On June 30, Jay Griffin is expected to conclude his term as chairperson of the Public Utilities Commission, a three-member body appointed by the governor and confirmed by the state Senate that oversees some of Hawaii’s largest companies.

In this role, Griffin and his two fellow commissioners have decided key regulatory matters affecting the energy and telecommunications industries. A slew of other businesses that serve the public also fall under the commission’s purview including private sewer and water companies, interisland cargo ships, tour buses, taxis, shuttles and more.

Griffin, 47, became a PUC commissioner in 2017 after serving as chief of policy and research since 2012. He has chaired the quasi-judicial tribunal since January 2019.

Portrait of Jay Griffin fronting the Territorial Office Building
Jay Griffin is the outgoing chair of the Hawaii Public Utilities Commission. Cory Lum/Civil Beat/2022

Rulings by the PUC run the gamut from how much utilities can charge customers, whether regulated businesses are complying with the law, and if new projects get to operate. Businesses that Griffin has regulated or made rulings on include Hawaiian Electric Co., Hawaiian Telcom, Sandwich Isles Communications, Young Brothers and Hu Honua.

Griffin’s tenure as chair came shortly before a particularly turbulent time for the state. With the onset of the Covid-19 pandemic and public health restrictions, many key industries ground to a halt and their bottom lines plummeted.

Troubled Waters

Case in point: Young Brothers, an interisland freight business that runs what is essentially a monopoly barge service within the Hawaiian islands. Its fleet of barges carries everything from fresh milk to livestock to vehicles.

Young Brothers container barge enters Honolulu Harbor.
A Young Brothers container barge enters Honolulu Harbor. Cory Lum/Civil Beat/2021

Shortly into the pandemic, Young Brothers hit troubled waters. The company faced a steep drop in cargo volume while its operating costs spiked. In May 2020, Young Brothers alerted the commission it was in dire financial straits and needed an emergency cash infusion or it would soon be forced to cease operating. The company had already asked the Legislature for help and was turned down.

In July 2020, the company filed paperwork formally seeking PUC permission to drastically hike its shipping rates to stay solvent. Without that approval, Young Brothers said it would stop sailings, a move that could have resulted in bare grocery store shelves in short order.

The commission approved Young Brothers’ request, allowing it to raise shipping rates by 46%.

In a long and wide-ranging interview recently with Civil Beat, Griffin said the rate increases for consumers were “incredibly painful” but the PUC had no other choice.

“You’re facing the financial insolvency of this critical lifeline,” Griffin said.

Although allowing an essential service to go bankrupt was not an option, the commission placed several conditions on the company, including undergoing a financial and management audit that later found that Young Brothers’ money problems started long before the pandemic hit.

The audit resulted in the commission appointing an independent observer to oversee a restructuring of the company, Griffin said.

“We have to balance the needs of the company to stay afloat, operational, to provide the services that everyone depends upon, but also the services need to be affordable and reliable, and both were threatened, and we put in place something that can allow that balance to be restored,” he said.

Young Brothers declined a request for comment.

Fuel Prices

Around the same time, Griffin was also dealing with a refinery crisis brought on by declining demand for fuel caused by the pandemic.

Hawaiian Electric Iwilei station.
Par Hawaii Refining, the company that supplies low-sulfur fuel to utilities, unilaterally broke its contract with Hawaiian Electric during the pandemic. Cory Lum/Civil Beat/2021

Par Hawaii Refining, the company that supplies low-sulfur fuel to Hawaiian Electric and other utilities, unilaterally broke its fuel contract with Hawaiian Electric and demanded to renegotiate price increases to cover the company’s losses, he said.

“They were losing money because airline travel went to nothing overnight. So all the revenue they were generating from selling jet fuel they were losing and they demanded to make that money back on the backs of utility customers,” Griffin said.

Eric Wright, president of Par Hawaii, disagrees. He said the company takes its role in the Hawaii economy seriously and has a “moral obligation to do all in our power to ensure a reliable supply of all necessary energy products.”

As Par Hawaii sought to renegotiate fuel prices with Hawaiian Electric, it was exercising a contractual provision that had been reviewed and approved by the PUC before going into effect, Wright said.

The way Griffin remembers it, Par Hawaii said it needed action within 30 days or else its Oahu-based fuel refinery operations would cease. Par was seeking a $160 million price increase over two years. If approved, those costs would be passed on to Hawaiian Electric residential customers on Oahu, adding $4.52 to the average monthly bill.

Granting approval for the amended fuel contract, which the commission ultimately did, felt like paying ransom, Griffin said. But as in the Young Brothers case, there was no choice.

Scott Glenn DLNR

“You can’t have that level of risk and disruption in the middle of a pandemic when we’re scared to go outside,” he said.

In Wright’s view, while Par Hawaii made it clear that failure to reach a renegotiated price would result in the fuel contract being terminated,  the company said it would not result in a cut off of fuel to Hawaiian Electric.

Par Hawaii would either continue to supply fuel at a “new fair price” or it would supply fuel to a third party that the utility would contract with. A third alternative, Wright said, was that Par Hawaii would allow its facilities to be used for imported fuel if Hawaiian Electric chose to go that route, according to Wright.

To imply that Par Hawaii was putting the state’s energy security at risk is incorrect, he said.

“We take great exception to that notion and nothing could be further from the truth,” Wright said.

Scott Glenn, Hawaii’s chief energy officer, said his office examined the situation the PUC was facing and agreed with Griffin that allowing Par Hawaii to hike rates was a necessary step because the alternative — importing refined fuels from the mainland — would have been even more expensive.

“It was a really hard, complicated decision and usually the PUC takes years to make decisions of that magnitude and they had to do it in months. I think that was Jay’s hardest decision yet,” Glenn said.

Higher electric prices driven by the pandemic not only remain in place, they have increased even more because of spiking oil prices, he noted.

‘A Willing Soldier’

Born on Long Island and raised in upstate New York, Griffin got his professional start in Hawaii in the late 1990s. He worked for former Rep. Mina Morita as a legislative aide when he was a graduate student. She later hired him to work at the PUC when she was its chair.

A graduate of Williams College in Massachusetts where he majored in political economy, Griffin holds several advanced degrees. He has a master’s in economics from University of California Santa Barbara, a joint master’s from Duke University in environmental management and public policy, and a doctorate in policy analysis from the Pardee RAND Graduate School.

Despite his credentials, Griffin is low key and self-effacing, said Makaala Kaaumoana, executive director of Hanalei Watershed Hui, a Kauai nonprofit.

Kaaumoana said she met Griffin in 1999 when he offered to write the first watershed inventory and assessment for the community, a plan that served as a blueprint for future environmental conservation work and actions to reduce risks from natural disasters.

Portrait of Jay Griffin fronting the Territorial Office Building
Griffin has been a strong advocate of moving the state toward meeting its target of being 100% powered by renewable energy by 2045. Cory Lum/Civil Beat/2022

“He presented himself as a willing soldier who knew how to do that sort of thing,” said Kaaumoana. “That set this organization and this community on a path of true and deep understanding of our watershed and made a huge difference.”

Griffin handled himself with humility in a new community where he was an unfamiliar face, she recalled.

“Being able to work with government and the community and be the interface is a key experience and tool that serves you well later on,” she said.

Chairing the PUC and its roughly 60 staff members is a difficult job but it’s an exciting one because you get to set policy, said Randy Iwase, a former lawmaker who retired as PUC chair in 2018.

Iwase thinks Griffin was well-suited for the position.

“He has a very good mind. Totally committed to achieving the state’s renewable energy goals,” Iwase said.

Griffin has been a strong advocate of moving the state toward meeting its target of being 100% powered by renewable energy by 2045.

