jump is to to threaten to take away an incentive or an incentive going down. So I believe as well that the tax credit going down by 4% is not trivial. So it's, I won't call it a perfect storm but all these factors play into the greater march to people wanting to sign contracts. So Vivint Solar which was recently purchased by or will be purchased by Sun Run makes for a juggernaut now in terms of solar leasing companies that are doing business across the US. And Vivint has come back big time, especially on Oahu over the past couple of years so clearly there's still a market out there. And even though net energy metering went away, gosh going on five years to go. The incentive to go solar is less now in terms of utility interconnect programs is clear that it's still seen as a good investment by no small number of homeowners and business owners who didn't jump four or five 1015 years ago. I wonder if they they worry about them, you know, the supply of electricity and they want to have the ability to go on on off the grid essentially, and have their own source, given not only the, you know, the risk of that but the risk of storms which could also disrupt the power. Could be that. I wonder about that. Yeah. I mean if you look at if you look at the percentage of time when Hiko Halko Miko and Ki you see are offline. It's an it's a very, very small percentage. Yeah, so I don't think there is the perception that the availability of utility power at present and in the recent past has been at risk. I think given kind of the overall level greater level of anxiety and concern based on coven based on economic conditions. Again, I kind of go back to it is a type of insurance policy when you're going solar especially solar with storage and those people who can afford to do so and who are willing to to take on a lease or take on a loan are are they're voting with their their pocketbook so to speak that they see this type of investment in not a few thousand dollars but you know in the 10 to 100,000 range easily these days for solar plus the financing is available the banks are leasing companies are willing to do it. That makes it easier back to the storms for a minute you know it's very interesting about the storms. Perhaps, you know there won't be so many storms. You know we don't have as much carbon going in the into the atmosphere. We don't have as much disruption. In the climate change continuum, because the economies of the world are down. I've seen a couple of articles along those lines. I'm not sure that people understand that or make the connection, but that's a factor going to the question of storms. Well I hadn't heard that chain I got to believe given the magnitude of the global ecosystem that the reduction of greenhouse gases and carbon dioxide. Over the last several months. What effects that's going to have in terms of climate activity there's going to be a substantial lag so, you know, I'm not going to say surely you're joking and I am calling you surely, Jay, but it seems to me that's any type of effect on the global climate in terms of super storms or greater, more monsoons, more fierce monsoons, more fierce hurricanes that that's going to play out over considerably longer period of time. Well, okay. I don't have to be optimistic I can be negative about this too and say they're coming. We're in the storm period already we're in July and we could have a storm any day. I always say you walk outside see the sun shining beautiful weather like right now today where one day closer to a major storm. And that's certainly going to disrupt everything and disrupting everything in a time of covert is particularly, you know troublesome. Anyway, let's go to the second point. And that is who who knew who who know I you know you were talking about who know a long time ago, and questioning whether it was the right move and Supreme Court didn't like it much. And the PUC finally on the remand from the Supreme Court decided that it was not that it was not good for the environment right. Well, the in a major decision. Gosh, this goes back about fall of 2018. I'm tempted to say October 2018 and this is all due to to Henry Curtis suing for the commission to look at that decision again in light of greenhouse gases and again full kudos to Henry Curtis for for being that once the sole voice there that was pushing the right cause. So he got a unanimous decision I believe it was unanimous. Last year from the white Supreme Court and the Commission the Public Children's Commission issued a decision in order. I think it was just last week that formally said, or rescinded rescinded their approval of the power purchase agreement between helco and who knew that went back to 2017. So, I think it was an absolutely fantastic decision I'm extremely pleased that the three commissioners. And Jenny Potter and Leo Asuncio made the decision that they did in my position all along Jay has been that we need clean green power across the state cost effective clean green power, and any type of new power generation that is combustion based of any, any source regardless of the fuel source is something we simply cannot do. So I think fingers crossed that the $350 million project, according to who know they were spent 350 million and climbing that this will be the end of it. I don't get any particular pleasure that a business is losing a whole bunch of money or that they're going to have to write off a bunch of that money, but it was definitely the best and right decision for this island it was the best and right decision for the state of Hawaii to put an end to any new power