13 de enero, 2007. Del frente de guerra local.
Mientras la ESCP gana la guerra mundial de los mercados eléctricos, como se puede ver en la nota ESCP Gana Guerra Mundial de los Mercados Eléctricos, durante el día de ayer, 12 de enero de 2006, se escenificaron cruentas luchas en el frente de batalla local, entre las fuerzas de leales a la ESCP y los que querían sancochar modificación de la LGE. Para detalles de las acciones del GMH en el frente internacional, pueden ver la nota en inglés Memoria Reciente del Frente de Guerra.
Los ataques, dirigidos por Rolando Reyes y Bernardo Castellanos, aparentemente de las fuerzas del gobierno y de la contrarreforma ahora leales a la CDEEE, respectivamente, recibieron gran resistencia tanto del propulsor de la ESCP a ambos ataques, como de las fuerzas amigas al GMH a los ataque del segundo.
Después de un cañonazo personal de Bernardo al propulsor de la ESCP, para desconcertar al GMH, los amigos del GMH, primero Rhadamés García, y luego Américo Sánchez Díaz, lanzaron fuertes cohetes teledirigidos a las posiciones que estaban destinadas a favorecer el intento de sancochar la modificación de la LGE en la Cámara de Diputados.
El GMH agradece el apoyo brindado por el FORO ELECTRICO en una reunión previa a los enfrentamientos. Milton Tejeda hizo aportes importantes y oportunos tanto en conseguir copia electrónica de la modificación de la LGE, como en la redacción del comunicado, que a pesar de no ser difundido a la prensa, entendemos que llenó plenamente su cometido. Frank Castillo y César Félix también colaboraron en defensa de la ESCP. Puede que en los créditos estemos dejando importantes aportes de otros que también los merecen.
Una fuente vinculada al propio Presidente Fernández, que pidió no ser identificada, envió dos mensajes: el primero, para indicar que estaban al tanto de los intercambios; y el segundo, para congratular el esfuerzo, que había resultado en la extensión de la legislatura y el envío a comisión del proyecto de modificación de la LGE.
© 2007, José Antonio Vanderhorst Silverio, Ph.D.
sábado, enero 13, 2007
ESCP Gana Guerra Mundial de los Mercados Eléctricos
EnergyPulse, 13 de enero 2007. Del frente de guerra internacional.
El pasado 11 de enero de 2007, terminó la guerra de los mercados eléctricos con una victoria de electricidad sin control de precios al cliente. Es una guerra que se inició en los años 80 dirigida por Fred C. Schweppe desde MIT y que perdió vigencia con su muerte en 1988 hasta finales del año 2005 cuando el GMH reinició los combates. En la última semana se desarrollaron las dos batallas finales de la guerra mundial de los mercados eléctricos con menor intensidad que la de la primera batalla “Jugando con Fuego,” en la cual hubo otros enfrentamiento adicionales.
Como se había reportado, el frente de batalla se movió primero al terreno debajo del artículo The Potential for Residential Demand Response on Transmission and Distribution Assets. La audiencia de Internet lo ha mirado 1,341 veces y consta de 15 comentarios a las 11:36 a.m. de esta fecha. Las escaramuzas fueron libradas por el Dr. José Antonio Vanderhorst Silverio, Ph.D, de parte de la ESCP, y por los expertos energéticos Roger Arnold y Len Gould. El ataque de Arnold había sido ya repelido con una sola nota. Los insistentes ataques de Gould, en ambos frentes de batalla, en defensa de su switchboard (central de conmutación) IMEUC y en contra de los precios marginales locacionales (LMP, por sus siglas en inglés) fueron repelidos.
A pesar de la estrategia de los que se encontraron perdidos, para restringir los enfrentamientos debajo del artículo Playing with Fire – Part II al tema al gas natural y así no pelear la guerra de los mercados eléctricos a la luz pública, insistieron en que la guerra siguiera debajo del artículo Playing with Fire - The 10 Tcf/year Supply Gap -- Part I, que ya había cumplido su cometido.
No obstante, Vanderhorst-Silverio colocó una nota debajo de Playing with Fire – Part II, para asegurar que la Guerra había terminado a favor de la ESCP. James Carson ignoró ese ataque y al que le siguió que fue más potente y demostró sin lugar a dudas que la guerra podía seguir. Carson regresó al primer frente con nuevos ataques que fueron repelidos, uno de los cuales sirvió para abrir la batalla final en el segundo frente y ganar la guerra. Las acciones de Banks que defiende a rajatabla el Modelo I, pasaron de ser cada vez menos agresivas a ser respetuosas a la emergente ESCP. Esta segunda y posiblemente última batalla “jugando con fuego,” se libró ante una audiencia de Internet que lo ha mirado 4,516 veces y que consta de 64 comentarios a las 1:00 p.m. de esta fecha.
El último ataque de la ESCP fue precedido por la presentación de los escenarios “jugando con fuego” y “apagando el fuego,” que representan los caminos del Modelo 2 a ser evitado y el de la ESCP a ser promovido, respectivamente. Rozenstock lo consideró como un ataque injusto, en contra de los intereses creados en la industria eléctrica, que no tenía sentido, argumentando que el sacrificio debería ser compartido con otros sectores de la economía. Los lectores no deben dejar de leer la nota A Generative Dialogue Without Illusions Part 20, que infiere la estocada mortal a los intereses creados y donde queda bien claro que el único sacrificio lo han experimentado los clientes más pequeños en muchas partes del mundo, debido a la extensión por más de una década del obsoleto negocio de las distribuidoras comercializadoras basado en ganarle casos tarifarios a los reguladores.
Podemos concluir que el Modelo #3, la electricidad sin control de precios (ESCP), ha ganado la guerra. Los mercados contendores Modelo #1, el viejo mercado de integración vertical, y Modelo #2, la liberación defectuosa de mercado, basada en el acceso abierto a transmisión y la carga “nativa,” han resultado perdedores. El monopolio de comercialización de las distribuidoras a los clientes regulados tiene sus días contados. Centremos todo el esfuerzo en el proceso de transición hacia la ESCP.
© 2007, José Antonio Vanderhorst-Silverio, Ph.D.
