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Jess Del Fiacco talks with ILSR Co-Director John Farrell about recent publications from ILSR’s Energy Democracy initiative. Jess and John start things off by talking about the Community Power Scorecard, which grades states on whether their energy policies help or hinder local clean energy action. They discuss how states are graded and the policies that make some states stand out, and which state policies give cities the most power to take action around clean energy. They then discuss ILSR’s recent report on community choice energy, which allows communities take charge of their energy supply and more equitably share the economic benefits of the clean energy transition.
Their conversation also touches on:
- Which regions of the U.S. are leading the way in clean energy policy.
- Why only two states received an “A” on our scorecard, and why some states have problematic 100% renewable energy laws.
- How the Community Power Scorecard can be useful for states wanting to empower cities to adopt more equitable clean energy policies.
- Other ways ILSR is tracking how communities can have self-determination around their energy supply.
“And so, the state and the city have been looking at this issue of municipalization, or a public power takeover. And what it means really is completely being able to change the perspective of the utility… Instead of having shareholders that you’re trying to serve and who have a very significant interest in earning a return on investment, you’re just considering the public interest in the choices that you make for the utility.”
The 2020 Community Power Scorecard
Why ILSR’s Community Power Scorecard Matters
How Can Your State Get an “A” Community Power Score?
Which Regions and States are Spearheading Local Clean Energy Policy in 2020?
Report: An Alternative to Electricity Monopolies Enables Communities to Center People and Planet
What If The City Of Chicago Ran Its Own Electric Utility? WBEZ Chicago
|Jessica Del Fiacco:||Hello and welcome to this episode of the Building Local Power podcast from the Institute for Local Self Reliance. I’m Jess Del Fiacco the communications manager here at the Institute for Local Self Reliance and I’m with John Farrell co director of our organization and director of our energy democracy initiative. John, what are you here to talk about today?|
|John Farrell:||Well, I’m hoping to share a little bit about the community power scorecard. It’s a recently released tool from the Institute for Local Self Reliance from our energy democracy initiative focused on giving states a grade to help summarize perspective on how their energy programs work to enable more clean energy.|
|Jessica Del Fiacco:||Okay so each state got a grade. So which ones are the stars of the class who got A’s and then who needs a little extra help to make some progress to improve their failing grade?|
|John Farrell:||So actually there’s only two states, Massachusetts and New York, that got an grade on our 2020 scorecard. We’ve been doing this scorecard for several years now and the section with the fewest number of A’s that we’ve ever had we do change the methodology a little bit every year to try to account for which states are really doing well and which aren’t. There’s about 10 states that get an A or a B so that are doing pretty well overall but there are an awful lot of states that are doing either mediocre or really poorly unfortunately.|
|Jessica Del Fiacco:||And why is that? What are some of the policies that we give failing grades or lack of policies?|
|John Farrell:||Yeah, so the most important policies that get states a high score are ones that give communities and cities a lot of flexibility in how they plan for their energy future. So one of the primary ones for example is called Community Choice Energy. It’s something we actually just released a big report about where we explore how it allows communities to go a lot further and a lot faster towards renewable energy. So instead of for example relying on a private utility company, Community Choice Energy allows us city to on behalf of it’s residential and small commercial customers choose where the electricity supply comes from. So they can say, “We want to get it from solar, we want to get it from wind, we want to get it from local sources versus far away sources.”|
|John Farrell:||And so we score very highly for that. States that have that policy can get seven points out of a total of around 35 to 40 points so it’s a big chunk of this score. Other things that we focus on are things like shared or community renewable energy so policies that allow people to finance renewable energy projects through property taxes or just to have policies that make it easier for individuals to put solar on their own rooftop.|
|Jessica Del Fiacco:||So how is our scorecard different from other clean energy report cards that other organizations might put out?|
|John Farrell:||I think the biggest distinguishing factor is that we’re not as focused on some total of carbon reductions or renewable energy percentage in terms of what state policy accomplishes we’re really focused on the way that state policy is enabling cities to do more. So, you see that in for example we give high scores to states like Massachusetts in New York which would probably score high on other state scorecards because they also have ambitious overall state policy goals on clean energy. But we also give high scores to states like Illinois, New Hampshire, Ohio. Ohio for example recently repealed its entire clean energy state standards and passed policy to subsidize nuclear and coal plants. Those are obviously very bad policies and we disagree with them strongly but Ohio scores well on our scorecard because it still allows communities to make their own choices. So even though the state is going to do some really bad things around energy policy as a state it still allows communities to do really interesting things.|
