Síntesis: Jugando con Fuego y con el Colapso Parte 2 Grupo 0

Referencia: Síntesis: Jugando con Fuego y con el Colapso

Feliz Navidad a todos los Amigos del GMH y demás lectores,

Ayer, el Editorial El Día: El País Eléctrico trajo un mensaje que refleja el poco avance en la solución de la crisis del sector eléctrico en la opinión pública, pero esperando una solución para el próximo año. La opinión pública merece conocer el progreso acontecido en esta Bitácora Digital y en esta segunda parte aparece cada vez más clara y contundente la tercera vía que nos sacará del debate hacia el diálogo generativo. Seguimos jugando con fuego y las cosas están muy calientes en esta entrega de la primera hasta la última nota.

Por la íntima relación con el proceso de colapso que vivimos en la economía dominicana, sigo concentrando mi atención en un artículo muy oportuno e interesante, que aparenta ser excesivamente leído (7,458 veces en menos de 6 días), sobre los riesgos de precio y suministro en la crisis emergente de gas natural. Aunque insisto en poner cuidadosa atención al artículo Playing with Fire – The 10 Tcf/year Supply Gap -- Part I, de Andrew Weissman, Editor-in-Chief & Publisher, EnergyBusinessWatch.com, y muy especialmente a los 44 comentarios colocados ya al respecto, esta es una breve e incompleta síntesis de la segunda parte a este momento del dialogo generativo que he impulsado:

Playing With Fire and Collapse Part 6

En respuesta a la propuesta de Arvid Hallén de realizar una expansión a base de energía nuclear para resolver la crisis del gas natural, le expliqué la existencia de la tercera vía emergente diferente aquí de los modelos de CDEEE y de Capitalización. Le hice una pregunta para confirmar su modelo mental.

Playing With Fire and Collapse Part 7

Defendí las grandes oportunidades del desarrollo de los recursos del lado de la demanda basándome en informaciones del Electric Power Research Institute (EPRI).

Playing With Fire and Collapse Part 8

Len sugiere aprovechar las economías de alcance de otros servicios públicos para expandir la ESCP. Digo que sería los servicios públicos sin control de precios – SPSCP. El agua aquí y en otras partes es un serio problema emergente que el GMH tiene en su mira. Explico que la ESCP no es una solución pura de mercado como sugiere Len: T&D y la operación del sistema seguirán siendo monopolios y deberán satisfacer el cuarto criterio de Schweppe.

Playing With Fire and Collapse Part 9

Identifico que el modelo mental de Arvid es de la industrial verticalmente integrada. Explico que esa industria - como la CDEEE - es cada vez más ineficiente, pero que la liberación defectuosa de los mercados – como la capitalización - es mucho más ineficiente para la mayoría de los clientes. Adelanto serios problemas en la liberación anunciada de los mercados de Europa en el 2007.

Playing With Fire and Collapse Part 10

Respondo a comentarios calientes del Prof. Banks, quien dice saber demasiado y tener buena memoria. Lo cito y le doy la oportunidad para reconocer el aporte de Schweppe.

Playing With Fire and Collapse Part 11

Respondo otra solicitud de Arvid y lo oriento sobre como poner al día con la tercera vía.

Playing With Fire and Collapse Part 12

Respondo otros comentarios calientes del Prof. Banks quien insiste en una opinión fija. Le cito de nuevo sus propias expresiones y le explico como los ingenieros de la industria eléctrica administran el riesgo – uno de sus fuertes a nivel externo a la industria – y muestro como la respuesta de la demanda es la clave para hacerlo en el modelo emergente de la industria eléctrica. Agrego los comentarios muy favorables de Jamie Wimberly el CEO de Distributed Energy Financial Group al esfuerzo que he venido realizando sobre la solución emergente.

Playing With Fire and Collapse Part 13

Len reitera que tenemos diferencias sobre la solución emergente; el cree que no se necesitan detallistas. Le explico las razones institucionales que entiendo justifican a los detallistas.

Playing With Fire and Collapse Part 14

Ultima, pero la más caliente de todas. Una corte de Estados Unidos abre la puerta para la invalidez de los contratos de la industria eléctrica y el posible pago de grandes multas. Esta noticia debe ser la clave para una reforma con visión de futuro de la industria eléctrica. Hagamos que exista un país eléctrico y esa sea su marca-país.

Playing With Fire and Collapse Part 14

Reference: Playing With Fire and Collapse Part 13

Historical news on deregulation scams: "Court Says U.S. Oversight of Power Industry Was Lax," by DAVID CAY JOHNSTON, The New York Times, December 20, 2006.

"A federal appeals court yesterday called into question the government’s efforts to change the power industry into a more competitive business, ruling that national energy officials abdicated their responsibility to ensure fair electricity markets."

Playing With Fire and Collapse Part 13

Reference: Playing With Fire and Collapse Part 12

This is my most response to Len Gould - see his comment below

Len,

My opinion about having a middleman - the retailers under competition - between the generators and the customers to replace two middlemen - the regulator and the distributor under monopoly - is related to long run risk management for the development of the resources of the demand side. I just don't see yet the institutional arrangement to avoid the middleman. Rate of return regulation or performance based rates are avoided for the commercial competitive activities. Instead, retailers operate under prudential regulation / similar to the financial industry - to protect the public. Retailers also perform physical risk management on the demand side.