El pasado 11 de enero de 2007, terminó la guerra de los mercados eléctricos con una victoria de electricidad sin control de precios al cliente. Es una guerra que se inició en los años 80 dirigida por Fred C. Schweppe desde MIT y que perdió vigencia con su muerte en 1988 hasta finales del año 2005 cuando el GMH reinició los combates. En la última semana se desarrollaron las dos batallas finales de la guerra mundial de los mercados eléctricos con menor intensidad que la de la primera batalla “Jugando con Fuego,” en la cual hubo otros enfrentamiento adicionales.
Como se había reportado, el frente de batalla se movió primero al terreno debajo del artículo The Potential for Residential Demand Response on Transmission and Distribution Assets. La audiencia de Internet lo ha mirado 1,341 veces y consta de 15 comentarios a las 11:36 a.m. de esta fecha. Las escaramuzas fueron libradas por el Dr. José Antonio Vanderhorst Silverio, Ph.D, de parte de la ESCP, y por los expertos energéticos Roger Arnold y Len Gould. El ataque de Arnold había sido ya repelido con una sola nota. Los insistentes ataques de Gould, en ambos frentes de batalla, en defensa de su switchboard (central de conmutación) IMEUC y en contra de los precios marginales locacionales (LMP, por sus siglas en inglés) fueron repelidos.
A pesar de la estrategia de los que se encontraron perdidos, para restringir los enfrentamientos debajo del artículo Playing with Fire – Part II al tema al gas natural y así no pelear la guerra de los mercados eléctricos a la luz pública, insistieron en que la guerra siguiera debajo del artículo Playing with Fire - The 10 Tcf/year Supply Gap -- Part I, que ya había cumplido su cometido.
No obstante, Vanderhorst-Silverio colocó una nota debajo de Playing with Fire – Part II, para asegurar que la Guerra había terminado a favor de la ESCP. James Carson ignoró ese ataque y al que le siguió que fue más potente y demostró sin lugar a dudas que la guerra podía seguir. Carson regresó al primer frente con nuevos ataques que fueron repelidos, uno de los cuales sirvió para abrir la batalla final en el segundo frente y ganar la guerra. Las acciones de Banks que defiende a rajatabla el Modelo I, pasaron de ser cada vez menos agresivas a ser respetuosas a la emergente ESCP. Esta segunda y posiblemente última batalla “jugando con fuego,” se libró ante una audiencia de Internet que lo ha mirado 4,516 veces y que consta de 64 comentarios a las 1:00 p.m. de esta fecha.
El último ataque de la ESCP fue precedido por la presentación de los escenarios “jugando con fuego” y “apagando el fuego,” que representan los caminos del Modelo 2 a ser evitado y el de la ESCP a ser promovido, respectivamente. Rozenstock lo consideró como un ataque injusto, en contra de los intereses creados en la industria eléctrica, que no tenía sentido, argumentando que el sacrificio debería ser compartido con otros sectores de la economía. Los lectores no deben dejar de leer la nota A Generative Dialogue Without Illusions Part 20, que infiere la estocada mortal a los intereses creados y donde queda bien claro que el único sacrificio lo han experimentado los clientes más pequeños en muchas partes del mundo, debido a la extensión por más de una década del obsoleto negocio de las distribuidoras comercializadoras basado en ganarle casos tarifarios a los reguladores.
Podemos concluir que el Modelo #3, la electricidad sin control de precios (ESCP), ha ganado la guerra. Los mercados contendores Modelo #1, el viejo mercado de integración vertical, y Modelo #2, la liberación defectuosa de mercado, basada en el acceso abierto a transmisión y la carga “nativa,” han resultado perdedores. El monopolio de comercialización de las distribuidoras a los clientes regulados tiene sus días contados. Centremos todo el esfuerzo en el proceso de transición hacia la ESCP.
© 2007, José Antonio Vanderhorst-Silverio, Ph.D.
Memoria Reciente del Frente de Guerra
Para ver la memoria de los ataques y defensas del GMH, hasta las 1:41 p.m. del 13 de enero de 2007, antes las embestidas de los contrarios, pueden ver las todas las acciones debajo de cada frente de batalla o pueden ver las últimas acciones libradas por el GMH en las notas publicadas en la Bitácora Digital:
Frente de batalla debajo del artículo The Potential for Residential Demand Response on Transmission and Distribution Assets:
Demand Response Under EWPC Part 5
Demand Response Under EWPC Part 4
Demand Response Under EWPC Part 3
Demand Response Under EWPC Part 2
Frente de batalla debajo del artículo Playing with Fire – Part II:
A Generative Dialogue Without Illusions Part 20
A Generative Dialogue Without Illusions Part 19
A Generative Dialogue Without Illusions Part 18
A Generative Dialogue Without Illusions Part 18
A Generative Dialogue Without Illusions Part 17
A Generative Dialogue Without Illusions Part 16
A Generative Dialogue Without Illusions Part 15
A Generative Dialogue Without Illusions Part 14
A Generative Dialogue Without Illusions Part 13
A Generative Dialogue Without Illusions Part 12
A Generative Dialogue Without Illusions Part 11
A Generative Dialogue Without Illusions Part 10
Frente de batalla debajo del artículo The Potential for Residential Demand Response on Transmission and Distribution Assets:
Demand Response Under EWPC Part 5
Demand Response Under EWPC Part 4
Demand Response Under EWPC Part 3
Demand Response Under EWPC Part 2
Frente de batalla debajo del artículo Playing with Fire – Part II:
A Generative Dialogue Without Illusions Part 20
A Generative Dialogue Without Illusions Part 19
A Generative Dialogue Without Illusions Part 18
A Generative Dialogue Without Illusions Part 18
A Generative Dialogue Without Illusions Part 17
A Generative Dialogue Without Illusions Part 16
A Generative Dialogue Without Illusions Part 15
A Generative Dialogue Without Illusions Part 14
A Generative Dialogue Without Illusions Part 13
A Generative Dialogue Without Illusions Part 12
A Generative Dialogue Without Illusions Part 11
A Generative Dialogue Without Illusions Part 10
Demand Response Under EWPC Part 5
On January 11th, 2006, I posted the following message under the article The Potential for Residential Demand Response on Transmission and Distribution Assets to respond to Len Gould:
Len had Gould said:
AMR or whatever subsystem it evolves to also comes in different flavors. Retail business design innovations depend on the whole customer interface.
Len had Gould said:
Given that every customer will still need a meter anyway, AMR is going to happen regardless of market design, and bills still need to be transmitted and collected in any system; THEN I fail to see how IMEUC might pose any impediment to your retailers business design innovations. I proposed the market manager making longterm contracts for eg. baseload etc. only because I don't think many private "retailers" will, but see no reason to bar them from doing so and using the metering system to verify their transactions.
