DR1: Systemic Competitiveness Plan under way

The Dominican Republic has embarked on the preparation of its first National Systemic Competitiveness Plan, which seeks to generate guidelines to help raise the DR's level to that of a world-class country in 15 to 20 years. Mexican competitiveness expert, Rene Villarreal said that the country is already a world-class player in cigar exports, and he envisages that more areas could be added. Villareal, who has been entrusted with drawing up the plan, says that it will be ready in eight months time and will set the strategies to increase the country's capacity to compete. The program is one of local empowerment, with the strength coming from clusters. It brings government and the private sector together, focuses on logistics, innovation, an institutional framework and the rule of the law. Locally, the counterpart for the program that will cover all economic areas - energy, agriculture, industry and manufacturing, and tourism - is the National Competitiveness Council (CNC). The CNC works through clusters that bring together all players in a community, and seeks to empower these with the strategy so that when the government changes, the local communities ensure that the program, that has been agreed upon by all, may continue. Villareal stresses that what is needed is a change in business, labor, and government culture. In President Fernandez's own words, he said that Dominicans have to understand that competition should not be between ourselves, but with the outside. "That is a fundamental aspect of the work philosophy among us Latin Americans, that needs to be changed for one of working as a team," he stressed. He said that all groups need to be competitive in their area - business, sectors, government, country, teachers and unions - and that is why the plan is called "systemic." What is necessary is to integrate a chain of trust among all. Furthermore, Andres Van Der Horst of the National Competitiveness Council explained that Dominicans have to come together within their business associations to make statements that may be beneficial to the community. He said a paradigm change is necessary both in the public and private sector. "The private sector has to understand that the way to solve competitiveness problems is not by having breakfast with the minister. That is not sustainable."

As reported in Hoy, Villareal explained the plan will\nalso propose a change in the education system to a focus on learning how to learn and be creative. He says the country has the natural resources and entrepreneurial and business capacity. He said that there is still time to make changes that will benefit the population. He commented that in his native Mexico, changes were not made on time, and now the poor resent the rich, and are aggressive and not the "contented poor" of the 1970s. He says that in the DR the poor do not have that resentment, or hate that leads them to think, "Why don't I have what you have." He said that changes needed to be made before the country gets to the point where Mexico is where the poor were marginalized for too many years, and today the population must suffer the consequences in\nthe shape of violent crime and all its effects.

Villareal is making a diagnosis of the weaknesses and strengths of the country as far as competitiveness is concerned. But he stresses that a game plan and team strategy, together with passion and commitment is needed to move ahead. "But also, if we do not believe we can become champions, we wont make it. Then we have to believe we can be world-class," he says. The program began on 29 March with a meeting between the President and his cabinet.

Please Blame the Deregulation and Regulation Fiascos Parte 35

Gentlemen,

Steve has added a very good comment once again.

I missed the ironic nature of Len's comment, if there was one. I thought he was talking about Hogan's long captivity after the death of Schweppe. I am very proud to say that I am captive of no one Yet.

Reading Steve argument about what conventional wisdom have told that only commercial and industrial are responsive, I remember that Bob Lieberman found out that convencional wisdom is wrong. Please look a the single 4 paragraph comment to Strategic Perspectives on Utility Enterprise Solutions, by Warren Causey, Vice President, Sierra Energy Group comment. This is the insight in 2 of the paragraphs:

[comment starts.] With the presentation " Ruminations on Demand Response - a view from Chicago," Bob Lieberman has given a new hope to residential real-time pricing based on the existence of a risk premium, part of which responsive customers can pocket. Bob adds that conventional wisdom regarding that real-time pricing of residential customers won’t work was proven wrong. Lieberman identifies 4 problems to be overcome develop the market: 1) Short term thinking; 2) Who's job is it?; 3) Overcoming the "DR is about protection system "mindset; and, 4) Explaining to customers what we are talking about and what's in it for them.

