miércoles, febrero 24, 2016

Another EWPC Discovery II

EWPC is a high leverage intervention of the power industry as can be seen in the article Another EWPC Discovery. The article was written after the CMU Electricity Industry Center showed that restructuring is a low leverage system intervention. To respond comments related to the discovery, copied below, more detail is given to show how EWPC is a high level intervention. 

I will respond in reverse order,


Len Gould: “'The Apt study result is certainly no surprise to me." But it happens that the article in the link is not the article referenced by Don.

Readers should hit the links found by “googling” IMEUC to make their own conclusions. That is going to turn out in a good boomerang hint!

Agree! Restructuring “. . .was CLEARLY designed only to benefit large industrial customers.”

Disagree on access! EWPC customers will have access to highly competitive retail markets. Most small customers everywhere access indirectly the wholesale markets by accessing retail markets. The economic reasons are most obvious and well understood by businesspeople.


From what you wrote, I understand that you are not concerned with the small customers that remain under price controls all over the place and that, believe it or not, are the source of a lot of risk management potential at much lower costs than most large customers. All customers large and small should be considered. When one does that, Brazil becomes a candidate for EWPC development. I will put your country back into the BRIC EWPC candidates.


The CMU Electricity Industry Center working paper can be said to have found that the low leverage restructuring interventions are a customer rip-off. Incremental improvements in generation are good, but can no longer be the source of a high leverage. In addition, those system interventions are restricted to states of the US, provinces of Canada, or countries of Europe. Restricting risk management on the supply side is very inefficient. Risk needs to be managed also at the demand side aiming to produce the best risk management mix, among customers, 2GRs and generators.

As provided by the EWPC market architecture paradigm, the source of a high leverage system intervention can only come from increasing returns by developing business model innovations, based on the third industrial revolution, which can initially be deployed in the larger federal market of the US, the whole of Canada, and the whole electricity market of the European Union or maybe surprisingly in one of the BRIC countries.

I am sorry to say that no numbers can be given before the innovations are developed. Recall that “EWPC is very robust, because it is generation and storage technology neutral, from the supply side and the demand side. Markets should be allowed to determine what technologies will have the best chances, as it is impossible to predict the best technologies.” What is needed is to level the playing field by taking down the barriers for the development of the resources of the demand side, so that risk can be managed in the best way.

Highly Suggested readings on the high leverage intervention:

Don Giegler
"But, no data is needed."Sounds like even greater risk, Jose. Looks like those liberated customers will be buying some pretty expensive kilowatt-hours. That is, if any are available!

Len Gould
The Apt study result is certainly no surprise to me. It is an obvious outcome of the crippled pseudo-free-market system implemented in every jurisdiction i kwno of which has tried de-regulation. That system was CLEARLY designed only to benefit large industrial customers.I insist that IF the price I pay for electricity is to be determined in an unregulated market THEN I MUST HAVE ACCESS TO THAT MARKET MYSELF!! EWPC doesn't provide that, nor does the identical system currently operating in Ontario. (comperirive generation, regulated T&D, competitive retailers free to install as much load management as they are willing) Only IMEUC can provide that. Note that I did NOT say that IMEUC was my preference, see the IF which starts this paragraph.

Rafael Herzberg
Very interesting discussions have been generated by this article. I would like to suggest 2 comments.1st) ENERGY PRICE CONTROLS
For decades now there are no price controls in fact. Even if we consider geographical areas, where regulators determine electric energy prices. In my consulting practice for industrial, commercial and institutional energy users it is fair to say that they are constantly monitoring energy prices and accordingly shifting to the most economical energy package. Let me give 3 examples:
From oil to electricity
A few years ago a major multi national company operating in the agro business sector accepted my suggestion to change from a fuel oil boiler to an electric boiler because at that specific point in time it was cheaper, due to available non-firm electric energy for that purpose. This energy user is a regulated one.
From electricity to oil
On-peak hours for the corporate world is far more expensive that off-peak. Depending on the regulations (time of use rates) using on site diesel gen sets are cheaper. Peaking power generation has become a very popular arrangement. A major IT company accepted this concept and is using for years now their diesel gen sets during on-peak hours, These gen sets were originally for emergences now they are a cost reduction tool! On-peak rates are twice the cost of the diesel gen set costs (fuel + operations + maintenance).
As opposed to purchasing electric energy from the public grid to run a plant and fuel to run boilers and other thermal loads, developing a cogen project is a way to reduce costs.
These examples are very popular among corporate energy users around the globe - show a very interesting and intriguing reality:
* The end user´s perception is that regulators may set up rates but ultimately it is the energy user who decides what to pay because the name of the game is comparison!
* Regulators are not perfect. The may set up rates too high or too low. If it is a too high scenario energy users will find better options (on-site generation for instance) if it is too low they will replace their energy sources for electricity. If they are setting the rates exactly at the same price as the market would, these regulators would not be needed at all!
The current model (regulated or de-regulated) is not properly addressing the global warming challenge. It s fair to say that energy prices are inelastic. They have been for decades or even centuries! If we are to face the global warming threat we must find a new mechanism. The purpose of the tax on weight is to signalize a new pattern. Energy costs are small compared to most products and services. Even at US$ 100/barrel energy is still a minor cost for most products and services.
Tax on weight would signalize a new approach to designing products and services. Without this tax why should the supply side try to come up with energy efficient products? Or dou you expect that most of us would choose a better efficiency car just because we are concerned about the global waring threat?

Len Gould
I've also may have finally figured out the motive for all Jose Antonio's repetitive and largely erroneous posts.. If one googles "IMEUC", the first twenty results include 19 entries where he posts INCORRECT criticism's of it.Rats!!

Len Gould
Article referenced by Don above - Rethinking Electricity Deregulation - Lester Lave, Seth Blumsack, Jay AptOn telling slide near the end, shows that of all PUC comissioners, 53% are lawyers and only 7% are businessmen. That sets my base objection to BAU regulation.


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