domingo, abril 27, 2008

Dialogue, Reliability/Ultraquality & What to do First?

To answer ‘What to do First?,’ a generative dialogue insight is that in the EWPC EPAct to be enacted, all market business models should compete in a truly open market (except from the controlled transportation market) that doesn’t favor any party, nor control all customers. System adequacy and system security are non-trivial processes to implement system reliability and ultraquality transportation that should enable social maximum welfare in the open market.

Dialogue, Reliability/Ultraquality & What to do First?

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

First posted in the GMH Blog, on April 27th, 2008.

Copyright © 2008 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 to contact the author for any kind of engagement.

1. On Generative Dialogues

I thank Todd for his “skillful conversation (SC),” in which he still defending IMEUC. Defending is not a level 3, win-win communications mode, as Todd forgets the “Unjustified Universal System” part of the GMH post A Universal System with Price Spikes. By ignoring that IMEUC should compete on the open market, instead of being selected as a risky bet of a regulator, as Jim seems to assert, the conversation could get stocked with a disagreement on the What to do First question to go forward.

According to Dr. William Isaacs, the author of “dialogue and the art of thinking together,” the ‘SC’ is part of “productive defensiveness,” as opposed to “unproductive defensiveness.” For more than 28 months, I have faced a lot of “unproductive defensiveness” and also every once in a while some “productive defensiveness.” The problem is that while the former is more productive than the latter, it is still very ineffective.

Dr. Isaacs suggests that deliberation in a different way is more productive. His dialogue process goes through three stages: suspension (listening without resistance; dis-identity), reflective dialogue (explores underlying causes, rules, and assumptions to get to deeper questions and framing of problems), and to generative dialogue (invents unprecedented possibilities and new insights; produces collective flow). That is the sole reason why I have promoted the level 3, win-win communications mode to enable a generative dialogue, since November 2006, when I recorded an EnergyPulse post as the GMH post Let's Get Out of Back Rooms to a Generative Dialogue.

2. On Reliability and Ultraquality

I want to ask again, do we all want to shift from defend to suspend? If we do, we should suspend our opinions on how the non-trivial engineering planning should be accomplished in these conversations. Assuming we are willing to suspend, so we can get to more important matters, like “What to do First?,” I will respond to Todds’ questions on (system) reliability and ultraquality as follows:

System reliability involves system security (for the short run – i.e. operations planning) and system adequacy (for the long run - i.e. investments planning). The ultraquality imperative is the concept behind system reliability which under EWPC becomes transportation ultraquality.

System security was defined above on 4.25.08 in the paragraph that stars with "To fulfill its responsibility to transport, the transportation utility performs a non-trivial operations planning process (which I have named as reliability constraint generation and demand commitment)."

The process to implement system adequacy is also non-trivial and is aimed to produce the expansion planning of the transportation system at least costs, taking also into consideration all of the investments forecasted in the open market (by customers, retailers and generators) to enable the potential for maximum social welfare. At planning intervals, the interdependent transportation controlled market and the open market reinforce each other to produce maximum social welfare.

In the open market, the potential of maximum social welfare is handled at the Economic Level, not at the Control Level as Todd have proposed. It is at the Economic Level that we optimize the capital and operating costs to have both system security and system adequacy. If we don’t execute the Economic Level transactions between customers and 2GRs, we may end up having a very costly system.

If the power market operates at ultraquality, under the coordination of demand integration to power system planning and control, then less customers will justify investing in back-up power supplies. The maximum social welfare will be then be the result of large coordination savings at the Economic Level by 2GRs, instead of the large value destruction expected by the highly risky regulators bets.

3. On What to do First?

Todd wrote that “I don't see the point in promoting any 'what to do first' conversation until it's agreed upon that a) it's truly open in all parts (except maybe the natural monopoly of distribution) b) it's not favoring any party to a given competition and c) it's technically feasable (including economics).” My response in the same a, b, c order is as follows:

a) EWPC is truly open except for the natural monopoly of (tightly integrated transmission and distribution) Transportation compact.
b) EWPC doesn’t favor utilities or IMEUC to have all customers, as 2GRs want to compete by developing market business models.
c) The way to enable that a system is technically and economically feasible is not by regulators’ edits, but by a real market vs. market competition.

As all the elements of the 'what to do first' conversation are satisfied, the only thing in the way is the political will to enact the EWPC EPAct suggested in the EWPC article Leadership Answers What to do First, whose summary reads:

“The answer to the question of what to do first is for the global power industry to get out of the wrong jungle to produce a EWPC based EPAct as soon as possible. That is the kind of leadership needed to face the inevitable fundamental changes required to significantly reduce today’s legislative and regulatory uncertainty.”

Reference and context: Building Models for the Smart Grid Business Case, by Jagoron Mukherjee, Senior Consultant, KEMA

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