martes, marzo 20, 2007

Utility Deregulation and Vertical Integration Revisited... Still Bad Ideas Part 4

Thanks Greg for your timely inquires on EWPC.

If you don’t represent vested interests, I will complete my response after learning more about your relationships with the industry. However, I found in Internet a person that works or have worked for EPCOR with your same name. In that case, please answer the following questions:

1) Does EPCOR have generation assets and/or large industrial and commercial customers?
2) Is asset unbundling (see below) an issue for EPCOR?

If you represent vested interests, I will assume that your company has enough resources to have read quietly all the comments that I have posted. If you have not, please reading all my comments under Playing with Fire - Part I and – Part II should be enough.

Energy Central news today bring the following headline: Asset unbundling: utilities seek to prolong the status quo, followed by “Several German utilities have reportedly put forward proposals to merge their networks with those of foreign competitors as an alternative to divesting these operations.” I found a very interesting paragraph which partially reflects EWPC:

Brussels acknowledged the importance of transformation and distribution assets in promoting European energy competition in its Directive 2003/54/EC, which called for the legal separation of the distribution and transmission systems. Intuitively, the directive included the possibility of future amendments if its rules were inadequate. This is now indeed the case, as the European Commission is debating stripping vertically integrated utilities of their network assets outright.

EWPC market design (rules) goes a bit further: there is no need for a debate to strip vertically integrated utilities of their network assets. It is just an essential element for the development of the resources of the demand side under EWPC as the winning paradigm. The above is in perfect agreement with Nick Clark statement:

In reality, during the process of unbundling all the various services in Alberta’s deregulated market, the value chain of the market was fractured. The investor-owned utilities (IOUs) -- wires company -- retained the MDM function, while the independent retailers own the commercial customer relationship. As such, this split has created a problem that the regulators have not yet addressed. The Alberta Electric Utilities Board (AEUB) is not mandated to allow the IOUs to include in their cost justification of AMI the full list of potential benefits that would impact the consumer, but rather only the benefits over which wires operators have control.


José Antonio

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