sábado, enero 13, 2007

GMH Ayuda a Evitar que Sancochen la Modificación a la LGE

13 de enero, 2007. Del frente de guerra local.

Mientras la ESCP gana la guerra mundial de los mercados eléctricos, como se puede ver en la nota ESCP Gana Guerra Mundial de los Mercados Eléctricos, durante el día de ayer, 12 de enero de 2006, se escenificaron cruentas luchas en el frente de batalla local, entre las fuerzas de leales a la ESCP y los que querían sancochar modificación de la LGE. Para detalles de las acciones del GMH en el frente internacional, pueden ver la nota en inglés Memoria Reciente del Frente de Guerra.

Los ataques, dirigidos por Rolando Reyes y Bernardo Castellanos, aparentemente de las fuerzas del gobierno y de la contrarreforma ahora leales a la CDEEE, respectivamente, recibieron gran resistencia tanto del propulsor de la ESCP a ambos ataques, como de las fuerzas amigas al GMH a los ataque del segundo.

Después de un cañonazo personal de Bernardo al propulsor de la ESCP, para desconcertar al GMH, los amigos del GMH, primero Rhadamés García, y luego Américo Sánchez Díaz, lanzaron fuertes cohetes teledirigidos a las posiciones que estaban destinadas a favorecer el intento de sancochar la modificación de la LGE en la Cámara de Diputados.

El GMH agradece el apoyo brindado por el FORO ELECTRICO en una reunión previa a los enfrentamientos. Milton Tejeda hizo aportes importantes y oportunos tanto en conseguir copia electrónica de la modificación de la LGE, como en la redacción del comunicado, que a pesar de no ser difundido a la prensa, entendemos que llenó plenamente su cometido. Frank Castillo y César Félix también colaboraron en defensa de la ESCP. Puede que en los créditos estemos dejando importantes aportes de otros que también los merecen.

Una fuente vinculada al propio Presidente Fernández, que pidió no ser identificada, envió dos mensajes: el primero, para indicar que estaban al tanto de los intercambios; y el segundo, para congratular el esfuerzo, que había resultado en la extensión de la legislatura y el envío a comisión del proyecto de modificación de la LGE.

© 2007, José Antonio Vanderhorst Silverio, Ph.D.

ESCP Gana Guerra Mundial de los Mercados Eléctricos

EnergyPulse, 13 de enero 2007. Del frente de guerra internacional.

El pasado 11 de enero de 2007, terminó la guerra de los mercados eléctricos con una victoria de electricidad sin control de precios al cliente. Es una guerra que se inició en los años 80 dirigida por Fred C. Schweppe desde MIT y que perdió vigencia con su muerte en 1988 hasta finales del año 2005 cuando el GMH reinició los combates. En la última semana se desarrollaron las dos batallas finales de la guerra mundial de los mercados eléctricos con menor intensidad que la de la primera batalla “Jugando con Fuego,” en la cual hubo otros enfrentamiento adicionales.

Como se había reportado, el frente de batalla se movió primero al terreno debajo del artículo The Potential for Residential Demand Response on Transmission and Distribution Assets. La audiencia de Internet lo ha mirado 1,341 veces y consta de 15 comentarios a las 11:36 a.m. de esta fecha. Las escaramuzas fueron libradas por el Dr. José Antonio Vanderhorst Silverio, Ph.D, de parte de la ESCP, y por los expertos energéticos Roger Arnold y Len Gould. El ataque de Arnold había sido ya repelido con una sola nota. Los insistentes ataques de Gould, en ambos frentes de batalla, en defensa de su switchboard (central de conmutación) IMEUC y en contra de los precios marginales locacionales (LMP, por sus siglas en inglés) fueron repelidos.

A pesar de la estrategia de los que se encontraron perdidos, para restringir los enfrentamientos debajo del artículo Playing with Fire – Part II al tema al gas natural y así no pelear la guerra de los mercados eléctricos a la luz pública, insistieron en que la guerra siguiera debajo del artículo Playing with Fire - The 10 Tcf/year Supply Gap -- Part I, que ya había cumplido su cometido.

