viernes, noviembre 30, 2007

El Estado NO Debe Comprar RDP

Varios sectores del mundo empresarial se están oponiendo a la compra del resto de las acciones de la RDP o REFIDOMSA. Se trata de un negocio muy riesgoso ante un mundo tan incierto. Lo que el Estado debe hacer es poner en venta su parte y abrir el mercado de importación al mismo tiempo en competencia con la refinería.

Hay tres escenarios para la próxima década que he tomado del libro “Powerful Times” que se pueden contemplar para hacer la decisión. Su autor Eamonn Kelly estima que uno de estos tres escenarios (no predicciones) dominará la próxima década, derivando su forma primaria y sustancia para el próximo siglo. Se dice que “la incertidumbre crítica” es “cual de ellos dominará,” porque “cada uno de esos escenarios contiene elementos de los otros dos. De hecho, los tres estarán en juego al mismo tiempo a cierto nivel… ninguno tiene derechos exclusivos al futuro.”

Los escenarios parten del modelo ‘emergente’ de poder, desde abajo hacia arriba, descentralizado, en redes, que probaría ser la fuente verdadera de una transformación profunda del mundo. Los escenarios son:

1) Emergencia (es el escenario ‘emergente’ de liderazgo, innovación y cambio).

2) El Nuevo Siglo Americano (es el escenario ‘no emergente’ a la creciente influencia de los Estados Unidos en el mundo).

3) Poderes de Parchos (Es el escenario ‘no emergente’ a la decreciente influencia de los Estados Unidos).

Estos escenarios fueron “diseñados para ensanchar nuestros pensamientos, retar nuestras suposiciones, y ayudar a prepararnos con múltiples posibilidades, en vez de asumir un futuro único o simplemente esperando, como Pandolfo Petrucci, para reaccionar a cualquier cosa que nos ponga el destino al frente.”

La decisión en el escenario Emergencia es obviamente NO COMPRAR. La gran incertidumbre que se cierne sobre la humanidad necesita ser enfrentada con liderazgo e innovación. Estrategias como reducir la factura de petróleo y gas en 25% en los próximos 4 años, requieren un planteamiento decidido a reestructurar el sector eléctrico. Por ejemplo, al hacer la eficiencia energética uno de los pilares de la reducción del consumo en los medidores del sector eléctrico, no se tendría que afectar el consumo final de energía que necesitamos para impulsar el crecimiento de la economía.

El Nuevo Siglo Americano se basa en un “sistema de mercado que tiene una demostrada tolerancia a los fracasos; hasta parece que están dispuestos a permitir que grandes corporaciones sucumban a la competencia en vez de sacarlas de apuro, asegurando una remoción y dinamismo que son la envidia de muchos otros países.” Bajo ese escenario la decisión obvia es la de NO COMPRAR.

Sin embargo, por lo que está sucediendo, por ejemplo en la industria eléctrica, dicha tolerancia parece haber desaparecido. Por otros muchos indicios, que Kelly menciona como “errores hechos en los años que siguieron al horror del 11 de septiembre… hay una lista bastante depresiva de las formas en que los Estados Unidos han socavado su propia autoridad y posición en el mundo,” todo luce indicar que El Nuevo Siglo Americano podría ser minimizado y que la humanidad, con los Estados Unidos a la cabeza, debería apostar por Emergencia, en que los ideales originales americanos de democracia y capitalismo son abrazados por muchos otros países.

No obstante Poderes de Parcho está cobrando mucha fuerza en la República Dominicana. La decisión en ese escenario es claramente la de COMPRAR, porque no se necesita desarrollar liderazgo, ni embarcarse en los senderos de la innovación. Este escenario está siendo reforzado por préstamos venezolanos para que sigamos atados al petróleo, a cuenta de las nuevas generaciones de dominicanos que los tendrán que pagar. Este escenario nos confirma como grandes derrochadores y contaminadores, que hablan hasta de aumentar la capacidad de refinar petróleo.

Esos tres escenarios son radicalmente apartados de lo que estamos acostumbrados a vivir. Como los dominicanos debemos estar preparados para vivir en cualquiera de esos tres escenarios del futuro, la mejor decisión entonces es NO COMPRAR.






jueves, noviembre 29, 2007

Ohio Should Focus on EWPC

First Energy Corp. entered into a contradiction by handing a letter signed by prominent economists to show they believe in competitive markets. The contradiction is that the economists recommended focusing on the necessary improvements in market design, while the utility identified a “number of legal problems that won’t easily or quickly be resolved.” Ohio House of Representative should focus closely on EWPC.

Ohio Should Focus on EWPC

By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity

Copyright © 2007 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

Speaking before the Ohio House of Representative, Leila L. Vespoli, senior vice president and general counsel for FirstEnergy Corp., testify on November 28 on the proposed energy policy.

Stating three reason for a continue believe in competitive markets, Ms. Vespoli provided a copy of the June 26, 2006, Open Letter to Policymakers, signed by the prominent economists Paul L. Joskow, Alfred E. Kahn, William W. Hogan, Peter Cramtom, Howard J. Axelrod and Vernon L. Smith.

The conclusion of the letter states: “… despite the recent increases in electricity prices, policymakers should stay the course and continue to support restructuring and the evolution of competitive wholesale and retail markets for power. Competition is the very foundation of our nation’s economy. Competitive electricity markets are relatively new and will continue to evolve. We urge policymakers to focus on making the necessary improvements in market design and resist the temptation to reject competition for a return to heavy-handed regulation. We are persuaded that competition in electricity markets will stand the test of time and continue to provide visible customer benefits.”

It is important to highlight the suggestion to “… focus on making the necessary improvement in market design and resist the temptation to reject competition for a return to heavy-handed regulation,” since EWPC market architecture and design emerged as the key to such improvements.

In the statement, Ms. Vespoli also stated “… if we fail to preserve the market-based option for utilities and customers, we create a number of legal problems that won’t easily or quickly be resolved.” Such argument, however, contradicts the conclusion of the prominent economists, since the utilities grid and enterprise need to be separated to make the necessary improvements to allow competition to emerge in the enterprise without incumbent retailer.


sábado, noviembre 24, 2007

Una Verdad “Trivial” de Amcham

[Actualización del 25 de noviembre en corchetes.

"El liderazgo eficaz deriva su credibilidad no de prácticas y técnicas (las que son importantes), sino de la persona que las apoya, el ser humano detras del comportamiento de liderazgo."

Peter Koestenbaum - Leadership: The inner Side of Greatness]


Por José Antonio Vanderhorst Silverio, Ph.D.
Consultor Sistémico: Electricidad

24 de noviembre, 2007

Bajo el título, “A propósito de institucionalidad y desarrollo de la nación,” la Cámara Americana de Comercio (Amcham), en su columna “Comercio y Competitividad,” publicada en el Listín Diario del 24 de noviembre, 2007, ha producido una muy importante exhortación hacia la institucionalidad y el desarrollo de la nación.

No obstante, el ejemplo que emplean no ha sido el mejor. Creo que se basa en una verdad trivial sobre el devenir del sector eléctrico dominicano. A continuación presentamos la verdadera reforma institucional del sector eléctrico que requiere el desarrollo de la nación, basada en una verdad no trivial sobre la electricidad, que tiene un alto potencial para crear grandes oportunidades de negocios al país.

Con el auspicio de la USAID, vía el Centro Universitario de Estudios Políticos y Sociales de la Pontificia Universidad Católica Madre y Maestra, fui seleccionado y contratado en 1996 por el Grupo de Acción por la Democracia, como especialista nacional, para redactar uno de 3 documentos de trabajo con planes de acción en la prioridad del sector eléctrico. Diferente a los otros dos especialistas, yo había practicado la planificación de los sistemas eléctricos interconectados y el desarrollo de sistemas modernos de información.

De acuerdo a la “Agenda Nacional de Desarrollo (Volumen II): Planes de Acción para las Diez Principales Prioridades,” la propuesta que elaboré se suponía debía “contribuir con la tarea de las autoridades nacionales, y más especialmente de aquellas que habrán de conformar el equipo de la nueva Administración a inaugurarse el venidero 16 de agosto [del 1996], de formular las mejores políticas para impulsar el desarrollo nacional.”

