Cámara Americana de Comercio - De los Planes a la Acción

Listín Diario

Sábado 21 de Junio del 2008, actualizado 1:55 AM

CAMARA AMERICANA DE COMERCIO

De los planes a la acción

- 6/21/2008

El escenario energético mundial y sus repercusiones en el panorama nacional del sector eléctrico obligan a pasar sin más demoras de los planes a la acción. Durante los últimos años, la industria de energía ha experimentado las condiciones más complejas y particulares de las pasadas dos décadas. La demanda global de hidrocarburos ha crecido sostenidamente y los precios del petróleo y sus derivados han alcanzado récords históricos en términos nominales.

Según la Agencia Internacional de Energía, la demanda mundial energética crecerá a un ritmo cercano al 1.6 % anual hasta el año 2030. Los países en vías de desarrollo, y entre ellos principalmente China e India, se estima que contribuirán en más del 70% del crecimiento de la demanda anual debido a que sus economías y poblaciones crecen más rápidamente que el resto del mundo. Este incremento de la demanda en combustibles fósiles se destinará principalmente para generación de electricidad y transporte.

La demanda de energías primarias se vuelve cada vez más insensible a las variaciones de los precios del petróleo. Si el escenario actual de altos precios se mantiene en los próximos años, afectará aún más la situación macroeconómica de los países que son importadores netos, como el caso de la República Dominicana.

Especial preocupación produce el análisis de la matriz de combustibles del sector eléctrico dominicano, como motor del desarrollo y clave para lograr los niveles deseados de competitividad industrial y de calidad de vida para la población en general. Durante el 2007, el 47% de la energía eléctrica producida en el país se generó utilizando derivados del petróleo como el fuel oil números 2 y 6, lo que delata la gran dependencia que tiene el país de este tipo de combustibles líquidos.

A esta realidad se suma la problemática del alto porcentaje de pérdidas que registran las distribuidoras y la posposición de la aplicación de la ley de electricidad que tipifi ca al fraude eléctrico como un crimen. Todo esto en un entorno de precios al alza de los combustibles y una tarifa eléctrica con necesidad de ser transparentada y ajustada de manera objetiva y periódica. Las autoridades gubernamentales del sector eléctrico han publicitado por largo tiempo sus planes para el sector eléctrico que tocan aspectos como el suministro de energía, la gestión operativa de las distribuidoras, la calidad de servicio, la expansión del sistema de transmisión y de la capacidad de generación, así como la adecuación y actualización de la legislación y la defi nición de políticas y roles de una manera más clara y precisa.

La Cámara Americana de Comercio de la República Dominicana entiende que ha llegado el momento en que pasemos de los planes a la acción. El escenario mundial y nuestra realidad local lo demandan urgentemente. El país tiene buenos ejemplos de iniciativas exitosas de este tipo que se han verifi cado en el sector privado con resultados muy positivos para la nación.

Es el caso de inversiones de capital privado en centrales eléctricas a base de gas natural y carbón cuya generación actualmente representa un 38% del total de energía que se produce en el país. La instalación de una terminal de importación de gas natural líquido en Andrés, Boca Chica; la construcción de un gasoducto hasta la central Los Mina, la conversión a carbón de las unidades termoeléctricas Itabo I y II, así como la conclusión de la central Barahona carbón (que tenía un retraso de más de 10 años en su construcción mientras estuvo en manos del Estado) son muestras fehacientes del éxito de estos planes. Fuentes del sector indican que el impacto de estas inversiones en el sector eléctrico provenientes de capital privado multinacional representó sólo en el año 2007 un ahorro de más de 400 millones de dólares en la operación del sistema eléctrico nacional al utilizar combustibles más económicos.

Ahora bien, para que se concreticen nuevos proyectos similares es necesaria una férrea voluntad política para enfrentar el problema, claridad, estabilidad y respeto en las reglas del juego como garantía de las inversiones, así como un fortalecimiento de las instituciones del sector. Con estos elementos afi anzados, y la aplicación de los planes disponibles en el presente, tendremos respuestas adecuadas en distintos plazos.

