martes, agosto 26, 2008

Let’s Avoid Many Expensive Fiascos

There is no need to cite any evidence “to enable a highly competitive, pro-consumer, complete and fully functional market architecture and design paradigm shift.” What is needed is to have “the global power industry … get out of the wrong jungle to produce a EWPC based EPAct as soon as possible.”

Let’s Avoid Many Expensive Fiascos

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

First posted in the GMH Blog, on August 26th, 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.

Under the article Campaign for Fair Electricity Rates, Don Giegler writes “Of course, if you can cite any evidence that what you are pushing provides or has provided lower electric energy rates than intelligently regulated, unrestructured VIUs have, you'll have at least one less critic.” Congressional leaders need to forget history to understand where we are at the moment.

As I said in the EWPC article on leadership mentioned at the end of this article, “I agree with Warren Causey’s article Utilities Full Speed Ahead on IUE/SG: The Question is What to do First that “the consensus is correct: ‘fundamental changes are inevitable… the paradigm is going to have to change.’”

Going against the flow, VIUs are in the process of extending the useful life of the price control business model under the watch of regulators making “big bets with questionable data,” as can be seen in the video WSJ: How Growth Succeed by JEANNE M. LIEDTKA, that explain that they “will end up with expensive fiascos,” that will be added to the rate base.

Being “obsess with bigger is better” and needing to “cite evidence” by getting involved in analysis, regulators are pushing what Leidtka calls the Greek Tragedy. This has been dealt in another light in the EWPC article Utilities and Regulators’ Value Destruction, whose summary says: “Excessive marketing costs are identified by Marty Agius, under today’s regulations, which make utilities and regulators unable to add customer value as will be done under EWPC. Added to his arguments is the large value creation waiting to happen with the emergence of business model innovations, to be develop by retail marketers (2GRs) to integrate demand to power system planning, operation and control, since market research doesn’t work yet.”

EWPC restructuring enables competition among Second Generation Retailers to find better value for customers in the market where as Leidtka explains “all the real learning happens” with “customer feedback” while avoiding the Greek Tragedy.

As can be seen in the EWPC article Leadership Answers What to do First , “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.”

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