Lamentablemente para la familia dominicana, mi documento de trabajo no fue ni siquiera considerado por esa Administración, ni por las que le sucedieron. Creo que humildemente puedo decir que en aquel momento hubo falta de institucionalidad que afectó grandemente el proceso posterior de reestructuración y que le ha costado grandes pérdidas a nuestra sociedad. En particular, existen ahora toda una serie de costosos intereses creados que se pudieron evitar. Ahora bien, los errores en las reformas han sido en todo el mundo, dejándonos todavía la oportunidad para ser los pioneros en la reforma de los mercados eléctricos mundiales.

Ramón Flores, un especialista nacional, que redactó uno de los otros dos documentos, escribió “Cualquier sector energético de propiedad pública o privada que no se sustente en sí mismo, sino en las finanzas del Estado termina convirtiéndose en un barril sin fondo.” No obstante, la decisión de capitalizar extendió la participación de las finanzas del Estado en el negocio eléctrico. Esa participación, se hizo con el modelo de negocios de las distribuidoras, que sirve para extraer rentas abultando las compras de infraestructura que se pasan a tarifa. El resultado es tres distribuidoras quebradas.

La verdad trivial sobre el sector eléctrico aludida por la Amcham se basa en los estudios de los economistas Douglas North, premio Nóbel 1993, que ofrece “una visión neoclásica del desempeño económico de los pueblos, incorporando la importancia del rol de las instituciones y la evolución de la sociedad a través del tiempo,” y Hernando de Soto “quien se ha enfocado en un concepto revolucionario al que ha llamado ‘la carencia de derechos de propiedad formales como la fuente de la pobreza en los países pobres.’” Sucede que la verdad del sector eléctrico no es solo asunto de sus aspectos triviales; es ante todo un asunto de un aspecto no trivial de electricidad.

Sabemos que el premio Nóbel de economía 1970, Paul Anthony Samuelson, ofreció una proposición que fuese a la vez verdadera y no trivial: “El principio de las ventajas comparativas. Que es lógicamente verdadera no es necesario comprobarlo ante un matemático; que no es trivial se ha comprobado por los miles de hombres importantes e inteligentes que nunca han podido entender por sí mismos dicha doctrina o creer en ella después que se les ha explicado".

Basado en los aspectos triviales de la electricidad, el economista Alfred E. Kahn ha dicho “Estoy preocupado sobre cuán únicos son los mercados eléctricos. Siempre he estado incierto sobre eliminar la integración vertical. Podría ser una industria en que esta funcione razonablemente bien.”

Lo que el Dr. Kahn explica es un asunto que es lógicamente verdadero y que también no es trivial. Lamentablemente, no fue tomado en cuenta el gran esfuerzo desplegado en el Instituto Tecnológico de Massachussets, durante gran parte de los años 80, por un equipo de investigadores dirigido por Fred C. Schweppe, dando lugar a la teoría y la práctica de la formación de precios de oportunidad (spot) de electricidad.

La integración vertical permitía aproximar el mayor bienestar social, cuando la expansión del conjunto generación-transmisión del sistema eléctrico interconectado se realizaba al mínimo costo, como lo exigió a la CDE el Banco Mundial al final de los años 80. Yo preparé un plan de expansión en esa oportunidad. Esta expansión asumía la demanda y la confiabilidad del sistema eléctrico como externalidades, e incluía los costos de inversión, operación, manteniendo y desabastecimiento (los costos de los apagones a la sociedad).

No obstante, la reestructuración introducida en el país en el año 1999 continúo dejando los insoportables costos de los apagones a los consumidores, dada la baja confiabilidad ofrecida, al tiempo que le confiscan su potencial derecho de propiedad de manera indefinida. Así se refuerza el mercado Sálvese Quien Pueda (SQP) de soluciones individuales de autoabastecimiento a los consumidores. Es ese defecto de la reforma, los apagones como externalidad, que aparentemente [eliminé "la"] hace atractiva la reforma a los inversionistas, a mi entender la fuente principal del fracaso de la misma. De ahí es que puede operar la creencia subyacente que ha impulsado el hurto de electricidad a niveles alarmantes, de que ladrón que le roba a ladrón tiene 100 años de perdón.

Es por lo anterior que los cambios incorporados a la normativa, que según Amcham “pretenden corregir algunas distorsiones del sector de distribución, estableciendo mayores penalidades y acciones punitivas para el resguardo de las consabidas garantías Estatales al derecho de la libre empresa y a la seguridad jurídica de las empresas distribuidoras,” se quedan cortas para contribuir a la institucionalidad y al desarrollo de la nación, por estar concentradas en los derechos de una sola de las dos partes.

El Ex-Vicepresidente de los Estados Unidos, Al Gore, en el prefacio de la segunda edición del libro “Capitalism at the Crossroads,” de Stuart L. Hart, afirma que “los intereses de los accionistas, tanto públicos como privados, a través del tiempo, serían mejor servidos por compañías que maximicen su rendimiento financiero administrando estratégicamente su rendimiento económico, social, ambiental y ético… La ‘licencia para operar’ ya no puede ser una suposición de los negocios, cuando retos tales como la crisis ambiental… escasez de agua y la pobreza llegan a un punto donde la sociedad civil y los consumidores demandan una respuesta de los negocios y del gobierno. Las compañías líderes entienden esto y ya están moviéndose antes que los legisladores y los reguladores y, al hacerlo, están asegurando la ventaja competitiva.” Es [no "Esa"] así como se deben interrelacionar de ahora en adelante el comercio y la competitividad.

El aumento de la eficiencia de los sectores eléctricos mundiales, en la propuesta de Schweppe y su equipo, diseñada para un mercado regulado y extendida por el autor para un mercado abierto, proviene de la competencia al detalle con demanda activa, haciendo que la demanda y la confiabilidad dejen de ser externalidades. Para lograr el mayor bienestar social, la eficiencia del sector entonces resultaría de la optimización del conjunto, tomando en cuenta no solo la oferta y el transporte, sino también la confiabilidad y la demanda. Esto es posible por la reducción significativa en los costos de transacción, gracias al gran progreso acontecido y por acontecer en las tecnologías de la información. Más abajo amplío esto al tratar las tecnologías “disruptivas.”

El aspecto de confiabilidad nace de uno de cuatro criterios en que descansa la teoría y la práctica de la formación de precios spot que es cierto y no trivial. El criterio es considerar los requisitos para controlar, operar y planear un sistema eléctrico. En verdad es el criterio fundamental de diseño arquitectónico del sistema eléctrico. Como veremos a continuación, al ser cierto y no trivial, ese criterio no puede ser objeto de debate, como se ha realizado equivocadamente al implantar los mercados eléctricos en todas las jurisdicciones y mucho peor en la República Dominicana, donde se ha realizado una fuerte contrarreforma sin ni siquiera debate.

Eberhardt Rechtin y Mark Maier, en su libro “The Art of System Architecting,” explican que “la calidad de un sistema social… es menos un fundamento que una elección caso por caso; esto es, la calidad deseada (en nuestro caso principalmente la confiabilidad) depende del sistema que se quiere proveer. En la generación nuclear, en la manufactura moderna, y en los vuelos espaciales, la ultracalidad es un imperativo. Pero en salud pública, en control ambiental, y en seguridad, el nivel aceptable de calidad es solo uno de muchos factores económicos, sociales, políticos y técnicos a ser reconciliados.”

Con el objeto de obtener un mayor bienestar social que en la industria verticalmente integrada, la propuesta que realicé en 1996 como “La Necesidad de una Política Integral de Electricidad para la República Dominicana,” separa el sector eléctrico en dos grandes mercados: el mercado controlado de transporte y el mercado abierto de comercialización de electricidad al por mayor y al detalle. Hallazgos posteriores en lo que ha emergido, durante los últimos dos años, como la electricidad sin control de precios (EWPC, por sus siglas en inglés) aplica el imperativo de ultracalidad al sistema controlado de transporte. Ese sistema de transporte se planea para una expansión de mínimo costo que habilita el máximo bienestar social en el mercado abierto.

Peter Van Doren y Jerry Taylor, del Cato Institute, indican que “la reestructuración eléctrica fue iniciada en los años 90 para remediar el problema de costos de electricidad relativamente elevados en el Noreste y en California… los economistas querían una reforma que eliminara los incentivos a la capacidad excesiva de generación y para introducir precios en tiempo real.”