By taking a close look to "An Alternative Business Case for Demand Response," my comments to Why We're Selling Advanced Metering All Wrong... And How to Sell It Right and the discussions on "Energy Bill 2005 - A Waste of Time?" and "2006: New Challenges and Opportunities in the Brazilian Electric Energy Arena" all 4 problems can be addressed by competitive retail marketers, with innovative business designs under their own Retailers Enterprise Solutions. The result will be a new paradigm of the electricity industry for the new global economy, where increased efficiency will result. Every customer will be able to chosse value added from electricity and the mayority of customers will have lower prices, after a while. [Comment ends.]

My earlier comment to Steve answered issue 2 (the retailer will be in charge) and 4 (education and empowerment). Issue 1 is the restructuring issue: we need a paradigm that is trully consistent in the long run for the winning market. Issue 3 is better synthesized by EPRI's President above. This is the unconventional wisdom mental model.

Please take a look at "A Dominican Strategy" is Featured in The Business Scene Section of the IEEE Power & Energy Magazine.

I will be out of the discussions on a short vacation from tomorrow until next wednesday.

Regards,

José Antonio

Please Blame the Deregulation and Regulation Fiascos Parte 34

Dick Maclay has offer more light to the discussion as follows:

Len, I am not now, and never have been, an academic. I did participate in deregulation of railroads, and set some precedents in contracts I negotiated. I learned from that experience how beneficial deregulation can be, and how it really works. I will read your references.

Steve, the problem with the Hogan Mental Model is that it does not work. Cost-of-service regulation, the Banks Mental Model, works. If regulators could be more innovative (an oxymoron) then space C, the Unextended Schweppes Mental Model, would replace the Banks model, because it would be a better form of regulation. Market competition, also called Space D and the Extended Schweppes Model, works because competition between suppliers and price elasticity discipline prices.

The Hogan model leaves peaking generators with annual losses each year. When we introduce year-to-year dynamics we see there is an incentive to close power plants, but none to build them. Shortages are inevitable with the Hogan Mental Model. When the shortages occur there is no price discipline because there is no cost-of-service regulation and no price elasticity effect.

Ferdinand suggested that I blamed California’s disaster on the drought. That is not the case. Whatever industry structure we use should cover all states of nature, and droughts are one of those. It was the Hogan model that did in California. Both PG&E and the ISO considered bringing in whatever generation could be mobilized quickly to meet the shortages they saw looming. In a cost-of-service world PG&E would have done so, and been paid for it. The ISO thought it should fill those shoes when PG&E realized it was no longer responsible for reliability. But the PUC told the ISO not to proceed. Providing generation is not its role. But without contracts, most generators were not willing to bring in generators to serve short peaks. The unregulated part of PG&E tried to bring in a barge with FT4 generators, but environmentalists kept it out of the Bay. All that was left was demand reduction. But following the Hogan model, there was no retail price signal. Governor Davis could have done what is done when water is short and called for voluntary reductions in use. Instead, he proclaimed that there was no problem. In the circumstance resulting from piling on so many stupidities, wholesale prices could rise to infinity because there was no price discipline. Unlike cost-of-service and open markets, the Hogan model is internally inconsistent. Perhaps it would be more correct to call it internally incomplete.

Various attempts are being made to fix the Hogan model. One way to fix it is to allow mergers among generators until market power is sufficient to raise wholesale prices to levels that justify supplying all the power demanded at regulated prices. But how many mergers is one too far? I suspect a close examination of Ferdinand Bank’s complaints may reveal that he is complaining about such a system. His criticisms are applicable to such a system.

In the U.S., the favored fix for the Hogan model now is capacity markets. This creates an additional revenue stream that hopefully brings total revenues up to cost-of-service levels. My question about this approach is, why bother? We are left with something that has the underlying inefficiencies of cost-of-service regulation, without the consistency of cost-of-service regulation.

I agree with Steve that the average residential consumer is not interested in more complexity in their lives. It is the industrial and commercial customers, typically two-thirds of the load, that are interested in competition. We could reap much of the available efficiency by deregulating those who want to be deregulated. But, unlike the California fiasco, leaving cost-of-service should be a one way street. During a shortage period spot market prices probably will be higher than regulated prices. Those who choose competition and choose not to hedge should not be allowed to take the lower of market or regulated prices.

