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Schwarzenegger Signing Executive Order to Advance State's Renewable Energy

SECRETARY CHRISMAN:

Good afternoon ladies and gentlemen. Thank you all for coming today. My name is Mike Chrisman and I am the California Secretary for Natural Resources it's a pleasure for me to lead off the event this afternoon. I'd especially like to thank our host, the Sacramento Municipal Utility District, AeroJet and Solar Power of course all of the energy companies who are here and renewable energy companies and others. We want to thank you for supporting this activity today.

Behind us is a 3.5 megawatt solar site it's one of the largest single site industrial solar installations in the United States. It's a great example of how the private sector can indeed work in cooperation with energy providers to develop a very unique and very sustainable energy solution. The Aerojet Solar Power and SMUD partnership demonstrates, quite frankly, that it is very possible when public and private come together to achieve our renewable energy goals in this great state.

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Governor Arnold Schwarzenegger signs an Executive Order directing the California Air Resources Board to adopt regulations increasing California's Renewable Portfolio Standard to 33 percent by 2020. Photo by Justin Short, Office of the Governor.

I'd also like to thank some of the people you're going to hear from today in this very important celebration. With us today is the Independent Energy Producers Association executive director, Jan Smutny-Jones. Also with us is Southern California Edison's chairman and CEO, Al Fohrer. California Air Resources Board chair, Mary Nichols. California ISO president and CEO, Yakout Mansour. California Municipal Utilities Association executive director, David Modisette. Also today is the California Public Utilities Commission Deputy Executive Director for Policy and External Relations, Nancy Ryan our California Energy Commission chair, Karen Douglas.

Today, the Governor again builds on his commitment to promote renewable energy here in California. In November of 2008, he increased the state's renewable energy standard to 33 percent renewable power by the year 2020 today this helps move us very much closer to that goal.

Ladies and gentlemen, it is again a pleasure for me to introduce the Governor of the state of California, Arnold Schwarzenegger. Governor? (Applause)

GOVERNOR SCHWARZENEGGER:

Well thank you very much, Mike, for the nice introduction I also want to just say thank you to our Secretary Mike Chrisman for being here today and being such a great leader. And Mary Nichols, our Chair of the Air Resources Board, thank you very much. And Yakout Mansour, President of Independent System Operator. And Al Fohrer, CEO of Southern California Edison. And Jan Smutny-Jones, Executive Director of Independent Energy Producers Association. And David Modisette, who is our Executive Director of the California Municipal Utilities Association. And then Nancy Ryan of the California Public Utilities Commission. And then Commissioner Karen Douglas of the California Energy Commission.

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Governor Schwarzenegger discusses the Executive Order that ensures California will have the flexibility needed to use renewable energy sources for 33 percent of our state's energy consumption by 2020. From left to right: Governor Arnold Schwarzenegger, California Secretary for Natural Resources Mike Chrisman and Independent Energy Producers Association Executive Director Jan Smutny-Jones. Photo by Justin Short, Office of the Governor.

There is also a lot of other people that I haven't mentioned I just to say thank you to them also but my staff only gave me a limited amount of names. (Laughter).

So in case I left anyone out, it was my staff that did that, not me. And I also want to say thank you to all of you for being here today. This is really a great day today because we are creating major action to create more green jobs and more green energy. Three years ago, as the secretary was just mentioning earlier, I signed a bill, AB 32, which was a historic bill that the news covered around the world that we became leaders in the commitment that we made in reducing greenhouse gases, CO2, by 25 percent by the year 2020. Which basically means that we're rolling back our greenhouse gas emissions to the 1990 level. So that was a huge accomplishment but at the same time we recognized that even though this was a great victory, that there was a lot of work ahead. And this is why we're here today.

I think that we never sat on our laurels when we signed this bill. We always knew that there was a lot of work to be done we have already adopted several measures through the Air Resources Board and other agencies. If it is the low carbon fuel standard, or if it's regulations to capture the methane from landfills, or improving our fuel efficiency of heavy duty tractors, or fuel efficiency of cars. And the list goes on and on. So a lot of great work already has been done but of course in order to reach this 25 percent of reduction in greenhouse gases much more needs to be done.

