I disagree in part with the authors. I believe that DR is a risk management function that should be marketed by a retailer, under a different value chain from the supply chain. I have just sent an article to the editor and here are 2 paragraphs in advance.The business case of Demand Response (DR) is enhanced under free markets, innovation, and probabilistic (risk) mindsets. DR is poised to be the demand side risk management tool to complement the traditional "LOLP" supply side risk management tool. There are two sides on the DR coin. On one side, system crashes are mitigated by a least cost mix of supply and demand risk management tools that may be applied in time and space. On the other, DR is the key to the segmentation of customers supply security (a kind of insurance). Because of its fine grain nature, DR can help mitigate delays (intended or not) of lumpy investments in generation, transmission, and distribution.
A new supply chain is required in the power business for commercial activities, from generators and wholesale brokers, to competitive retailers, to end-users; while transmission and distribution monopolies are forbidden to interfere with those activities, charging a toll for their services. This is an essential element of the market design.
José Antonio Vanderhorst Silverio, PhD Interdependent Consultant on Electricity javs@ieee.org
miércoles, octubre 26, 2005
Re: Artículo Sobre Demand Response Part 5
DR1: "No Way Out," says Segura, but the GMH says There Is Way.
Radhames Segura, vice-president of the Dominican Corporation of State-owned Electric Companies (CDEEE), has said that there is "no immediate way out of the electricity crisis," and that the government is not disregarding the possibility of intervening in the Ede-Este distribution company. Segura admitted that "the public is receiving very expensive electricity, and they are not willing to continue supporting this or the continual blackouts that occur due to power rationing." Segura said that there was no miraculous way out of the situation, and that the government has well conceived plans but it will take two years for the results to be seen. Segura also commented on the fact that Ede-Este has been administered by AES-Dominicana since it was privatized, but that this entity has recently sold its shares to a Californian company, TCWW, and TCWW chose AES-Dominicana to run the operations, all without c! onsulting the Dominican government, a major partner in the privatization process. In fact, Segura told reporters from Hoy that the government was going to ask TCWW to change the management of Ede-Este because, in his words, "AES has not proven to be efficient in the Dominican Republic."
Continuing along with the electricity theme, El Caribe reports that there will be renewed negotiations about the contracts with power generators, starting this morning. Under review will be the Madrid Accords and the IPP contracts. (Independent Power Producers) The discussions will include planning and cash flows projected for 2006. The meeting will attempt to clear up just how large the accumulated debts are for the Rural Electrification Project (PER), the Program for the Reduction of Blackouts (PRA) as well as the IPPs' deficits. According to El Caribe, two weeks ago the government announced its need to renegotiate the contracts with the IPPs with a view to clearing up the exact cost p! er kilowatt/hour. According to Segura, current invoices are at least 2 5% overpriced. The power providers have said on several occasions that they have not sat down with government negotiators because they have not been asked to do so. Today's meeting is the first step towards the renegotiation of the contracts. According to Hoy, once the government has in its hands the numbers of the total deficit, then President Fernandez can talk to the World Bank and the IMF in order to ensure that the subsidies do not exceed the US$300 million approved by the IMF.
Re: Artículo Sobre Demand Response Part 4
---------- Forwarded message ----------
From: Armando Rodriguez
Date: Oct 26, 2005 1:22 PM
Subject: RE: Demand Response Drafts
To: javs@ieee.org
José Antonio:
Te marqué algunas palabras para que las chequees. Muy bueno el escrito.
Saludos,
Armando
The business case of Demand Response (DR) is enhanced under a free market, innovation, and probabilistic (risk) mindsets. DR is poised to be the demand side risk management tool to complement the tradi tional "LOLP" supply side risk management tool. There are two sides on DR coin. On one side, system crashes are mitigated by a least cost mix of supply and demand of risk management tools in time and space. On the other, DR is the key to the segmentation of customers supply security (insurance no sera assurance??? ). Because of its fine grai n nature DR can help mitigate delays (intended or not) of lumpy investments in generation, transmission and distribution .