Demand Response Under EWPC Part 4
On January 11th, 2006, I posted the following message under the article The Potential for Residential Demand Response on Transmission and Distribution Assets:
Len, if every customer is not allowed to participate, then is not a switchboard. That is a centralized market. I see the problem in the central market.
The retailer might purchase part of his long run needs by contract with a plurality of suppliers - generators - and the remainder from the central spot market. The innovations come from competition not by imposition.
The customer contracts with the retailer not the provider. Should a retailer enter into a contract regardless of the provider’s price, its days are counted under competition. The IMEUC is a metering monopoly that is a barrier for retailer’s business design innovations.
Len, if every customer is not allowed to participate, then is not a switchboard. That is a centralized market. I see the problem in the central market.
The retailer might purchase part of his long run needs by contract with a plurality of suppliers - generators - and the remainder from the central spot market. The innovations come from competition not by imposition.
The customer contracts with the retailer not the provider. Should a retailer enter into a contract regardless of the provider’s price, its days are counted under competition. The IMEUC is a metering monopoly that is a barrier for retailer’s business design innovations.
A Generative Dialogue Without Illusions Part 20
On January 11th, 2006, I posted the following message under the article Playing with Fire – Part II:
Thanks Mr. Rosenstock for your useful response that allows me to explain, as you will see, why my suggestion makes a lot of sense.
As a promoter of a generative dialogue, I also enjoy the free exchanges of ideas, especially to learn about what has been emerging for electricity customers since the 80's, when Fred C. Schweppe led the development of Spot Pricing of Electricity at MIT.
Faulty deregulation - Model 2 – overextended the useful life of the utility business model – how to win cases to the regulator - and fragmented the transportation system, by placing a tough barrier to Schweppes’s homeostatic utility control, as is explained in the post A Generative Dialogue Without Illusions Part 7. The so called “native” load is a barrier to the development of the resources on the demand side. That is the main reason of the decade old debate, as those resources remain mostly undeveloped.
Hence, there will be no such sacrifice for those vested interests, as they have more that a decade of advantage. The sacrificed have been the little guys, not just in the U.S., but all over the world. “Deregulation, as explained in 2001 was designed as a scam. Donella Meadows got it very close to its essence in the article Restructuring and Faith in the Market. She said:
To further justify immediate action, I repeat what I said on 10.3.06, under the article Divorcing Electricity Sales from Profits Creates Win-Win for Utilities and Customers:
I suggest reading what Walter Wriston, chairman of Citicorp said in 1981 about the rights of inherited markets (see Megatrends: ten new directions transforming our lives, by John Naisbitt). That was the lesson of the railroads - a very capital intensive business that didn’t know it was on the business of transportation.
Under EWPC, retail business design innovators will be on the business of electric energy service - light, heat, conditioned air, etc. - which is right after the customer end-use devices. Vested interest should start learning that they will be like the railroads very soon, as EWPC – the wining market model - gets developed and implemented.
© 2007, José Antonio Vanderhorst Silverio, Ph.D.
Thanks Mr. Rosenstock for your useful response that allows me to explain, as you will see, why my suggestion makes a lot of sense.
As a promoter of a generative dialogue, I also enjoy the free exchanges of ideas, especially to learn about what has been emerging for electricity customers since the 80's, when Fred C. Schweppe led the development of Spot Pricing of Electricity at MIT.
Faulty deregulation - Model 2 – overextended the useful life of the utility business model – how to win cases to the regulator - and fragmented the transportation system, by placing a tough barrier to Schweppes’s homeostatic utility control, as is explained in the post A Generative Dialogue Without Illusions Part 7. The so called “native” load is a barrier to the development of the resources on the demand side. That is the main reason of the decade old debate, as those resources remain mostly undeveloped.
Hence, there will be no such sacrifice for those vested interests, as they have more that a decade of advantage. The sacrificed have been the little guys, not just in the U.S., but all over the world. “Deregulation, as explained in 2001 was designed as a scam. Donella Meadows got it very close to its essence in the article Restructuring and Faith in the Market. She said:
…electricity restructuring is not being driven by the goal of reducing residential rates. The drivers are technology and industry. New ways of making electricity, such as combined-cycle natural gas generators, and soon fuel cells, allow industrial users to produce their own power at lower cost and with less pollution. One by one they are slipping off the grid, leaving the utilities, with their huge, outmoded, unpaid-for power plants, in a panic.
To save themselves, the power companies meet in back rooms with politicians. They must accomplish three things. First, they must allow big customers to lock in low rates, so they will stay on the grid. Second, they must pay off the debt for their dinosaur plants. Third, they must sell the deal to the public by promising lower rates.The only way to pull off this miracle is with a public bail-out, called "stranded costs" in the back rooms. Stranded cost payments mean that your electric bill will actually be higher, but a chunk of it will be hidden in your tax bill. This maneuver has nothing to do with a free market. It is perverse socialism. Prop up a dying industry by forcing the people to pay for bad investments. Order utilities to cut rates for awhile to lull taxpayers. Then let the people shop for power in competition with the big guys. That's where the market will come in, but markets aren't kind to little players competing against big ones.
To further justify immediate action, I repeat what I said on 10.3.06, under the article Divorcing Electricity Sales from Profits Creates Win-Win for Utilities and Customers:
I suggest reading what Walter Wriston, chairman of Citicorp said in 1981 about the rights of inherited markets (see Megatrends: ten new directions transforming our lives, by John Naisbitt). That was the lesson of the railroads - a very capital intensive business that didn’t know it was on the business of transportation.
Under EWPC, retail business design innovators will be on the business of electric energy service - light, heat, conditioned air, etc. - which is right after the customer end-use devices. Vested interest should start learning that they will be like the railroads very soon, as EWPC – the wining market model - gets developed and implemented.
© 2007, José Antonio Vanderhorst Silverio, Ph.D.
A Generative Dialogue Without Illusions Part 19
On January 11th, 2006, I posted the following message under the article Playing with Fire – Part II:
Steven has given some of the elements to be considered in a scenario - named playing with fire - centered on Model 2 to protect vested interest in electric power. I think it will be a plausible scenario to be avoided. Environmental pressures are denied; holocaust is an issue, etc.
