I placed a comment under the EnergyPulse article TXU Displacing Older Generation With Advanced Technologies, by Bill Opalka, Editor-in-Chief, Topic Centers, Energy Central. This is what I said:
What about displacing an important share of generation for energy and reserves with the development of the resources on the demand side?
TXU supply side strategy: "Faced with higher fuel costs, over-reliance on natural gas generation, increased demand, dropping reserve margins and anticipated pressures to regulate carbon emissions, TXU has made plans for $2 billion of investment in advanced technologies." Did TXU consider energy efficiency under a true free market orientation to compete on an equal basis in the long run with the supply side? Did TXU consider demand response to replace under a true free market orientation to compete on an equal basis for reserves in time (short run) and space with the supply side? Please read the article "Flaws Seen in Markets for Utilities," by David Cay Johnston, on the New York Times, November 21st, 2006, to learn that the Texan market does not work right.
The article explains that "producers can withhold power or limit production, with little risk or penalty...," even in the "free" Texans market. A true free market is required where generation and retail compete without the interference of the wire monopolies. The wires monopolies need to be reintegrated and have total control of the real time operation, so that withholding committed power capacity will face the proper risks or penalties.
In the new paradigm of electricity without price controls, center stage changes from generation to T&D, leading to the End-State of the power industry for quite some time. Displacing older generation with generation is insufficient. We need to displace generation with a combination of generation and resources from the demand side, which requires a reform in the market architecture and design to eliminate the evident flaws identified.
Since electric power deregulation is a very complex matter, debate is insufficient to resolve the flaws. What is needed is a generative dialogue, which will help us learn the market architecture and design that is emerging from the theory of Spot Pricing and from the experiments in several locations. This idea was introduced in the post Let's Get Out of Back Rooms to a Generative Dialogue.