Please Blame the Deregulation and Regulation Fiascos Parte 33

Steve comment came as I was writing in this "inactive," but very active discussion. He is correct that there are no physical implementations of Electricity WPC. He is wrong in regard to customers’ active participation as envisioned by EPRI. Retailer’s business model innovations are the key to educate and empower customers, so that they can segment themselves in accordance with their needs.

Going back to the essence of the article “The fallacy of blaming deregulation for rising electricity prices,” what is evident is that the hypothesis is mistaken. The common consumer like Prof. Banks will only be very happy when they receive, as late Prof. Schweppe said, "more service from the use of electric energy per dollar spent." That is the new hypothesis!

Please Blame the Deregulation and Regulation Fiascos Parte 32

Thanks Dick for your complementary description that place us in the same track. The interesting idea about making retailers responsible for metering was borne in a discussion, in which Len participated, on the article Energy Bill 2005 - A Waste of Time?, by Amatsia Kashti, Managing Director, Olive Domestic Metering Ltd. The following is what I said:

[Comment begins.] Dr. Kashti analysis should be completed by including the Demand Response part of the bill and to look at other benefits that an AMI infrastructure will bring to the business case for such enlarged service.

I agree with Len, there is no "business case" for present businesses to implement this metering service. However, I believe that a "business case" for the enlarged service, that will lead to the End-State of the electricity industry requires a true retail deregulation, where retailers compete with each other, and where as Dr Kashti says "metering is taken out of the hands of the" distributors (utilities that will then simply transport electricity to end users).

Such "business case" is based on my article "An Alternative Business Case for Demand Response," which solves the "basic reliability control purposes" that Len left out. I believe that Demand Response is a demand side risk management tool that complements the “LOLP” supply side risk management tool. To implement the “basic reliability control,” retailers segment customers by their supply security requirements.

As can be seen, retailer’s jobs are to minimize customer’s short run and long run electricity costs. Retailers may do that by purchasing the energy requirements from energy suppliers and the spot market. Retailers will also be deploying demand response, and energy efficiency, which by the way are, respectively, their most important tools to control the spot price, and to negotiate long term contracts with suppliers. Instead of a dream, as David claims, I think this is a very clear vision of the End-State of the electricity industry.

By the way Len, I think the natural T&D monopolies will still require regulation. [Comment ends.]

In other comments I have expressed that retailers’ business model innovations should be centered on AMI, CIS and demand response integration. That leads to the market winning approach, which is the first phase of competition: market vs. market, where collaboration is the critical strategy according to Geoffrey Moore in the book “Living on the fault line.”

Len articles are part of the second phase of competition: company vs. company. That is a zero sum game, and so competition is the core strategy. That is why I don’t want to take sides yet. Sorry Len, I think your approach is one of several available to retailers. Good luck!

Regards,

José Antonio

Please Blame the Deregulation and Regulation Fiascos Parte 31

Steve Rozenman is not convinced, but it seems he will never be convinced like Prof. Banks.

I have been following the exchange between Dick Mclay and Jose Antonio
Vanderhorst-Silverio and sensed a religious-like fervor and faith in what is
still basically a concept. This comment should not be taken as criticism, but
rather as a way of calling for a back step unto reality. The premise here is
that the common consumer is just waiting to be provided with all the information
and proper metering so he can engage in the retail business of electricity. In
my opinion, Hogan’s model is based on the real life fact that the consumer is
hardly interested in such business. Is it probable that the business of
electricity ranges between a regulated utility and wholesale trade, not beyond
that? . If this is correct, than Deregulation has to be examined and adapted for
such a constellation.

Please Blame the Deregulation and Regulation Fiascos Parte 30

Above sequence illustrates why captive academics are so valuable to entrenched interests. The academics are masters of techniques such as appearing to discredit ideas they'd prefer go away by simply refusing to acknowledge them while taking sidelong swipes at them in their memo's to each other.

eg. "You probably add that the centralized metering system would be designed by committee and, therefore, expensive to boot." What's the ideal alternative? Everybody installs whatever meter they like *<}

I'm still waiting for anyone to acknowledge Independent Market for Every Utility Customer - Preliminary Business Case or Independent Market for Every Utility Customer Part 2 - Market Operation

Please Blame the Deregulation and Regulation Fiascos Parte 29

Dick Maclay has offered a very good response:

Jose Antonio, thanks for the clarifications. I followed the references and I think we are on the same track. Without proper price signals to customers the choice of energy services is distorted by misinformation.