En las conclusiones de su trabajo, Van Doren y Taylor decían: “mientras la reestructuración no ha sido tan mala como las facciones contrarias al mercado mantienen, ha creado problemas desconocidos previamente en la industria eléctrica:”

1. Se concentró en la competencia en generación e ignoró los asuntos de precios e incentivos relativos a la administración del sistema de transmisión y sus características públicas comunes
2. Injertó un mercado mayorista relativamente libre encima de un mercado al detalle altamente regulado; y
3. Estableció instituciones artificiales que invitaron a la manipulación y el abuso. El resultado final ha probado estar lejos de ser satisfactorio.

Esos problemas desconocidos resultan en la falta de conocimiento de los elementos esenciales del mercado genérico de la EWPC que humildemente descubrí, sinteticé y presenté este año en la Universidad Carnegie Mellon: competencia al detalle con demanda activa y transporte de ultracalidad, los cuales había intuido en la propuesta que realicé en 1996.

El primer problema desconocido para Van Doren y Taylor se resuelve con un mercado controlado de transporte con ultracalidad. El segundo con la competencia en el mercado al detalle con demanda activa, el cual da una ventaja bien grande a los dominicanos para integrar el mercado SQP al sistema interconectado. El tercero se resuelve con el cambio de la regulación de control de precios a la regulación prudencial para proteger a los consumidores de los abusos de los detallistas y del potencial poder de mercado de los generadores.

Siguiendo las sugerencias del premio Nóbel Douglas North, en 1996 escribí: “Las instituciones y la gente necesitan tiempo para asimilar los cambios, especialmente aquellos que transforman. Se puede adoptar un cambio radical para ser implantado en etapas con pasos firmes. La gente necesita tiempo para conocer, entender y finalmente comprender que se quiere hacer… la meta de transformar la industria eléctrica en dos etapas, es en verdad una meta muy optimista.”

La primera de las dos etapas que estimaba de 5 años era para desarrollar el mercado minorista y el mercado de transporte (transmisión y distribución) de electricidad de clase mundial. La apertura de la generación era para la segunda etapa.

Argumenta Amcham que “A seis años de promulgada dicha Ley (General de Electricidad), su implementación y aplicación real ha sido limitada y aún no ha resuelto la problemática de la sostenibilidad del segmento de distribución.” Este tema de la sostenibilidad es una creencia altamente defectuosa en la mente de los que dirigen la reforma dominicana.

La sostenibilidad que impulsa el desarrollo es la que resulta en el máximo bienestar social del conjunto, que garantiza a su vez el bienestar de cada una de las partes. La primera etapa que sugerí en 1996, como parte de la política integral, suponía que “mientras más actores (en el mercado minorista) hay presentes inicialmente en la solución de las pérdidas, más pronto se solucionará el problema.” En efecto, la política implantada se hizo a la inversa y considerando la sostenibilidad de los segmentos por separado sin pensar en la del conjunto.

[Sustituir "Como afirmamos más arriba, la" por "La"] La industria eléctrica a nivel mundial está desde hace tiempo en la Zona No Rentable. En esa zona, los aumento de los costos (incluyendo aquí los de los apagones) a los clientes resultan del modelo de negocios de las distribuidoras de ganarle casos de tarifas a los reguladores. Para sacarla de esa zona se necesitar reestructurar correctamente. De eso es que trata la EWPC para posicionar la industria en la Zona Rentable.

Mientras el bienestar del segmento de generación está garantizado a las empresas capitalizadas por contratos a largo plazo con el segmento de distribución, no así está garantizado el derecho de propiedad del segmento de los consumidores, incluso de aquellos que no carecen de derechos de propiedad formales. Se trata en efecto de reglas de juego muy defectuosas que se amparan en la impunidad de los derechos formales, como lo son los contratos de la capitalización y el Acuerdo de Madrid.

Así que en el país, la reforma del sector eléctrico ofrece derechos de segunda categoría a los consumidores del mercado minorista, lo que va más allá de los conceptos que aboga Hernando de Soto sobre “la carencia de derechos de propiedad formales como la fuente de pobreza en los países pobres.” Al ofrecer un servicio precario sin compensar los apagones, los derechos de los consumidores afectados son secuestrados con impunidad.

La EWPC genera un derecho a los clientes que estén dispuestos a recibir un servicio de menor confiabilidad a cambio de un derecho de propiedad a título individual. Los pobres podrán contar con ese derecho, de forma que paulatinamente la electricidad pueda contribuir junto a la institución del micro-crédito a reducir la pobreza.

Es al considerar también los derechos de los consumidores que la EWPC tiene su enfoque que la diferencia de los otros procesos de reestructuración. La reforma planteada para desarrollar las instituciones del sector eléctrico, tienen la EWPC como uno de los “factor[es] determinante[s] para garantizar el desempeño económico de” la nación dominicana “y su permanencia con el paso de los años.”

A la fecha he identificado 6 tecnologías “disruptivas” que permitirán desplazar la industria eléctrica de la Zona No Rentable a la Zona Rentable. Esas tecnologías son: 1) la respuesta de la demanda, 2) la eficiencia energética, 3) la generación y almacenamiento de electricidad, 4) la infraestructura avanzada de medición (AMI por sus siglas en inglés), 5) la red inteligente (smart grid) y 6) los modelos innovadores de negocios. Esta sexta tecnología “disruptiva” es la que permitirá integrar mezclas de las otras cinco, por medio de planes de servicio a los clientes consumidores de parte de los detallistas de segunda generación (esto es para diferenciarlos de los detallistas que ofrecen servicios en los mercados actuales).

Es importante destacar que disponemos una gran inversión en la generación y almacenamiento de electricidad en el mercado SQP. Al integrar al Sistema Eléctrico Nacional Interconectado dichas tecnologías deberá ocurrir lo mismo que acontece con la industria de la computación, en la que modelos de negocios sucesivos permiten mayores niveles de eficiencia, empezando por algunas implantaciones rudimentarias. Es con la estructura de la EWPC que se inicia la gran revolución de los sectores eléctricos mundiales, lo que debería ocurrir aquí.

Generando un conjunto de reglas claras y contundentes “se asegura una continuidad del desarrollo institucional, se obtiene una mayor confianza en la comunidad de inversionistas, tornándolos predecibles en el desempeño de nuestras instituciones, disminuyendo el riesgo y creando confianza, lo que se traduce en atracción de la necesaria inversión para mejorar la productividad, la creación de empleos y por ende el bienestar de la ciudadanía,” tal como sugiere Amcham.

Ante las anteriores explicaciones, repetimos la pregunta que hace Amcham: ¿tendrán la sociedad dominicana y las organizaciones políticas la voluntad de contar con instituciones sólidas, para cimentar su desarrollo con una visión de largo plazo? La respuesta es que sí la tienen, pero para ello debe existir un ideario común, un proyecto país compartido por la sociedad…” Para el sector eléctrico, ese proyecto es la electricidad sin control de precios (EWPC).

Con mucho respeto, espero de los directivos de la Cámara Americana de Comercio expresen su refutación o aprobación a esta exposición.

Para más información se puede consultar la Bitácora Digital del Grupo Millennium Hispaniola (http://grupomillenium.blogspot.com) y a www.energyblogs.com.





jueves, noviembre 22, 2007

Does EWPC have a “Bystander Problem”?

Believe it or not, EWPC is about teaching leadership. As “human beings are a lot more sensitive to their environment than they may seem,” I would like to learn from the bystanders whether EWPC has tipped or not in the Energy Central Network environment.

Does EWPC have a “Bystander Problem”?


By José Antonio Vanderhorst-Silverio, Ph.D.

Systemic Consultant: Electricity

Copyright © 2007 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

In order to get support for EWPC, I wrote the now best selling Conspiracy Theory Against Mr. X (562 views, until Nov 22nd, 2007). So now I think is time to ask what that means in terms of leadership.

“The Tipping Point: how little things can make a big difference,” by Malcolm Gladwell, carries the story of Kitty Genovese, which I contend is similar to that of EWPC in Energy Central Network environment.

Gladwell tells that “… Kitty was chased by her assailant and attacked three times on the street, over the course of half an hour, as thirty-eight of her neighbors watch from the windows. During that time, however, none of the thirty-eight witnesses called the police.”

Two New York City psychologists, Bibb Latane and John Darley named the above situation the “bystander problem,” explaining that “when people are in a group… responsibility for acting is diffused. They assume that someone else will make the call, or they assume that because no one else is acting, the apparent problem… isn’t really a problem.”

In the case of EWPC, during the past two years Mr. G has attacked without mercy EWPC, and no one else have come with help, even though an inordinate amount of people have seen it.

Gladwell ends the brief story by saying that “human beings are a lot more sensitive to their environment than they may seem.”