So of course the big prize and the big puzzle of this whole thing is energy. And right now we're relying too heavily on dirty, coal-fired power plants. This pollutes the air and it sickens our children. We can do much better than that this is why we ought to harness the sun. We have such great energy from the sun we have the wind. We can harness the wind and use that renewable energy and many other sources, if it is biomass, or geothermal so on.

Now California is already a leader when it comes to renewable energy. Our goal is 20 percent by the year 2010. But we know that we cannot reach our goal of AB 32, which is 20 percent, so this is why we moved it to 33 percent. And of course the scoping plan also calls for 33 percent of renewables, the scoping plan of the Air Resources Board. So last November, I called on the legislature and the lawmakers to send me legislation requiring 33 percent renewable power by the year 2020. And I also said that legislation must be crafted to protect the rate payers and to create a healthy renewable market. But last week the lawmakers passed legislation that failed to meet each of these criteria.

Its most objectionable provision, of course, was to limit the amount of renewable energy that can come from outside of California. Now not only would this stifle competition but it also would drive up the prices. But it is also protectionism I am totally against protectionist policies because it never works. It has never worked in California, it has never worked in America, or in any other country.

I'm against protectionist policies, so it has no place in the laws. Therefore, I will veto that legislation. And while my first preference is always a bipartisan legislative solution, California cannot afford to wait any longer, because we have set the goal of 25 percent reductions in greenhouse gases and we've got to meet that goal by 2020. So this is why we have to act now.

So we have a timeframe where things have to happen. In 2008, what has to happen in 2010, what has to happen in 2012 2016 so on, to get this air by 2020. So today I'm signing an Executive Order to direct the Air Resources Board to adopt the 33 percent mandate administratively.

The Air Resources Board, under the leadership of Mary Nichols, who has done an extraordinary job and I'm so proud of the kind of work that she has done, they have already the authority under the provision of AB 32. But I think this is an extra shot under the arm that will get us going and send us in the right direction. I'm also directing, of course, the board to consult with all the stakeholders in an open and transparent process. With this action we will ensure that California remains the pioneer in clean energy and clean jobs.

All of the laws and standards that we're putting in place are helping to unleash a wave of green innovation. California is leading the nation in clean energy businesses by more than 10,000. Last year clean technology investment in our state hit an all time high with $3.3 billion. Now just to see how great that is, that is double the amount of the year before. And not only that but California companies hold 40 percent of the nation's new patents in solar and in wind technology.

And the amount of solar installed in California last year was double the amount from the previous year the way it's going right now it will be double the amount of the previous year the next years. I mean we are increasing all the time the amount of solar that we are installing. So it's very successful, the whole program I'm so glad that we also did the Million Solar Roof Initiative. We are showing the world how to protect the environment and how at the same time to create jobs and stimulate the economy.

That's what this is all about, so I want to say again, thank you to all of you for being here today. Now I want to have our next speaker come out, which is Jan Smutny-Jones, to say a few words. He is, I call him, "Mr. Energy." (Laughter)

Because not only because he deals with that subject but when you listen to him he is so passionate about this subject. I love his energy. So thank you very much. So Jan, please. (Applause)

MR. SMUTNY-JONES:

Thank you very much. Thank you, Governor. As long as I don't have to wear that pink bunny costume I'll be OK.

Thank you very much, Governor. We stand proudly here today as the renewable energy industry with you in support of this Executive Order, which we believe is an important step forward towards moving to a more renewable future here, a 33 percent renewable portfolio standard that actually works. And this is critically important to our industry here in California and throughout the west.

Today here at SMUD you can see behind us there's people working, men and women working installing photovoltaics. Across California there are people installing all types of renewables throughout the western United States, in large part driven by California's vision and your leadership. And we certainly appreciate that.

Among us today, I just want to name a few of the companies that are here because it's important, I think, to put this in perspective. We've got the California Solar Energy Industries Association, Buena Vista Biomass, Calpine, NextLight, Elemental Power, EnDevCo, Evolution Markets, Four Star, the Geothermal Resources Association, Eva Droller (phonetic) Renewables, LS Power, the Clean Power Campaign, NextEra, NRG Solar, Padoma Wind, Solar Millenium, Terragen US Renewables Group. And there's other people sitting here as well.