I believe one of your points is that the Banks Model (space A) and the Hogan Model (space B) both fall victim to bad consumer decisions based on misinformation in regulated prices. Hogan introduces volatility by disconnecting wholesale and retail prices. All he adds are disasters like the one that befell California. (I am viewing Hogan as the dominant of the two models occupying Space B, Hogan and Enron.)

Your description of Scheppe is that of someone I consider a nieve optimist. The Banks model could incorporate good price information by differentiating retail prices over time, but it does not for political reasons. Centrally planned command and control systems from communism to cost-of-service regulation become highly politicized. And good price information is just plain inconvenient to deal with. The easy way to deal with it is political pressure to get relief from it! It would be interesting to see what Ferdinand Banks would make of the UNextended Shweppes model. He may not object to it since it can be centrally administered. In fact, during the early years of cost-of-service regulation in the U.S. regulators sought retail pricing that would encourage greater overall efficiency. But regulation is subject to entropy, and there is too little energy left in it to overcome the political pressures to ignore uncomfortable realities that need to be addressed to achieve economic efficiency. So I see space C as an idealized version of space A. It envisions a world that has faded away in political feasibility as its physical feasibility has been pretty well perfected.

Space D, the extended Schweppe Model, removes the politics of space C by removing the regulators. This is the essence of the history of successful deregulation in other industries. Removing regulators disables manipulation by political means to hide reality. In this context, considered harsh by the lazy, efficiency and low prices result. In the mid 1990s I named the emergence of real markets, Space D, the Polish Scenario. Our modeling showed muted price rises in the Polish Scenario with a major drought in a system where a third of annual energy came from hydro, and a major drought cut hydro energy in half. The scenario I named Belarus assumed enforcement of the Hogan model, and it accurately forecasted the disaster for California inherent in the Hogan model five years before the fact. We never revealed the names of our scenarios to company management when we adopted the Belarus Scenario as the base case. We did not want the rewards that went with revealing that we thought they were as smart as the Belarus.

Have I wondered from your views of the spaces?

Your note about metering is interesting. I gather that you see a centralized vision as too limiting to include the proper parameters for enabling contracts between retailers and their customers the restricted regulatory mind failed to imagine. You probably add that the centralized metering system would be designed by committee and, therefore, expensive to boot.

"A Dominican Strategy" is Featured in The Business Scene Section of the IEEE Power & Energy Magazine

The Institute of Electrical and Electronics Engineer published my article A Dominican Strategy in the May-June issue of Power and Energy Magazine.

This is what the editor Mel Olken said to introduce the article in With Age, Some Wisdom:

In the previous issue of IEEE Power & Energy Magazine, Hyde Merrill articulately broached the subject of electricity supplies in the poorer nations of our world. "The Business Scene" column in this issue continues the discussion on that same subject. The contributor, Dr. José Antonio Vanderhorst-Silverio, is from the Dominican Republic and the subtitle of the column is "Customer-Oriented Risk Management." Dr. Vanderhorst-Silverio describes an electric system that has an excess of supply but because of poor reliability, a very expensive individual cost to allay the inevitable shortages that result. He then makes the case for voluntary demand responsiveness as a possible solution and links the program to the economic benefits that demand response resources (DRR) could produce for the Dominican Republic. It is of interest to note that the Dominican Republic has been invited to participate in an upcoming round of demand responsiveness discussions with nations that include China, India, Kenya, and Thailand—certainly a most diverse gathering.

I take it as a great present for the first anniversary of the BMH blog.

Editorial Periódico Hoy: Reto Permanente

Encontrar solución para el problema del sistema eléctrico de este país es un reto con carácter de permanencia.

No importa lo que digan el FMI, el Banco Mundial o el BID, siempre habrá voluntades obstaculizando las soluciones.

Uno de los más graves obstáculos para el avance de un negocio de venta de algún bien o servicio es la falta de vocación de pago por parte de una proporción muy alta del sector que demanda.

Si a esto se suma el fracaso de un modelo de capitalización de la empresa eléctrica estatal por no haber previsto medios para hacer que la gente pague la energía, veremos que habrá reto por mucho tiempo.

Nuestros problemas no son de capacidad de generación instalada. En términos nominales se sobrepasa con mucho la demanda, y en términos netos también.

Lo que ha sumido en un permanente déficit al sector eléctrico es la falta de pago para cubrir los costos de la capacidad instalada.

El precio del kilovatio hora en nuestro país es abusivo, porque, entre otras cosas, para poder cubrir parte de los costos del sector se recurre a la práctica cuasi delictiva de hacer que los clientes solventes paguen el consumo de los morosos y tramposos.

Es un "remedio" que ha hecho mutar de solvente a moroso a mucha gente que era puntual en sus pagos de la energía utilizada. Por eso el déficit del sector eléctrico está en constante crecimiento.

No se entiende cómo un servicio estratégico como el suministro de energía eléctrica, que mueve el motor de la economía en todos los sentidos, puede llegar a estos niveles de calamidad.

Hay fallas de origen en el modelo de capitalización y lograr resolverlas será siempre un reto permanente, a menos que el Estado cuelgue la túnica política con que se ha estado presentando ante el problema.

Clarifications About the Electricity WPC the Market Winner

1. Please Blame the Deregulation and Regulation Fiascos Parte 28
10 May 2006
Dick, I will add that States that deregulated on Hogan's model might have created large unnecesary inefficiencies that States that have no deregulated can avoid. Also, central to the Electricity WPC restructuring is that selecting one ...

2. Please Blame the Deregulation and Regulation Fiascos Parte 27
10 May 2006
Dick, I agree that Banks' mental model is cost of service regulation. Schweppe's mental model is best explained by the post Some Friendly Comments on True Electric Deregulation Part 4 on the GMH blog (the original comment is under the ...

3. Please Blame the Deregulation and Regulation Fiascos Parte 26
10 May 2006
Dick, The most important elements of Schweppe's unextended mental model are the demand response element and the tight nature of T&D. That is a prerequisite that was bypass by Hogan's missunderstanding of the energy marketplace and the ...

4. Please Blame the Deregulation and Regulation Fiascos Parte 25
10 May 2006
Dick Maclay asked for clarifications on the mental models:. Jose Antonio, I would just like to confirm the differences among your mental models, if you would be so kind. This is my understanding of the essence of the models: ...

5. Please Blame the Deregulation and Regulation Fiascos Parte 24
10 May 2006
Thanks Len. The road to Electricity WPC requires many hurdles to be passed. Metering is just one of the components. A demand response system is another. Still Customer Information System an additional one. On the wires side, ...

6. Please Blame the Deregulation and Regulation Fiascos Parte 23
10 May 2006
Len Gould says: I agree with Mr. Vanderhorst-Silverio that advanced metering can provide a true market in electricity if combined with open access for all to an electronic central market of offers from generators, and provided all ...

7. Please Blame the Deregulation and Regulation Fiascos Parte 22
10 May 2006
Yes Steve, Retail competition under Electricity WPC is a viable business. The metering infrastructure leading to demand response will pay for itself just on the other operational benefits. Bringing together sellers and buyers is the job ...

8. Please Blame the Deregulation and Regulation Fiascos Parte 21
10 May 2006
Steve Rozenman questions whether retail is viable:. Jose Antonio This has been a long discussion with excellent feedback from everyone. But no one questioned the fundamental premise, upon which the entire deregulation rests namely, ...

9. Please Blame the Deregulation and Regulation Fiascos Parte 20
10 May 2006
I said I didn't want to fight with Prof. Banks. This is what he wrote when he flew out the dialogue:. Dick Maclay tells us that the deregulation fiasco in California was caused by the weather. Some people ascribe General Custer's ...

10. Electricidad SCP y la Estratregia de Competitividad
8 May 2006
Las exportaciones al mercado americano pueden aprovecharse de una electricidad, que si bien no sea de precios aparentemente bajos, apoye la estrategia de competitividad basada en la agilidad y la cercanía. ...

Please Blame the Deregulation and Regulation Fiascos Parte 28

Dick,

I will add that States that deregulated on Hogan's model might have created large unnecesary inefficiencies that States that have no deregulated can avoid. Also, central to the Electricity WPC restructuring is that selecting one central advanced metering infrastructure is very risky in regard to demand response evolution. Competition of complete retail marketing business models is central Electricity WPC. Schweppe's unextended mental model had those infrastructure risks.

Please Blame the Deregulation and Regulation Fiascos Parte 27

Dick,
I agree that Banks' mental model is cost of service regulation.

Schweppe's mental model is best explained by the post Some Friendly Comments on True Electric Deregulation Part 4 on the GMH blog (the original comment is under the EnergyPulse article A Few More Unfriendly Comments on Electric Deregulation by Prof. Banks ).

In the post, both Enron's and Hogan's mental models are represented in Space B, where price spikes larger than necessary are expected when the system operates close to capacity. The "system" in Space A was in fact several area systems (not necessarily control areas) interconnected by tie-lines, which in Space B become congested very easily. The shift from Space A to Space C can be centered in the many area systems avoiding the congestion of tie lines.

I am copying part of the above post that says: " ‘…A spot price based energy marketplace is a win-win situation for both the regulated utility and its customers. The customer's lifestyles improve because the customers are receiving more service from the use of electric energy per dollar spent. The utility has a more controllable, less uncertain world in which to operate.’ That is exactly the opposite of what has been happening, by leaving the customer out in the re-regulation efforts. Demand response will change that."

So, what I am saying is that Schweppe's extended mental model it is NOT what most of those commenting in this thread were agreeing is desirable from the beggining. It is much different than just simple retail. It is a win-win mental model with lower price volatility, where the end-customer is not an afterthought.

I accept that the details about the difference between Hogan's model and Enron's model might not be substantial. My point is that Hogan himself was against the final Enron’s mental model. In addition, I agree that Hogan's mental model was being pushed closer to vertical integration before accepting to include demand responsiveness.

Regards,

José Antonio

Please Blame the Deregulation and Regulation Fiascos Parte 26

Dick,
The most important elements of Schweppe's unextended mental model are the demand response element and the tight nature of T&D. That is a prerequisite that was bypass by Hogan's missunderstanding of the energy marketplace and the development of stages 1, 2 3 and 4. It is not just to allow a retail, but a truly responsive regulated energy marketplace. What I have been doing is working on the architecture of electricity without price controls to the customer and recognizing the need of retail market development should be an integral part of transforming the electric power sector into a regular business environment.

Today I am tied up. Tomorrow I will expand and give you some links to earlier discussions on EnergyPulse.

Regards,

José Antonio

Please Blame the Deregulation and Regulation Fiascos Parte 25

Dick Maclay asked for clarifications on the mental models:

Jose Antonio, I would just like to confirm the differences among your mental models, if you would be so kind. This is my understanding of the essence of the models:
The Banks model is traditional cost of service regulation.

The Extended Schweppe model is the open competition with choice for all retail customers. It is whatt most of those commenting in this thread are agreeing is desirable.

The Hogan model confines markets to the wholesale sector, while maintaining regulation for the retail sector of the market.

The Enron model is a variant on the Hogan model in which the ISO and the power exchange are separated. I am a little confused about this one because the industrial customers in California pushed hard for separation of the ISO and power exchange. They wanted to be able to bypass the power exchange in their direct access power purchases, and have the ISO clearly limited to only those activities associated with system reliability. They were concerned that if the ISO ran the power exchange they would get dragged into it, or be adversely influenced by it. So the intent was to achieve something like the Schweppe results. Unfortunately, wires and commodity prices were not properly separated. The wires prices included subsidies of power purchases by the utilities on the assumption there would be stranded costs, plus some confusion by regulators on the proper long-term separation of the two. As a result, power exchange bypass only worked for some very large customers. So is your Enron mental model a variant of the Hogan model, regardless of the unfulfilled hopes of many of its supporters? In that case does it exclude retail customer choice?