generation that is combustion based. I'm much less enthusiastic about this $350 million is is a lot of money. It's not just so much that they lost that money, it's, it's gone. You might as well throw it away. This point. It's that they got a permit. They went through the process and got a permit. And then it was up through an appeal I guess life of the land was involved in that and maybe others in that appeal, you know, questioning their environmental rigor. And it took a while, and then it took another while for the whole thing to get sorted out. And then it crashes. It sounds a little bit like TMT, because they got a permit, they thought they did the right thing, you know, dotted the eyes crossed the T's. And then, you know, years later they find they didn't have a permit years after they spend all that money. And so, okay, I'm not, you know, I'm not saying that, you know, they didn't know there was a risk of an appeal and a reversal. The thing is, if investors on the outside, Wall Street, the same people who gave them the $350 million were to look at Hawaii as a place to invest, they would say, Let's see, we have super ferry with Wall Street lost 200 million on that one. We have TMT there's, I don't know how much money but it's a lot has been lost already on that one and will be lost on that one. And we have Honua. So is it a safe place to invest. Is it a safe place to put the, you know, the the initial capital in is it a safe place to spend the time and energy to get a permit, only to find the permit is pulled out from under you. We have a record of that now. So if I were Wall Street I wouldn't I wouldn't invest in Hawaii. And this would be just another reason. Yeah, I don't disagree with you, you make excellent points and I certainly thought of that as well and colleagues I've spoken to, you know, that's that's a major point I get it. But when it comes to what's best for the silent when it comes to what's best for the state. There are priorities that have to take priority. The promise of incoming Wall Street money, mainland money, international money coming into the state. When you weigh that against what's best for the people of the state, and for the environment of the state. So I absolutely believe the commission made the right decision. The reality is, of course, I should note to you, Jay, is that who who knew is not necessarily completely done. They could seek to enter into or cast their their hat in the ring for another competitive bidding round with Helco in terms of bringing on new firm generation. Whether they'll decide to do that after spending all this money all these years, you know, I'm not privy to that discussion, but it's not as if they can't come back for another shot because the decision was made by the commission quote without prejudice without prejudice. Similar to what the commission did under Randy was a book in what was 2016 with the next energy buying whole electric industries that to that decision was made without prejudice. Now that said, the very next Monday next year said hey we're out of here we're done. So we're all waiting now for Jenny Johnson and Templeton who are the firm behind who knew it to to decide and to announce that. Are they going to sue everybody in sight for trouble damages? Are they going to walk away? Are they going to request a reconsideration? I don't know. I don't know, but it'll be very interesting. They're not going to come back though Marco. They're not going to come back and anybody who knows about this reads about this and integrates it with the other things that have happened in terms of offshore investment not going to invest. You know, the thing is that Hawaii needs investment. It is always needed investment because it doesn't have investment. You know, the big capital concentrations in Hawaii, like, you know, well, the estate, for example, the, the employees retirement system. They have huge, huge funds for investment, but they don't invest locally. We need investment locally and we can't get it from the local market because it's not that much capital here otherwise. So we need to get it from the mainland. We've always needed that, at least in our lifetime you and me. But what's happening now is our economy is crashing and we need to rebuild the economy. So to say that we, you know, we don't care about offshore investment that we have our principles about this, which, you know, really would have been, it would have gone the other way had the Supreme Court decided the other way. The original permit granted by the PUC would have stuck and that project would have gone ahead. My point only is that we need capital from offshore more now than before. We have to rebuild our economy. The way you rebuild your economy is you bring in capital. And maybe you have to make a little compromise because although it's not coal, you know, and it is fossil fuel. I should say fossil fuel is burning fuel. You know, at least for a time people thought it was okay. So I think I think this is not it's a timing question is what I'm saying. But let's go on to the next one. The next one is probably the most interesting one on our list today. We have to get to it. And that is the par Hawaii par Hawaii is so interesting. Can you can you talk to us about that? Sure. It's just a bit of a sleeper story these days, Jade, because the media being the herd mentality media that they typically are have been focused on young brothers, young brothers, young brothers, young brothers, hotels, hotels, hotels, hotels, restaurants, small businesses. And I'm not saying it's not justified to look at those aspects