This is a good test for EWPC now that it seems to have tipped in www.energyblogs.com with 6 of the 10 “Most Commented” and the top 6 and the 8th place of the 10 “Most Viewed” articles, but no one has firmly committed (Mr. Causey issued a nice comment) his/her support to EWPC.

I would like to learn from the bystander whether EWPC has tipped or not in the Energy Central Network environment. Believe it or not, EWPC is about teaching leadership.

miércoles, noviembre 21, 2007

EEI-ting Your Own Lunch

Edison Electric Institute members have empowered the government to take control of the power industry. They should stop dreaming, work hard to ban regulation and to let the market decide by following Hewlett Packard’s advice of “eating your own lunch.”

EEI-ting Your Own Lunch

By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity

Copyright © 2007 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

In the book “Inside the Tornado,” Goeffrey Moore writes “There is no more challenging management task than, as the folks of H-P like to put it, “eating your own lunch.”

The power industry is in the process to be transformed by the information revolution. By hiding behind “native load,” generators and utilities have empowered the government to control the power industry.

In the article All the issues crux of the matter, explaining that government bureaucracy (and state-controlled enterprises are extensions of that bureaucracy) is inherently the worst possible way to solve any problem, Warren Causey writes:

With regard to good ideas dying at the utility/commission staff interfaces, I don’t disagree at all. In fact, I consider that as proof of the argument in my original post, and as both the crux of the issue and the fly in the ointment of Dr. Silverio’s, and other bloggers’, restructuring proposals. My educational training actually is in history and that’s why I consider this a fascinating time-period in which to live.

Over the last couple of generations, the U.S. has become increasingly socialist (regardless of the party in power) and people increasingly expect the government regulate everything and solve every problem. The issue with that is that government bureaucracy (and state-controlled enterprises are extensions of that
bureaucracy) is inherently the worst possible way to solve any problem. You can ask the Russians what a long, slow dive into an empty swimming pool feels like. Of course don’t pay to much attention to what they say because now they seem intent on climbing, dazed, back up onto the board and trying it again.

When you introduce government planning into any operation at any level of government (local planning commissions and their interventions into private property are a nightmare) and remove or distort economic incentives, you produce a horse designed by a committee—it looks a lot like a camel. Add politics (most state regulators are elected and national politicians’ raison d’etre is to get elected regardless of the consequences) and the possibility of allowing free markets to work out problems via trial-and-error disappears.

EEI membership should take serious consideration to the EWPC articles EEI California Dreamin’, To EEI: “Let's Ban Regulation,” Starting in Ohio and “Let the Market Decide” in Ohio.




martes, noviembre 20, 2007

Increased Sense of Urgency of EWPC

EWPC sense of urgency is reinforced. As the market architecture and design breakthrough paradigm, EWPC will enable the possibility to a superior development path for the power industry. However, putting EWPC into practice to reap most of the benefits requires high caliber professional advice.

Increased Sense of Urgency of EWPC

By José Antonio Vanderhorst-Silverio, Ph.D.

Systemic Consultant: Electricity

Copyright © 2007 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

Dear Mr. Gould,

Thank you very much for asking one right question, the one in the first crucial point that reinforces the increased sense of urgency about EWPC. The balance of your comments, however, has distortions and unnecessary repetitions.

In that “crucial point” you are describing the possibility of systemic risk – system adequacy problem - which is one of the main jobs of the system engineer (planner and operator) to be performed in coordination with generators, transporters and retailers. Today's regulation, deregulation, and re-regulation, based on inactive and inelastic demand (and an externality), and lacking customer oriented service, are not prepared to handle the managerial complexity involved.

To handle such complexity, we need to deploy 2GRs before "... electricity should become the mode to replace transportation fuels (PHEV's, H2, etc.)." Several market segments will develop, for example price takers, responsive demand (source of demand elasticity) and long term contracts. As 2GRs come up with the long term contractual commitments of ( i.e. industrial and commercial) customers that desire to buy the right of future electricity service at a fixed price, including those that have serve to finance base load power plants (i.e. via futures market), 2GRs will provide the system operator much more accurate demand forecasts. Such forecasts are better because demand in no longer an externality.

By updating power system planning procedures to EWPC with those quite accurate forecasts, the “projected demand” will NEVER “exceed available supply by a larger margin than the available demand control?” System reserves, in the proper mix of the “elastic” demand side and the supply side, should be adequate to run a stable system.

“How will your grid operator "guarantee" it's existence in all combinations of circumstances?” By proper long run power system planning system adequacy development. The statement “a new 1500 MW nuclear station when demand for it may be only at 100 MW,” is the result of a planning mistake or a misunderstanding of power system operation procedures.

That is why EWPC is the winner of the first phase of competition are precisely highly interrelated "absolute requirements" 1) integration of active demand and 2) that distribution and transmission are fully integrated geographically. Those requirements enable a superior solution path to the PROFIT ZONE through fully functional retail and wholesale competition. The obsolete regulation paradigm shifted the industry to the NO PROFIT ZONE and the deregulation experiments place it in an even more inferior path of development.

As for price caps, they are easily sold to voters. Under EWPC each customer has the right to choose its own price caps in the service plan of their 2GR as explained in No Need for Regulated Price Caps - I and No Need for Regulated Price Caps - II.

Distorting and naming the “absolute requirements” of EWPC as “two minor differences,” is no serious, just as it is also the “the added point” which are repeated again, and again, because Mr. G NEVER followed the links on EWPC is NOT the Ontario Model Either. Comparing the Ontario single generation retailer actions to those of the 2GRs adds insult to injury.

Finally, I repeat the summary of the article Take EWPC Lead & Reap Large Benefits: “The US Congress, the European Commission, the state of Ohio, and the Dominican Republic, are some the most likely candidates to start the paradigm shift to EWPC, ending demand forever as an externality. It has been shown that the days of the obsolete VIUs paradigm are counted. A paradigm shift to EWPC is the next source of business innovations, jobs with a lot of future and increasing exports. Those governments that take the lead, and avoid the risks of market implementation failure by retaining high caliber professional team advice, will reap most of the benefits.”

Best regards,

José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity


domingo, noviembre 18, 2007

EEI California Dreamin’

The U.S. power industry is dreaming that it is safe, when in fact the leaves are brown and the sky is gray as the industry is in the NO PROFIT ZONE. To get it safe and warm into the PROFIT ZONE, EEI should lead the regulation ban, on such a winter’s day, to let the commercial market decide.

EEI California Dreamin’


By José Antonio Vanderhorst-Silverio, Ph.D.

Systemic Consultant: Electricity

Copyright © 2007 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.


All the leaves are brown … And the sky is grey … I've been for a walk … On a winter's day … I'd be safe and warm … If i was in l.a … California dreamin' … On such a winter's day …


Dear Mr. Rosenstock

Albeit minimizing the importance of a well documented proposed “ban of regulation [except on transportation]” (see To EEI: “Let's Ban Regulation,” Starting in Ohio) to “let the [commercial] market decide” (see “Let the Market Decide” in Ohio), thank you very much for at least acknowledging the ban. I think it is a defensive, but nonetheless, good start.

Highlighting the positive, the ban’s objective, and to let the market decide, is to “…provide the potential for modernizing the whole productive structure and for raising the general level of productivity and quality to a higher plateau,” of the power industry. In other words, the goal is to shift the industry from the NO PROFIT ZONE to the PROFIT ZONE, so that the EEI membership avoids what the railroads, the nuke industry, and Detroit, went through or are going through.

The need for the shift is in the EWPC article Customer Wallet Cleaning Problem and Solution, where you can “… learn that the vertically integrated utilities paradigm has been in a NO PROFIT ZONE for quite some time, letting utilities make a profit under regulation only by the ‘consumer having his wallet cleaned out by ever increasing power costs.’ To get the power industry in the PROFIT ZONE, there is a need to restructure with the aim to admit business model innovations to develop.”

Going back to the beginning, in the Executive Summary of the full paper, Van Doren and Taylor write: “Electricity restructuring was initiated in the 1990s to remedy the problem of relatively high electricity costs in the Northeast and California... Economist wanted reform to eliminate regulatory incentives to overbuild generating capacity and spur the introduction of real time prices."

