miércoles, marzo 23, 2016

David and Goliath

Jose Antonio Vanderhorst-Silverio | Dec 31, 1969

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David is EWPC re-regulation and Goliath is the Vertically Integrated Utilities. Both markets architectures and designs are non-trivial paradigms of the power industry. It is argued, that the paradigm shift to EWPC is waiting to happen as engineers take back its control on the controlled market, while the complementary open market is developed to integrate demand into the power system. It is just a matter of David beeting Goliath once again.

To all writers and readers
 
Dear Mr. Giegler,
 
Thank you very much for a decent comment at your stature and for reading with interest something I wrote.
 
While I have not read about Nassim Nicholas Taleb's books, I have read about Samuel Insull, Edison’s Secretary, which you quote on many earlier posts. I suggest you also read Gordon L. Weil’s, “Blackout: How the Electric Industry Exploits America.” Insull's world’s, - the business model of wining rate cases to regulators that do not understand the non-trivial vertical integration - is not today's world, when the information technology revolution is claiming the transformation of most industries, market architecture and design.
 
My strong opinion is that vertically integrated utilities are just plainly obsolete and abusive. EWPC is emerging to allow the introduction of competition in the open market value chain - generation, retail, customer-, under prudential regulations. System engineering and ultraquality transportation of electricity controlled market do without the need of inefficient NERC mandatory rules, in line with my response to Edward A Read Jr. first question about a (worldwide) single market structure [and rules].
 
As a reminder, I copy a paragraph of my response to Edward about my opinion: “Although it is highly worthy, my confidence on EWPC doesn’t depend on the carbon tax. It depends on a non-trivial truth about electric power systems, which is a very complex machine whose design and operation is not a subject of debate, but on the work of a systems architect. It also depends on large changes experienced on fuel [costs] and transactions costs. Lowering of transactions costs allows the integration of demand to the power system with the development of the resources of the demand side, which leads to the development of robust, complete and fully functional retail and wholesale markets.” Forget Sam Insull, his scams are not longer needed!
 
The whole debate with deregulation was designed to be easily won by incumbents that don't want to compete. Thanks to the non-trivial EWPC such a debate can now be shown to be a hell of a great waste of time and resources for the whole world, and incumbents which don’t deserve the helm of IOUs, for lack of leadership. Engineers need to take back the leadership of the industry, by claiming the controlled (not the open) market of EWPC. The IEEE would do its job by recognizing the challenge.
 
I believe there were intelligent people in the US, Japan and Europe, working for the utilities that could have developed EWPC much earlier, but maybe there were not.
 
Maybe not; because there was not anyone left that really understood the non-trivial vertically integrated utilities as a whole with the system’s architecting background. Defending the vertically integrated utilities paradigm, Jack Casazza has written at length of the loss of institutional memory in the power industry. Professor Fred C. Schweppe, a system control genius at MIT, understood the great complexity of the non-trivial vertical integration paradigm, and led the development of Spot Pricing of Electricity, but died in 1988 when he was most needed. Besides Casazza and Schweppe, how many people do you know that truly understood or understand the non-trivial vertically integrated utilities paradigm?
 
The origin of EWPC is 1996, when I was retained to "solve" the electricity problem in the Dominican Republic. I am glad that my clear 1996 vision, based on Schweppe´s and Casazza’s work is becoming a reality, as my intuitive understanding can now be ascertain as another true and non-trivial paradigm (EWPC). It seems that unintentionally and subconsciously, I was working hard until 2003, to prove that my vision is needed. Since then, I became aware of my capacity to fight Goliath. While, I am not my opinion, let's just leave it to the test of time whether David will win once again.
 
Best regards,
 
José Antonio Vanderhorst Silverio, Ph.D.

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