I mention those to just make it clear that this is a very real, viable industry that's investing billions of dollars here in California and that serve the California market. So we are very excited about the fact that this is an important step forward in terms of moving California to a more renewable energy future, not only for us but for our children's sake we do commend your leadership.

And I would like to introduce Al Fohrer who is Chief Executive Officer for Southern California Edison, who is sometimes gracious enough to buy our products. Thank you. (Laughter and applause).

MR. FOHRER:

Thank you. I'm delighted to be here today I just wanted to congratulate and thank the Governor for his leadership on this issue. Edison has been a leader in this field for a long time. We buy more renewable energy than any utility in the country, 13 billion kilowatt-hours. We are constructing down in southern California the first transmission line in the country primarily dedicated to renewable resources, $2.2 billion on the Tehachapi transmission line, more than five years in the making. Edison took the leadership to get this through, both federal and with the help of the ISO and the PUC. That line is being constructed today.

I also will mention that the Governor came down not long ago and participated at a dedication of a solar rooftop in Fontana. That was the first of 250 megawatts that Edison proposed on a solar rooftop program, the largest program in the country. And the PUC adopted a program that's 500 megawatts: 250 megawatts by Edison, 250 by the independent power industry. That's the type of partnership and cooperation we need with the regulators in the industry to make this happen.

We're very happy to work with the Governor, to work with Chairman Nichols, on the Executive Order and what it takes to dramatically expand renewable energy in California. It does take a few things.

One, as the Governor cited, expanding the market. Edison leads the country at 13 billion kilowatt-hours. We have to more than double that in the next ten years to hit the Governor's goal. The state of California has to more than double it. That is a daunting task and we need to have all the opportunities to develop resources we can.

The second is transmission. Recent studies showed that there needs to be as many as 11 new transmission lines to help accomplish all the renewable resources we need in California. Many of those, or most of those, are in our area. We want to make sure that we are totally focused on the goal of expanding transmission, working with the ISO, the PUC and the other agencies to make sure we get this done. We think it's critical. We think it's something that we need to take the lead on we want to work very closely with the Governor and his agencies to make sure we get this done.

So we want to thank the Governor again and this group for being here for supporting renewable energy. Thank you. (Applause)

And I was reminded I want to introduce the Deputy Executive Director of the California Public Utilities Commission, Nancy Ryan. Nancy? (Applause)

MS. RYAN:

Thank you for that introduction, Al. My name is Nancy Ryan, as Al said. I'm the Deputy Executive Director for Policy and External Relations at the California Public Utilities Commission. The PUC administers much the current RPS program and has long been on record as supporting a 33 percent renewable energy standard for California.

Over the past year the PUC has worked with the legislature in developing RPS legislation, informing them of the strengths and weaknesses of the current program and the barriers to reaching the 33 percent target in 2020. The PUC's goal is to keep the expansion of the program simple, flexible workable. Unfortunately, the legislature's quest to satisfy many competing stakeholders resulted in our RPS legislation that is highly proscriptive and overly complex. If enacted, this legislation would jeopardize the state's ability to meet the 33 percent target by 2020 and unnecessarily increase costs for rate payers.

Case in point, the definition of delivery for out of state renewable resources to qualify for California's RPS program. It became more complicated every time SB 14 was amended. Proponents of the bill argue that it allows unlimited use of out of state resources to meet the definition of delivery.

But they don't explain that this restriction severely limits out of state renewables. It's the equivalent of saying that we can use out of state resources as long as they're not delivered Monday through Sunday. Such limits would significantly reduce the pool of resources that California utilities can choose from, making it all but impossible to meet the 33 percent goal on time and increasing the cost of compliance. That's not what California needs. California needs rules that allow regulators like the PUC to respond to changes in the market in order to maximize utility compliance and minimize costs for rate payers.

This legislation would also ensnarl regulators, developers and utilities in a rat's nest of red tape. We don't need more complicated rule makings and litigation now. What we do need is for all of us to focus on removing barriers to developing new renewable generation and building the transmission needed to bring it to market.

This is why the CPUC supports the Governor's Executive Order. The CPUC will work closely with the Energy Commission to advise CARB as it develops the regulations. CARB doesn't need to start from scratch. California's existing RPS program provides the foundation for implementing the 33 percent target. If anything, we should probably move in the direction of further simplifying this program as we extend it. The CPUC looks forward to immediately beginning work with its sister agencies to build the framework for the 33 percent RPS program, a framework that is both cost effective and workable.

We also very much hope that the Governor and the legislature and find common ground. Everyone agrees on the direction that we need to go. I look forward to the day when we can all agree on how to get there, too, so that we can all start paddling together.

Thank you very much. It's my pleasure now to introduce Yakout Mansour, President and CEO of the California Independent System Operator. Thank you. (Applause)

MR. MANSOUR:

Thank you, Nancy, Governor, Mr. Secretary, ladies and gentlemen.

I can't tell you how honored I am to be here. The California ISO continues to whole'heartedly support the goal of the 33 percent RPS.

Governor, the rest of the nation is looking at us for lessons learned if we don't do it right, keep the lights on, costs contained the supply is cleaner, we will contribute to losing the fight against global warming, not helping it. We feel this Executive Order is the best means for achieving this important target in the best way possible while maintaining electric system reliability and containing costs.

California is not an island. As the transmission operator for the bulk of California, the ISO manages about one'third of the power flowing within the 14 states that make up the Western Interconnected Grid. Just as we breathe the same air, we also share electrons. The electric system is one synchronized and complex machine governed by the laws of physics.

The electricity demand of the Western U.S. is supplied by resources throughout the region. For instance, California depends on getting a quarter of its energy needs from out of state imports. This helped California in the past and we are looking for every way to maintain the same benefits but with a much cleaner portfolio of resources from whatever they are in the west and largely still from within California.

We have learned a lot of lessons from our efforts to integrate the 20 percent target we can tell you that achieving the 33 percent goal is an order of magnitude more challenging but we are up to the task. And this can only happen through flexibility to guard against uncertainties and unknown, competition that lowers costs and increases reliability, viable projects that are actually built deliverability that doesn't hamstring us and undo the cage of reciprocal resource sharing and coordination in time and location.

Restrictions on importing renewables in the region from out of the state by means of restrictions and how it is delivered, when it is delivered and where it may be stored will mean higher cost and increased use of in state fossil power plants to provide essential services needed to maintain the reliable operation of the grid.

Differences across the west in energy use and hours that solar and wind generation produce electricity create opportunities under today's rules for sharing the bounty of the region's diverse and abundant renewable resources.

Under today's rules we can export our wind regeneration to the Pacific Northwest when we don't need all the available clean resources in the state on those winter nights when they need it for heating. Reciprocally, we can use their hydro facilities to store our contracted renewable energy in the northwest when the wind is blowing in those regions and take delivery at a different time when we need it.

Failing to draw on this diversity would force increased use of in state fossil fuel generation at peak times, face surplus that we don't know what to do with when we don't need it undermine our efforts to reduce carbon emissions.

Consumers have already paid for an extensive transmission network to deliver regional generation to California from out of state. As our reliance on coal diminishes and fossil fuel reduces, as it will under the Governor's policies, we should green the grid by using this existing network for renewable resources. This is contrary to what is being claimed by some of the opponents to the Governor's action.

California's renewable policy must be flexible to respond to the wide array of uncertainties we face in this transformation of the electricity system.

This includes uncertainty about the viability, uncertainty about the feasibility of permitting transmission needed and uncertainty about what it will take to operate the system with so much weather dependent sources on the system.

In order to meet the goal successfully against all of those odds, we must be less prescriptive and be flexible on all fronts with the opportunity of learning as we go but never losing the vision of what we're trying to achieve.

California has an opportunity to encourage the development of renewable resources in the state and across the west. We applaud the Governor for his leadership both in the development of renewable energy and his effort to combat climate change.

Thank you very much.

And now it is my pleasure to introduce David Modisette, the Executive Director of the California Municipal Utilities Association. Thank you.

MR. MODISETTE:

Thank you, Yakout. And thank you, Governor, for your leadership today continuing California's landmark efforts to reduce greenhouse gases while also protecting electric rate payers.

The California Municipal Utilities Association represents about 40 publicly owned electric utilities in California that provide power to one'fourth of all Californians. These are locally governed utilities like the Sacramento Municipal Utility District where we are today that provide electricity and other energy services without profit to serve the needs of their local residents and businesses.

