High Leverage Shake-Up in California

California has a great opportunity to repair the damages of the BIG California LIE to the world. The CPUC can do it by introducing a high leverage shake-up of the power industry that results in a win-win proposition for every stakeholder, becoming the example of indiscriminate access of electricity for the third industrial revolution.

High Leverage Shake-Up in California

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

First posted in the GMH Blog, on March 11th, 2008.

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.

The California Public Utilities Commission (CPUC) has begun a process that could allow businesses and homeowners to bypass utilities and buy power on the open market. See Shake-up could be coming in electricity. The CPUC is considering a limited form of deregulation called “direct access.” This time there is hope that the intervention of the systemic electricity crisis does not result once again in a BIG California LIE.

On the EWPC article Shrinking the Regulator’s Jobs, I updated my views on the BIG California LIE and wrote that “I am now convinced that FERC, the CPUC and the three largest California utilities actions were integral part of the natural systemic response that led to the vicious circle of the mistaken efforts that has had a large impact on the delay of restructuring worldwide.” In that light, for details (please hit corresponding link of the EWPC article here and below) see Slicing the Last of the Regulated Monopolies.

However, direct access could be just another form of low leverage structural separation, which maintains in place incumbent utilities and produces well known unintended consequences. See Utilities vs. Neelie Kroes.

To become a high leverage shake-up, the process should allow all customers, without any discrimination, to buy and sell power (Watt-Vars and NegaWatts-NegaVars) in the open market. The term “bypass” is a trap; utilities should be restructured by having the CPUC consider the following:

Adopt a shared vision of the end-state of the electricity industry for quite some time, as provided by the Electricity Without Price Controls (EWPC) paradigm. See Creative Destruction of the Old Electric Paradigm.

Adopt the essential requirements of the electricity industry which are: Active Demand, Retail Competition and Ultraquality Transportation. See Power Markets Essential Requirements and Power Markets Essential Requirements - II.

Perform restructuring to provide a high leverage shake-up that minimizes unintended consequences by considering the management of systemic risks in the long run and the short run. See Another EWPC Discovery and Another EWPC Discovery II.

Redefine utilities as transportation only utilities that provide Ultraquality Transportation. See The Smart Grid Transportation Utility.

Retain price controls on the transportation utilities closed market. Shift from price controls to prudential regulations in the open market. For details see Shrinking the Regulator’s Jobs.

Introduce “direct access” under Second Generation Retailers - 2GRs with statewide Retail Competition. Later on those 2GRs should be able to operate in federal and worldwide markets as EWPC becomes the new paradigm, where the large value creation will result in a win-win proposition for every stakeholder. See The Sixth Disruptive Technology.