No obstante, Vanderhorst-Silverio colocó una nota debajo de Playing with Fire – Part II, para asegurar que la Guerra había terminado a favor de la ESCP. James Carson ignoró ese ataque y al que le siguió que fue más potente y demostró sin lugar a dudas que la guerra podía seguir. Carson regresó al primer frente con nuevos ataques que fueron repelidos, uno de los cuales sirvió para abrir la batalla final en el segundo frente y ganar la guerra. Las acciones de Banks que defiende a rajatabla el Modelo I, pasaron de ser cada vez menos agresivas a ser respetuosas a la emergente ESCP. Esta segunda y posiblemente última batalla “jugando con fuego,” se libró ante una audiencia de Internet que lo ha mirado 4,516 veces y que consta de 64 comentarios a las 1:00 p.m. de esta fecha.

El último ataque de la ESCP fue precedido por la presentación de los escenarios “jugando con fuego” y “apagando el fuego,” que representan los caminos del Modelo 2 a ser evitado y el de la ESCP a ser promovido, respectivamente. Rozenstock lo consideró como un ataque injusto, en contra de los intereses creados en la industria eléctrica, que no tenía sentido, argumentando que el sacrificio debería ser compartido con otros sectores de la economía. Los lectores no deben dejar de leer la nota A Generative Dialogue Without Illusions Part 20, que infiere la estocada mortal a los intereses creados y donde queda bien claro que el único sacrificio lo han experimentado los clientes más pequeños en muchas partes del mundo, debido a la extensión por más de una década del obsoleto negocio de las distribuidoras comercializadoras basado en ganarle casos tarifarios a los reguladores.

Podemos concluir que el Modelo #3, la electricidad sin control de precios (ESCP), ha ganado la guerra. Los mercados contendores Modelo #1, el viejo mercado de integración vertical, y Modelo #2, la liberación defectuosa de mercado, basada en el acceso abierto a transmisión y la carga “nativa,” han resultado perdedores. El monopolio de comercialización de las distribuidoras a los clientes regulados tiene sus días contados. Centremos todo el esfuerzo en el proceso de transición hacia la ESCP.

© 2007, José Antonio Vanderhorst-Silverio, Ph.D.

Memoria Reciente del Frente de Guerra

Para ver la memoria de los ataques y defensas del GMH, hasta las 1:41 p.m. del 13 de enero de 2007, antes las embestidas de los contrarios, pueden ver las todas las acciones debajo de cada frente de batalla o pueden ver las últimas acciones libradas por el GMH en las notas publicadas en la Bitácora Digital:

Frente de batalla debajo del artículo The Potential for Residential Demand Response on Transmission and Distribution Assets:

Demand Response Under EWPC Part 5

Demand Response Under EWPC Part 4

Demand Response Under EWPC Part 3

Demand Response Under EWPC Part 2

Frente de batalla debajo del artículo Playing with Fire – Part II:

A Generative Dialogue Without Illusions Part 20

A Generative Dialogue Without Illusions Part 19

A Generative Dialogue Without Illusions Part 18

A Generative Dialogue Without Illusions Part 18

A Generative Dialogue Without Illusions Part 17

A Generative Dialogue Without Illusions Part 16

A Generative Dialogue Without Illusions Part 15

A Generative Dialogue Without Illusions Part 14

A Generative Dialogue Without Illusions Part 13

A Generative Dialogue Without Illusions Part 12

A Generative Dialogue Without Illusions Part 11

A Generative Dialogue Without Illusions Part 10

Demand Response Under EWPC Part 5

On January 11th, 2006, I posted the following message under the article The Potential for Residential Demand Response on Transmission and Distribution Assets to respond to Len Gould:

AMR or whatever subsystem it evolves to also comes in different flavors. Retail business design innovations depend on the whole customer interface.

Len had Gould said:

Given that every customer will still need a meter anyway, AMR is going to happen regardless of market design, and bills still need to be transmitted and collected in any system; THEN I fail to see how IMEUC might pose any impediment to your retailers business design innovations. I proposed the market manager making longterm contracts for eg. baseload etc. only because I don't think many private "retailers" will, but see no reason to bar them from doing so and using the metering system to verify their transactions.

Demand Response Under EWPC Part 4

On January 11th, 2006, I posted the following message under the article The Potential for Residential Demand Response on Transmission and Distribution Assets:

Len, if every customer is not allowed to participate, then is not a switchboard. That is a centralized market. I see the problem in the central market.

The retailer might purchase part of his long run needs by contract with a plurality of suppliers - generators - and the remainder from the central spot market. The innovations come from competition not by imposition.