Another scenario based on EWPC should be written, whose elements are in Part I and II of Playing with Fire. The EWPC for the customer scenario - named putting out the fire - should be promoted. The resources of the demand side, including energy efficiency, demand response, CHP-waste heat heating , hybrid cars and other distributed resources, should have the same opportunities as central stations by taking down the "native" load barrier. Environmental pressures are acepted; holocaust is not an issue, etc.
Steven has given some of the elements to be considered in a scenario - named playing with fire - centered on Model 2 to protect vested interest in electric power. I think it will be a plausible scenario to be avoided. Environmental pressures are denied; holocaust is an issue, etc.
Another scenario based on EWPC should be written, whose elements are in Part I and II of Playing with Fire. The EWPC for the customer scenario - named putting out the fire - should be promoted. The resources of the demand side, including energy efficiency, demand response, CHP-waste heat heating , hybrid cars and other distributed resources, should have the same opportunities as central stations by taking down the "native" load barrier. Environmental pressures are acepted; holocaust is not an issue, etc.
A Generative Dialogue Without Illusions Part 18
On January 9th, 2006, I posted the following message under the article Playing with Fire – Part II:
Part 2 of 2.
Locational “marginal” prices come in many flavors. This is what the paper mentioned by Len says “LMP is still a new model and only time will definitively demonstrate its successes or failures. LMP will probably never be a perfect solution for all wholesale market concerns. It has its limitations. At this time, LMP is largely a supply-side focused approach to organized markets. Integration of demand-side factors to such issues as transmission congestion or generation shortages remains to be considered.
There is another flavor in the article Demand Response and the FERC Standard Market Design NOPR:
Part 2 of 2.
Locational “marginal” prices come in many flavors. This is what the paper mentioned by Len says “LMP is still a new model and only time will definitively demonstrate its successes or failures. LMP will probably never be a perfect solution for all wholesale market concerns. It has its limitations. At this time, LMP is largely a supply-side focused approach to organized markets. Integration of demand-side factors to such issues as transmission congestion or generation shortages remains to be considered.
There is another flavor in the article Demand Response and the FERC Standard Market Design NOPR:
There is still another flavor under EWPC, which will be much better than what was though for the SMD, as the system engineering institution satisfies the ultraquality requirements. Retailers will concentrate no on lower prices to customers, but on lower costs and/or higher value, as business designs innovations will aim to that. Most of the customers will – eventually - have lower prices. However, customers that are receiving energy cross-subsidies and/or hidden supply security cross-subsidies might have higher prices later on.Demand Response, Locational Marginal Pricing, and Centralized Markets
In the proposed Standard Market Design (SMD), the key elements that would encourage demand response are locational marginal pricing (LMP) and the establishment of centralized day-ahead and real-time markets for energy, ancillary services, and transmission services. LMP and centralized markets provide efficient wholesale price signals to which LSEs and customers might respond if retail market designs allow such response. Over the longer term, LMP and centralized markets will lead to more efficient investment in generation, transmission and demand response technology, resulting in lower costs and ultimately lower prices to
consumers.
LMP will allow demand response to play a role in relieving transmission constraints, both in the short and the long term, by communicating the cost of electricity service to customers. Locational marginal prices are the only prices that are consistent with efficient system dispatch, and they are the only prices that induce self-interested loads to consume efficient quantities of power and profit-maximizing generators to produce efficient quantities of power.
A Generative Dialogue Without Illusions Part 18
On January 9th, 2006, I posted the following message under the article Playing with Fire – Part II:
Part 2 of 2.
Locational “marginal” prices come in many flavors. This is what the paper mentioned by Len says “LMP is still a new model and only time will definitively demonstrate its successes or failures. LMP will probably never be a perfect solution for all wholesale market concerns. It has its limitations. At this time, LMP is largely a supply-side focused approach to organized markets. Integration of demand-side factors to such issues as transmission congestion or generation shortages remains to be considered.
There is another flavor in the article Demand Response and the FERC Standard Market Design NOPR:
Part 2 of 2.
Locational “marginal” prices come in many flavors. This is what the paper mentioned by Len says “LMP is still a new model and only time will definitively demonstrate its successes or failures. LMP will probably never be a perfect solution for all wholesale market concerns. It has its limitations. At this time, LMP is largely a supply-side focused approach to organized markets. Integration of demand-side factors to such issues as transmission congestion or generation shortages remains to be considered.
There is another flavor in the article Demand Response and the FERC Standard Market Design NOPR:
There is still another flavor under EWPC, which will be much better than what was though for the SMD, as the system engineering institution satisfies the ultraquality requirements. Retailers will concentrate no on lower prices to customers, but on lower costs and/or higher value, as business designs innovations will aim to that. Most of the customers will – eventually - have lower prices. However, customers that are receiving energy cross-subsidies and/or hidden supply security cross-subsidies might have higher prices later on.Demand Response, Locational Marginal Pricing, and Centralized Markets
In the proposed Standard Market Design (SMD), the key elements that would encourage demand response are locational marginal pricing (LMP) and the establishment of centralized day-ahead and real-time markets for energy, ancillary services, and transmission services. LMP and centralized markets provide efficient wholesale price signals to which LSEs and customers might respond if retail market designs allow such response. Over the longer term, LMP and centralized markets will lead to more efficient investment in generation, transmission and demand response technology, resulting in lower costs and ultimately lower prices to
consumers.
LMP will allow demand response to play a role in relieving transmission constraints, both in the short and the long term, by communicating the cost of electricity service to customers. Locational marginal prices are the only prices that are consistent with efficient system dispatch, and they are the only prices that induce self-interested loads to consume efficient quantities of power and profit-maximizing generators to produce efficient quantities of power.
A Generative Dialogue Without Illusions Part 17
On January 9th, 2006, I posted the following message under the article Playing with Fire – Part II:
Hi Fred and Len,
Good points Fred about what is known. As far I know, this is what is emerging with EWPC.
Part 1 of 2.
In what I posted today, when I said “To mitigate congestion and price spikes - both of which signal whole system risk of failure - ultraquality is needed based on both resources of the supply side and on the demand side,” should be sufficient to take care, together with no/nonsense prudential regulation, in disallowed that “the seller … achieve a high price by deliberately under-investing and driving up marginal cost…”
Electricity reform is a very complex problem and as such it can only be useful in a generative dialogue, where insights are placed on the right spot to solve the puzzle. On important insight about EWPC is emerging as central generation is being displaced from center stage.
