The World Shouldn’t be Running Out of Electricity

According to Alan Caruba, America is running out of electricity, but in fact the whole world is running out of electricity by keeping in place several flawed or obselete market architecture and design paradigms. The American Public Power Association proposed that “all industry participants need to work together to design a regulatory system for electricity markets that truly benefits consumers, businesses and the environment.” Such a regulatory system has already emerged and is the EWPC market architecture and design paradigm.

The World Shouldn’t be Running Out of Electricity


By José Antonio Vanderhorst-Silverio, Ph.D.

Systemic Consultant: Electricity

Copyright © 2008 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. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

Bob,

Thank you for your comment, as it gives the opportunity to prove that Len’s opinion (not Len!) about 2GRs is wrong once again. As you see below the incentives to 2GRs are not well widely understood yet in business strategy practice, but nonetheless have been in used for quite some time by many organizations implementing third industrial revolution technologies. But first, I agree with him regarding the anticompetitive ploy. In fact, under Rafael’s article I suggested “that as a global issue, this might be a trade matter closer to WTO tariff agreements on CO2 [change that GHG] "exports" to the global commons by a given user.”

Your “definition [that] consumer energy efficiency and conservation enable consumers to use LESS energy . . . will never be a profitable activity for an energy retailer” applies to the perverse incentives that today’s utilities have and maybe first generation retailers to “encourage investment in themselves and in generation and distribution but only to maximize their own efficiencies, with the result being minimized lower energy prices for consumers.” 2GRs will be centered on a total customer solutions strategy, instead of the traditional best product strategies of low costs and differentiation mindset.

2GRs do not have those perverse incentives as they offer customers no just low costs, but even more so, high value propositions to stay in business by developing information intensive business model innovations. The whole point is that customers will be able to invest in long term projects in coordination with the long term development of the power system, while 2GRs integrate demand to power system planning, operations and control, as well as compete among themselves and generators in the wholesale market by aggregating their retail portfolios.

I repeat that “"Tam is right that ‘energy efficiency is far cheaper than any power technology and there is vast potential to increase efficiency in the US. . .” and elsewhere. But a cost efficient implementation cannot be done by regulatory mandates’… ” since client’s energy businesses costs and value requirement and opportunities vary widely. This last explanatory phrase stresses the need for Shrinking the Regulator’s Jobs as soon as possible. This is how 2GRs will help a world that might be running out of electricity.

In a recent white paper, the American Public Power Association finds this “a time of increasing peril for electricity consumers – both in present costs and future reliable service…” and “wants … to contribute to a constructive dialogue to develop sorely needed reforms … [of] electricity markets …” and suggests that “all industry participants need to work together to design a regulatory system for electricity markets that truly benefits consumers, businesses and the environment.” Such a regulatory system has already emerged and is the above mentioned EWPC market architecture and design.


Reference and context:

America is Running Out of Electricity, by Alan Caruba, CEO, The Caruba Organization.

Consumers in Peril: Why RTO-Run Electricity Markets Fail to Produce Just and Reasonable Electricity Rates, by American Public Power Association, February 2008.