One of the ways he’s sought to accomplish that is by implementing what’s called performance-based regulation for Hawaiian Electric, the state’s largest electric utility.

After nearly three years of collaborative work with stakeholders, the commission in June 2021 issued a decision approving a new portfolio of performance metrics that offers financial incentives and penalties for Hawaiian Electric. It’s aimed at spurring the company to integrate renewable energy resources into its grid to help Hawaii achieve its clean energy goals.

Jennifer Potter Courtesy: Governor's Office

At the time the performance-based rules took effect, PUC Commissioner Jennifer Potter described the new framework as a “win-win-win for the utility, customers and Hawaii’s renewable energy future.”

Hawaiian Electric described it as the culmination of a model collaborative process and a framework that has been well-received and is balanced, thoughtful and innovative.

But in a recent filing with the commission, the utility appears to have soured a bit on the new carrot-and-stick approach.

It notes that less than 70 days after the framework became effective, the commission is “proposing a penalty-heavy package” be added. The package is a set of performance incentive mechanisms that Hawaiian Electric said has conflicting objectives, deals with matters outside the company’s control in some instances, and results in unnecessary uncertainties and overlapping penalties.

“This is premature and unsettling,” the company wrote in a Sept. 30 filing.

The issue remains the subject of an open docket, hearings and filings before the PUC. Whether Griffin will sign off on it before he leaves is unclear.

‘Cooling Off’

One of the more contentious matters on Griffin’s plate has been Hu Honua, a proposed biomass plant on the Big Island.

The plant is located on a former sugar plantation 10 miles north of Hilo. It would generate power by burning eucalyptus trees, a process some energy experts and environmentalists say is outdated because of the air pollution it would release.

The Hu Honua biomass plant on the Big Island has been a contentious issue for the PUC. The commission recently rejected the plant’s proposed purchase agreement with Hawaiian Electric. Cory Lum/Civil Beat/2022

Honua Ola Bioenergy, the company that built the plant, says the plant will be carbon neutral because it would displace existing fossil fuel generators and the company’s reforestation efforts would offset any amount of greenhouse gases emitted.

In a May 23 decision rejecting a proposed 30-year power purchase agreement between Hu Honua and Hawaiian Electric, two of the three commissioners found those arguments to be speculative.

Another major concern about the plant involves the high cost of the energy it would produce. Again, two of the three commissioners — Griffin and Potter — found that customers would face unreasonably high increases to their monthly bills with the plant in operation, and that Hu Honua would displace lower-cost renewable sources of energy on the island.

Workers from Honua Ola and members of ILWU Local 142 rally along King Street fronting the PUC offices.
Workers from Honua Ola and members of ILWU Local 142 rallied along King Street fronting the PUC offices Friday in protest of the Hu Honua decision. Cory Lum/Civil Beat/2022

Commissioner Leo Asuncion dissented, saying in his view Hu Honua had met its burden of proof.

On Thursday, Hu Honua lawyers filed a 762-page motion asking the PUC to reconsider its decision and hold more hearings.

Griffin said he couldn’t discuss the Hu Honua decision and that the order speaks for itself. Asked if he could talk about it after he leaves the PUC, Griffin hedged.

“We’ll see how things transpire including whether there’s further litigation, possible appeals of the decision and possible litigation against commissioners. It’s not unheard of,” he said.

On Friday, a group of protesters gathered outside the PUC’s offices in Honolulu to express their frustration with the commission, namely Griffin and Potter. The protesters included plant employees and labor union members.

As far as where he goes next after his term ends later this month, Griffin said he has no immediate plans. The only thing on his personal docket is taking a vacation and spending more time with his family, including his 7-year-old daughter.

“I need a cooling off period,” Griffin said.

Gov. David Ige appointed Naomi Kuwaye to fill Griffin’s seat. The Honolulu attorney will join Potter and Asuncion in July. It remains to be decided who the next chair will be.

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