The same situation of Wisconsin is being experimented in many other jurisdictions around the world. Regardless of the location, economic efficiency in the electric power sector results by investing in a proper mix of supply side and demand side investments (energy efficiency, and demand response). As explained by Mr. Heins, and others, both demand side investments are unnatural acts for utilities; the business models are just not designed to perform those acts very well. I think the discussion about energy efficiency on “Energy Bill 2005 – A Waste of Time?” might result useful to this discussion. Wisconsin, and other jurisdictions, should give
serious consideration to implement true retail (and wholesale) deregulation as suggested in "Strategic Perspectives on Utility Enterprise Solutions." Hopefully, Sooner or later, customers will be free everywhere.
lunes, diciembre 19, 2005
I have added a comment to the article "Free All Wisconsin Utilities to Make Money Helping Customer's Save Energy," by Stephen Heins, VP of Corporate Communication, Orion Energy Systems, on EnergyPulse, that reads as follows:
GMH takes note of the considerations of the leading business sectors of DR. Again, we advise that the contracts should be renegotiated thinking on the future, and not just on short run competitiveness, but on real systemic compettiveness. Systemic competitiveness means that all customers get increased value added from electricity. To get such value additions across the board, the new paradigm of customer oriented electricity needs to be statrted, as soon as possible so that the Cluster of Retail Marketing of Electricity takes off before the effective protection is completely wiped out.
Some of the leading business sectors of the Dominican Republic, including the Federation of Industrial Associations (FIA), the Dominican Chamber of Merchant Businesses and the National Young Business Association (ANJE), consider that the IMF's idea that the price of electricity should be allowed to "float" on the local market is a good one, as long as the costs of generation and distribution are clear and transparent. The different representatives agreed that as long as the current contracts are re-negotiated and the costs are transparent, they felt that the IMF demands were "reasonable." Most believed that if this were to come about, the costs of electricity would drop from the current 23c a KWh to about 10c or 11c the KWh (kilowatt-hour). The key point is that the contracts have to be renegotiated, since with the current contracts in place the price of electricity would reach 40! c a KWh under current conditions. According to the superintendent of electricity, Francisco Mendez, the World Bank is requiring the DR to "float" the price of electricity as part of the prerequisites for the disbursement of the US$150 million loan to shore up the energy sector. The low reliability and the high cost of electricity in the Dominican Republic is a major factor working against the competitiveness of most business that rely on the public electricity grid.