The customer contracts with the retailer not the provider. Should a retailer enter into a contract regardless of the provider’s price, its days are counted under competition. The IMEUC is a metering monopoly that is a barrier for retailer’s business design innovations.

A Generative Dialogue Without Illusions Part 20

On January 11th, 2006, I posted the following message under the article Playing with Fire – Part II:

Thanks Mr. Rosenstock for your useful response that allows me to explain, as you will see, why my suggestion makes a lot of sense.

As a promoter of a generative dialogue, I also enjoy the free exchanges of ideas, especially to learn about what has been emerging for electricity customers since the 80's, when Fred C. Schweppe led the development of Spot Pricing of Electricity at MIT.

Faulty deregulation - Model 2 – overextended the useful life of the utility business model – how to win cases to the regulator - and fragmented the transportation system, by placing a tough barrier to Schweppes’s homeostatic utility control, as is explained in the post A Generative Dialogue Without Illusions Part 7. The so called “native” load is a barrier to the development of the resources on the demand side. That is the main reason of the decade old debate, as those resources remain mostly undeveloped.

Hence, there will be no such sacrifice for those vested interests, as they have more that a decade of advantage. The sacrificed have been the little guys, not just in the U.S., but all over the world. “Deregulation, as explained in 2001 was designed as a scam. Donella Meadows got it very close to its essence in the article Restructuring and Faith in the Market. She said:

…electricity restructuring is not being driven by the goal of reducing residential rates. The drivers are technology and industry. New ways of making electricity, such as combined-cycle natural gas generators, and soon fuel cells, allow industrial users to produce their own power at lower cost and with less pollution. One by one they are slipping off the grid, leaving the utilities, with their huge, outmoded, unpaid-for power plants, in a panic.

To save themselves, the power companies meet in back rooms with politicians. They must accomplish three things. First, they must allow big customers to lock in low rates, so they will stay on the grid. Second, they must pay off the debt for their dinosaur plants. Third, they must sell the deal to the public by promising lower rates.

The only way to pull off this miracle is with a public bail-out, called "stranded costs" in the back rooms. Stranded cost payments mean that your electric bill will actually be higher, but a chunk of it will be hidden in your tax bill. This maneuver has nothing to do with a free market. It is perverse socialism. Prop up a dying industry by forcing the people to pay for bad investments. Order utilities to cut rates for awhile to lull taxpayers. Then let the people shop for power in competition with the big guys. That's where the market will come in, but markets aren't kind to little players competing against big ones.


To further justify immediate action, I repeat what I said on 10.3.06, under the article Divorcing Electricity Sales from Profits Creates Win-Win for Utilities and Customers:

I suggest reading what Walter Wriston, chairman of Citicorp said in 1981 about the rights of inherited markets (see Megatrends: ten new directions transforming our lives, by John Naisbitt). That was the lesson of the railroads - a very capital intensive business that didn’t know it was on the business of transportation.

Under EWPC, retail business design innovators will be on the business of electric energy service - light, heat, conditioned air, etc. - which is right after the customer end-use devices. Vested interest should start learning that they will be like the railroads very soon, as EWPC – the wining market model - gets developed and implemented.

© 2007, José Antonio Vanderhorst Silverio, Ph.D.

A Generative Dialogue Without Illusions Part 19

On January 11th, 2006, I posted the following message under the article Playing with Fire – Part II:

Steven has given some of the elements to be considered in a scenario - named playing with fire - centered on Model 2 to protect vested interest in electric power. I think it will be a plausible scenario to be avoided. Environmental pressures are denied; holocaust is an issue, etc.

Another scenario based on EWPC should be written, whose elements are in Part I and II of Playing with Fire. The EWPC for the customer scenario - named putting out the fire - should be promoted. The resources of the demand side, including energy efficiency, demand response, CHP-waste heat heating , hybrid cars and other distributed resources, should have the same opportunities as central stations by taking down the "native" load barrier. Environmental pressures are acepted; holocaust is not an issue, etc.

A Generative Dialogue Without Illusions Part 18

On January 9th, 2006, I posted the following message under the article Playing with Fire – Part II:

Part 2 of 2.