In a post to both of you, on 11.23.06, under the article AMI Services Solutions for Alberta's Deregulated Market, by Nick Clark, I said:
Hi Fred and Len,
Good points Fred about what is known. As far I know, this is what is emerging with EWPC.
Part 1 of 2.
In what I posted today, when I said “To mitigate congestion and price spikes - both of which signal whole system risk of failure - ultraquality is needed based on both resources of the supply side and on the demand side,” should be sufficient to take care, together with no/nonsense prudential regulation, in disallowed that “the seller … achieve a high price by deliberately under-investing and driving up marginal cost…”
Electricity reform is a very complex problem and as such it can only be useful in a generative dialogue, where insights are placed on the right spot to solve the puzzle. On important insight about EWPC is emerging as central generation is being displaced from center stage.
In a post to both of you, on 11.23.06, under the article AMI Services Solutions for Alberta's Deregulated Market, by Nick Clark, I said:
Most electric power reforms are unstable. For example, European market liberalization will run into a wall if distribution is kept separate from transmission and let generators exercise and abuse market power. Market power is neutralized by keeping a T&D only wires monopoly that assures long run and short physical risk management. In the new paradigm center stage changes from generation to the T&D infrastructure.
The result will be a robust, complete and fully functional non-real time market that does not interferes with real time power system operation, as the T&D (engineering) system operator takes charge of committed resources on the supply and demand side… I like to see competing paradigms that are also emerging.
A Generative Dialogue Without Illusions Part 16
On January 9th, 2006, I posted the following message under the article Playing with Fire – Part II:
LRMC works when your have an adapted system. Things like congestion and price spikes make a lot of noise and the expected value of short run deviates a lot from long run values. To mitigate congestion and price spikes - both of which signal whole system risk of failure - ultraquality is needed based on both resources of the supply side and on the demand side.
The dimension of the demand side, however, is well undeveloped. So, EWPC innovation opportunities abound in the demand side, which definetly should include differentiated customers interruption costs, and not only the power bill in the rationing optimization. That is how the whole system - not its parts - is adapted to resolve both the stability of output prices and recovering of capital costs, by making the expected value of short run marginal costs get closer to the long run marginal costs.
LRMC works when your have an adapted system. Things like congestion and price spikes make a lot of noise and the expected value of short run deviates a lot from long run values. To mitigate congestion and price spikes - both of which signal whole system risk of failure - ultraquality is needed based on both resources of the supply side and on the demand side.
The dimension of the demand side, however, is well undeveloped. So, EWPC innovation opportunities abound in the demand side, which definetly should include differentiated customers interruption costs, and not only the power bill in the rationing optimization. That is how the whole system - not its parts - is adapted to resolve both the stability of output prices and recovering of capital costs, by making the expected value of short run marginal costs get closer to the long run marginal costs.
A Generative Dialogue Without Illusions Part 15
On January 8th, 2006, I posted the following message under the article Playing with Fire – Part II:
Sorry Len,
The document talks about marginal cost which are variable costs by definition. New hydro units can apparently make "a lot of money" at zero marginal costs, but they have to pay for the large fixed costs.
Just take a look at “Accounting Systems Interaction Glossary of Terms Assets The ...,” to see the definition: “marginal costs are variable costs which vary in direct proportion to the level of activity.”
Sorry Len,
The document talks about marginal cost which are variable costs by definition. New hydro units can apparently make "a lot of money" at zero marginal costs, but they have to pay for the large fixed costs.
Just take a look at “Accounting Systems Interaction Glossary of Terms Assets The ...,” to see the definition: “marginal costs are variable costs which vary in direct proportion to the level of activity.”
A Generative Dialogue Without Illusions Part 14
On January 8th, 2006, I posted the following message under the article Playing with Fire – Part II:
Len,
Generating facilities are dispatched on their variable costs, not on average costs. Hydro facilities variable costs are nearly zero and those units are usually energy limited, but their new development costs are usually very high. In the US, old hydro developments expected benefits are already committed. The LMP price is relative to variable costs. Bidding systems of Model 2 are suspect, as they are in your proposal.
In order to make sense of the data it is not possible to do simply arithmetic calculations as you propose. It is necessary to simulate what the expected random LMP values are for a long over a long period of time. That depends on the probabilities of rainfall or the snow that is expected to fall and melt into the hydro plant. In addition, the power flows at a given node depend on the system as a whole at every moment.
If a region does not allow central or distributed generation, energy efficiency, and transmission development, they should know they will be playing with fire, not matter what the model is.
Len,
Generating facilities are dispatched on their variable costs, not on average costs. Hydro facilities variable costs are nearly zero and those units are usually energy limited, but their new development costs are usually very high. In the US, old hydro developments expected benefits are already committed. The LMP price is relative to variable costs. Bidding systems of Model 2 are suspect, as they are in your proposal.
In order to make sense of the data it is not possible to do simply arithmetic calculations as you propose. It is necessary to simulate what the expected random LMP values are for a long over a long period of time. That depends on the probabilities of rainfall or the snow that is expected to fall and melt into the hydro plant. In addition, the power flows at a given node depend on the system as a whole at every moment.
If a region does not allow central or distributed generation, energy efficiency, and transmission development, they should know they will be playing with fire, not matter what the model is.
Demand Response Under EWPC Part 3
On January 8th, 2006, I posted the following message under the article The Potential for Residential Demand Response on Transmission and Distribution Assets:
Len,
Thanks for explaining that there is no competition in the retails markets of gasoline and natural gas. If I understand correctly, oligopolies control the retail markets. If the gasoline stations and the gas retailers are owned or controlled by oligopolies, the market structured and design is flawed or the competition authorities are not doing their jobs or it could be that technology has not advanced sufficiently as is emerging in retail markets of electricity.
Gasoline stations are still retailers that develop their business directly with customers. There is no doubt that there retail function is absolutely necessary and cannot be done without it. Today’s distributors do them, and I am suggesting that the concentrate on their wires.
There is an urgent need for no-nonsense prudential regulations and ultraquality, as well as the development of the resources of the demand side in the power business. If gasoline stations have to compete with electric retailers, there is an opportunity to increase retail competition traveling by cars and trucks.
If you don't resolve the issues of retail competition, the oligopolies will own your swithboard too. In addition, by not dispatching economically under a whole system perspective, with an engineering institution, the cost to society will be excessive.