What happen after that is partially (more below) documented in the EWPC article The BIG California LIE, which in brief says: “The BIG LIE is that retail competition is impossible in electric markets. The implementation of a competitive retail market was the center of the debate in California. Instead of cooperating to implement it, the three big California utilities, that didn't care about the end-customers, acted very irresponsibly. EWPC is the paradigm shift to show that retail competition is not only possible, but absolutely necessary to turn the electricity industry into a vibrant value added business for all stakeholders.”

That explains why you “don’t know any regulators who would really like that idea.” We all should questioned if behind the irresponsibility there was a conspiracy that seems to have been “successful” so far. Please read the EWPC article A Vertical Integration Conspiracy Theory for the US Judiciary to learn about it.

You are right, “there are many politicians who seem to want more price controls and regulation on electricity,” because they are unaware of both the BIG LIE and the potential conspiracy, while also unaware of the recent emergence of EWPC.

To learn more about what happen in California, please read the following EWPC articles (excerpts are included below each title):

Divine Dispensation of Electric Markets is Gone



… the “Law of the Situation: the railroads did not understand,” (see my post of 9.11.07 above) that applies to VIUs, from which I extract, “Some people [IOUs for example] still believe there’s a divine dispensation that their markets are theirs - and no one else’s - now and forevermore. It is an old dream that dies hard, yet no businessman in a free society can control a market when the customers decide to go somewhere else [under EWPC for example]. All the king’s horses and all the king’s man are helpless in the face of a better product. Our commercial history is filled with examples of companies that failed to change in a changing world, and became tombstones in the corporate graveyard.”

When energy costs were low, the business model of winning rate cases to the regulator didn’t bother the customers. But since the oil embargo in the 70s, customers are ever more interested in competitive prices, as free society recognized that IOUs cannot control anymore the electricity markets. I have followed Donella Meadows advise (see link Let's Get Out of Back Rooms to a Generative Dialogue) to end the divine dispensation to the IOUs. But after many things have occurred during more than 30 years, with the obsolete VIUs controlled market, customers like those of the state of Ohio want and effective and efficient re-regulation process.


The Sixth Disruptive Technology



The above difficulties are also explained in a different way by Jack A. Casazza, as the scrambled egg, that can’t be unscrambled. That would mean that The BIG California LIE was supposed to get away with a much larger scam than the Enron’s scam, as vested interests extended the obsolete VIUs paradigm well beyond its useful life, by tilting the competitive balance in an equilibria away from the best economic outcome for society. That is what is fueling a backward movement away from real retail liberation in Europe now. It is to the best equilibria that EWPC is concerned. As Einstein said; "We can't solve problems by using the same kind of thinking we used when we created them."

Let EWPC Come to Fruition


Just like you [another person], I am also a long time critic of deregulation that agrees with many of the professor’s points. However, instead on placing myself on the problem side, as a power engineer I have been, since 1995, concentrated on the solution side. By “Working on ideas outside” engineering, I “can enjoy the enthusiasm built on partial ignorance,” as my hero and role model Uno Lamm suggested. Please refer to “Uno Lamm: Inventor and Activist,” by Catherine Wollard, published in March 1988 on the IEEE Spectrum, here and below.

It is such a solution that evolved into EWPC, which makes the deregulation debate totally unnecessary. In fact, such debate was a completely waste of time, which could had been avoided if The BIG California LIE (hit link to read the article about that LIE) had not been enabled, as retail competition “is not only possible, but absolutely necessary to turn the electricity industry into a vibrant value added business for all stakeholders.”

In addition, in the BIG LIE article I repeated that there is a great need to consider A Vertical Integration Conspiracy Theory for the US Judiciary (please hit link also) to provide an ordered framework with which to understand that chaotic event and process.

Finally, unlike the case the HVDC Pacific Intertie, in which “it was estimated that the people in Los Angeles saved $600,000 a day when Columbia River power began to flow south,” the same California IOUs were unable to come up with their BIG LIE. Like Uno Lamm, I understand that “’Among Americans, when the heat of combat is over, and a decision has been reached,’ he says, ‘all the bitterness disappears, and people work hard to bring the final decision to fruition in the best possible way.” That has been a central tenet in my work on the development of EWPC.

Best regards,

José Antonio Vanderhorst-Silverio, Ph.D.






EWPC is NOT the Ontario Model Either

Just as EWPC is not the UK Model, it is not the Ontario market model either. However, probably with a hidden purpose, Mr. G keeps confusing the de-regulation market model of Ontario with the EWPC market paradigm. Is that serious behavior? It seems that although he is a very intelligent and important man, Mr. G. has a very difficult time following links.

EWPC is NOT the Ontario Model Either

By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity

Copyright © 2007 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.


Dear Mr. Gould,

Thank you for your intelligent and important questions, which I will respond with care and diligence.

However, please don’t use phrases like “anyone can take you in any way seriously…,” as they don’t follow the “most important rule of the EnergyPulse media,” set by Mr. Y. So, don’t forget to read what Mr. Y said about Mr. G in the Conspiracy Theory Against Mr. X, particularly where is says: “It doesn't surprise me AT ALL that you didn't follow the link, you NEVER follow a link…” So once again follow the links below.

With much respect, please find my last response to Mr. Giegler, which could have been found by following the link, under the article Free Market and Central Planning, Under R1E2. The response was:

There is no need for simulation at all... The R1E2 concept makes the VIUs and the EWPC paradigms indistinct in term of the non-triviality of electric power systems, which is missing from IMEUC and all deregulation experiments. [this discovery is mentioned below] … The added efficiency of EWPC with respect to the VIUs paradigm comes from demand integration and the elimination of prices controls. Said in other words, the VIUs paradigm can't no longer maximize welfare for the future, as that process started back in the 70s.

Following Einstein’s (Mr. Y’s role model) quote “Everything should be made as simple as possible, but not one bit simpler,” the essential requirements of EWPC, that differ from existing de-regulation that you mentioned is “retail competition with active demand (UK had no active demand) and ultraquality transportation (UK has separate transmission and distribution and no ultraquality identified). That is the essence." as can be seen by following the link to the recent article EWPC is NOT the UK Model (referred, from here on, as the first article). It follows that to get ultraquality transportation, transmission and distribution should be tightly integrated.

However, the Ontario, Canada, paradigm as you explained on 11.16.07 under the article Distributed Architectural Renewable Energy Generation, has these characteristics: “The separation of distribution from generation, transmission and (retail if used) into a regulated monopoly on geographic boundaries should be considered an absolute requirement for competitive electrical systems.”

According to your opinion, under de-regulation and inactive loads, the separation of transmission and distribution is assumed as an absolute requirement. However, under EWPC with active loads the separation is a big mistake, as the optimization of the transportation system (that enables the optimization of the system as a whole under EWPC) does not result from the optimization of transmission plus the optimization of distribution by themselves.

The optimization of the system as a whole, can also be seen in the first article where “I wrote of the discovery that ‘To optimize the transportation system, it is required to consider total social (demand, transport, supply) welfare needs, and not just the optimization of transmission, distribution, or both, by themselves.’”

The discovery (not invention) mentioned above is the ultraquality imperative that the vertically integrated utilities (VIUs) paradigm and the EWPC paradigm have, but which Ontario, Canada and the UK models don’t. The whole VIU paradigm controlled market can be divided into two markets, one of which, the controlled transportation market retains the ultraquality imperative, by planning, operating and controlling the transportation system to keep the characteristics of the whole (both the controlled transportation market and the competitive commercial market).

The response to “Why would any retailer risk the financial investment to implement real demand control on their customers when the resulting benefits will accrue not to them or their customers, but to all connected customers including those of their competitive retailers?,” can be found in the comments to the article A Little Silicon is Necessary but NOT Sufficient (please hit the link and follow it to read them).

I like to add, that the qustion itself comes from a misunderstanding of the theory and practice of spot pricing of electricity, which may or may not have been implemented under de-regulation. Under EWPC, as an extension of Schweppe et al regulated energy marketplace, spot prices are not the result of real demand control, but forecasted prices resulting from security constraint unit commitment (generation and demand) simulations.

As I wrote yesterday (see above) all that is needed to develop a market with financial credibility is a professional market with high reliability and without price spikes (a fully functional market). By lacking those two elements, IMEUC needs fallback to government / rate-payer guarantees. Read the details in the whole article To EEI: “Let's Ban Regulation,” Starting in Ohio, to try to understand “The idea that regulation is the only paradigm that ensures generation investments is flawed.”

To understand the last comment of your post, readers are advised to read, as an example, A Paradigm Shift to EWPC (don’t forget to follow the link) to see my response to a similar complaint by Len that said “My problem with EWPC are myriad eg. it's precisely identical to every existing failed attempt at de-regulation in N. America. And it's promoter flatly refuses to answer any difficult questions about it. Questions which I have posed before, such as:…”

See also Len Ask: What Is Transportation?, 2nd Time: Ontario is Far From EWPC...

So the final boomerang question is: Is Mr. G serious about EWPC or just fooling around?


viernes, noviembre 16, 2007

To EEI: “Let's Ban Regulation,” Starting in Ohio

Should we ban regulation? YES! Go for a paradigm shift to “moving energy” with the EWPC winning market architecture and design breakthrough. The next opportunity then is in Ohio. Now we can agree with EEI to let the market decide for the bulb, but just after they agree to ban regulation.

To EEI: “Let’s Ban Regulation,” Starting in Ohio


By José Antonio Vanderhorst-Silverio, Ph.D.

Systemic Consultant: Electricity

Copyright © 2007 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

This is intended as the practice article that complements “Let the Market Decide” in Ohio. For all practical purposes deregulation is already banned. Now we will show that regulation (with or without independent generators) should also be banned, to let the market decide.

Should we ban the bulb? No conclusive evidence can be found, in the above posts, between banning the bulb and letting the market decide (see Should We Ban the Bulb?, If not in EnergyPulse). The evidence is found in regulation, where incumbent utilities and generators have perverse incentives against banning the bulb. This may be the same as saying that the Edison Electric Institute (EEI) has perverse incentives under regulation against banning the bulb, since utilities and generators have the political power in the EEI.

For example, banning the bulb of 60 watts to be replaced with 15 watts CFL’s reduces lighting demand to an incredible 25%. Corresponding retail sales are reduced and profits too. The real problem under regulation, however, is with the precedence it creates to politicians that will have the door wide open to ban other investments in energy efficiency devices once the bulb is banned.

See now how the precedence also affects today’s generators. Utilities enter long term contracts with generators, negotiated under the obsolete business model of winning rate cases to regulators. Those contracts once negotiated extend utilities monopoly power to generation investments for the long term. So generators incentives are also perverse under regulation to avoid competition.

The obsolete business model of winning rate cases to the regulator will finally end, giving way to new innovative business models, based on new technologies to shift the industry and make customers better off, while letting investors earned enough profits under a stable environment. “These new technologies provide the potential for modernizing the whole productive structure and for raising the general level of productivity and quality to a higher plateau,” as Carlota Perez discovered from the historic impact of 4 previous technological revolutions.

In his Speaker Notes at the World Economic Forum, in May 2007, Michael Power writes a clear message to characterize the old business and the new business we are entering in the fifth technological revolution: "Electricity consumers becoming part-time producers – “pro-sumers” – and utilities shifting from “energy-making business” to “energy-moving business”… analogous to banks or telecom firms."

Since utilities and generators are clearly in the old "energy-making business," the perverse incentives come from regulation. Since one of its essential elements is active demand, EWPC is about the "energy moving business," where competition, in wholesale and retail, among (without incumbent) retailers and generators, depends of satisfying end customers needs for low cost and/or added value of service plans, with economic transactions about “moving energy.”

The idea that regulation is the only paradigm that ensures generation investments is flawed. As can be seen in EWPC is NOT the UK Model, “Ultraquality transportation is the key requirement to develop A Futures Market under EWPC (hit link please), which the UK model lacks. That is why the UK model, as you (Adrian Lloyd) say “has failed to deliver adequate investment in new generation…” It has also failed to deliver “demand side participation,” because it only considered the 4 possible End-States at the outset.”

What that means in practical terms is that EWPC also ensures generation investments. However, as EWPC will also allow the replacement of financial capital with production capital as the industry becomes one again a predictable environment, which is now no longer possible with regulation, it is now advisable to ban deregulation. A simple explanation can be found in the practical message We Need Demand Elasticity that also reaffirms EWPC as the market winning paradigm, with high system reliability and without price spikes.

Hence, to help “raising the general level of productivity and quality to a higher plateau,” EEI leadership should tell their membership Jack's Welch’s “… story about a retreat he had with the managers of the nuclear engineering group. This was after the 1979 meltdown at the Three Mile Island nuclear-power station, yet their business plans still assumed that they would continue to sell more nuclear-plants in the United States. He said to them, ‘I can’t imagine we’re ever going to sell another nuclear-power plant, so go back and make this plan work without new reactors.’ They went back and developed a plan based on selling services to existing reactors.” See “Crafting a Message that Sticks,” in the Nov. 2007, McKinsey Quarterly.

The suggestion to EEI leadership is that EWPC strategy may transform the industry to satisfy even the worst case "environmental" scenario of zero net additions of generation, through heavy investments in energy efficiency to complement coal stations retirements. I also suggest to EEI leadership the need to reflect on what happen with the auto industry and better yet into that of the Divine Dispensation of Electric Markets is Gone, which in brief says: “As a result of David killing Goliath, US Congress has the great opportunity to introduce EWPC to the USA. In addition, the state of Ohio has the first opportunity to reap the benefits of retail competition, by developing 2GRs and integrating active demand to power system planning, operation and control. The Dominican Republic has one of the best positions to implement EWPC, but needs to place the Very Short Electricity Law in the waste basket.”

Should we ban regulation? YES! Go for a paradigm shift to “moving energy” with the EWPC winning market architecture and design breakthrough. The next opportunity then is in Ohio. Now we can agree with EEI to let the market decide for the bulb, but just after they agree to ban regulation.


Una Crítica Eléctrica al Discurso Presidencial

Una Crítica Eléctrica al Discurso Presidencial

Por José Antonio Vanderhorst Silverio, Ph.D.
Consultor Sistémico: Electricidad

16 de noviembre, 2007.

Esta crítica es una crítica constructiva del discurso del Presidente Fernández en lo que respecta al sector eléctrico. Ante los incesantes aumentos del precio del petróleo, aparece de nuevo la eficiencia energética como uno de los elementos vitales. Con la medida aparecen incentivos a la importación libre de impuestos de equipos eficientes. Una dificultad aparente al éxito de la medida es el acceso al financiamiento.

La dificultad es la siguiente: por un lado, las empresas que tienen acceso a financiamiento y disponen de un caso de negocios para invertir en eficiencia energética pueden haberlo hecho ya; por el otro, las empresas restantes que no tienen acceso a financiamiento y que pueden tener un caso de negocios si tuvieren dicho acceso, no invertirán. Una sugerencia es medir esta variable por medio de una encuesta con la mayor brevedad, mucho antes de la campaña de relaciones públicas que se está gestando.

La situación anterior se da mucho más en las PYMES, pero también se da en la mayoría de los hogares. Hace por tanto falta un medio que facilite el acceso a financiamiento a la eficiencia energética.

El impacto de una vigorosa y eficaz campaña de eficiencia energética aparenta estar en contra de la industria eléctrica tal y como está estructurada, pudiendo dicha campaña hasta ser torpedeada por los grandes intereses. Una reducción del orden del 15 al 25 por ciento de la demanda en los medidores del sector eléctrico podría afectar aun más los planes de expansión actualmente previstos con el llamado Plan Integral del Sector Eléctrico. El problema estructural es que la generación está posicionada en las mentes de los que toman decisiones y en el público en general como el elemento más relevante. Este es el paradigma de los “negocios que producen energía.”

Adicionalmente, el titular del periódico El día, del 15 de noviembre, es “EdeEste gestiona venta de acciones al Gobierno: El socio privado busca por esa vía dejar sin efecto las demandas que ha hecho.” Si las distribuidoras fuesen privadas estarían quebradas y su valor sería solamente aquel de rescate. Pero como son mixtas, la situación es totalmente distinta.

Ambos problemas, el de la falta de financiamiento para la eficiencia energética, y el del impacto en el sector eléctrico de un plan exitoso de eficiencia energética, son parte del problema estructural del sector eléctrico.

Haciendo un cambio estructural hacia la Electricidad Sin Control de Precios (EWPC, por sus siglas en Inglés), la situación cambia totalmente. El cambio de paradigma es de una industria en que los consumidores pueden ser productores a tiempo parcial, algo en que los dominicanos le llevamos la delantera a muchos países.

Lo que nos hace falta es que los consumidores participen del sistema interconectado, haciendo que la filosofía del sector eléctrico pase de “negocios que producen energía” a “negocios que mueven energía,” análogo a la banca o las telecomunicaciones. Es así como el impacto de las nuevas tecnologías de información, telecomunicación y control transformará los sectores eléctricos mundiales.