Contrary to the belief expressed on the November 2004 Issue of the IEEE Spectrum, under the theme of " W ???right and Wrong," the late Professor Fred C. Schweppe, of MIT, brilliantly predicted a mayor tech breakthrough in electric power, when he said that "There is a good chance that by the year 2000 the term blackout (societal definition) will be considered to be a term out of the Dark Ages." The chance has been there all along, except that a powerful lobby has delayed it, by keeping the natural monopoly of distribution related or integrated with non monopoly retail marketing. It took the august 2003 blackout to initiate a Demand Response Resources project at the International Energy Agency, but I strongly believe that the distribution monopoly needs to be kept totally independent of commercial retail for it to be functional.
Professor Schweppe "envisioned a world of customer-based electrical generation and storage," which has been happening in the Dominican Republic, for quite some time, missing only the Demand Response System and a truly competitive retail deregulation to fulfilled the dream. Just as the DC-10 initiated commercial air travel at the time of the Great Depression, electric power systems will also fly reliably to get Dominican power sector out of collapse , since Demand Response will enable the system to operate within the Normal Operating State, returning back as soon as possible from the Alert and Emergency States with Demand Response actions. A new supply chain is required in the power business for commercial activities, from generators and wholesale brokers, to competitive retailers, to end-users; while transmission and distribution monopolies are forbidden to interfere with those activities, charging a toll for their services.
I agree with the introductory sentence of the article, except for the last three words -"the resource portfolio," which come from an integrated utility mental model. I believe that the End-State of the power industry is to keep the wires monopolies completely separate from the competitive generation and retail businesses. In that sense, the DR domain belongs to the retailer, which substitutes the two existing intermediaries – the distributor and the regulator (that negotiate prices on behalf of retail customers). The retailers compete with each other for customer services and be prepared to buy (and sell) electricity to generators to be sold (and purchased) to customers. The result is a much simpler value chain, typical of most business activities. The result is also a promising business model. However, I don't discount the possibility of a better business model to emerge in the future. Therefore, the assumption of a value chain identical to the supply chain is an unnecessary restriction of the paper.
I also believe that the business model of distribution utilities that control retail activities is close to their useful life. I recently attended the AMRA Autovation Symposium and learned that distribution utilities need to undergo large and risky reengineering programs to reap the benefits of AMI. Retailers, however, can develop their business models from a clean slate. In particular, reading the paper I come to a different conclusion: most distribution utilities will find themselves stocked with old CIS technology. The time is ripe for the new value chain, where customer can chose the minimum cost plan from a portfolio of options available at through competitive retailers. Retail customer will segment themselves to purchase (and sell) watts, vars, and supply security in a completely deregulated market. The solution is thus customer driven. It is a completely different ball game.
There is no need whatsoever to keep customers business activities associated to the distributors. Demand Response then becomes a condition of service, where the lowest supply security standard applies. I learned from Professor Carlos Rufin, that retailers regulating framework should be a prudential similar to the financial institutions. The Georgia gas deregulation can serve as an successful example. I don't discount market confusion developing at the outset, even with incumbent distributors barriers totally eliminated.
Most wholesale deregulation efforts have been a failure. Professor Schweppe, had a different idea. He and his colleagues wrote in the book "Spot Pricing of Electricity": "We believe the deregulation which considers only the supply side of the supply-demand equation is dangerous and could have very negative results." It has taken a long time and a lot of value destruction to understand that insight. Demand Response is no just load shifting and conservation, but a demand side risk management tool for the whole power system. Most IOUs have invested dearly in capacity, making the business case unattractive at the moment. The doors to innovative solutions in the power industry will be wide open when these concepts are finally understood.
José Antonio Vanderhorst-Silverio, PhD
Interdependent Consultant on Electricity
BS ´68, MS ´71 & PhD ´72, all from Cornell University
Valued IEEE Member for 34 Years.
javs@ieee.org
Research and practice areas, and interests:
systems architecture,
systems thinking,
retail marketing,
customer orientation,
information systems requirements and design,
market rules,
contract assistence.