Publicly owned utilities recognize the need to serve our local communities in an environmentally responsible manner and to reduce emissions of greenhouse gases. For this reason, we support the Governor's goal of 33 percent renewable power by 2020. In fact, many of our local governing boards have already adopted this goal and are working hard to achieve it.

Now, make no mistake about it, 33 percent renewable goal is a major challenge for all utilities and will be very difficult to achieve. Most renewable resources are intermittent by nature, so we can't always get this power when our citizens need it. And there are external factors such as new transmission lines and permitting requirements. These factors may delay or even prevent us from getting renewable resources from some locations.

So while we strongly support the 33 percent goal, we also need the flexibility to get renewable power where we can find it and at a competitive cost that will protect California rate payers.

Unfortunately, the two bills which the legislature sent you, Governor, on this issue will only make it more difficult to make this transition to clean renewable power and would saddle rate payers with unnecessarily high costs.

So we are pleased to stand here with the Governor and with the other stakeholders today to support not only the 33 percent goal but a realistic pathway to get this going and to get this job done.

Again, we thank you, Governor, for your leadership on this issue.

And now it is my distinct pleasure to introduce to you the Chair of the California Air Resources Board, the honorable Mary Nichols. (Applause)

CHAIRMAN NICHOLS:

Well thank you, David.

Three years ago California made history in passing and signing AB32 committing California as the first state in the country to develop and carry out a comprehensive plan to reduce the state's share of global greenhouse gas emissions. Today California is making an equally historic step towards a renewable energy future.

The Executive Order that the Governor is about to sign ensures that California will lead as we have on energy efficiency now in the new world of renewable power well into the 21st Century and beyond.

The Air Resources Board is well suited to take the lead on the renewable portfolio standard working closely with the CEC, the Energy Commission, that is the Public Utilities Commission and the independent system operator. This standard constitutes a key part of our AB32 scoping plan that was issued last year it will help us indeed we've already laid out how it will play a role in helping us to meet our goals of reducing the state's greenhouse gas emissions to 1990 levels by 2020.

The RPS is projected to reduce 21 million metric tons of greenhouse gas emissions by 2020 which is about 15 percent of the total emissions that we need statewide from all sources it's by far the biggest and most important of the measures that are addressed specifically to the electric utility industry.

We will be working closely with our sister agencies. We're beginning right now we will start traveling the state within the next few months holding workshops to seek stakeholder input, as the Air Resources Board traditionally does when we go about developing a new rule making.
We plan to develop a rule that is both good for California's economy and good for the environment we invite everybody, not just the people standing behind me or in front of me today but all stakeholders in California to give us your best input as we roll up our sleeves and get to work on the details.

Ultimately, we believe that California can be and will be a model for the rest of the country.

And remember, 33 percent is not a ceiling; it's a start. We will need to continue to explore and develop renewable energy resources well beyond 2020 if we're going to continue to keep pace with continued economic and population growth and meet our security needs as a country.

It's now my great pleasure to call on Governor Schwarzenegger, a passionate and untiring leader in the clean energy movement, who is going to sign the Executive Order over here and then we will answer questions. Governor. (Applause)

GOVERNOR SCHWARZENEGGER:

Now, before I take any questions, I just wanted to mention some other terrific news that further demonstrates California's leadership when it comes to the environment. Today the Obama Administration released its proposed Tailpipe Emission Standards, the same standards that we have adopted here in California.

So they are following, the Federal Government is following our footsteps. So that's great news, number one. And great '' hold your applause '' and then the National Code Council also announced that they will be using California's Green Building Standards to write the national standards. So now you can give applause to all these great accomplishments. (Applause)

So as you can see, we are in the right direction. California is the leader in environmental protection it's always the greatest compliment when the Federal Government is looking at the states as kind of a laboratory where they test things first then they actually follow your footsteps and copy what you are doing.

And so we are absolutely delighted that the Federal Government is doing that we will do everything we can to help them with their implementation and with them drafting those laws. So that is really exciting news.

Now, if the press has any questions about any of this we talked about the other day, please feel free. We have all the experts here. Look at this brain power that we have here. Yes.

QUESTIONS/ANSWERS

QUESTION: Governor, this question is for you. Many of your critics have said that an Executive Order doesn't carry the force of law that legislation signed by you would have, that it could be overturned by a future governor or get tied up in court battles therefore creating uncertainty for utilities and the industry. So why take this route rather than trying to negotiate with lawmakers?