|John Farrell:||And we have a podcast interview for example with some folks from Athens, Ohio. In that community because of they have access to Community Choice Energy in Ohio which is one reason that state scores better they’re able to not only choose where their energy supply comes from writ large but they’ve been able to raise funds specifically to put clean energy on public buildings by adding a fee onto the bills there. It was something they could determine locally and something that you’re not allowed to do in a lot of other states. So that’s the big distinguishing feature is that rather than focusing on what’s the big flagship energy policy with some kind of number about clean energy instead how do this state policies allow for cities and communities to make more of those choices themselves and often to go much further than some of the most ambitious state policies.|
|Jessica Del Fiacco:||So going off that a little bit there are those states that have 100% clean energy laws like Virginia and New Mexico and we didn’t give them great grades so it’s just because they don’t have that kind of community empowerment that we’re looking for.|
|John Farrell:||Yeah, that’s exactly right. And I think it’s important to talk a little bit about what in those policies is problematic as well. So Virginia was just in the news in early March because it passed its clean energy law. New Mexico was a flagship one, got a lot of coverage in the fall of 2019. So both Virginia and New Mexico’s laws are problematic for similar reasons. In those policies that set high 100% goals for clean energy policy for the state by some certain date like 2045 or 2050 they also include a lot of handouts for the incumbent investor owned private utility companies. These big utility corporations have had monopolies for a long time guaranteed by the state so customers there don’t have a choice generally speaking about what utility provides energy to them. And the companies own everything from the meter on your house to the poles and wires running through your alley to the power plants that generate the electricity.|
|John Farrell:||And New Mexico for example they had one of the biggest and dirtiest coal power plants in the entire country as part of utilities portfolio and the utility cut a deal as part of this clean energy program to be allowed to shut it down. But also to be allowed to recover 100% of the cost and to make a profit on the cost of shutting that plant down even though they had been warned many times over the past decade that it was not economical to continue running it.|
|John Farrell:||The other thing that the New Mexico bill guarantees for the utility is that they get to own everything that replaces that coal power plan and we are in this timeframe when there’s no reason that utilities have to own everything. Solar panels can be put on individual rooftops. Wind projects can be owned by farmers. We have actually featured a number of those kinds of projects on our website either in stories or in podcast interviews of community ownership. And so, it’s really disappointing with the New Mexico law focusing so much on rewarding utility shareholders for the clean energy transition rather than giving opportunities to individuals, to tribal nations, to other folks to benefit from the clean energy transition.|
|John Farrell:||And Virginia is similar in that law that just passed in early March Dominion Energy which has been very politically powerful in the state succeeded in negotiating to own 65% of the clean energy resources that are going to be built. I thought it was really interesting in one of the articles I saw about the law they were hailing that the number had gone down from 75% to 65% but again it is a guarantee that is unnecessary. Really what states should be focused on doing is setting clean energy targets and looking for the most economical way to do it if you’re just going to like put it out for bid or if you just want to like set a goal and do nothing else let the utility commission identify what’s the most cost effective way or to set priorities for how you get there.|
|John Farrell:||And this is where a state like Massachusetts which gets an A on our scorecard is very different. They not only have ambitious longterm goals for clean energy but in their policies they specifically set out ways to encourage development of certain kinds of clean energy projects, projects that include energy storage which will be very helpful for the grid, projects that allow low income folks to get savings on their bill so that they help reduce the energy burdens for low income folks. Projects on brown fields, so taking distressed, polluted properties and putting solar on them. And so, they’re much more focused on the general public benefit from clean energy rather than just hitting this one big number 20 to 25 years from now and letting the utility shareholders rake in the profits of getting to that point.|
|Jessica Del Fiacco:||So John, are there any states that are on the verge of getting a passing grade that we could see in the near future have policies that would bump them up a little bit in our scorecard?|
|John Farrell:||There are a few states I think that I would highlight as being on the verge. So Virginia is one, they actually do have now a Community Choice Energy law that was recently passed. It’s going to be really interesting to see if they’re able to implement it. Virginia actually is a lot like California, we talk about this in our Community Choice Energy report in that the state used to have retail competition which means that individuals could choose who they bought their electricity from. And then after the big Enron debacle 20 years ago when Enron was manipulating markets and causing an electricity crisis in California a lot of states walked back from competition and Virginia and California are both among them.|