Locational “marginal” prices come in many flavors. This is what the paper mentioned by Len says “LMP is still a new model and only time will definitively demonstrate its successes or failures. LMP will probably never be a perfect solution for all wholesale market concerns. It has its limitations. At this time, LMP is largely a supply-side focused approach to organized markets. Integration of demand-side factors to such issues as transmission congestion or generation shortages remains to be considered.

There is another flavor in the article Demand Response and the FERC Standard Market Design NOPR:


Demand Response, Locational Marginal Pricing, and Centralized Markets

In the proposed Standard Market Design (SMD), the key elements that would encourage demand response are locational marginal pricing (LMP) and the establishment of centralized day-ahead and real-time markets for energy, ancillary services, and transmission services. LMP and centralized markets provide efficient wholesale price signals to which LSEs and customers might respond if retail market designs allow such response. Over the longer term, LMP and centralized markets will lead to more efficient investment in generation, transmission and demand response technology, resulting in lower costs and ultimately lower prices to
consumers.

LMP will allow demand response to play a role in relieving transmission constraints, both in the short and the long term, by communicating the cost of electricity service to customers. Locational marginal prices are the only prices that are consistent with efficient system dispatch, and they are the only prices that induce self-interested loads to consume efficient quantities of power and profit-maximizing generators to produce efficient quantities of power.

There is still another flavor under EWPC, which will be much better than what was though for the SMD, as the system engineering institution satisfies the ultraquality requirements. Retailers will concentrate no on lower prices to customers, but on lower costs and/or higher value, as business designs innovations will aim to that. Most of the customers will – eventually - have lower prices. However, customers that are receiving energy cross-subsidies and/or hidden supply security cross-subsidies might have higher prices later on.

A Generative Dialogue Without Illusions Part 18

On January 9th, 2006, I posted the following message under the article Playing with Fire – Part II:

Part 2 of 2.

Locational “marginal” prices come in many flavors. This is what the paper mentioned by Len says “LMP is still a new model and only time will definitively demonstrate its successes or failures. LMP will probably never be a perfect solution for all wholesale market concerns. It has its limitations. At this time, LMP is largely a supply-side focused approach to organized markets. Integration of demand-side factors to such issues as transmission congestion or generation shortages remains to be considered.

There is another flavor in the article Demand Response and the FERC Standard Market Design NOPR:


Demand Response, Locational Marginal Pricing, and Centralized Markets

In the proposed Standard Market Design (SMD), the key elements that would encourage demand response are locational marginal pricing (LMP) and the establishment of centralized day-ahead and real-time markets for energy, ancillary services, and transmission services. LMP and centralized markets provide efficient wholesale price signals to which LSEs and customers might respond if retail market designs allow such response. Over the longer term, LMP and centralized markets will lead to more efficient investment in generation, transmission and demand response technology, resulting in lower costs and ultimately lower prices to
consumers.

LMP will allow demand response to play a role in relieving transmission constraints, both in the short and the long term, by communicating the cost of electricity service to customers. Locational marginal prices are the only prices that are consistent with efficient system dispatch, and they are the only prices that induce self-interested loads to consume efficient quantities of power and profit-maximizing generators to produce efficient quantities of power.

There is still another flavor under EWPC, which will be much better than what was though for the SMD, as the system engineering institution satisfies the ultraquality requirements. Retailers will concentrate no on lower prices to customers, but on lower costs and/or higher value, as business designs innovations will aim to that. Most of the customers will – eventually - have lower prices. However, customers that are receiving energy cross-subsidies and/or hidden supply security cross-subsidies might have higher prices later on.

A Generative Dialogue Without Illusions Part 17

On January 9th, 2006, I posted the following message under the article Playing with Fire – Part II:

Hi Fred and Len,

Good points Fred about what is known. As far I know, this is what is emerging with EWPC.

Part 1 of 2.

In what I posted today, when I said “To mitigate congestion and price spikes - both of which signal whole system risk of failure - ultraquality is needed based on both resources of the supply side and on the demand side,” should be sufficient to take care, together with no/nonsense prudential regulation, in disallowed that “the seller … achieve a high price by deliberately under-investing and driving up marginal cost…”

Electricity reform is a very complex problem and as such it can only be useful in a generative dialogue, where insights are placed on the right spot to solve the puzzle. On important insight about EWPC is emerging as central generation is being displaced from center stage.
In a post to both of you, on 11.23.06, under the article AMI Services Solutions for Alberta's Deregulated Market, by Nick Clark, I said:

Most electric power reforms are unstable. For example, European market liberalization will run into a wall if distribution is kept separate from transmission and let generators exercise and abuse market power. Market power is neutralized by keeping a T&D only wires monopoly that assures long run and short physical risk management. In the new paradigm center stage changes from generation to the T&D infrastructure.