Len's comment

Jamie Wimberly's comment, quoted by Jose Antonio

"In fact, many utilities also are moving in that direction and attempting to more tightly integrate their systems, platforms and practices. Technology such as AMI is allowing for this progress in a way that simply did not exist five years ago"

simply indicates how poorly Mr Wimberly understands the concept I, and to a lesser extend Jose Antonio, advocate. Anyone with my experience in IT hardware and software would know that the ideal deregulated system which I advocate has been easily achievable and economical for at least the past 20 years, if fact ever since the development of the economical embedded digital computer. (How old is the digital wristwatch, the industrial barcode printer, portable barcode scanner, etc.? All these systems use esentially the same technology with similar economics. We were buying smart communications-capable thermal barcode printers and installing them in washdown industrial environments in the mid 1980's). We and many others were also connecting multiple very large databases all across Canada since 1990.

There is currently simply no technological or economic barrier to implermenting the smart metering infrastructure I advocate.

And Fred. I agree with you that the system cannot be fully implemented safely as long as many areas are served by only a few monopolistic generation entities. But I ask you, regarding your hate for "deregulation" and "energy free markets", how much of that is the result only of the experience of Sweden, where local prices were held artificially low because the generating companies were arbitrarily barred by law from seeking markets in other countries where electricity was more valuable? I grant that you may have a case, but I think it may not be an example which applies broadly to economics of electricity marketing outside of Sweden. I am convinced that the marketing model I advocate could safely be applied to most distribution regions in North America with only minor re-structuring of generation, esp. where the ISO - RTO model for transmission and market operation has been adopted, a significant proportion.

And given that the meters I advocate would inherintly include a connection for the customer's local CHP generation to tie in, and a communication pathway for the ISO to broadcast requests for their startup in urget peak situation (simply by offering a high enough price), I think it shouldn't take too long for a significant proportion of total generation to be provided by eg. small CHP generating units "topping the energy quality" of most natural gas now burned for heating fuel, which would then be able to keep the large generators honest.

Playing With Fire and Collapse Part 12

Reference: Playing With Fire and Collapse Part 11

Prof. Banks,

Everybody needs to agree with that you know what happen in Sweden: it is a scam in which the government makes the most. You are a brilliant man with fixed opinion that got everything right, except some humble engineering things (about physical electric power risk management for example) as you mentioned last year – “I don't know as much of the engineering as I should and could know…” (see my post of yesterday).

Prof. Banks - 10.4.05 – on Electric and Gas Deregulation: Not-So-Cold Cases:

… in my journeys I never miss a chance to emphasize that deregulation increases uncertainty, and according to mainstream economic theory, uncertainty leads to a decline in physical investment.

In addition, where Europe is concerned, I happen to know that with both electricity and gas, the decision makers of the EU once entertained the thought that they could make deregulation work by strong-arm methods, by which I mean constructing additional pipelines (and power lines) for billions of dollars, and thereby obtaining what DeVany and Wall called “connected networks”. Personally, I prefer seeing this money going into high-quality health care and personal security, because as far as I can tell almost everyone who wants to buy gas and electricity has access to it, even though they may have to buy it from regulated monopolists.

The fact that the theory supporting natural gas and electricity deregulation is internally inconsistent, blatantly unrelated to reality, grossly incomplete, and to a certain extent amateurish, is not likely to keep this particular wolf away from the door.

Prof. Banks – 6.28.05 – On Econimic Theory and Some Disobliging Aspects of the Swedish Deregulation Experience:

The problem is not the theory, but the people using it.

The most valuable risk management tools in the electric market are still long term contracts in a regulated or deregulated environment.

Vanderhorst-Silverio – 11.3.05 - On An Alternative Business Case for Demand Response:

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.

Vanderhorst-Silverio: As can be seen, with the development of the resources on the demand side there is no need to develop “connected networks.” The decline of physical investments, the increase in uncertainty, etc. are certainly about the people using it, but also to a large extend a problem with the theory. The old vertical integrated utility does its risk management physically by investing in reserves. Schweppe disclosed how the new vertical integrated utility could develop a market with demand response to decrease uncertainty. Vanderhorst-Silverio envisions the development of the resources of the demand side by way of a suggesting a third way that promises lower costs and/or enabling higher value from electricity to the customers, instead of lower prices, but open to change his opinion to make electricity without price controls an emergent reality in a public generative dialogue.

There was one way for one person to know too much and get stuck in debates: learning from the past. There is another way to learn: several people learning from the emergent future in a generative dialogue. The electric power industry is being exposed to new realities that were thought out by late Prof. Fred Charles Schweppe in the decade 1978-1988. That research he led is only recently being flesh out in what is a creative destruction – not tinkering. Jamie Wimberly DEFG CEO, in synchronicity with my comments in support to the emerging power sector reform paradigm revolution, said the following in a sharp closure of his article The Future Utility Customer Service Model:

Thank you to Dr. Vanderhorst-Silverio for his interesting comments and citations. We also agree that a systemic approach is required to envisioning the future. In fact, many utilities also are moving in that direction and attempting to more tightly integrate their systems, platforms and practices. Technology such as AMI is allowing for this progress in a way that simply did not exist five years ago.

At my firm, the Distributed Energy Financial Group LLC, we believe the changing utility customer service model is simply one manifestation of a technological revolution akin to the industrial revolution that promises much more value creation over time. Building off of the advances in information technology and network management begun decades ago, those advances are now being incorporated into complex systems and the management of assets that form the bedrock of any economy, namely, energy, transportation, water, telecommunications, etc. Greater levels of efficiency and productivity are leading to new product and service generation.

And what do customers want? Most customers are not buying “alternative” or “green,” but are more interested in cheap, reliable energy sources. In fact, I would argue that they are not even buying energy per se, but rather comfort, convenience, light, entertainment, mobility, etc. Greater levels of efficiency allowing for greater levels of consumption of what people desire have the virtuous impact of being “cleaner and greener.” One must be careful to not confuse cause and effect.

Jamie

Jamie Wimberly DEFG CEO