--
José Antonio Vanderhorst-Silverio, PhD
Interdependent Consultant on Electricity
BS ´68, MS ´71 & PhD ´72, all from Cornell University
Valued IEEE Member for 34 Years.
javs@ieee.org
Research and practice areas, and interests:
systems architecture,
systems thinking,
retail marketing,
customer orientation,
information systems requirements and design,
market rules,
contract assistence.
Renegociación de los Contratos. José Luis Moreno San Juan
Estimados Todos
De la interesante presentación de José Luís Moreno San Juan y las discusiones que se originaron, quisiéramos destacar los siguientes aspectos
- El costo actual (Octubre 25,2005) de compra de la energía por parte de los distribuidores a los generadores, según los contratos de compra y venta de energía amparados bajo el Acuerdo de Madrid es de unos US$0.14/Kwh.
- Moreno San Juan plantea, que de acuerdo a los análisis y estudios realizados, el precio promedio de venta de energía de los generadores a los distribuidores, incluyendo el peaje de transmisión deberá de ser alrededor de US$0.09/Kwh.
- Una forma de renegociar los contratos de compra y venta de energía firmados entre generadores y distribuidores bajo el Acuerdo de Madrid, sería como se planteo anteriormente liquidar dichos contratos en base a las cláusulas y formula de indexación establecidas en los contratos de la capitalización, los cuales vencían en el 2004 y a partir de ese momento calcular toda la energía vendida en el mercado en base a los precios del mercado spot. Eso implicaría, que los contratos de Dominican Power Partners (DPP), Seaboard y Compañía de Electricidad de Puerto Plata (CEPP), deberían ser recalculados a los precios de los contratos IPP que tenían con la Corporación Dominicana de Electricidad (CDE). El contrato de DPP con CDE vencía en Agosto 2010, Seaboard tenía dos (2) contratos, Estrella del Norte! que vencía en Junio 2002 y Estrella del Mar que vencía en Septiembre del 2007. CEPP también tenía dos contratos, CEPP II que vencía en Septiembre del 2004 y CEPP I en Mayo 2011
- La deuda actual en el sector eléctrico oscila alrededor de US$400 millones, de los cuales unos US$300 millones son deudas del gobierno y el resto, unos US$100 millones, deudas entre los agentes del sector eléctrico
- Si se vuelve a los contratos de la capitalización, que permitiría liberar a las distribuidoras de los contratos de largo plazo firmados bajo el Acuerdo de Madrid, la deuda del Gobierno pasaría de US$300 millones a unos US$500 millones a US$600 millones Esta renegociación que significaría un aumento de la deuda del Gobierno para liberar a las distribuidoras de los contratos de largo de compra de energía con los generadores, permitiría licitar la las distribuidoras la contratación de nuevas potencia y energía según lo establecido en el articulo 110 de la Ley General de Electricidad
- La renegociación antes mencionada, no incluye la renegociación de los contratos IPP que tiene la CDE con Smith and Enron y Cogentrix, los cuales vencen el primero en Enero del 2015 y el segundo en Septiembre del 2020. Adicionalmente la CDE recuperaría el IPP de DPP que vencería en Agosto del 2010, Seaboard (Estrella del Mar) que vencería en Septiembre del 2007 y CEPP I que vencería en Mayo 2011
- Si estos IPP no se pueden renegociar, el estado Dominicano se quedaría con una carga financiera, superior a los US$5 millones mensuales, ya que seguiría comprando energía a los IPP a un precio mas caro de lo que se la vendería a las distribuidoras
- La renegociación de estos cinco IPP en poder de la CDE, para traspasar dichos contratos a las distribuidoras a precio de mercado, significaría una deuda adicional para el estado Dominicano por concepto de costos hundidos, superior a los US$250 millones, que habría que añadírsela a los US$500 millones o US$600 millones mencionados anteriormente
- Si esta renegociación es exitosa y se lleva el Valor Agregado de Distribución (VAD) a sus niveles racionales de US$0.05/Kwh., el precio monomico de la tarifa sin subsidio cruzado seria de US$0.14/kwh. Con subsidio cruzado, en condiciones similares a las actuales, la tarifa máxima oscilaría entre US$0.17/Kwh. a US$0.18/Kwh. Evidentemente, como las deficiencias de las distribuidoras en términos de índices de facturación y cobranza de energía no se resuelven de la noche a la mañana, significa que el Gobierno tendrá que seguir subsidiando a las distribuidoras y al sector eléctrico, en una cantidad menor, pero que seguirá siendo significativa, quizás unos US$100 millones al año. Adicionalmente las distrib! uidoras para mejorar los índices de facturación y cobros de la energía, deberán hacer inversiones en infraestructura por un monto cercano a los US$100 millones
Como se puede apreciar, la solución de liberar a las distribuidoras de los contratos de largo plazo de compra de energía con los generadores y a la CDE de los IPP, implica una cantidad apreciable de recursos económicos. La pregunta obligada es, de donde saldrán los mismos?