GOVERNOR: Well, let me just guarantee you that any regulation from the Air Resources Board has the same effect as law, has the same strength as law. That's number one. All of the regulations, if it's the diesel regs of the low carbon fuel standards, all the things that we are doing to get us to the 25 percent reductions in greenhouse gases are all through regulations. That's number one.

Number two, I just want to let you know that the reason, as I said in my speech, we moved forward with the Executive Order is simply because we can't wait any longer. We have told the legislators just a year ago that we need this legislation and I'm looking forward to receiving it and signing it. But what they have proposed '' and we made it very clear to them that we will not sign this. What they have proposed is a job killer. It also will give us a limited amount of chance to reaching that goal. It will raise the rates, which is of course very important that we protect the rate payers also it is protectionism to the highest level.

I mean, you have to understand that we get our water from outside California. We get it from the Colorado River, for instance. Why can we get the water from the Colorado River but we can't get renewable energy from outside the state? We get most of our cars from outside the state; why can't we get renewable energy?

And on top of that, President Obama who has shown great leadership with environmental issues has said that he wants to create a network where all the states can help each other all over the United States, that if someone needs power and doesn't have it they can get it from California or California can get it from another state. Or if they for instance have a very cold winter somewhere in the north that we can deliver them energy when we use less in the winter here in California.

So that's how we go back and forth and help each other. That's what the United States is all about, to help each other and that we are one nation, rather than having all of a sudden legislators that say, no, no, we want to protect here something, let's just get the renewable in California. When in fact it doesn't protect anything.

What it is is a setup for failure, because the way they wrote the legislation, we will never, as Mary Nichols said, we will never meet that goal. Because already now we have difficulty meeting the goal for 2010, the 20 percent. Why? Not because we don't have the solar plant entrepreneurs wanting to build it; they want to build it but they can't get the permits. So how do you go now with this legislation which now adds another permitting process. It slows down even more the possibility of building solar plants and building. It makes us less competitive, it kills jobs, it would drive up the rates. It is a terrible legislation.

And this why I want to say, I'm more than happy to sit down with the legislators and with the legislative leaders any time, because remember what we did with the Million Solar Roof Initiative? We got hung up, we did it through Executive Order then within the year we then passed legislation. And I hope the same thing happens here.

As you've heard several people say here, yes, we can do it with legislation and we want to sit down with them. It's always great to work with Democrats and Republicans; that's our ultimate goal.

Anything else? Yes.

QUESTION: Another issue that you're dealing with is that of park closures. Are you currently reviewing the list of proposed park closures and will the public have a say in that ultimate decision?

GOVERNOR: We will be looking at the list. Obviously, we have been looking at the list carefully since we did the budget. And let me just say that it is a really terrible situation to be in, to make the kind of cuts that we had to make in this last budget when you have a shortfall of revenues of 23 billion and then just a few months before of $42 billion. So then we had to make cuts that we don't really normally want to make.

I never wanted to make cuts with our parks. I actually wanted to pump more money into the parks because people love parks. But you can't go and promise people things you don't have. I don't have more money. The state doesn't have more money. So now we have to be creative and look at it, how can we form public/private partnerships, how can we work together with the locals, with the state, with the Federal Government and find ways to fund some of those parks that are very important to all of us. Plus the public will have some input.

But right now we are going through the list and we will see what parks we have to close and which parks can stay open.

Any other questions? Yes.

QUESTION: Governor, two related questions. One, will you call a special session to deal with the water issue. And two, you said before that you weren't signing legislation, considering legislation to (inaudible). Where are you on that?

GOVERNOR: Well, I'm glad you asked that question, because I am very interested in getting the water legislation done and, you know, they fell short. They couldn't get it done. And I was the first one to say, I called the leaders, Democratic leaders and Republican leaders I asked them to go and make every effort possible to sit down again since they came so close. They all said, we came so close but we just ran out of time. That happens sometimes.

But let's go now and think only of one thing that is to get them back to the table and to negotiate and to get it done this week. Because if they're that close, they can get it done this week. And then we go and think about the next step.

Okay? Thanks very much. Thank you all. Have a good day. (Applause)

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