|John Farrell:||And what happened in California where Community Choice Energy has really flourished is that there was an enormous and painful fight to get the policy enacted because the utilities had become monopolies again and they didn’t want to share the with communities making choices about where they got their energy supply. And so, they poured a lot of money into lobbying, into ballot initiatives, that kind of thing to stop community choice from growing.|
|John Farrell:||So Virginia is a state where we have some opportunities coming up because if Community Choice Energy can be successful, if communities can make those choices, then they can help change that big number that we just talked about in the 100% Clean Energy policy about utility ownership because the communities will be able to choose where the energy comes from. And so the utility can own 65% of nothing if all the communities in Virginia decide to go buy their power wherever they want to get it. I’m sure it won’t play out that way I’m sure the utility is still going to own some stuff and in the end that’s fine. It’s not that we don’t want utilities to own anything it’s just that we don’t think we should be giving them guarantees. So I see Virginia as a state that actually is an up and comer here with Community Choice Energy. The legislature there is very focused, is increasingly skeptical of utility ownership. I think they may also pass a Community Renewable Energy policy and we may see other things then other ways in which they increase their score on our scorecard.|
|John Farrell:||Colorado is another state, in fact I think they’ve always been in some ways evaluated lower on our scorecard overall then I hold them in my heart in the sense that they were one of the first states to have a community solar program and to really launch that concept across the country. The problem that they face along with a state like Minnesota where I’m based is that both states have gotten a really good start on things like community renewable energy but because they’re both states in which utilities have monopolies they don’t give a lot of flexibility to communities to make more choices.|
|John Farrell:||And in Colorado famously the city of Boulder has been involved for 10 years now in trying to take over its electricity system from the incumbent utility to have more local choice to be able to focus more on local economic development and other benefits from clean energy. So I think there are some states like that where they’ve already shown some flexibility and interest in how they do this.|
|John Farrell:||Oregon is another state, they recently finally finished the rulemaking after almost four years for a Community Renewable Energy Program. When that launches and PR projects start getting built their score could rise. So we have a lot of states like that right now that have had a mix of policies but I think are on the verge of shooting up in the rankings.|
|Jessica Del Fiacco:||So I’m curious do we see any regional trends with these high scores or do states look to their neighbors to see how they could be successful in terms of democratic energy distribution?|
|John Farrell:||Well we do actually every year try to provide some regional comparisons because I think it is a really important question to ask in the sense that states when they think about the policies that they enact they tend to compare themselves to their neighbors. We run into this where we’re from in Minnesota all the time where lawmakers here will say, “Well if California did it that’s a reason almost for us not to consider it because it will be politically polarizing. But if Illinois has passed a policy like this or Ohio or Wisconsin well now that’s something that we can think about.”|
|John Farrell:||So what we have found is that there are definitely regional differences. Northeastern states, the New England region for example, every state in the New England region and you can see this in a post that we have linked to from the community power scorecard gets a C grade or higher and so that entire area is pretty strong. We have the Mid Atlantic region, it’s New Jersey, New York, Pennsylvania. New York gets an A grade for example and New Jersey gets a B. So there are some definite leaders in that area. On the Pacific region in the West california and Oregon both get a C grade or better. We unfortunately still have some laggards though, Alaska, Hawaii, and Washington. But what we have found is that in almost every region we have at least one state that stands out.|
|John Farrell:||Some regions that are not so great in our analysis, the Southeast is particularly bad. Every state down there gets it a D or an F, unfortunately same for the West South central census districts which are named really weird. So, you have all of these dual direction areas, but this is Texas, Oklahoma, Arkansas, Louisiana again all D’s or F’s. And the West, North central which is like the upper Midwest both of these regions the C grade is the highest one that you see. So, you’ve got some really good leaders in the Eastern side of the Midwest, Illinois, Ohio, out on the West coast and on the East coast but in a lot of the rest of the country a real struggle to see policies that enable communities to do more.|
|Jessica Del Fiacco:||So besides this energy scorecard is there any other way that ILSR is tracking how communities can have more self determination in the energy sector?|
|John Farrell:||Yeah, we actually have a couple of different things that we’ve been doing recently on this theme. One is that we’ve been looking at in particular the spread of interest in public power sometimes called municipalization. And this is, there are over 2000 cities in the United States that already have city owned utility companies. It’s a very common way to deliver electricity and in fact back 100 years ago when the electricity system was actually getting set up there was a lot of contention between private companies and cities about delivering electricity services, it was a wild west. And before things really settled down into the regulatory framework we have now there was a lot of fighting between cities and private companies. And the result is that you have for example, some very large cities that still and have for decades own their own utility like Los Angeles, Austin, Texas or Sacramento, California, as well as hundreds of smaller cities.|
|John Farrell:||What we’ve found recently though is that there is a real interest in a lot of different places in the country in continuing to expand public power. So it’s not very common that we see a switch between private and public utilities or from public to private utilities but we’ve actually seen a really growing interest in recent years. So in a way this all got kicked off with Boulder, Colorado about a decade ago and we’ve actually covered this a lot on our website. I definitely encourage folks to listen to a recent podcast episode we did on local energy rules with Jonathan Cohn from the city of Boulder. He talks not just about their motivation around clean energy which was a really important catalyst for the move but also about why it is that local control is really important to them. It’s not just that they want to buy energy from wind and solar resources but they want to build them in the community, they want to build them in a way that has more economic benefits for the community and that really reflects the community’s values and they can’t do that unless they own the utility.|
|Jessica Del Fiacco:||Thanks for tuning in to this episode of the Building Local Power podcast. If you’re enjoying this conversation we hope you’ll consider making a donation to the Institute for Local Self Reliance. Not only does your support underwrite this podcast but it also helps us produce all the resources and research we make available for free on our website. Please take a minute and go to ilsr.org/donate to make a contribution. Any amount is welcome and sincerely appreciate it. That’s ilsr.org/donate. Thank you so much and now back to the show.|
|John Farrell:||And we’re seeing that kind of interest in other ways too so I think there’s been huge stories out of California around wildfires, the bankruptcy of Pacific Gas and Electric. Both the governor of California and the city of San Francisco have expressed an interest in buying out the utility which ought to be really inexpensive since it’s bankrupt. But it’s a really interesting opportunity to talk about how public power might do things differently. Because one of the reasons Pacific Gas and Electric finds itself bankrupt is that it basically went on the cheap when it came to basic maintenance spending for the grid trimming trees and other things that can hit or combust near power lines. Obviously the wildfires have been a big problem for them.|
|John Farrell:||And so, the state and the city have been looking at this issue of municipalization of a public power takeover. And what it means really is completely being able to change the perspective of the utility. In a way it seems small because for example the threat of the wildfires isn’t going to change. The poles and wires aren’t going to change just because you change hands in terms of ownership. But instead of having shareholders that you’re trying to serve and who have a very significant interest in earning a return on investment you’re just considering the public interest in the choices that you make for the utility. So you could really amp up for example maintenance spending knowing that because there are no shareholders who are going to care about reducing their dividend because you’re doing that, that you’ll have a longterm healthier grid system in California. One that is less subject to what they call now public safety power shutoffs where they have to literally shut down the grid in the face of these wildfires. So, California is one of the places that this is happening.|
|John Farrell:||All the way on the other coast in Maine there’s a couple of transmission companies that have gotten into real trouble, some enormous billing snafoos where they charged something like 40,000 customers extra and then bungled doing the refunds as well as some issues that the state had with them overcharging for energy in general and a lot of public resistance to some expansion plans for the transmission companies. And now there’s a bill in the state legislature to do a public takeover of those two things. And we’re even seeing that among presidential candidates when they’re talking about how to address climate change that we’ll just make everything public.|
|John Farrell:||I think it’s important to point out that it’s not being public or being private that necessarily makes a utility good in fact it’s sometimes the transition between the two or the fact that you’re really making an effort to hold one of them accountable that makes the difference. But public power obviously has a lot of advantages. You can borrow money at low interest rates, you have the public interest at heart instead of shareholders, and there are a lot of opportunities there. So there’s a recent piece on our website that goes into more detail of the places around the country that are looking at public power and what their motivations are and why it is that they’re interested in it. And what’s really striking in the past decade is that the movement toward public power is as much about self reliance and self determination as it is about clean energy. It’s motivated by both but we’re seeing that in different ways.|