The result will be a robust, complete and fully functional non-real time market that does not interferes with real time power system operation, as the T&D (engineering) system operator takes charge of committed resources on the supply and demand side… I like to see competing paradigms that are also emerging.

A Generative Dialogue Without Illusions Part 16

On January 9th, 2006, I posted the following message under the article Playing with Fire – Part II:

LRMC works when your have an adapted system. Things like congestion and price spikes make a lot of noise and the expected value of short run deviates a lot from long run values. To mitigate congestion and price spikes - both of which signal whole system risk of failure - ultraquality is needed based on both resources of the supply side and on the demand side.

The dimension of the demand side, however, is well undeveloped. So, EWPC innovation opportunities abound in the demand side, which definetly should include differentiated customers interruption costs, and not only the power bill in the rationing optimization. That is how the whole system - not its parts - is adapted to resolve both the stability of output prices and recovering of capital costs, by making the expected value of short run marginal costs get closer to the long run marginal costs.

A Generative Dialogue Without Illusions Part 15

On January 8th, 2006, I posted the following message under the article Playing with Fire – Part II:

Sorry Len,

The document talks about marginal cost which are variable costs by definition. New hydro units can apparently make "a lot of money" at zero marginal costs, but they have to pay for the large fixed costs.

Just take a look at “Accounting Systems Interaction Glossary of Terms Assets The ...,” to see the definition: “marginal costs are variable costs which vary in direct proportion to the level of activity.”

A Generative Dialogue Without Illusions Part 14

On January 8th, 2006, I posted the following message under the article Playing with Fire – Part II:

Len,

Generating facilities are dispatched on their variable costs, not on average costs. Hydro facilities variable costs are nearly zero and those units are usually energy limited, but their new development costs are usually very high. In the US, old hydro developments expected benefits are already committed. The LMP price is relative to variable costs. Bidding systems of Model 2 are suspect, as they are in your proposal.

In order to make sense of the data it is not possible to do simply arithmetic calculations as you propose. It is necessary to simulate what the expected random LMP values are for a long over a long period of time. That depends on the probabilities of rainfall or the snow that is expected to fall and melt into the hydro plant. In addition, the power flows at a given node depend on the system as a whole at every moment.

If a region does not allow central or distributed generation, energy efficiency, and transmission development, they should know they will be playing with fire, not matter what the model is.

Demand Response Under EWPC Part 3

On January 8th, 2006, I posted the following message under the article The Potential for Residential Demand Response on Transmission and Distribution Assets:

Len,

Thanks for explaining that there is no competition in the retails markets of gasoline and natural gas. If I understand correctly, oligopolies control the retail markets. If the gasoline stations and the gas retailers are owned or controlled by oligopolies, the market structured and design is flawed or the competition authorities are not doing their jobs or it could be that technology has not advanced sufficiently as is emerging in retail markets of electricity.

Gasoline stations are still retailers that develop their business directly with customers. There is no doubt that there retail function is absolutely necessary and cannot be done without it. Today’s distributors do them, and I am suggesting that the concentrate on their wires.

There is an urgent need for no-nonsense prudential regulations and ultraquality, as well as the development of the resources of the demand side in the power business. If gasoline stations have to compete with electric retailers, there is an opportunity to increase retail competition traveling by cars and trucks.

If you don't resolve the issues of retail competition, the oligopolies will own your swithboard too. In addition, by not dispatching economically under a whole system perspective, with an engineering institution, the cost to society will be excessive.

A Generative Dialogue Without Illusions Part 13

On January 8th, 2006, I posted the following message under the article Playing with Fire – Part II:

Thanks Len for your insistence against LMPs.

What you intuitively think is "the ideal price" seems to me what a monopolist wants. It is completely wrong in a market where demand has elasticity.

There are a lot of risks involve for the generator under competition. Just one example suffices: if the generating unit is not available they need to pay somebody else the LMPs to cover for him, under Model 3.

In addition, LMPs are much lower when demand has enough price elasticity. In a robust supply and demand market there should no be very often significant overpayment, nor very often significant underpayment.