lunes, enero 07, 2008

Global Electric Service Shared Vision

By extending the suggestion of Martin Rosenberg, Editor-in-Chief, EnergyBiz Magazine, a global electric service shared vision is needed. Such shared vision is open to gain a foothold for company vs. company competition in a state of the U.S., a country of Europe, or any of the BRIC countries.

Global Electric Service Shared Vision

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

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.

In the Fifth Discipline there is quote by Robert Fritz that says “In the presence of greatness, pettiness disappears.” Peter Senge rephrases it as: “In the absence of a great dream, pettiness prevails.” Senge adds: “Shared visions foster risk taking and experimentation. When people are immersed in a vision, they often don’t know how to do it. They run experiments. They change direction and run another experiment. Everything is an experiment, but there is not ambiguity. It’s perfectly clear why they are doing what they are doing. People aren’t saying ‘Give me a guarantee that it will work.’ Everybody knows that there is no guarantee. But the people are committed nonetheless.”

Earlier in my interventions, I followed the suggestion of Geoffrey Moore to divide competition in two stages: 1) market vs. market competition and 2) company vs. company competition. Since my interest on EWPC is concentrated in the first stage, I now feel very comfortable to keep working towards a shared vision as if pettiness has disappeared.

So, the opportunities towards as to how EWPC will evolve a shared vision of universal electricity service might be initiated in a state of the US, in a country of Europe, or maybe with a higher likelihood in one of the BRIC countries, as I suggested in the EWPC article A Global Standard Market Architecture and Design.

For those reasons, I respect Professor Ferdinand E Banks decision not to participate in a generative dialogue. Many of his inputs, that seem to be intended to oppose EWPC, have been very useful to the generative dialogue insights that have emerged. Obviously, every person has the same right. However, more money is to taken out of the pockets with today’s experiments in Sweden and elsewhere because of all the ambiguity as they lack a clear vision (see more below about NERC and FERC).

I recall from a whitepaper I wrote in 1996, to propose the vision that has evolved as EWPC, that I quoted Odgers Olsen Jr. of Ernst & Young as saying something like this “In the discussions that we had with people in the power industry some visions are clearly defined, others are quite clouded. For those that are clouded, some say: ‘let’s go forward and refine the vision as we go; we need to have certain flexibility.’ Others don’t understand that the vision itself is clouded. Those people will start, and restart, again and again, until they are behind in the game.”

There are many people that will not be convinced that going for a shared vision is correct. There are many people that don't believe that there is a looming (systemic) crisis that is long overdue. Those people should be left behind as it is a waste of precious time trying to convince them, when they are not open to dialogue or to have the courage to be open to be convinced. Peter Senge said that “… I find that I spend very little time trying to convince people of my view, and I can honestly say that it makes life a lot easier and more fun.”

Time is better expended working with the many others that are open to be convinced that going for a shared vision is correct and believe that there is a looming (systemic) crisis that is long overdue. In addition they have the freedom to have their personal visions which they wish to become shared visions of an emergent solution to the systemic crisis.

My vision is NOT about deregulation, but re-regulation. The Old Paradigm of the power industry has stocks of capacity (provided under regulation under a responsibility to serve) which are under the control of the system operator as the mean to provide ultraquality service for the whole system. But that ultraquality only results by overbuilding transmission and generating capacity.

The New Paradigm of the power industry (wide open to be enhanced to become a shared vision) gives the system operator (under a responsibility to transport) the control the stocks of capacity (provided from the open market under prudential regulations), in addition to the control of stocks of demand, in accordance with the commitments that customer make in the open market under contractual relationships with Second Generation Retailers (also under prudential regulations) to provide ultraquality service for the whole system. Under EWPC the long run investments expansion plans in transportation (integrated transmission and distribution) will be at least costs. Generation investments of base load power plants in the open market will lead to the development of a futures market.

As the incremental extensions (symptomatic solutions) to the Old Paradigm like Open Transmission Access that have later required the introduction of NERC mandatory rules (to give the incentives to invest in transmission, which will not be at least costs) in response to very costly blackout and as FERC is implementing Demand Response by introducing modifications to NERC rules, excessive investments in unnecessary transmission and bureaucracy will lead to more costs that in the end will have to be paid by the end-customer. Each ambiguous and unclear symptomatic solution has generated its own stranded costs that now involve “massive investments.”

The resulting shared vision of universal (global) electricity service is a more efficient power sector leading to fewer costs for the whole and for individual customers after a while. EWPC is open to gain a foothold for company vs. company competition in a state of the U.S., a country of Europe, or any of the BRIC countries, to implement such certainly needed vision.

Reference and context: Continental Grid Vision Needed, by Martin Rosenberg, Editor-in-Chief, EnergyBiz Magazine