El centro en la EWPC lo ocupa el mercado centralizado de transporte integrado, que es la entidad que permite que la energía se mueva en la cadena de valor del mercado libre (sin control de precios) de generación, comercialización, cliente, bajo una regulación prudencial. Este nuevo modelo, de dos mercados, uno controlado y otro libre, que transformará la industria mundial, es el modelo hacia el cual las circunstancias nos está empujando desde hace más de una década para que seamos los pioneros, como consta en el trabajo “La Necesidad de una Política Integral de Electricidad para la República Dominicana,” de julio de 1996 y que ha emergido en los últimos dos años como la EWPC.

Así, la mayor parte del derroche de gasolina, gasoil, y ahora gas, en instalaciones excesivamente pequeñas e ineficientes será desplazado por generadores con ciclo combinados que aprovechen el calor que también se desperdicia a nivel industrial, pero que también se derrocha en las grandes centrales.

El valor de las distribuidoras comercializadoras (D/C) actuales se eleva substancialmente con el cambio estructural a la ESCP, ya que su efecto anti-sistema (el valor de la “D/C” es menor que la suma del valor de “D” y el valor de la “C”) desaparece. El valor de la “D” es mayor porque pasará a ser parte integral del sistema de transporte, el cual puede ser sujeto de un concurso internacional para atraer a las empresas transportistas de clase mundial a fin de implementar un sistema de transporte de ultracalidad.

El valor de la “C” está en su potencial de innovación, incluyendo su capacidad de integrar la demanda a la planificación del sistema interconectado. Son estas comercializadoras al detalle las que podrán entrar en convenios a largo plazo con los clientes para financiar las inversiones en eficiencia energética.

Ese transporte de ultracalidad es la clave para desarrollar un mercado de futuros de electricidad, que a su vez asegura las inversiones en generación y el desarrollo de las comercializadoras privadas, las cuales se reforzarán mutuamente generando un círculo virtuoso. Nunca hubo un mejor momento para crear valor en la República Dominicana a través de las innovaciones latentes de la EWPC como uno de los principales candidatos de su principal marca-país.

Los conceptos de la EWPC ocupan desde hace unas semanas los 5 primeros lugares del sitio web http://www.energyblogs.com/ del Energy Central Network, en el cual se dan cita los principales expertos internacionales del sector eléctrico.

jueves, noviembre 15, 2007

EWPC is NOT the UK Model

In EWPC there are 8 possible End-State (UK was developed on 4), only one of which is the generic market model paradigm: retail competition with active demand (UK had no active demand) and ultraquality transportation (UK has separate transmission and distribution and no ultraquality identified). That is the essence."

EWPC is NOT the UK Model

By José Antonio Vanderhorst-Silverio, Ph.D.

Systemic Consultant: Electricity

Copyright © 2007 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. Please write to javs@ieee.org to contact the author for any kind of engagement.

Adrian: thanks for your comments. I hope you get to see this very brief response that goes right to the essence.

If you didn't have the time to read the "Synthesis Proposal Agreement of EWPC," you will see that EWPC it is NOT the UK model, but a new market architecture and design breakthrough paradigm that emerged in the last two years. This is the summary of my discovery as simple, but not simpler, as it can be said:

There are "8 possible End-State (UK was developed on 4), only one of which is the generic market model paradigm: retail competition with active demand (UK had no active demand) and ultraquality transportation (UK has separate transmission and distribution and no ultraquality identified). That is the essence."

Ultraquality transportation is the key requirement to develop A Futures Market under EWPC (hit link please), which the UK model lacks. That is why the UK model, as you say “has failed to deliver adequate investment in new generation…” It has also failed to deliver “demand side participation,” because it only considered the 4 possible End-States at the outset.

Please don’t confuse EWPC with the UK model. EWPC is an extension of Fred Schweppe et al Spot Pricing of Electricity. Under EWPC, system reliability is first and foremost. Instead of first generation (and incumbent) retailers, as the UK has, EWPC has Second Generation Retailer - 2GR (no incumbents) that participate in long run power system planning to integrate demand.

The important example of the Dominican Republic is not that of the vegetables, which we certainly have. I have tried hard, as Len can attest, to have Dominican like electric retailers. The example is that of customer differentiation, giving the opportunity to integrate demand and to practice true spot pricing of electricity. The opportunity is to integrate demand into power system planning, operation and control. It is about the opportunities available on demand side risk management.

In Free Market and Central Planning, Under R1E2, I wrote of the discovery that “To optimize the transportation system, it is required to consider total social (demand, transport, supply) welfare needs, and not just the optimization of transmission, distribution, or both, by themselves.” I used to say that electricity was not a commodity (I did in 1995 at an IEEE meeting). But once you have ultraquality transportation in the least cost controlled grid, electricity becomes the best commodity in an open market.


A New Response to Adrian Lloyd

Adrian Lloyd’s is happy to listen. His opinions, which he may change, as he is a well versed and important person, are responded below.

This is how EWPC completes the answers Adrian Lloyd comments:

1) Be against isolated distributed generation. Mixed feelings!

For the 3rd time, “… Existing national power grids won't disappear.

”In addition, many customers can remain integrated to the grid without
being interconnected. That is how most customers operate their distributed
resources in the Dominican Republic, with which they will be able to provide
Demand Response services to the grid.

2) Suggest that the grid is for one way traffic from central station to customers. Bad!

Supply side only risk management needs generating reserves (sometimes in the order of 35% of capacity) with some of them to operate a few hours in the year to service customers reliably. One way traffic used to be the way with inactive demand as an externality. Active demand should be integrated to power system planning, operation and control to increase power industry efficiency.

Also read under the article EWPC As The New Internet my response to Malcolm "Problem is that millions of distributed generators will results in no income for the people that supply and operate the grid. No money no maintenance, no maintenance no grid and the scheme falls apart."

3) Saying that the power system should be operated in the Normal Operating State. Good!

That is satisfied with the essential requirement of transportation ultraquality under EWPC. Read the article Synthesis Proposal Agreement of EWPC please.

4) Power quality needs to be solved. Good!

Same response as in item 3.

5) There is problem with variable generation. Good!

Read the article Integrating Uncertain Generation to the Grid posted above please.

6) Wants to know: Who pays? Consider all the costs. No more subsidies. Good!

Leave that to the open market value chain and not to the Government or the utilities. I like to stress from the above article Financing and Developing Uncertain Generation, that the question “Who pays?” is always answered by those that control the political process, as debates get locked, and to get them unlocked the hierarchical force of the authorities is employed. Please read also Slicing the Last of the Regulated Monopolies to complete the response.

Reference and context: Distributed Architectural Renewable Energy Generation, by Brian Braginton-Smith, Executive Director, Sustainable Resources Group.


Financing and Developing Uncertain Generation

Another partial response to respond to Adrian Lloyd in this upgrade to Nov. 15, 2007, most viewed article. EWPC is the answer to the difficult question on how to finance and develop uncertain generation projects for all stakeholders to win. The underlying problem is found on the successive extensions of the inefficient price controls of the vertically integrated utilities paradigm that leads to simple and stupid behavior.

Financing and Developing Uncertain Generation

By José Antonio Vanderhorst-Silverio, Ph.D.

Systemic Consultant: Electricity

Copyright © 2007 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. Please write to javs@ieee.org to contact the author for any kind of engagement.

In the article Optimize Transmission Assets for New Wind Farms but Who Pays?, Mr. HIMADRI BANERJI brings a difficult question on how to finance and develop wind [changed to Uncertain Generation without any loss of generality] projects. The problem, however, comes from the lesson that Dee Hock, CEO Emeritus VISA International, gave us: “Simple, clear purpose and principles give rise to complex and intelligent behavior. Complex rules and regulations give rise to simple and stupid behavior.”

The problem Mr. Banerji is bringing has its origin in the vertically integrated utilities (VIUs) paradigm, whose incremental extensions give rise to very complex rules and regulations that result in simple and stupid behavior. It is well known that price controls are inefficient and lack transparency. Lack of transparency is one side of a coin, the other side being corruption. So the question “Who pays?” is always answered by those that control the political process, as debates get locked, and to get them unlocked the hierarchical force of the authorities is employed. Please read Slicing the Last of the Regulated Monopolies.

Electricity Without Price Controls is a market architecture and design paradigm shift away from the VIUs paradigm based on “simple, clear purpose and principles,” as can be seen in the article Synthesis Proposal Agreement of EWPC. Under EWPC, both questions – who should pay and how to develop an optimal transportation (T&D) grid, as many RR projects are to be connected to distribution lines, are answered without getting into debates.

Financing and Developing Uncertain Generation . . . continued . . .

Optimal transportation should be the result of expansion planning where all potential RR projects (see also Integrating Uncertain Generation to the Grid ) are taken into consideration at the same time for a give planning horizon. Such expansion planning is to be done in the environment suggested in the article Free Market and Central Planning, Under R1E2.

With a transportation utility that is financed by tolls the problem of “Who Pays?” is solved. A simple explanation of how to optimize the transportation system is given in the context of the article Demand Integration Under EWPC, as follows:

Generators and Second Generator Retailers interchange with the System Engineer their proposed investments and other key information to allow the System Engineer develop the transportation utility expansion plans for the long run, in order to optimize the future grid by minimizing total system costs (not just the transportation costs) in order for 2GRs to enable a potential maximum social welfare in the national economic context, and not just the financial viewpoint of the utility as the VIUs paradigm calls for.

For more details please read other articles in the Energy Central Network EWPC Blog.




Integrating Uncertain Generation to the Grid

As a partial response to Adrain Lloyd, the article Wind Integration: An Emerging Paradigm, can be paraphrased almost entirely by interchanging “wind” with “UG (uncertain generation),” from the second paragraph on, as follows:

After reading the article by Sandy Smith, Communications Coordinator, Utility Wind Integration Group, some of its references, the articles by Roger Arnold, and all of the really valuable comments on all 4 articles, I like to select what J. Charles Smith wrote in the article Winds of Change as a summary message: “For many of us, this has created the necessity of a fundamental realignment in our thinking. We must understand all the implications of this and go about the business of helping to create the future.”

The following are my generative dialogue suggestions (I am not my opinion) for a fundamental realignment in our thinking:

1) A carbon tax should be negotiated on a global setting, i.e. the World Trade Organization. Each country that does not apply the negotiated tax, will then free ride the global system.

2) Most of the discussions are indirectly supporting generation as a monopoly. Generation competition is not only possible, but absolutely necessary to go forward.

3) UG variability is an important consideration, but its uncertainty is even more important. Power system systemic risk management of system failure (system security) responds to uncertainty. Supply side management of systemic risk of system failure should be complemented by demand side management of systemic risk of system failure. See An Alternative Business Case for Demand Response and a Dominican strategy.

4) UG best performance will come from balancing areas, in which generators are widely dispersed and mostly located in the distribution system. Open transmission access is insufficient to integrate UG generation in the state of the art.

5) There is thus a need for full transportation access. Transmission and distribution reintegration requires dismantling native loads, which changes the concept of a utility to wires only utility. See NERC Compliance and Power Sector Structure.

6) Fully functional and competitive wholesale and retail markets can then allow the development of the resources of the demand side. See We Need 2GRs as the Forecast is Always Wrong.

All of the above implies an emerging EWPC is Pragmatics' Winning Market Architecture and Design. [Since that time EWPC emerged as the winning market in the first phase of competition.]

To go forward to EWPC as the End-State of the electricity industry for quite some time, I made a presentation at Carnegie Mellon University that can be found on the Grupo Millennium Hispaniola Blog, as A Generative Dialogue to Reach the End-State of the Power Industry.


miércoles, noviembre 14, 2007

Storage is Ready to Cross the Chasm

As experienced in the Dominican Republic, the disruptive technology of distributed storage has been ready for prime time for quite some time, lacking a shift to the EWPC paradigm. The reason it has not crossed the Chasm is because of the “native load” barrier that unnecessarily extends the life of the obsolete vertically integrated utilities paradigm.

Storage is Ready to Cross the Chasm

By José Antonio Vanderhorst-Silverio, Ph.D.

Systemic Consultant: Electricity

Copyright © 2007 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

A very important invention is announced in the article New Energy Storage Options Needed! The invention, however, is not required to recognize distributed storage as an innovation that is ready to cross the Chasm of Geoffrey Moore. Al that is needed is to break the "native load" barrier by making a paradigm shift from the vertically integrated utilities to the EWPC. Once the shift is done, that invention will increase its odds substantially, as they will no longer be "overlooked - and especially by the government," as David Austin suggests with his supply side mindset. We will now see that distributed storage has been ready for quite some time.

Jack Ellis has tried to provide one example against the feasibility of distributed storage (another case of distributed resources) using an EITHER/OR argument. My response to Malcolm Rawlingson applies also in this case as will see below. The response was The BOTH/AND Assumption of EWPC (hit link please if not under the EnergyPulse here and below for more details), which in brief says: “By using both the smart grid and distributed resources, EWPC will produce reliable electricity at affordable costs, just like Toyota does with cars.”

In that same response, I also mentioned that “The BOTH/AND assumption is based on the quote which I posted above as The "Continuity" Scenario is Gone … about “The future of electric power,” that in particular says: “Existing national power grids won't disappear. They will operate like the Internet [please read EWPC As The New Internet], as part of a complex web through which people will supply electricity, by uploading, as well as downloading it."

In the [seminal] EWPC article An Alternative Business Case for Demand Response, I wrote:

The business case of Demand Response (DR) [a key disruptive technology] is enhanced under free markets, innovation, and probabilistic (risk) mindsets. DR is poised to be the demand side risk management tool to complement the traditional "LOLP" supply side risk management tool. There are two sides on the DR coin. On one side, system crashes are mitigated by a least cost mix of supply and demand risk management tools that may be applied in time and space. On the other, DR is the key to the segmentation of customers supply security (a kind of insurance). Because of its fine grain nature, DR can help mitigate delays (intended or not) of lumpy investments in generation, transmission, and distribution.

At this point, I want to highlight “probabilistic (risk) mindsets,” to explain the importance of distributed storage investment by customers that can be exploited as demand side risk management tools, in time and space.

This is part of what Mr. Ellis wrote: “Storage is an issue with distributed generation, but so is cost, and no reasonable level of incentives can erase the gap between 8 cent grid power and 25 cent distributed power.”

Mr. Ellis’ opinion seems to be correct with a long run analysis of EITHER/OR isolated service and a under deterministic supply side mindset. Under probabilistic customer oriented perspective and demand integration it is wrong as follows:

This is what we have experienced in the Dominican Republic with an unreliable utility electric service. Customers invest in accordance with their perceptions in battery inverters. The proof is in the pudding, as one company has sold so many of these inverters, that it designed a model specifically for the country. Those customers use the grid when it is available and use the inverters, which connect automatically, when the grid isn’t available. For every customer there is a perceived optimal combination (a sign of differentiation) of grid vs. storage investment that results in expected minimum costs. This was one of my intuitive insights in 1996 for what is now EWPC, which intelligent and important people in first world countries couldn’t probably imagine (until now).

Using Jack Ellis’ numbers, if the probability of service of the utility in a neighborhood is 90% (it varies widely from circuit to circuit in my country), and the unreliable service is priced at 8 cents (it is much higher in small countries) and 25 distributed, then the (expected) cost to the customer in the long run is equal to:

8 x 0.9 + 25 x 0.1 = 9.7 cents.

The gap is reduced from 17 to 1.7 cents. That is how the gap is almost erased (no need to be erased, as it only depends on customers perception of value), being one of the insights that underlies a Dominican strategy, which was published in the May-June 2006 issue of the IEEE Power&Energy Magazine.

In my [seminal] article mentioned above I wrote: “Professor Schweppe "envisioned a world of customer-based electrical generation and storage," which has been happening in the Dominican Republic, for quite some time, missing only the Demand Response System and a truly competitive retail deregulation to fulfilled the dream of a country without blackouts.”

There are then strong reasons for Disintegrating the Grid and Retail Worlds to break the “native load” barrier that keeps the obsolete vertically integrated utilities paradigm in place. Those same reasons suggest to “Let the Market Decide” in Ohio in order to Let EWPC Come to Fruition.

In sum, as experienced in the Dominican Republic, the disruptive technology of distributed storage has been ready for prime time for quite some time, lacking a shift to the EWPC paradigm. The reason it has not crossed the Geoffrey Moore’s Chasm is because of the “native load” barrier that unnecessarily extends the obsolete vertically integrated utilities paradigm.

Reference and context: Distributed Architectural Renewable Energy Generation, by Brian Braginton-Smith, Executive Director, Sustainable Resources Group.