miércoles, diciembre 21, 2005

José You Are Close... José Estas Bien Cerca...

Dear VIP,

Go directly to the Index below.

Best regards,

José Antonio Vanderhorst-Silverio, PhD

Estimada y estimados VIPs

Vayan directamente abajo al índice.

Con mucha estima,

José Antonio Vanderhorst Silverio, PhD





1. Retail Market Deregulation Dialogue on EnergyPulse Part 2

21 Dec 2005

Un nuevo comentario que respalda mis planteamientos, aunque asegura que me quedo corto, aparecer en seguimiento a Retail Market Deregulation Dialogue on EnergyPulse. Veamos:. Len Gould. 12.21.05 says:. Jose: You're close, just not going ...

2. Retail Market Deregulation Dialogue on EnergyPulse

21 Dec 2005

En Free All Wisconsin Utilities to Make Money Helping Customer's Save Energy (Energy Management) - Stephen Heins, VP of Corporate Communication, Orion Energy Systems, me contestó lo que sigue y le respondí ...

3. Apliquemos el Recetario de Aznar para Lograr un Centro de ...

20 Dec 2005

Anoche fue cuando tuve la oportunidad de escuchar una gran parte de las recetas para un buen gobierno que José María Aznar ofreció en la Fundación Global. Me encantó la explicación del aumento de 50% en el empleo acontecido en España en ...

4. Free All Customers Everywhere

19 Dec 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: ...

5. DR1: Business leaders want to "float" electricity

19 Dec 2005

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 ...

6. Small is Beautiful: Supporting Greater Wind Energy Usage

17 Dec 2005

I made a comment on "Energy Storage - Supporting Greater Wind Energy Usage," by Richard Baxter on EnergyPulse, that reads. Small is beautiful. It is now clear that distributed resources cannot be compared with central stations, ...

7. Letter to Dr. Alfred E. Kahn

17 Dec 2005

Dear Professor Banks, Below you may find a letter that I just sent to Dr. Alfred Kahn. If you have a comment regarding the letter, please don't hesitate to make it. Best regards, José Antonio Vanderhorst-Silverio, PhD. Dear Dr. Kahn ...

8. DR1: Leonel promotes technology

16 Dec 2005

President Leonel Fernandez wants the Dominican Republic to emulate the state of Florida in becoming a "technological corridor". He spoke yesterday at the IT Technological Forum of Florida, an activity sponsored by Governor Jeb Bush. ...

9. Power Encounter: Lessons from the Failure of U.S. Electricity Restructuring

16 Dec 2005

Power Encounter es el blog de Jesús M. Martín-Giraldo, de Madrid, España. Su introducción es: Power Industry is experiencing a deep reform. Advances in technology are seen as drivers to improve electricity business performance ...

Re: Mensaje de Navidad: Solución al Problema Eléctrico de la República ...

16 Dec 2005

Muchas gracias Radhamés, porque tu aporte enfatiza y ayuda a aclarar el mensaje de Navidad. La idea de mucho material colgante se refiere a todos los funcionarios públicos de los cuatro poderes, así como los líderes del sector ...

11. Re: Mensaje de Navidad: Solución al Problema Eléctrico de la República Domin...

15 Dec 2005

Hola José. Muchas gracias por felicitarnos. Hoy ya son 7 meses de Bitácora y muchos otros esfuerzos antes de eso. Creo que realmente inicié esta fase en 1993, cuando empecé a opinar con el Proyecto de Ley General de Electricidad ...

Retail Market Deregulation Dialogue on EnergyPulse Part 2

Un nuevo comentario que respalda mis planteamientos, aunque asegura que me quedo corto, aparece en seguimiento a Retail Market Deregulation Dialogue on EnergyPulse. Veamos:

Len Gould

12.21.05 says:

Jose: You're close, just not going quite far enough. You need to eliminate your "Retail marketers" by implementing intelligent software within the customer's meters which takes over the simple task of selecting either a lowest-cost supplier from among all available in a central electronic "marketplace", or alternatively choose to not purchase, and shut down some of the customer's less critical loads if the price exceeds customer-set limits.

Jose Antonio Vanderhorst-Silverio says in response:


Thank you very much Len for the “lead” and a sharp comment.

Being conservative, I agree with you if there were only the short run market problem. However, there is also a long run problem for which retailers need to coordinate in the wholesale market. This is where I understand boom bust (long run risk management) power system behavior should be managed from the demand side by retail (and wholesale) marketers. Marketing service offerings need to be designed based on what will be coming up in the future.