Saludos
Bernardo
Re: Herrera "NO se Opone," sino que Condiciona y Sugiere que no Sean a Centrales a Carbón IPP
--
José Antonio Vanderhorst-Silverio, PhD
Interdependent Consultant on Electricity
BS ´68, MS ´71 & PhD ´72, all from Cornell University
Valued IEEE Member for 34 Years.
javs@ieee.org
Research and practice areas, and interests:
systems architecture,
systems thinking,
retail marketing,
customer orientation,
information systems requirements and design,
market rules,
contract assistence.
Herrera "NO se Opone," sino que Condiciona y Sugiere que no Sean a Centrales a Carbón IPP
José Antonio, según mi punto de vista, Herrera no se opone...Condiciona y sugiere que no sea IPP.....Creo que tu titular fue periodístico y desisnformante... Luisxx
Re: Artículo Sobre Demand Response Part 3
Re: Artículo Sobre Demand Response Part 2
Professor Schweppe "envisioned a world of customer-based electrical generation and storage," which has been happening in the Dominican Republic, for quite some time, missing only the Demand Response System and a truly competitive retail deregulation to fulfilled the dream. Just as the DC-10 initiated commercial air travel at the time of the Great Depression, electric power systems will also fly reliably to get Dominican power sector out collapse, since Demand Response will enable the system to operate within the Normal Operating State, returning back as soon as possible from the Alert and Emergency States with Demand Response actions. A new supply chain is required in the power business for commercial activities, from generators and wholesale brokers, to competitive retailers, to end-users; while transmission and distribution monopolies are forbidden to interfere with those activities, charging a toll for their services.
I also believe that the business model of distribution utilities that control retail activities is close to their useful life. I recently attended the AMRA Autovation Symposium and learned that distribution utilities need to undergo large and risky reengineering programs to reap the benefits of AMI. Retailers, however, can develop their business models from a clean slate. In particular, reading the paper I come to a different conclusion: most distribution utilities will find themselves stocked with old CIS technology. The time is ripe for the new value chain, where customer can chose the minimum cost plan from a portfolio of options available at competitive retailers. Retail customer will segment themselves to purchase (and sell) watts, vars, and supply security in a completely deregulated market. The solution is thus customer driven. It is a completely different ball game.
There is no need whatsoever to keep customers business activities associated to the distributors. Demand Response then becomes a condition of service, where the lowest supply security standard applies. I learned from Professor Carlos Rufin, that retailers regulating framework should be a prudential similar to the financial institutions. The Georgia gas deregulation can serve as an successful example. I don't discount market confusion developing at the outset, even with incumbent distributors barriers totally eliminated.
Most wholesale deregulation efforts have been a failure. Professor Schweppe, had a different idea. He and his colleagues wrote in the book "Spot Pricing of Electricity": "We believe the deregulation which considers only the supply side of the supply-demand equation is dangerous and could have very negative results." It has taken a long time and a lot of value destruction to understand that insight. Demand Response is no just load shifting and conservation, but a demand side risk management tool for the whole power system. Most IOUs have invested dearly in capacity, making the business case unattractive at the moment. The doors to innovative solutions in the power industry will be wide open when these concepts are finally understood.