Customer oriented electricity

First update. These are original comments of the EWPC Blog.

Comments

Thu, 11/08/2012 - 12:24pm

This comment and the next are taken from the MENTIRAS Y VERDADES - VERDADES A MEDIAS Facebook group. http://www.facebook.com/groups/239056806198729/

A 2 personas les gusta esto: John Mirador and Miriam Then

John Mirador:

There's a large proportion of the DR population who live below the poverty level where they're unable to pay for electricity. The IMF would want this population cut off from the grid. Then there'sthe question of massive fraud by big business and government, and the IMF would push for higher electricity rates raised to make up for the current deficit...

Miriam Then:

I thought that I couldn't understand the Dominican energy crisis because of lack of dominance of the language.... Now, I read this in English.... And I'm still in the DARK!

John Mirador:

Miriam, We're all in the DARK! ; )

Miriam Then:

That is comforting to know John, I started to feel like an idiot! Ja ja ja ja!

José Antonio Vanderhorst-Silverio:

Thank for being still in the dark. Maybe I will shed some light. However, I know there are a lot non trivial issues involved.

Because there is not storage in large capacity yet, the whole system of electricity is supposed to have sufficient redundant supply security to give customers commercial quality service. One approach is to have enough running generating capacity just in case the largest generating unit fails all of the sudden. That way, no one notices the failure.

The idea was to develop an expansion plan to have enough capacity for such a situation. In Puerto Rico they have reserves right now above 50 per cent. However, here in the Dominican Republic, we have always been behind. The thinking of decision makers have made thing a lot worse.

From a systemic point of view under the regulator orientation, poor customer actually being used as a provider of system supply security to keep the whole system running without paying them anything. Under a customer orientation, a vibrant supply security market emerges where those that need higher supply security, like for meeting digital devices, we buy from the poor. The rich and the poor help keep the system running.

8/11/12 1:18 p.m.

Jose Antonio Vanderhorst-Silverio

Thu, 11/08/2012 - 12:24pm

Miriam Then:

Thanks for your response Jose, but I have an inquiry. You say because of the thinking of "decision makers" have made things worse. First let me ask you who are these decision makers? Are they politicians? Are they experts in the field? Are they still in charge? What's the accountability? I have real issues with government bureaucrats, that feel the answer to every problem is to throw more money at it, and expect somehow, that things will just get solved that way.

John Mirador:

José, you skirted the most important issue, which is cost. We already have the highest electricity rates in the hemisphere, maybe of the entire world. Do you know that 37 percent of electricity is lost in the transmission lines and accessory systems? What about the tremendous graft going on with the purchase of fuel supplies for the generators?, etc., etc.

José Antonio Vanderhorst-Silverio:

Miriam, see the quote "President Danilo Medina says that the International Monetary Fund (IMF) is "fundamentally responsible" for the financial crisis that affects the Dominican electricity sector, because the specialists from the multilateral financial agency have always believed that the energy problem could be resolved by increasing collections, addressing the technical losses and reducing energy theft." The accountability is promises, promises, promises. I sympathize with your issues on bureaucrats.

José Antonio Vanderhorst-Silverio:

John, there are very large coordination saving by developing the new customer oriented electricity model. This is a proposal that customers are not expecting, but they love.

Miriam Then:

How is that? Jose, is no a rhetorical question. I would like to see the data that supports what he is saying. Otherwise, it is my personal believe that he lacks credibility.

José Antonio Vanderhorst-Silverio:

Miriam, there two things. One it is actually the experts, for example, retained by the World Bank, that suggested to the Government and the IMF to use a Customer Recuperation Index (CRI) to decide how to do the rationing of electricity, which at the time I opposed strongly. The other is in the post - there is no blame.

Miriam Then:

This is unrelated to DR, yet is about power grids, I thought you guys may find interesting. Hurricane Sandy and the limits of the smart grid http://www.pbs.org/wgbh/nova/insidenova/2012/11/hurricane-sandy-and-the-limits-of-the-smart-grid.html

José Antonio Vanderhorst-Silverio:

Miriam, the Smart Grid is actually the opposed approach to the Smart Market of customer oriented electricity. The experience we have to respond to hurricanes is great. The smart grid is regulator oriented electricity and thus is limited, because a regulator is unable to provide the differentiating service customers need.

8/11/12 1:18 p.m.

Jose Antonio Vanderhorst-Silverio

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For about 40 years, the Dominican Republic has undergone a severe crisis in the electric power sector. Experts have come and gone and the crisis gets worse and worse. What’s different in the Dominican Republic? I conjecture that we might have been ahead of the world for quite a while.

At this moment there is a great opportunity to show that we are ahead. From November 6 to 16, the International Monetary Fund is present in the Dominican Republic. To do it, I have suggested that the Letter of Intent of the government includes the following text:

1. The excessively prolonged Dominican electricity sector crisis is a systemic crisis.

2. The International Monetary Fund, World Bank and Inter-American Development Bank are important part of the Dominican electricity system.

3. Representatives of the International Monetary Fund, World Bank and Inter-American Development Bank should come prepared to participate with other traditional and non-traditional representatives of the system to define the new Dominican electricity sector model.

A new global whole system of the electric power industry has been trying to emerge. However, a shift from the traditional regulator orientation to a customer orientation is being blocked by the way in which the authorities think.

That thinking is driven by the traditional style of management being used by the Dominican Government and multilateral organizations. According to DR1 news of October 12, 2012, “President Danilo Medina says that the International Monetary Fund (IMF) is "fundamentally responsible" for the financial crisis that affects the Dominican electricity sector, because the specialists from the multilateral financial agency have always believed that the energy problem could be resolved by increasing collections, addressing the technical losses and reducing energy theft.”

DR1 adds that “Medina said that the issues go far beyond these problems. He said that ‘there are interests in the electricity sector that need to be dealt with. We cannot continue with the current model. We have to deal with it and we will do this through an electricity pact just as we will do with education.’” The current model introduced in 1999, kept a regulator orientation for the majority of consumers.

In return, according to Listín Diario, of October 13, 2012, “The International Monetary Fund (IMF) said yesterday that the result of the policies implemented by the government during the years 2011 and 2012 to avert the crisis in the power sector are the ‘absolute responsibility of the Dominican authorities.’” As you will see next an electricity pact is not needed, what’s needed is to design an unprecedented customer oriented electricity model. One such a model is already available as the Value Added Electricity minimalist architecture (formerly the Electricity Without Price Controls Architecture Framework).

According to the last law of the “The Fifth Discipline,” (Currency Doubleday, 1990) Peter Senge states that “there is no blame.” He says that “We all tend to blame someone – the competitors, the press, the changing mood of the marketplace, the government – for our problems. Systems thinking shows us that there is no separate ‘other’; that you and the someone else are part of a single system. The cure lies in your relationship with your ‘enemy’”

The thinking behind both parties reflects a non systemic kind of thinking, when we are dealing with a highly complex socio-technical system, where cause and effect are effect are not closed, in time, nor space. It can be said that the systemic crisis started under a severe energy crisis as far as 1972, when President Balaguer allowed industry to import and operate emergency electric service generator sets to satisfy their own supply security. In 1992, under another sever crisis, Balaguer allow any customer to satisfy their own supply security by purchasing emergency generators and the electricity storage emerging technology of battery inverters. The world had changed.


The result was a migration of what should have been, but was not, a fully coordinated, supply side supply security vertically integrated system, to an everyone for himself, extremely uncoordinated, demand side supply security. The responsibility to serve had not been fulfilled by the Dominican Corporation of Electricity. The result is a huge generation and storage installed capacity waiting to be integrated to power system planning, operation and control, under the Value Added Electricity minimalist architecture.

From a systemic point of view, a shift of the whole has been trying to occur. It can now be said that a global customer oriented system is trying to replace the century old regulator oriented system. Such a shift follows the system axiom described by Peter Senge and others in the book "Presence" (Sol, 2004) that says: “So we have a new axiom: ‘What is most systemic is most local.’ The deepest systems we enact are woven into the fabric of everyday life, down to the most minute detail.”

Both parties are part of the same system. Just as the electricity customers, they are very important part of the system. The solution to the crisis will no be available unless it is addressed as a systemic crisis.