Restructuring of Ohio’s Power Industry Business

Reference: Ohio Needs to Consider EWPC

Ohio is in the best position and timing to solve the tough power sector problem by considering the Electricity Without Price Controls (EWPC) market architecture and design. As has been known for quite some time, in industry after industry, price controls lead to shortages and inefficiency. New technology is available to enable the transformation of the electric utility industry to EWPC.

The essential elements of EWPC are retail competition with active demand and ultraquality transportation. The latter means that transmission and distribution should not be mistakenly separated into two different entities, with different masters. Instead, bares bone utilities is what remains serving the transport of electricity in a given area at the speed of light. Ultraquality transportation design, operation and control cannot be the result of politicians and economist decisions, but the professional work of engineers, just as is done on nuclear power plants and space vehicles to insure real time reliable service.

Now I explain the former. Once distribution is shifted to transportation, what remains from the distribution utility is a retail monopoly which should be open up to competition. I have suggested the term Second Generation Retailers (2GRs), with the object to integrate active demand (increase its elasticity) into the power system, as well as to differentiate them from simple retailers as they showed up in many jurisdictions that deregulated.

2GRs will integrate active demand by a process that I term the development of the resources of the demand side. As such, 2GRs might end up with Customers Information Systems (CIS - not to be duplicated in distribution), Automated Meter Reading/Infrastructure (AMR/AMI), and managing demand response enabling systems, energy efficiency resources, distributed generation (like solar and wind) and distributed energy storage and many other services to the customer, from long run system planning to economic transactions, just as has always been done in the generating supply side. The result will be robust, complete and fully functional retail and wholesale markets.

EWPC is not deregulation, but a shift from price controls regulation to prudential regulation of competitive generators and competitive retailers, similar to that of the financial industry. As debates lead to getting stuck and using congressional force to get unstuck, the recommendation to Governor Strickland is to develop a comprehensive package by promoting a generative dialogue of all stakeholders to define the transition to EWPC.

© 2007. José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity