Response to Bob Gilligan, VP of GE's Digital Energy Business, Submitted to BusinessWeek

Responding to the article The Electricity Grid Wants Heat Relief, Too, by Bob Gilligan, the vice-president for GE's Digital Energy business, part of GE Energy, I submitted the following comment to Bloomberg-BusinessWeek :

I start the EWPC post An Epic Smart Grid Failure is in the Making, with “The smart grid is a transformation process of the global power industry. A transformation is not a trivial change. It is a big and complex change process that will satisfy ongoing customer needs, which they are not able to articulate yet…”

A smart grid that only helps “… reduce the financial and environmental costs associated with ‘peak load,’ when utilities are forced to activate the marginal, more expensive "peaker plants" required to meet spikes in energy demand” is not a fully deployed one. A fully deployed smart grid requires an emergent, minimalist, and holistic regulatory framework, which enables the transformation of the power industry with business model innovations, where most of the value creation is bound to occur in the demand side. To initiate such a transformation we need a strong industry leadership to enact the mentioned regulatory framework.

The regulatory framework “to ensure that that appropriate incentives are in place to drive the desired investments,” by industry agents, and by customers as well, is already conceptualized as the Electricity Without Price Controls Architecture Framework (EWPC-AF), which says that: “The EWPC-AF is a two tiered architecture that greatly simplifies regulations. The first level is an intermediate architecture aimed for an energy policy act, which separates the whole emergent complex system into two less complex systems [which I now call the T&D Grid and the Enterprise]. Those systems are highly cohesive with lightly coupled interfaces among them:…”

To enable the purpose of maximum social welfare, this is not just about minimizing cost either, which is the main aim of the T&D Grid side, but increasing value creation as well, mostly by business model innovations in the Enterprise side.

I conclude the EWPC post The BGE Domino is Down, with “This is in accordance with my Prediction #1: Recognizing the emerging global power industry in the complete context around the Intelligent Utility Inside article Baltimore G&E: AMI Comeback? and that of this EWPC article, the Maryland PSC “No so fast” decision on the BGE proposal is highly likely the 1st domino of the chain reaction that is going to start “knocking over the next” state regulator’s utility case, “which upsets the next one, and so on.” See the EWPC article Three Smart Grid Predictions for Initiating the Global Power Industry Transformation.

“The question of who pays and who benefits” doesn’t “need to be worked out on a case-by-case basis.” To design the EWPC-AF regulatory framework I employed the four who’s insight, that according the book “The Art of System Architecting,” by Rechtin and Maier, “asks four questions that need to be answered as a self-consistent set if the system is to succeed economically; namely who benefits? who pays? who provides? And, as appropriate, who loses?”

José Antonio Vanderhorst-Silverio, PhD
Creator of the EWPC-AF