No Need for Regulated Price Caps - I

Missing in the discussion under the article "Meeting Our Need for Electric Power," up to the 19th of October, 2007, are the huge coordination problems of short run unit commitment and long run system adequacy, which involve the opportunity for demand integration. Reliability First, Economic Second, is the approach to solve those problems. No longer will regulated price caps will be issued by regulators, as customers themselves have negociated individually their prices caps with Second Generation Retailers.

No Need for Regulated Price Caps - I

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

Copyright © 2007 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. Please write to javs@ieee.org to contact the author for any kind of engagement.

In addition of my comment on 10.15.07, about the emergence of at least 6 disruptive technologies, some of which Len and Todd want to integrate to power systems, but which Joseph think not, there is a prerequisite need of Rethinking Electricity Restructuring as EWPC, as I wrote above on 10.12.07.

"Meeting our need for electric power" has offered a very good interchange environment, mainly between Joseph on one side and Len and Todd on the other.

ToD stupid meters (for deterministic events) were used with specific ToD hours in the 90s. ToD smart meters (for probabilistic events) are to be used mainly anytime to avoid beforehand getting the system close to capacity at a given location, as peak pricing is a random variable. The idea of ToD meters is assumed to be under an Economics First, Reliability Second, approach, as it suggests US$1,250 dryer bills. That is exactly the theme of IMEUC: Unreliable Service and Price Spikes.

In addition, Joseph has discussed difficulties on the marketing and financing. EWPC is developed under a customer orientation as value migration has occurred and at least 6 disruptive technologies (some mentioned by Len and Todd) are available that will satisfy low personal intervention. Please look at Full Retail Choice Emerges, under prudential regulations to respond to Joseph opinions.

There are several market segments. Every customer should shop in the market to find the best fit for his needs, in terms of the mix of the six disruptive technologies. Some customers, for example, with high reliability need, might find out that demand side energy efficiency and distributed generation are the key investments need they have, which could be repaid in part or in full through competitive electric pricing. As the grid become unavailable at their location, the size of the DG could be fitted to an efficient load.

Missing in the above discussion are the huge coordination problems of short run unit commitment and long run system adequacy, which involve the opportunity for demand integration. Reliability First, Economic Second, is the approach to solve those problems. No longer will regulated price caps will be issued by regulators, as customers themselves have negociated individually their prices caps with Second Generation Retailers.