|Jessica Del Fiacco:||Yeah. I just wanted to make a comment there that you mentioned that this is a challenging process of public takeover of an existing utility and seeing interest in so many different communities does I think speak to the strong belief in and desire people have for local control for both of those reasons. So I don’t know if you want to get into what those challenges are just to illustrate how worth it it is in people’s minds to have local control over their energy.|
|John Farrell:||Yeah, there’s actually a couple of good examples I think that are worth talking about, one is really recent. So in Chicago, Illinois there is talk of taking over the utility system from Commonwealth Edison which is under intense scrutiny for illegal lobbying activities which really comes as no surprise in a state like Illinois where there’s unfortunately a really bad history of corruption. But what’s fascinating there is that there’s been some great coverage there by the public radio station by and there’s a story just out a couple of days ago by Becky Vevea with WBEZ.|
|John Farrell:||And the reason I mention this particular story is it highlights what I think is this inherent tension in every single fight for public power which is the city can exercise eminent domain to just take the grid, that’s the power that it has but then a court will determine what the fair price is. And the utility always starts with an opening bid that is ridiculously high. And in this case Commonwealth Edison said, “If Chicago wants to buy the grid it’s going to cost $10 billion.” And to be fair it is probably going to be in the billions like a city the size of Chicago, the kind of infrastructure, substations, whatever the population, it’s a lot of stuff that you have to buy. It’s also really old, in fact almost all the big cities that have grid systems the equipment is older than any of the rest of the grid system so it’s depreciated a lot. I won’t get into what depreciation means but let’s just say it’s older it’s not worth as much.|
|John Farrell:||The other thing that’s funny about it is they basically made up this number so they said it was $10 billion. Some local advocates crunched their own numbers and said it’s actually more like $2 billion or $1 billion. And they pointed out that if it actually was $10 billion that it would be basically half the value of the entire company would be in 2% of its service area in the city of Chicago which seems pretty crazy. And then when asked again where did they come up with that number they were like, “Well, we didn’t really crunch the numbers. We didn’t really do the math. We just know that it’s going to be around 10 billion.” And so, this is the kind of bullshit unfortunately that utilities throw at cities that are looking at this takeover.|
|John Farrell:||And what we’ve seen in a lot of places is that the utility will open with a ridiculously high bid probably five times the worth of the grid the city will come back with something that’s much more in the ballpark and the court will land somewhere in between and usually a lot closer to what the city thinks the value of the grid system is. But that court process takes a long time. So I mentioned Boulder, Colorado they’ve been at this for nine years. They may finally have a vote next year on a referendum to finally condemn the grid and take it over from a Excel Energy but it’s been a really long and painful process.|
|John Farrell:||And unfortunately state laws don’t make it very easy for cities to municipalize. And that’s why things like Community Choice Energy can be so important. And why we talk about these kinds of policies is because you don’t have to take over the grid to get the important powers of choosing where the energy comes from. So instead of buying poles and wires and fighting with a utility over how many billions it’s going to be you simply get to choose where does the energy supply come from and let the utility run the grid system as it always has and so it makes it a lot easier.|
|John Farrell:||And this is actually so the report that we recently released on Community Choice Energy helps explore some of the benefits that cities have in terms of the things that they can do. We actually divide up in a novel way Community Choice programs into what we call modest programs and ambitious programs. And this is actually a rather new development in the past two to three years where previously, this policy has been around for almost 20 or 30 years, previously what we’ve seen is that communities that used Community Choice basically just went out on the market, used their buying power like Costco to get a lower price for energy. They weren’t terribly interested in renewable energy or anything else they were just looking at how do we exercise our buying power. What we’re seeing now though is that cities are using this in a lot of different and interesting ways.|
|Jessica Del Fiacco:||And one of those ways is a more equitable distribution of the financial and environmental benefits of renewable energy correct?|
|John Farrell:||Yeah. We are actually seeing some real innovation when it comes to how cities think about how to use these powers that they have for energy supply. We actually have an entire section in the report that we released recently called California exceptionalism and it really gets into how in particular in California the cities and communities that are banding together to provide these choice programs are doing it in a way that have these significant benefits.|