Len,
Thanks for explaining that there is no competition in the retails markets of gasoline and natural gas. If I understand correctly, oligopolies control the retail markets. If the gasoline stations and the gas retailers are owned or controlled by oligopolies, the market structured and design is flawed or the competition authorities are not doing their jobs or it could be that technology has not advanced sufficiently as is emerging in retail markets of electricity.
Gasoline stations are still retailers that develop their business directly with customers. There is no doubt that there retail function is absolutely necessary and cannot be done without it. Today’s distributors do them, and I am suggesting that the concentrate on their wires.
There is an urgent need for no-nonsense prudential regulations and ultraquality, as well as the development of the resources of the demand side in the power business. If gasoline stations have to compete with electric retailers, there is an opportunity to increase retail competition traveling by cars and trucks.
If you don't resolve the issues of retail competition, the oligopolies will own your swithboard too. In addition, by not dispatching economically under a whole system perspective, with an engineering institution, the cost to society will be excessive.
A Generative Dialogue Without Illusions Part 13
On January 8th, 2006, I posted the following message under the article Playing with Fire – Part II:
Thanks Len for your insistence against LMPs.
What you intuitively think is "the ideal price" seems to me what a monopolist wants. It is completely wrong in a market where demand has elasticity.
There are a lot of risks involve for the generator under competition. Just one example suffices: if the generating unit is not available they need to pay somebody else the LMPs to cover for him, under Model 3.
In addition, LMPs are much lower when demand has enough price elasticity. In a robust supply and demand market there should no be very often significant overpayment, nor very often significant underpayment.
Thanks Len for your insistence against LMPs.
What you intuitively think is "the ideal price" seems to me what a monopolist wants. It is completely wrong in a market where demand has elasticity.
There are a lot of risks involve for the generator under competition. Just one example suffices: if the generating unit is not available they need to pay somebody else the LMPs to cover for him, under Model 3.
In addition, LMPs are much lower when demand has enough price elasticity. In a robust supply and demand market there should no be very often significant overpayment, nor very often significant underpayment.
domingo, enero 07, 2007
A Generative Dialogue Without Illusions Part 12
Reference: Playing with Fire – Part II
Thanks Fred for your timely response. I guess you are right that "no tinkering with the demand side can compensate for gaming and lack of investment on the supply side" is highly likely under Model 2 and its piecemeal extensions.
To face gaming and lack of investment under EWPC there is an ultraquality requirement to be performed by a system engineering institution. The commercial activities of generation, and wholesale and retail of electricity to end-customers need to operate under a no-nonsense prudential regulation.
If the expert to the authorities in China is pushing Model 2 and its extensions, I also agree that your "anti-electric deregulation performance" statement is very likely to occur. If vertical integration – Model 1 – becomes the default solution, the little guy is bound to pay more for the investments than he should. The development of the resources of the demand side equity criterion - Market 3 - should lead to the effective development of the Chinese market at the bottom of the pyramid, which is the largest in the world.
Unless Northamerican, Chinesse and European leaders listen very closely to the first and second part of these comments, discussions, debates, and dialogues, they will certainly be playing with fire. My humble recommendation is that they retain a system architect expert on EWPC to help them coordinate a generative dialogue to come up with a new vision and develop a transition to EWPC. An expert on gas without price controls (GWPC) should no be difficult to develop in a parallel generative dialogue.
© 2007, José Antonio Vanderhorst-Silverio, Ph.D.
Thanks Fred for your timely response. I guess you are right that "no tinkering with the demand side can compensate for gaming and lack of investment on the supply side" is highly likely under Model 2 and its piecemeal extensions.
To face gaming and lack of investment under EWPC there is an ultraquality requirement to be performed by a system engineering institution. The commercial activities of generation, and wholesale and retail of electricity to end-customers need to operate under a no-nonsense prudential regulation.
If the expert to the authorities in China is pushing Model 2 and its extensions, I also agree that your "anti-electric deregulation performance" statement is very likely to occur. If vertical integration – Model 1 – becomes the default solution, the little guy is bound to pay more for the investments than he should. The development of the resources of the demand side equity criterion - Market 3 - should lead to the effective development of the Chinese market at the bottom of the pyramid, which is the largest in the world.
Unless Northamerican, Chinesse and European leaders listen very closely to the first and second part of these comments, discussions, debates, and dialogues, they will certainly be playing with fire. My humble recommendation is that they retain a system architect expert on EWPC to help them coordinate a generative dialogue to come up with a new vision and develop a transition to EWPC. An expert on gas without price controls (GWPC) should no be difficult to develop in a parallel generative dialogue.
© 2007, José Antonio Vanderhorst-Silverio, Ph.D.
A Generative Dialogue Without Illusions Part 11
Reference: Playing with Fire – Part II
Fred,
There is a difference between classroom perfect competition and real life workable competition.
To operate in real life there is a need for a robust power system, where the resources of the demand side and the resources of the supply side are available to manage systemic short run and long run physical risk in time and space.
The T&D grid should be integrated in every geographic - control - area and its operation and control planned and executed by a system engineering institution, with both supply side and demand side resources pre-committed.
There is an urgent need to develop the resources of the demand side. That development requires business model innovations which in turns require competition, as customers need will evolve in significant ways. A regulator is not prepared to do that job, since neat customer classes and rates will be insufficient to get the most value for society out of rationing electricity. The demand side is today highly undeveloped and to develop it true leadership – commercial retailers - will be required, to allow the workable competition that should be emerging in a complete, integral and fully functional Market 3.
Piece meal extensions to the incomplete, fractured and not fully functional Market 2 will maintain valid to your statement that “deregulation has failed, is failing or will fail just about everywhere.”
With T&D grid electric regulated under ultraquality and generation and commercial wholesale and retail deregulated, EWPC should not failed just about anywhere, if the commercial market architecture and design is properly implemented, under competent leadership and management.
Fred,
There is a difference between classroom perfect competition and real life workable competition.
To operate in real life there is a need for a robust power system, where the resources of the demand side and the resources of the supply side are available to manage systemic short run and long run physical risk in time and space.
The T&D grid should be integrated in every geographic - control - area and its operation and control planned and executed by a system engineering institution, with both supply side and demand side resources pre-committed.
