Emerging Technology Transforming the Power Industry

Below is a comment to the article Technology Transforming Distribution, by Charles Newton , President, Newton-Evans Research Company, Inc., posted on 12/01/06 on EnergyPulse.

Mr. Newton offers important contributions to the suggestion introduced in the post Let's Get Out of Back Rooms to a Generative Dialogue. I believe he writes about a technology transformation trend to the power industry which goes well beyond distribution. He is actually talking about in his conclusion of "a new-school view that is customer focused." Said in another way he is writing about a new customer oriented paradigm of the industry that is emerging and thus an important element of the integral reform paradigm.

Mr. Newton mentions that studies suggest a causal link between reforms on performance based rates (PBRs) to spending increases in DA. As PBRs are utility focused, this is a clue to something that is emerging as customer focused. Look under the Peak Load Management Alliance (PLMA) for the customer focused presentation Achieving Electricity Market Value through DR Technologies I made in the Fall of 2004, where on the slide # 10, I say “Ask and Respond: the Four Who to develop a set of self consistent market rules.”

The emerging rules are coherent with the last sentence of the article the author says “In the end, fewer outages and fewer complaints brought about by DA investments will certainly mean more revenue flow delivered to the bottom line," which should be paid by those who benefit, and not by the average consumer. It is the lack of such coherent rules that is a barrier to the "sense of urgency to upgrade the electric power T&D infrastructure" leading to the integral reform paradigm.

The author even see "some hopeful signs out there... yet it is more difficult, more cumbersome and perhaps more expensive to retrofit and upgrade the existing distribution grid... than to start afresh, as developing nations can do in their greenfields approach to development of an electric power grid." In this regard, I also made a PLMA presentation Dominican Republic Electricity Risk: A Customer Orientation in the Spring of 2005, where I envisioned the great opportunities that I see emerging. That presentation evolved into the article a Dominican strategy published by the IEEE Power & Energy Review, in the May-June, 2006, issue.

Mr. Newton gives another confirmation to go beyond utility focused PBRs to customer focused price differentiation when he says: "Their customers are sensing better power delivery performance, obtaining more reliable and more secure power delivery with minimized outage duration and frequency," which depends on the specific customer, because "[i]n the end, the cost of acquiring and installing DA will be more than offset by concrete improvements in power quality, an issue so vital to the key industrial and commercial accounts, and a cause of customer erosion and lost revenues for the utility."

The emerging paradigm I believe is electricity without price controls (EWPC), as it is evolving so far in my comments on EnergyPulse under many articles, and in the GMH Blog. Under EWPC, the regulator and the distributor will cease to be intermediaries as retailers take their jobs to develop business design innovations to compete with other retailers on a new value chain, as explained in the article An Alternative Business Case for Demand Response, which makes me strongly believe that My iPod is on the Demand Side.