If I understand the Hogan model correctly, it does not allow generators to bid high enough to recover all of their capital amortization without periods of tight balance between supply and demand. But without the discipline of retail price elasticity, prices can soar in such periods, so some sort of oversight is soon demanded. But then a capacity market is required to collect the amortization of capital costs not fully collected in the managed spot market. Since capacity is charged to retailers on an average cost basis, I wonder why the money to be recovered in the capacity charge is not given the name ‘rate base’. In the end the Hogan model does not seem much different from the Banks model unless generators avoid the need for a capacity market by merging until they can collect money for plant amortization through monopoly power instead of administered payments. And in that event Ferdinand's concerns have some validity.

Please Blame the Deregulation and Regulation Fiascos Parte 24

Thanks Len.

The road to Electricity WPC requires many hurdles to be passed. Metering is just one of the components. A demand response system is another. Still Customer Information System an additional one. On the wires side, a clean slate reengineering is a recommended approach to integrate data coming from retailers.

My suggestion is that retail marketers compete with other retail marketers based on theirs business model innovations. There are many posible approaches to retail marketing and by selecting a given advanced metering component design will be taking the associated risk. When I participated at the last AMRA meeting there were many possibilities available, many of which were not end to end solutions.

Competitive retailers regulation should be changed to prudential regulation,similar to that of the banking industry. Regulation for T&D should stay as is .

Please Blame the Deregulation and Regulation Fiascos Parte 23

Len Gould says:

I agree with Mr. Vanderhorst-Silverio that advanced metering can provide a true market in electricity if combined with open access for all to an electronic central market of offers from generators, and provided all generation, including the smallest residential CHP or etc. generating equipment can participate fairly in that market without exhorbitant connection fees or standby fees etc.
Distribution should be compensated a flat rate based on amortization of capital invested + O&M (or perhaps max. service load capacity), regardless of customer consumption.

One interesting possibility at

http://www.energypulse.net/centers/article/article_display.cfm?a_id=1176

http://www.energypulse.net/centers/article/article_display.cfm?a_id=1181

With this in place, then feel free to completely remove all regulation.

Please Blame the Deregulation and Regulation Fiascos Parte 22

Yes Steve,

Retail competition under Electricity WPC is a viable business. The metering infrastructure leading to demand response will pay for itself just on the other operational benefits. Bringing together sellers and buyers is the job of the retail marketers business models.

Electricity WPC is not a scam. I knew Prof. Banks' mental model would be kept on the losing side, together with the other losers: Enron's and Hogan.'s mental models.

Please Blame the Deregulation and Regulation Fiascos Parte 21

Steve Rozenman questions whether retail is viable:

Jose Antonio

This has been a long discussion with excellent feedback from everyone. But no one questioned the fundamental premise, upon which the entire deregulation rests namely,

Retail Competition! . The question is:

Is retail of electricity a viable business? Can it bring together Sellers and Buyers? Is the common consumer of electricity interested in spending his time in engaging in such activity?. If the answer is hardly!, than all this deregulation in electricity is a big waste for the short duration of humans on this planet

Please Blame the Deregulation and Regulation Fiascos Parte 20

I said I didn't want to fight with Prof. Banks. This is what he wrote when he flew out the dialogue:

Dick Maclay tells us that the deregulation fiasco in California was caused by the weather. Some people ascribe General Custer's troubles on the Little Big Horn to the same source.

As for myself, I don't intend to believe Mr Maclay on this or any other matter, nor do I intend to take any of the half-baked advice that he so generously offers, most of which is based on a distortion of the facts. I suggest though that he and Jose and others of the same persuasion offer their services to the California state legislator who got the deregulation swindle on the road, but who later went over to the other side. US senators Byron Dorgan and Ernest Hollings might also need some help, since they have been running around telling people that electric deregulation is a scam. Honorable senators and others, it's worse than a scam.

Thank you for your time, gentlemen, but as for myself I'm going back to considering the great world of oil. However if we find ourselves in the same conference or seminar venue discussing this electric deregulation rip-off, I'll be only too glad to show you a thing or two.