Worthy of Repeating - Dr. Hyde Merrill

Dear Dr. Merrill,

It is a great pleasure for me to wait for your wise and kind response. I also appreciate highly wishing me good luck! Your timing was great, since tomorrow the blog is a year and a half old.

EWPC is something a few people have heard of. It is a natural response of the opposite: electricity with price controls for the customers. As such, EWPC is for the customers at retail and wholesale. So feeling uncomfortable about a debate is reasonable.

However, I wish to go beyond debating; I am trying to learn from the emerging future of increasing information and knowledge intensity in the power industry. A future in which system risk of failure is handled increasingly from the development of the resources on the demand side is emerging. The development of such resources can only be done through retail marketing, as customers requirements will evolve.

I am glad that you give me the benefit of the doubt, by saying that the material is interesting, and that you will study it in more depth to understand it. I hope you will join the effort in the future. So I indeed believe that your words are worth repeating.

With deep respect,

José Antonio Vanderhorst Silverio, Ph.D.

P.S. Posted on the Grupo Millennium Hispaniola blog

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From: Hyde Merrill
Sent: Tuesday, November 14, 2006 1:10 PM
To: javs@ieee.org
Subject: Re: Thanks

Dear Dr. Vanderhorst-Silverio -

Sorry to be slow getting back to you.

I must admit to not being current on your EWPC work, hence feel uncomfortable about entering the debate on it. The material on your blog is very interesting. I appreciate being pointed to it and will study it in more depth to understand it.

I don't believe anything I've said to you is worthy of repeating, but if you disagree, you may do what you want with it.

Good luck to you!

Hyde Merrill

Hyde M. Merrill, PhD
Principal, Merrill Energy LLC
9 Exchange Place, Suite 961
Salt Lake City, UT 84111 USA
www.MerrillEnergy.com

----- Original Message -----

From: José Antonio Vanderhorst-Silverio, PhD

To: Hyde Merrill

Sent: Monday, November 06, 2006 1:21 PM

Subject: Re: Thanks

Dear Dr. Merrill,

Thank you for the whole - writing, interesting, system approach, country by country, and success - message. I am deeply honored for your timely and kind response!

I feel a need to disagree a little on just the country by country issue, which is of utmost importance in my work on Electricity Without Price Controls (EWPC). Before EWPC there was not an approach that could work equally well everywhere in the long run, to be claimed as the emerging solution i.e. the End-State of the electricity industry. The very large solution space in the demand side resources needs to be included in a kind of Integrated Resource Planning led by a T&D utility with not commercial activities with customers and generators. The commercial activities that should be placed on a free market, will required retail marketing activities that are not possible under traditional regulation.

On the country by country approach, the biggest difference between systems is to be found on whether they are mostly thermal or mostly hydro systems. The attempt by FERC to try to sell the SMD of PJM did not work was because PJM's market architecture and design was optimized for a mostly thermal system with a supply side solution.

EWPC optimizes both the supply side and the demand side resources. In essence, EWPC is to be an efficient rationing system of the resources of the demand side so that the expected value of electricity is the maximum for the economy as a whole. I agree that rationing of the demand side resources is to be different on mostly thermal systems (short run troubles) than on mostly hydro systems (boom - bust troubles).

I also believe there will be a difference operating point in developed countries than emerging countries. Slide 41 (attached) on my presentation to the Academy of Science of the Dominican Republic this year, shows the idea. That is where the development of the markets at the Bottom of the Pyramid comes in, as they will be willing to be more responsive than the middle class, while getting a lot of value added most of the time. My experience here is that poor customers receive free electricity that does not add value and many times destroys it.

The transition to the End-State will need to be on a country by country basis. The international standard development process will be very helpful to produce the customer interfaces that Prof. Schweepe suggested in the 80s. Mass production of hardware and the development of retailers' business models should be the elements of a worldwide vision, where electricity will become a usual business, given that the natural T&D monopoly infrastructure does its work quietly.

I also understand the scramble eggs many states have made. Jack Casazza thinks it is not possible to unscramble the contracts and other important rights. I think they will only be delayed for quite a while to get to the new vision of the End-State.

There might be other potential flaws or things that I have overlooked that you can suggest. If you have any related thought, please don't hesitate to express it.

I want your permission to post your thoughtful comment (or comments) on my blog.

Thanking you again for your comment (or comments), and specially your desire for success in what I am doing.

Best regards,

José Antonio Vanderhorst Silverio, Ph.D.

On 11/6/06, Hyde Merrill wrote:

Dear Dr. Vanderhorst-Silverio -

Thank you for writing.

You have a very interesting blog!

I agree with you that a systems look is needed. It seems to me that this has to be individualized, country by country - at least there does not yet seem to be an approach that will work equally well in Denmark, South Dakota, and the Dominican Republic.

Success to you in what you are doing.

Hyde

Hyde M. Merrill, PhD
Principal, Merrill Energy LLC
9 Exchange Place, Suite 961
Salt Lake City, UT 84111 USA

www.MerrillEnergy.com

----- Original Message -----

From: José Antonio Vanderhorst-Silverio

To: Hyde Merrill

Sent: Saturday, November 04, 2006 6:34 PM

Subject: Thanks

Dear Dr. Merrill,

Thank you very much for your kind comment about my article "a Dominican strategy." I share your ideas about finding a solution for electric customers at the Bottom of the Pyramid. I have been writing comments on EnergyPulse about Electricity Without Price Controls. The most recent comment was today.

Since you were in Argentina for three years, I assume that your Spanish must be very good now.

If you any spare time I suggest you take a look at my blog http://grupomillenium.blogspot.com/ . There are more than 1,400 posts already, most about electricity. I have a PhD in Information Theory, but I have been working in power since 1966. In 1996 I was asked to write a paper on how to solve our electricity crisis, and I found Prof. Schweppe's work ( I read your Proceedings paper when it was published in the late 80s and reread it about 3 years ago) as the way to go. It didnt have any impact at all. Electricity here is a big mess. As you can see in the blog, I have looked at many angles of the business and I think that I have sufficient insights to satisfy the aim you mention in "My view," but with a different vision. The vision is to increase the economy of coordination with information technology and systemic thinking.

I think we have a common friend Ramón Tapia, which used to work for Power Technology Inc. I think he is still close to Schenectady (I think I miss spelled it).

I hope to be honoured with your response.

Best regards,

José Antonio
--
José Antonio Vanderhorst-Silverio, PhD.

Interdependent Consultant on Electricity.

BS ´68, MS ´71 & PhD ´72, all from Cornell University.

Valued IEEE Member for 35 Years.

javs@ieee.org

Research and practice areas, and interests: Electricity WPC; Systems architecture; Systems thinking; Retail marketing; Customer orientation; Information systems requirements and design; Market rules; Contract assistance.