There is an urgent need to develop the resources of the demand side. That development requires business model innovations which in turns require competition, as customers need will evolve in significant ways. A regulator is not prepared to do that job, since neat customer classes and rates will be insufficient to get the most value for society out of rationing electricity. The demand side is today highly undeveloped and to develop it true leadership – commercial retailers - will be required, to allow the workable competition that should be emerging in a complete, integral and fully functional Market 3.
Piece meal extensions to the incomplete, fractured and not fully functional Market 2 will maintain valid to your statement that “deregulation has failed, is failing or will fail just about everywhere.”
With T&D grid electric regulated under ultraquality and generation and commercial wholesale and retail deregulated, EWPC should not failed just about anywhere, if the commercial market architecture and design is properly implemented, under competent leadership and management.
A Generative Dialogue Without Illusions Part 10
Reference: Playing with Fire – Part II
Please be advised that today, before Len posted his last comment, I responded to Len's observations, under the article Demand Response Under EWPC Part 2, about his IMEUC proposal with a revised IMEUC retail to customer switchboard approach. The main reason is that his analogy of the gasoline market does not support his IMEUC wholesale to customer proposal, as gasoline stations are simply retailers that operate under competition just as suggested for EWPC.
If you read closely to the above message, Len is making up a distorted view of EWPC. The reason I perceive is that he now sees the LMP concept in the way of his wholesale to customer switchboard. LMP is the signal where supply meets demand at every location. Under Model 2, LMPs could be very high as transmission lines get congested without sufficient demand response close to the location.
Under Model 3, however, ultraquality long run system planning and design will aim to mitigate congestion with a mix of supply side and demand side resources. In general, LMP calculations before considering the demand side will signal the demand response needed. LMPs are part of the better designs possible. It is with the credibility that is inherent in long run ultraquality, not short run LMPs, that base load generators investments get built as they will get many dispatch hours during the lifetime. Technology obsolescence risk, however, should stay with the investors.
Please be advised that today, before Len posted his last comment, I responded to Len's observations, under the article Demand Response Under EWPC Part 2, about his IMEUC proposal with a revised IMEUC retail to customer switchboard approach. The main reason is that his analogy of the gasoline market does not support his IMEUC wholesale to customer proposal, as gasoline stations are simply retailers that operate under competition just as suggested for EWPC.
If you read closely to the above message, Len is making up a distorted view of EWPC. The reason I perceive is that he now sees the LMP concept in the way of his wholesale to customer switchboard. LMP is the signal where supply meets demand at every location. Under Model 2, LMPs could be very high as transmission lines get congested without sufficient demand response close to the location.
Under Model 3, however, ultraquality long run system planning and design will aim to mitigate congestion with a mix of supply side and demand side resources. In general, LMP calculations before considering the demand side will signal the demand response needed. LMPs are part of the better designs possible. It is with the credibility that is inherent in long run ultraquality, not short run LMPs, that base load generators investments get built as they will get many dispatch hours during the lifetime. Technology obsolescence risk, however, should stay with the investors.
sábado, enero 06, 2007
Demand Response Under EWPC Part 2
Reference: The Potential for Residential Demand Response on Transmission and Distribution Assets
I was conducting a generative dialogue with Len that resulted in the posts shown below. To follow very well this post, I suggest reading them:
Playing With Fire and Collapse Part 22 -- Playing With Fire and Collapse Part 21 -- Playing With Fire and Collapse Part 20 -- Playing With Fire and Collapse Part 19 -- Playing With Fire and Collapse Part 17 -- Playing With Fire and Collapse Part 16 -- Playing With Fire and Collapse Part 15
In response to posts sequence, Len wrote on 12.26.06: “Jose Antonio: Your cogent discussion raises some issues with IMEUC which I hope to clarify in a third article in the series here on EnergyPulse in perhaps a couple of weeks, provided I can submit it up to the high standards of the editorial staff. Thank you.”
I am adding some new insights for Len as a result of an effort to comprehend his posts related to the gasoline analogy and to make it easy to update his IMEUC with a third article:
1) It is impractical to have a switchboard between refineries and customers. So, it is also impractical to have a switchboard from generators and customers. The wholesale market’s engineering criteria, including maintenance programming, contingency runs, energy commitment and dispatch procedures, locational marginal prices, real time operation, etc., do not allow for a switchboard between generators and customers.
2) The wholesale market of gasoline, where gasoline is produced at refineries, is similar to wholesale electricity market; that is where retailers purchase their gasoline and electricity. Natural gas retailers could have similar situations.
3) At the gasoline market, customers go to the best retailers to get the best short run deals. So, instead of designing a switchboard on the wholesale market, which is impossible, there is a need to first develop EWPC retailers and second to implement the switchboard between retailers and customers. I am no expert on gas retailing, but assume it will be similar process.
4) Short run retail competition will result in several market segments.
The above suggestions are not to be taken without considering the posts mentioned above. EWPC is then one generic and open market architecture and design that doesn’t does not impose any restriction whatsoever to the revised IMEUC retailing switchboard.
I was conducting a generative dialogue with Len that resulted in the posts shown below. To follow very well this post, I suggest reading them:
Playing With Fire and Collapse Part 22 -- Playing With Fire and Collapse Part 21 -- Playing With Fire and Collapse Part 20 -- Playing With Fire and Collapse Part 19 -- Playing With Fire and Collapse Part 17 -- Playing With Fire and Collapse Part 16 -- Playing With Fire and Collapse Part 15
In response to posts sequence, Len wrote on 12.26.06: “Jose Antonio: Your cogent discussion raises some issues with IMEUC which I hope to clarify in a third article in the series here on EnergyPulse in perhaps a couple of weeks, provided I can submit it up to the high standards of the editorial staff. Thank you.”
I am adding some new insights for Len as a result of an effort to comprehend his posts related to the gasoline analogy and to make it easy to update his IMEUC with a third article:
1) It is impractical to have a switchboard between refineries and customers. So, it is also impractical to have a switchboard from generators and customers. The wholesale market’s engineering criteria, including maintenance programming, contingency runs, energy commitment and dispatch procedures, locational marginal prices, real time operation, etc., do not allow for a switchboard between generators and customers.
2) The wholesale market of gasoline, where gasoline is produced at refineries, is similar to wholesale electricity market; that is where retailers purchase their gasoline and electricity. Natural gas retailers could have similar situations.
