Please Blame the Deregulation and Regulation Fiascos Parte 39

Gentlemen,

First I say - sorry Dick - since in my last comment there was a lapse. I said "Steve has added a very good comment once again," when what I meant was Dick instead of Steve.

Len seems to accept that his proposal might fit the Electricity WPC restructured market, by calling retail marketers "service providers," in the first of the last two comments. This means that a metering monopoly is not good either. Certainly a standard functionality is required for meters.

If I understand it correctly, Texas is doing a real case of what Dick is explaining. Monopoly customers have a higher fix price by system design. So he talks about practice. Is Texas also under Hogan's mental model? How much demand response has occurred? Is there sufficient price volatility mitigation? Can retailers differentiate supply security risk in the offerings? Are prices increasing more than they should?

Even if we wanted to satisfy fairness as Len explains, in practice the transition is multiyear in most cases. However, if only large customers can benefit, there is a market design problem. That is the case of Hogan's mental model, which makes Electricity without price controls a better market possibility. For example, customers with supply security requirement away from the average should be able to choose the offering from the very beginning, irrespective of how large the customer is. Another way to look at it is to think about how responsive a customer can be.

As market competition develops it should be expected that retailers’ enterprise solutions will be oriented towards market segments. Some retailers might aim to the large customers’ market segments, while other retailers aim to the mass markets market segments.

The vertical integrated utility was centered on the US local states markets and in other countries national markets. The resulting market should be centered on the global market. The economy of scope of services is a very important step to move from electricity without price controls to electricity, gas and water service without price controls. I think, however, that the discussion on power line carrier vs. wireless standardization is ahead of the time and as such introduces unnecessary complexity at the moment.

Regards,

José Antonio