COMPETE Coalition to Stop a Huge Greek Tragedy in the Making

Entrenched IOUs reaction to change set up at the outset of restructuring a fatal architecture flaw that will lead to a Greek Tragedy unless a politically strong stakeholder, like the COMPETE Coalition stops it.

COMPETE Coalition to Stop a Huge Greek Tragedy in the Making

By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity
EWPC Systems’ Architect

First posted in the GMH Blog, on June 28, 2009.

Copyright © 2009 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.

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In a response to the EWPC Comment to IEEE Spectrum: Can the Stimulus Bill both Stimulate and Transform?, James Carson wrote “How can you possibly continually talk about "entrenched" IOUs when the power sector in the US and Canada has gone through such a massive transformation over the past decade or so?”

First I like to recall that Mr. Carson stopped its comments under the EWPC article Competitive Markets for COMPETE Coalition Potential Losers. The point being discussed was the Greek Tragedy risks now increased by DOE to throw away (good money after bad) a huge amount of taxpayer’s dollars that will raise rates in the future. Can anyone call a change effort leading to the win-lose Greek Tragedy a transformation? I guess not!

For that reason, I thank Mr. Carson for the opportunity to try to address the COMPETE Coalition as a whole with this clear strategic message, as the potential losers (except the IOUs members) are now clearly the majority with the increased financial and political risks enabled by DOE raising the grant ceiling an order of magnitude under political pressure of the IOUs. The COMPETE Coalition should change their political strategy to push for a transformation of the power industry to a competitive and fully functional environment, which means doing without entrenched IOUs, so that they too are also able to make themselves unnecessary. Time is of the essence as the Smart Grid stimulus funds are not yet available to IOUs.

There is no doubt that the IOUs Architecture Framework (as I now call it) was certainly useful when electric rates decreased, year after year, before 1970. All stakeholders (IOUs, regulators and end customers) were happy with the economies of scale reality. In those days, regulators had almost nothing to do and a COMPETE Coalition was completely unnecessary.

As the world changed many customers and new stakeholders (environmentalists for example) have been unhappy. As rates have increased the IOUs-AF became obsolete and a new AF has been needed to replace it. But, as a new AF has been unable to emerge under the strong reaction to change of the entrenched IOUs, we now have entities like the COMPETE Coalition that should shift gears to be proactive to protect their interest as a transitory organization towards an emerging AF.

Instead of shifting paradigms to the emerging AF, the IOUs-AF has undergone many incremental extensions experiments under a fatal architecture error at the outset, forced politically by the powerful entrenched IOUs that are costing billions of dollars to taxpayers all over the world. The COMPETE Coalition is simply not fit to do a proper job under the highly complex and overwhelming IOUs-AF, while regulators have now an impossible self imposed job of making incredible high technology bets on the Smart Grid that will lead to a Greek Tragedy. Instead of being supportive of obsolete IOUs-AF the are costing and will continue to cost them dearly, the COMPETE Coalition needs to quickly shift its strategic aim towards promoting fair and competitive wholesale and retail markets that mutually reinforce each other under a new AF.

The "massive" Greek Tragedy change effort (not a real transformation that is here to stay) will fail as a result of the fatal 1992 architecture flaw of the IOUs-AF. The IOUs-AF has been extended it way beyond its useful life (trying to fix the flaw, with capacity markets, NERC mandatory requirements, etc.), with organized wholesale market based on said architecture flaw that is generating a legacy bubble that will explode with a stimulation package that will not transform the power industry at all. If the COMPETE Coalition does not act fast to shift its course, its members will need to pay the early obsolescence rates of the Greek Tragedy that will make many of their firms uncompetitive.

Transformation that is here to stay will only result under the win-win basic organizational innovation of the EWPC Architecture Framework. The EWPC-AF has a center of attraction different from that of the IOUs-AF to develop and integrate business model innovations, that will get back regulators to the original almost nothing to do situation and making the COMPETE Coalition unnecessary, as the end customers are empowered and allowed to fully represent themselves in the competitive market. The EWPC post The Renaissance of the Power Industry introduces what we should expect will happen under the EWPC-AF as the industry is turned up side down.