of our economy during this difficult time. There hasn't been much of a herding towards covering par Hawaii par Hawaii operates to my understanding the only refineries in the state. After they purchase Chevron. They, they are the only folks who do refining of crew petroleum here in the state install takes place a lot. And understandably, their revenue and their volume sales volume has been hit majorly right because they provide finished petroleum products to the utility company. They provide finished petroleum products to transportation, transportation ground transportation, ocean transportation, air transportation. So their volume has gone down. I don't know that percentage. I don't know if that's part of that docket that's been opened by the commission on a fast track kind of urgent, urgent, urgent, we need a decision, you know, urgently. And that is that is down substantially. So you have par that is essentially asking for renegotiation and new terms in the in the agreement between themselves and Hawaiian Electric, amongst other things. Okay. And if you're selling less, which they are right, you're selling less, you're making less money. Okay, that's the fact though. And if you want to try to stay in business, if you want to maintain an adequate profitability or at least not go into the toilet to do deep, then what do you do when you are selling less you try to sell whatever less you're selling for more for more per unit, right. And you can't just willy nilly say, okay, I like to be able to charge you 15% more this all subject to public utilities commission review and approval, right. But there has to be an agreement to that has to be an agreement, and there isn't an agreement, right. Well, I am not privy right now in terms of whether there has been an agreement I mean there's, you know, they're competing interests here par has their interests Hawaiian Electric has their interests consumer advocate has the state's interest in the residence that public utilities commission is supposed to figure it all out and come up with a decision. Right. So, ultimately, if there is an agreement to to purchase the reduced volume of petroleum products from par at a higher price who's going to pay the higher price is he go going to eat it. I know. So they are seeking to pass it on essentially to to consumers to raise. This is a really sensitive issue, because everybody is raw about the cost of electricity the cost of fuel. And J is not just the cost is also here we go again, GHG greenhouse gases. So any type of negotiation any type of agreement has to take into account greenhouse gas consequences, and that was mandated of course very clearly right by the Supreme Court decision. So you've got this this mix here where you've got major players in the state major that are foreign will form for owned outside the state right whether it's par, whether it's salt shook in the Pacific Northwest that owns young brothers, whether it's Macquarie that owns Hawaii gas and they've been trying to sell Hawaii gas now for for a while. So you've got these major players, based elsewhere, who are looking at what's going on in our state, they are losing money, right, they're losing money because the volume of their products and services has taken a huge shit. So who's going to make up for the money being lost. And, you know, what's going to come out of par and he go and the PUC, you know, my crystal ball I'll show you my crystal ball Jay, my crystal ball even though it looks pretty clear. It's actually pretty cloudy when I start asking questions about about par and Hawaiian electric and the PUC. So, it's, again, we know why the media hasn't really been covering this who knows they're just fixated, they're heard that they're herd animals they go to everybody else seems to be very dangerous dangerous business because it's dealing with life blood of energy for a lot of people and I can see this as being a dangerous moment a dangerous inflection point and the PUC really does have to act right away because if you don't act at all then then maybe you have a departure another departure from the state where you accelerate parts of the culture. And what do we do then I mean we lost sauce. We're going to talk about why what is it PGV in a minute, we're losing these capital investments in Hawaii. And it's the same point I made earlier we really can't afford to lose them, we want to stay around for a lot of reasons, they help us do business they can't afford to lose their economy. And one way or the other we can't throw them out of town. And I think if if there's no solution of this we, we run big risks. I agree I mean what is the solution Jim if it was easy then you know we would have figured out by now but when you've got the this extraordinary constellation of rather unique events based on cove it based on the economy based on multiple there's no guidebook you know you can't go to Amazon and type in in the search box there, you know fixing crises in Hawaii in terms of energy, or transportation I mean there's just no guidebook on this and. I mean, I have the utmost respect for for the public utilities commission commissioners and their staff and you couldn't pay me enough now. You couldn't pay me enough to be in the commission. I think this is a time for gubernatorial leadership. If, if I, as I think there is no agreement right now, you need an agreement to go forward agreement to approve they're going to have to approve something. So what is to approve they got to have an agreement. And so, you know the utility and par should talk at the table and make an agreement, which