jueves, septiembre 20, 2007

EWPC - Winner 1st Competition Phase

Dear writers and readers,

Please take a look a the last post Solving Smart Grid Cost Recovery, written under the article New Trends Emerging For AMI Cost Recovery, by Will McNamara, Principal Consultant, KEMA, Inc. I dedicate it to Len Gould as a reminder of my appreciation for his stubborn behavior. I think he should try to get a piece of the pie in the new industry organized under EWPC.

After many downloads, debates, reflexive dialogues and generative dialogues, I have two humble question to ask: Is EWPC the winning market of the first and cooperative stage of competition? Are we ready to introduce competition in the power industry with a negotiated transition, of course?

If you think no, to either question, explain very clearly your case to the audience, with facts, and without links. If you think yes, please, by all means say so.

I know that the next thing that should happen is to find out that there is a lot of value destruction made in the industry during the past decade. However, there are much more opportunities to add value, for those who have invested dearly in innovative solutions, but that the "native load" barrier don’t allow it to be implemented.

Silence is the best message.

Thanks to all that helped me get to this point.

Best regards,

José Antonio Vanderhorst-Silverio, PhD
Systemic Consultant: Electricity

Solving Smart Grid Cost Recovery

To solve the Smart Grid cost recovery dilemma requires a restructuring of the electric industry in such a way that the regulator gets the right signals. A shift from The Anti-System Utility to EWPC solves the problem, as cost recovery of AMI technologies are sent to the market with an international standard interface, that will restrict business model innovations by Second Generation Retailer - 2GR.


Solving Smart Grid Cost Recovery

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.


Dear Mr. McNamara and Mr. Gould,

Mr. McNamara’s paper is a welcome contribution to understand the reality of the demand side of the power business. Mr. McNamara writes: “The unfortunate result is that state regulators may be reluctant to approve cost recovery or even the implementation of AMI / Smart Grid technologies without specific guarantees that benefits of the technologies will exceed the costs in the long-term.”

The problem is with the business model of vertically integrated utilities (VIUs), because of what Mr. McNamara adds: “Determining the amount of cost that will be received in rates is a challenge for all utilities planning technology upgrades.”

The problem with the business model (winning rate cases to the regulator), to which Mr. Gould adds as being of so little imagination, is the result of the regulated retailers (called by Warren Causey as “the enterprise”) in The Anti-System Utility (hit the link please). To get thing moving fast, efficient and effectively, local (states in the US and countries in the EU) politics distortions must end. To do that A Warning to the US Congress and the European Commission (hit the link also please) is advised.

The regulated retailers operate the value chain in the industry by purchasing power under contract to the generators to serve the end customers. By replacing state and countries regulated retailers with federal competing retailers under EWPC, the problem with the investment in AMI technologies, which would be acquired under competition among retailers, is taken out the scope of the regulators and into the market, while the smart grid technologies rate recovery business cases to the regulator are easier to solve. All that is required to divide the responsibility under EWPC structure is to have a worldwide standard interface between AMI and the grid technologies.

To solve the Smart Grid cost recovery dilemma requires a restructuring of the electric industry in such a way that the regulator gets the right signals. A shift from The Anti-System Utility to EWPC solves the problem as cost recovery of AMI technologies are sent to the market with an international standard interface, that will restrict business model innovations by Second Generation Retailer - 2GR.

Best regards,

José Antonio Vanderhorst-Silverio, PhD

A Warning to the US Congress and the European Commission

US Congress and the European Commission need to digest EWPC very fast. The political distortions in the power industry at the state level in the USA and at the country level in Europe can be strongly mitigated by performing a paradigm shift to EWPC.


A Warning to the European Union and the US Congress

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.

Dear Mr. Giegler and Mr. Gould

In the post European Confusion and Tail Chasing, Marty Rosenberg reports that “This week comes work that the European Union wants to break open the energy markets. Again. I thought it was supposed to have happened July 1… The initiative is perplexing, particularly considering the fact that the major governments of Europe cannot keep their hands off the energy business.”

Just like in the US, the European Union wants to break open the electricity market with a faulty market architecture and design that keeps “native load” intact.

We ought to Mr. Giegler hero, Sam Insull, the ingenuity of the creation of the deadlock that the US is facing with the federal and state jurisdictional separation that lead to The Anti-System Utility. This is an excellent example of system thinking in action, as the 1st and 7th Law of the Fifth Discipline apply: “Today’s problems come from yesterday’s “solutions” and “Cause and effect are not closely related in time and space.” FERC and its pair in the EU will play its role with a transformation to EWPC, allowing the development of federal wide competition in the US and Europe by 2GRs initially, with worldwide competition later on.

EWPC applies the 8th Law of the Fifth Discipline: “Small changes can produce big results – but the areas of highest leverage are often the less obvious. Two example of high leverage are the change in structure from VIU to EWPC, and the introduction of competitive retailers.

EWPC takes into account the possibility of a transition, in accordance with the 6th Law of the Fifth Discipline: “Faster is slower.”

As state regulated retailers, aka “the enterprise” by Warren Causey, are transformed into federal competitive retailers, the negative political influence will be strongly mitigated. The open market activities in the value chain will change the need of financial capital to production capital, as predictability is reinserted into the industry.

The most important element to enable the open market and the key to predictability is a transportation grid with ultraquality. The motto “reliability first, economy second” is what should drive the industry from now on. As the deadlock is eliminated, new investments, innovations, and jobs with a lot of future, will be created. Financing base load power plants will be easy, under a predictable environment.

US Congress and the European Commission need to digest EWPC very fast. The political distortions in the power industry at the state level in the USA and at the country level in Europe can be strongly mitigated by performing a paradigm shift to EWPC.