Deregulation Which Considers Only the Supply Side of the Supply-Demand Equation is Dangerous

This was a comment I made, on January 2nd, 2006, in the post "DRAINING THE POWER GRID?" in the the Tech Talk Blog, by Susan Hassler, Editor-in-Chief IEEE Spectrum .

The authors place some of the blame on deregulation for grid maladies. However, the blame should be placed on re-regulation, without a true retail deregulation. A complete market should have demand response at the center of individual customer rationing (based on segmented reliability pricing), to help keep the system operating 24/7 within the normal operating state (NOS). Drifts to alert or emergency operating states, on any control area, should be returned as soon as possible to the NOS, by combined supply side (G, T&D) and demand response operating actions. See Get-Rich Quick Scheme January 2005 article.

Late professor Fred C. Schweppe of MIT, and his colleagues, wrote in the book "Spot Pricing of Electricity": "We believe the deregulation which considers only the supply side of the supply-demand equation is dangerous and could have very negative results." It has taken a long time and a lot of value destruction to understand the above insight. The doors to innovative solutions in the power industry will be wide open when that concept is finally understood.

Posted by: Jose A Vanderhorst-Silverio, PhD 02 January 2006 9:06 PM