Thanks Dick for your complementary description that place us in the same track. The interesting idea about making retailers responsible for metering was borne in a discussion, in which Len participated, on the article Energy Bill 2005 - A Waste of Time?, by Amatsia Kashti, Managing Director, Olive Domestic Metering Ltd. The following is what I said:
[Comment begins.] Dr. Kashti analysis should be completed by including the Demand Response part of the bill and to look at other benefits that an AMI infrastructure will bring to the business case for such enlarged service.
I agree with Len, there is no "business case" for present businesses to implement this metering service. However, I believe that a "business case" for the enlarged service, that will lead to the End-State of the electricity industry requires a true retail deregulation, where retailers compete with each other, and where as Dr Kashti says "metering is taken out of the hands of the" distributors (utilities that will then simply transport electricity to end users).
Such "business case" is based on my article "An Alternative Business Case for Demand Response," which solves the "basic reliability control purposes" that Len left out. I believe that Demand Response is a demand side risk management tool that complements the “LOLP” supply side risk management tool. To implement the “basic reliability control,” retailers segment customers by their supply security requirements.
As can be seen, retailer’s jobs are to minimize customer’s short run and long run electricity costs. Retailers may do that by purchasing the energy requirements from energy suppliers and the spot market. Retailers will also be deploying demand response, and energy efficiency, which by the way are, respectively, their most important tools to control the spot price, and to negotiate long term contracts with suppliers. Instead of a dream, as David claims, I think this is a very clear vision of the End-State of the electricity industry.
By the way Len, I think the natural T&D monopolies will still require regulation. [Comment ends.]
In other comments I have expressed that retailers’ business model innovations should be centered on AMI, CIS and demand response integration. That leads to the market winning approach, which is the first phase of competition: market vs. market, where collaboration is the critical strategy according to Geoffrey Moore in the book “Living on the fault line.”
Len articles are part of the second phase of competition: company vs. company. That is a zero sum game, and so competition is the core strategy. That is why I don’t want to take sides yet. Sorry Len, I think your approach is one of several available to retailers. Good luck!
Regards,
José Antonio
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