|John Farrell:||So East Bay Community Energy for example has what they call a local development business plan. So they take the profits from their business of selling electricity which in the case of an investor owned utility would go to shareholders on Wall Street and they are investing those instead in local economic development, workforce training, et cetera. Specifically targeting communities of color and other frontline communities that have been subject to some of the worst pollution from the fossil fuel industry and they are focused on making sure that those communities not only see clean energy development in their community as an alternative to the fossil fuel and polluting industries that have been there but also making sure that the folks in those communities have access to the jobs that are going to be created in order to provide that energy service.|
|John Farrell:||We’re also seeing that even in non urban areas. We did a podcast interview with Matthew Marshall from the Redwood Coast Energy Authority, just published that recently. It’s the 99th episode of Local Energy Rules. And what he talked about was they have a local forestry industry that’s been struggling and that the utility company there or the choice program there can buy power from a biomass power plant that uses wood waste from the forestry industry. And by continuing to buy that power even though it might be a little bit more expensive it’s a way that they can help maintain that local industry in a case in which in normal circumstances when it’s a private utility company the utility might simply say, “This power is not economical, we don’t want to buy it.” But because it’s a community owned utility they can say, “We’re willing to pay a small premium here if it has additional economic benefits for the community, if it can help sustain this industry that’s important to our community.”|
|Jessica Del Fiacco:||So Community Choice Energy isn’t available everywhere, right? Where are we seeing it? Are we seeing more states make it possible for communities to do something like this?|
|John Farrell:||So, right now there are nine States that allow for Community Choice Energy. That’s actually up from six about five years ago. And so, we are seeing more states explore this. The states that are new to the game are New York, Virginia and New Hampshire and that’s on top of Ohio, New Jersey, Massachusetts, Illinois, California. We are seeing growth in that and that’s actually one of the things that we’re highlighting. In Massachusetts you have over 150 communities that have signed up in the past five years. In New York over 50 cities mostly in last year alone. In California as much as half of the electricity sales to find ultimate customers are going to be flowing through community choice entities within the next few years. And so, some really stupendous growth in states that have both recently adopted and have had these policies on the books for a long time.|
|Jessica Del Fiacco:||Great. Thanks John. I just wanted to say for our listeners we’ve referenced a lot of different pieces of research throughout this episode. So we will have all these reports and stories linked in the webpage for this episode so you can go there and dive into all these different numbers that John’s been rattling off. John, is there anything else you wanted to talk about today?|
|John Farrell:||I just want to take a minute and make sure that folks had heard about the Frontline, PBS Frontline episode on Amazon Empire. So check this out, it’s about I think an hour and a half or two hours long documentary. The research that went into it took them like over a couple of years to put this together. The Institute for Local Self Reliance was intimately involved. Stacy Mitchell was a consultant on the project, is interviewed in the program.|
|John Farrell:||And it’s really an incredibly revealing look at how Amazon has grown and how it works and really gets at this issue that I think is so important for people to understand about how Amazon doesn’t just want to be a big player in the online marketplace but it wants to be the online marketplace. And how there’s this inherent tension between being the platform on which people transact and buy things and being a competitor on that platform. And I just think the frontline episode does such a good job of really giving you a picture I mean they’ve got interviews directly with the frontline interviewers talking to Amazon executives, talking to former employees, talking to outside experts, and it’s really just nice to hear in their own words what their perspective is on these different things to hear from actual workers and what the experiences are. I just think it’s a terrific look at a company that has had such an outsize impact on the U.S. economy.|
|Jessica Del Fiacco:||Thanks again for tuning into this episode of the Building Local Power podcast from the Institute for Local Self Reliance. You can find links to what we discussed today by visiting ilsr.org and clicking on the show page for this episode, that’s ilsr.org. While you’re there you can sign up for one of our newsletters and connect with us on social media. Finally, you can help us out with a gift that helps support our work including the production of this very podcast. You can also help us out by rating this podcast and sharing it with your friends on iTunes or wherever you find your podcasts. This show is produced by Lisa Gonzalez, Zach Freed and me Jess Del Fiacco. Our theme music is Funk Interlude by Dysfunkshunal.|
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