In addition, while most price response marketplaces have been designed with real-time, day ahead, and hour ahead markets, I strongly believe there is an important week ahead market mainly (some industries would classify also) for the low end residential market, where retailers need to participate on the wholesale market to complete week-ahead unit commitments.

However, I don’t dismiss "just not going far enough," because I am over 60 years old now, having work through design, operation, planning, management, and research of vertically integrated and (faulty) deregulated power systems, which don’t let me see very well outside of the box. For those simple reasons, Len, maybe I missing something really important, so please advise!


José Antonio

Retail Market Deregulation Dialogue on EnergyPulse

En Free All Wisconsin Utilities to Make Money Helping Customer's Save Energy (Energy Management) - Stephen Heins, VP of Corporate Communication, Orion Energy Systems, me contestó lo que sigue y le respondí


While I truly favor free markets for most goods and services, I have yet to find a competitive solution to the "last mile" problems for telecommunications and energy. In addition, you certainly must have noticed that the U.S. and most of the 50 states have retreated from deregulation over the last five years, because of reckless acts of manipulation by Enron, et al.

This is a long way of saying that my article is dealing with the real world of 2005-2006 and not some hypothetical free market experiment.

As for your point about monopolies ( and the "outdated business model "), the solution lies with state regulators who establish aggressive energy efficiency standards for the utilities so that everyone benefits from meeting those requirements.


Thank you very much Steve for your kind response. I am sorry for the extended response I will give you and the readers, but I don’t have time to make it shorter, even with the addition of my earlier comments.

I understand that the telecommunication business has a problem with the last mile. However, I have proposed elsewhere that the electricity industry has a problem with the first minutes. The problem with the first minutes results when customers are not able to respond to prices, and is resolved with demand response. It was precisely the lack of demand response that lets spot prices increase beyond reasonable values, leading to generator market power and congestion.

If I understand correctly, states now are supposed to study how useful demand response is, and the most important application is precisely to implement retail deregulation. To have a real social impact, states regulators should look deeply into liberating retail markets again.

I believe to have understood what is needed to design a true deregulation model for the electric sector. Dr. Alfred Kahn said some time ago that: "I am worried about the uniqueness of the electricity markets. I've always been uncertain about eliminating vertical integration. It may be one industry in which it works reasonably well."

That uniqueness is associated with the non-lineal nature of the risk of system failure. Physical risk of system failure, linked to high prices in deregulated systems, used to be managed as a supply security risk under vertical integration. The apparently large costs of generation and transmission reserves required, under vertical integrated utilities from resulting risk management planning, became the target of inefficiency identified by economist and policy makers at the outset of deregulation.

By reducing reserves and creating congestion, here and there, long run risk of failure was thus increased by deregulation of wholesale markets and incomplete deregulation of retail markets. Associated with the physical risks was increased value destruction, and unstable markets. I believe those to be the structural reasons of the uniqueness of the electrical industry.

In the mean time, as technology has progressed, end-customers perceived sensitivity to shortages has spread sufficiently as to make invalid the assumption that customers can be classified in neat classes to pay average rates. In a sense, that sensitivity is the basis for differentiating customers, and the essence for a retail market to be developed. In addition, progress has also brought us the new technology of Demand Response together with an Automated Metering Infrastructure (AMI).

DR technology can complement the mitigation of physical risk of system failure and spot price sharp increases, as a non-linear feedback mechanism to repositioned systems reserves, in time and space, much better than lumpy investments in generation, transmission, and distribution. By developing a market on customers differentiated supply security (sensitivity to shortage) requirements, an efficient rationing system can be developed. Investment on an AMI is apparently feasible just on the operational benefits to the distributor.

The architecture of a "true" deregulated model is centered on independent retail-marketers, and a new value chain, whose mission is to segment customers according to electricity value added services, which customers can select. The value chain is wholesale, retail, end customer, leaving the distributor as a pure transporter charging a toll. Retail-marketers then take control of the strategic Enterprise Solutions, developing innovative business models. As each customer selects what he perceives is the maximum value addition, the economy as a whole maximizes welfare.

This is just a glimpse of my insights, design, research and, humbled observations of the past 10 years. By no means am I saying that retail markets development will be easy. No; there is a lot of work needed to make it happen. Most investment in energy efficiency needs to look to the next 5 years, away from the Continuity scenario. I will be very happy if one place in the world decides to initiate the experiments requiresd for the development of new business models on retail marketing, and I wish to be there.

© José Antonio Vanderhorst-Silverio, PhD