En el corto plazo, el país podría tener resultados positivos de la lucha contra el fraude eléctrico, de la inclusión de las señales económicas adecuadas en los reglamentos de aplicación de la Ley de Incentivo a las Energías Renovables y tener mejoras importantes de los indicadores de las empresas distribuidoras. El robo de electricidad es sin duda la raíz de la problemática del sector al perderse 40% de la energía que se genera. Para lograr una mejora de este problema se deben aplicar de manera institucional acciones tangibles y radicales tendientes a reducir signifi cativamente las altas pérdidas de las distribuidoras de electricidad.

En el mediano plazo se debería concretar la conversión de las unidades de CESPM a gas natural, lo que garantizaría que en el 2010 la participación del petróleo en la matriz de combustible del sector eléctrico baje a un 35%, mientras que la del gas natural suba a un 32%. Para ello el sector privado tiene un rol fundamental ya que los recursos para la construcción del gasoducto que llevará el gas natural desde Boca Chica a San Pedro de Macorís así como la conversión propiamente dicha de la central, son de capital privado.

Para que en el largo plazo podamos contar con unidades de generación en base a carbón hay que considerar los tiempos de construcción y entrega de equipos de esta industria. Por lo que es necesario que de una vez por todas se concreticen los proyectos de manera transparente y que operen en régimen de competencia con los demás agentes del mercado eléctrico. A su vez, los primeros proyectos de energía renovable deberían estar en operación, independizando la producción de energía eléctrica del petróleo en un grado aún mayor.

En resumen, los retos que tiene en frente la República Dominicana en lo relativo a un abastecimiento de energía sufi ciente, confi able y a precios competitivos pueden ser enfrentados únicamente si se pasa desde ya de los planes a la acción, y las medidas concretas deben estar orientadas a incentivar la inversión privada y a fortalecer la institucionalidad del sector con miras a impulsar su desarrollo con una visión de largo plazo.

EWPC EPAct will Provide Fair Electricity Prices

In accordance with the “Campaign for Fair Electric Rates, Coalition of Business, Consumer and Utility Groups Launch Major Initiative to Reform Electricity Markets (NOTE: This article link expires on: 07/12/2008) - that a diverse coalition of industrial electricity users, public-interest organizations, consumer groups and publicly-owned electric utilities, representing the interests of millions of consumers, launched with the Campaign for Fair Electric Rates,” what is needed is that the U.S. Congress enacts ASAP the emergent EWPC EPAct.

From the above article link, I take that “According to John Anderson, president of the Electricity Consumers Resource Council (ELCON), ‘Today's organized markets are not competitive, are anti-consumer, and are likely to remain that way without significant action by FERC or Congress.’” That is why we need an EWPC EPAct, as soon as possible, to enable a highly competitive, pro-consumer, complete and fully functional market architecture and design paradigm shift.

I come to that conclusion after the 59 comments that make at the moment the most commented EnergyBlogs.com and EWPC article a resounding YES the answer to the question Can the Power Industry Eliminate its Price Controls to the End Customer? Members of the Coalition and stakeholders all over the world are invited to consider and support EWPC as the major initiative to reform global electricity markets.

First posted in the GMH Blog, on June 17th, 2008.

By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity

Para Salvar la Nación

Distinguido Dr. Rafael Molina Morillo

Muy buenas tardes,

Leí con mucho interés su columna Mis Buenos Días titulada Pequeños grandes cambios y recordé su columna "Quiero No Tener Razón" ante mi sugerencia "… que para salvar la nación lo que hace falta es desarrollar una masa crítica de verdaderos líderes en todos los estratos de la población." Son esos líderes los que impactarán "… las actitudes que los dominicanos debemos cambiar," que identifica la señora Ramírez de Hermón.