at least is a good starting point for approval. Somebody like a governor has to get in there and and twist arm bend elbow what have you talked to them the way it has always been with the chief executive I mean of the state the governor gets in and says come on guys. Let's make a deal. The future of the state is at risk. I want you to make a deal and I will mediate or put one of my, you know, one of my millions to sit with you and mediate and and get a resolution wouldn't that be a good idea Marco. Well, you know, and pigs could fly pigs had wings that could fly right Jay, I mean, no disrespect to Governor David E. gay, you know, former electrical engineer and I have a lot of respect for electrical engineers. That doesn't seem to really really his style. And it seems from what I can tell now our legislature which broke up last week. You know, they, my friend, Senator Lorraine and away, who is one of the chairs of the important committees there. She essentially said hey, we're waiting for the commission to decide or tell us what to do. So, I mean, there's this kind of finger pointing in terms of well, we would prefer that you decide, as a new the commission decide whether we should pony up 20 million 25 million to solid shook and young brothers you guys decide how to figure out the par Hawaii thing. So, again, my, what's, you know, the constellation of stuff going on in a public public utilities commission right now, it's just mind boggling. I would use the same word. And I don't think it's fair to lay all these substantive choices on them. These are business choices. And the business choices should be done by the business people and, and the legislature or the governor, mostly the governor should get involved and help them out. We're in a crisis. I don't know why the legislature left. They really did not attend to the agenda. They did not intend to attend to, you know, the problems we're suffering from and to, and to have this Swiss cheese session and now go home. And really, it's not a solution. It's just, this is not good for the state, but that's the subject of another show. Why don't we get to PGV with a couple of minutes we have left. What is going on with PGV we expected to be back in business are they So Punat geothermal venture they've been offline since early May 2018 two plus years now by my calculation, approximately $3 million of lost revenue per month so you can do the math that comes out to chunk of money right chump change. And there have been two dockets before the commission that would are essentially deciding the fate of PGV docket number one is regarding the reconstruction of transmission line 69 kilovolt translation transmission lines. And that was approved not too long ago by the commission because whenever you're dealing with transmission lines. You have to get commission approval so that's a box the PGV can check. Now the next one is regarding this revised power purchase agreement, which has been before them now since late December if memory is correct very late December, which would be the new terms moving forward, if and when PGV goes back online. So I don't know the timing of when a decision may come out on that, in terms of whether the commission will approve the PPA as is, whether the consumer advocate will approve it, or recommend changes or whether there will be attempts by the parties including the CA, or the commission to, to improve, or to, to change the PPA, so that it would be in the better public interest of the residents of the state of the residents of Hawaii island. Hopefully there will be something coming soon I would think you know in the next handful of months in terms of a decision because the parent company or Matt PGV is sunk a lot of money continues to sink money into that plan, all with the the goal of bringing it back online. And for everybody's sake, from Hellcode to or Matt to PGV to the residents of the silent. It would be a good thing that the decision come come before too long but again you know we're talking about competing interest at the commission when that it houses burning down at par Hawaii the house is burning down at young brothers so you know somehow the commissioners have to find time for the more, you know the less crazy urgent stuff to deal with as well. I mean all of this has to be taken in light of coven and the economy and I feel to see if you agree with me. I feel that that you have to consider all that in our current business environment in our states. In our states crisis, and it may it's not business as usual. It's not regulation as usual. We're trying to get through this without having a disaster on our hands. If these projects fail if it all goes down. That's going to add to the disaster and maybe vomit a disaster that's worse. We don't want to have an apocalypse here right now we have increasing cases and our economy is being shut down more again. And gee whiz when we go next it's it's not a good time and all we can do is try to make the best of it and not get caught up in anything don't you agree with that. Better to have an octopus than an apocalypse for sure Jay and and work on keeping our crystal ball relatively clean and and see throughable. I knew you'd say that Marco. Marco mangoes off bringing his wisdom and his experience his knowledge and my crystal ball and his crystal ball to help us understand what's going on and all these things lots of things and energy in Hawaii even in the time of a crisis. Thank you so much Marco to think that you still believe anything I say JF for all these years. Thank you so very much for having me. Thank you.