lunes, octubre 02, 2006

On the End-State of the Power Industry Part 2

Hello Sean

On the wake of the 2003 blackout, you wrote a very interesting article entitled “Ten Questions for Electric Utility Regulators,” asking them to “Answer these questions… Dig into them. Don’t shy away from uncomfortable conclusions. Use your own staff to research the answers rather than relying exclusively on the analysis of interested parties. Once you have done so, you will be positioned to craft a reasonable electricity regulatory structure. But until you have completed this exercise, you will not have the tools to credibly free yourself from the vested interests of the parties you regulate…Good luck”.

I think that Electricity Without Price Controls (EWPC) is the correct regulatory and market structure, that it seems to me – correct me if I am wrong - you are shying away from them because they are offering such uncomfortable conclusions. By looking closely to EWPC, the utility and the regulator are being replaced as intermediaries of the customer by competitive retailers on the competitive activities. I think that regulators (seem to be very happy losing rate cases) will find it difficult to shy away from the business that utilities are in. States congress does not have the conflict of interest that regulators have, so they should find and retain a system architect with the competence required to do the work of answering your ten questions and a few more. I believe I have already done just that, but remain open to be proven wrong.

José Antonio

Synthesis of Electricity Without Price Controls

Electric power deregulation that separates transmission and distribution - the FERC way - is flawed, because that separation is not done at a modular interface. The interface isn't modular when most needed - when real time reserves are low - amplifying input fuel prices into output electricity prices, instead of mitigating them. True functional reform simply separates wires from the competitive activities of generation and retail, at modular interfaces with the wires. The resulting value chain of the competitive activities is wholesale, retail, customer. Supply side (watts and vars generation) and demand side (energy efficiency, demand response, distributed generation, and storage) resource adequacy responsibility should be kept by a planning (long run) and operating (short run) unit associated with the wires monopoly for the whole power system. The result is a robust, complete, and fully functional market of the competitive activities. Those are the control elements of true deregulation of electricity. That will be the electric idyll of the new era - the End-State of the electricity industry. European Union seems to be closer to that goal than the U.S. As a reference, please read "a Dominican strategy," in IEEE Power & Energy, May-June, 2006 and/or place vanderhorst-silverio at on a search engine.