3) At the gasoline market, customers go to the best retailers to get the best short run deals. So, instead of designing a switchboard on the wholesale market, which is impossible, there is a need to first develop EWPC retailers and second to implement the switchboard between retailers and customers. I am no expert on gas retailing, but assume it will be similar process.
4) Short run retail competition will result in several market segments.
a. One of those segments, for example, could be under the switchboard. For example, in that segment will have to auto finance resources like demand response, energy efficiency and energy storage or find alternative financing means or just do not investment whatsoever. In this case, customers will get a “continuous choice of several suppliers at time intervals comparable to my gasoline or other purchases.”5) T&D is a natural monopoly that competes with gas pipelines monopolies, not in the short run, but in the long run.
b. In an extreme segment, customers could not be under the switchboard. For example, customers getting full financing deals in resources like demand response, energy efficiency and energy storage may not be able to switch so easily.
The above suggestions are not to be taken without considering the posts mentioned above. EWPC is then one generic and open market architecture and design that doesn’t does not impose any restriction whatsoever to the revised IMEUC retailing switchboard.
viernes, enero 05, 2007
Demand Response Under EWPC
Reference: The Potential for Residential Demand Response on Transmission and Distribution Assets
Roger’s “Hmmm, this discussion sounds vaguely familiar...” is related to the long discussion about deregulation, under the article Playing with Fire - The 10 Tcf/year Supply Gap -- Part I, in which I suggested that the decade old deregulation debate, centered on the past, is no longer necessary, because an important third way of true deregulation market architecture and design went missing from implementation. I suggested to shift to a generative dialogue centered on an emerging future that was envisioned by Fred C. Schweppe and colleagues at MIT from 1978-1988.
As can be seen from the series “EWPC: People Coordinating and Cooperating with Electrons,” referred to in my post above, and in the most recent posts A Generative Dialogue Without Illusions Part 9 , A Generative Dialogue Without Illusions Part 8, A Generative Dialogue Without Illusions Part 7, EWPC: People Coordinating and Cooperating with Electrons Part 8, and EWPC: People Coordinating and Cooperating with Electrons Part 7, the parallel discussion with Fred Banks, Len Gould, Arvid Hallén, and James Carson, seems to have ended in favor of my suggestion of the emergent conceptual architecture and design of Market 3, electricity without price controls for the customers (EWPC) approach.
In the post My iPod is on the Demand Side, I said, among other things, that: “A breakthrough in electric power needs to start with a proper reform leading to a new paradigm - the End-State of the power industry [for quite some time]. Such End-State I believe will come from a structure where there is a T&D transportation monopoly (controlled market) that is separate from retail marketing and generation (free market) activities.”
In addition, Roger’s “Hmmm…” is suggesting that in Playing with Fire – Part II, the deregulation discussion was to be only about natgas. As I explained in EWPC: People Coordinating and Cooperating with Electrons Part 6, “Electric power market architecture and design is right at the center of the topic.” The intended topic of the author, not the EnergyPulse assigned topic, is what counts.
As can be seen in My iPod is on the Demand Side Part 2, “Demand Response is the best candidate iPod of the utility industry, located at the customer interface of the monopoly transportation system with a real and true potential free market.”
Roger’s opinion is directed at extending the obsolete monopoly retail market architecture and design model. The utility business model is not centered on a customer orientation, but on the supply oriented, good old days, of exploiting asymmetric knowledge with legal know-how to win rate cases to the regulator. As I said at the end of EWPC: People Coordinating and Cooperating with Electrons Part 2: “There is a need to allow for the emergence of the good new days, and EWPC is a strong candidate to increase the revised criteria: 1) Freedom of choice; 2) Economic efficiency; 3) Equity; and 4) Ultraquality. Only through new knowledge and innovations will societies satisfy emergent needs.”
© 2007, José Antonio Vanderhorst-Silverio, Ph.D.
Roger’s “Hmmm, this discussion sounds vaguely familiar...” is related to the long discussion about deregulation, under the article Playing with Fire - The 10 Tcf/year Supply Gap -- Part I, in which I suggested that the decade old deregulation debate, centered on the past, is no longer necessary, because an important third way of true deregulation market architecture and design went missing from implementation. I suggested to shift to a generative dialogue centered on an emerging future that was envisioned by Fred C. Schweppe and colleagues at MIT from 1978-1988.
As can be seen from the series “EWPC: People Coordinating and Cooperating with Electrons,” referred to in my post above, and in the most recent posts A Generative Dialogue Without Illusions Part 9 , A Generative Dialogue Without Illusions Part 8, A Generative Dialogue Without Illusions Part 7, EWPC: People Coordinating and Cooperating with Electrons Part 8, and EWPC: People Coordinating and Cooperating with Electrons Part 7, the parallel discussion with Fred Banks, Len Gould, Arvid Hallén, and James Carson, seems to have ended in favor of my suggestion of the emergent conceptual architecture and design of Market 3, electricity without price controls for the customers (EWPC) approach.
In the post My iPod is on the Demand Side, I said, among other things, that: “A breakthrough in electric power needs to start with a proper reform leading to a new paradigm - the End-State of the power industry [for quite some time]. Such End-State I believe will come from a structure where there is a T&D transportation monopoly (controlled market) that is separate from retail marketing and generation (free market) activities.”
In addition, Roger’s “Hmmm…” is suggesting that in Playing with Fire – Part II, the deregulation discussion was to be only about natgas. As I explained in EWPC: People Coordinating and Cooperating with Electrons Part 6, “Electric power market architecture and design is right at the center of the topic.” The intended topic of the author, not the EnergyPulse assigned topic, is what counts.
As can be seen in My iPod is on the Demand Side Part 2, “Demand Response is the best candidate iPod of the utility industry, located at the customer interface of the monopoly transportation system with a real and true potential free market.”
Roger’s opinion is directed at extending the obsolete monopoly retail market architecture and design model. The utility business model is not centered on a customer orientation, but on the supply oriented, good old days, of exploiting asymmetric knowledge with legal know-how to win rate cases to the regulator. As I said at the end of EWPC: People Coordinating and Cooperating with Electrons Part 2: “There is a need to allow for the emergence of the good new days, and EWPC is a strong candidate to increase the revised criteria: 1) Freedom of choice; 2) Economic efficiency; 3) Equity; and 4) Ultraquality. Only through new knowledge and innovations will societies satisfy emergent needs.”
© 2007, José Antonio Vanderhorst-Silverio, Ph.D.
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