Danah Zohar y Ian Marshall han refinado la pirámide de Maslow creando una escala de 16 paradigmas de motivación, que son: -8, Despersonalización; -7, Culpa y Vergüenza; -6, Apatía; -5, Angustía; -4, Miedo; -3, Ansía; -2, Enfado; -1, Auto-valía; +1, Exploración; +2, Sociabilidad y Cooperación; +3, Poder-interno; +4, Maestría; +5, Generatividad; +6, Servicio elevado; +7, Alma del mundo; +8, La ilustración.

Como en otras partes del mundo capitalista, amoral y antisocial, las actitudes de la mayoría de los dominicanos están concentradas en los paradigmas del -1 al -4, a consecuencia de la inversión de valores que nos arropa. Zohar y Marshall explican que ese capitalismo es insostenible y que para realizar un cambio cultural desde esos paradigmas, a un capitalismo sostenible, moral y social, se necesitan líderes con sabiduría (niveles 5 y superiores).

Esa es la masa crítica de verdaderos líderes que necesitamos. La tarea es encontrar y promover en el sector privado aquellos líderes con la sabiduría necesaria que sean "… dominicanos honestos, de bien y respetuosos," como escribe la señora Berenice Ramírez de Hermón, para que sirvan de ejemplo en el cambio cultural. La campaña de educación y conciencia que ella sugiere podría ser dirigida a premiar la sabiduría.

Espero que usted siga queriendo no tener razón, para bien de nuestra comunidad.

Muy cordialmente,

José Antonio Vanderhorst Silverio, Ph.D.
Consultor Sistémico

Mejor Capitalismo

Capitalismo Sobresaliente

Esta primera actualización es mucho más de 6 años después, redefine el Mejor Capitalismo como el Capitalismo Sobresaliente que se corresponde con la nota Should we waste the opportunity of an institutional innovation on the Electric Pact to start to leap Capitalism from Good to Great?, que en este momento tiene importantes aportes tanto con la brillante Intervención “Ciegos, Sordos y Mudos" del Dr.Vasquez Perrotta, como el no menos importante video de José Martínez Brito sobre la necesidad de despertar a la Clase Media de su largo letargo mientras el gobierno hace el mal negocio para dicha Clase Media de transferir una parte substancial su poder adquisitivo como caridad a los pobres

¡Despierta ya! #ClaseMedia http://t.co/QGjr07VAjK @VasquezPerrotta @matutino91 @jmartinezbrito @LucienneCarlo @fredemamzade @marianomalagon
— Jose A Vanderhorst S (@gmh_upsa) February 16, 2015

Mejor Capitalismo

El ganador del premio Nóbel Yunus tiene una nueva idea para atacar la pobreza por medio del capitalismo: reclutar compañías cuya misión es cambiar el mundo. Así se sintetiza el artículo “Dando a los pobres el negocio” que Alan M. Weber escribió para el USA Today del 21 de mayo del 2008. Ver Giving the poor the business - Opinion - USATODAY.com (actualizada con nueva fecha).

Según Yunus la caridad es un mal negocio tanto para el que la da como para los que la reciben. En vez de proveer una ruta para el auto mejoramiento, la caridad releva al receptor de la responsabilidad de su propio mejoramiento. Y aquellos que dan la caridad se encuentran a sí mismos escribiendo cheques cada año para el mismo problema, sin ninguna expectativa de que se va a resolver. Un caso particular de la caridad son los subsidios que en verdad perjudican grandemente a los sectores más vulnerables.

Un diálogo sincero que el Cardenal López Rodríguez ha sugerido para enfrentar una gran crisis es necesariamente un diálogo generativo en que emergen soluciones novedosas. La mayoría de las soluciones novedosas están íntimamente ligadas a la Tercera Revolución Industrial que estamos viviendo. Un ejemplo de soluciones novedosas lo podemos encontrar en la electricidad sin control de precios que le permite a cada cual recibir el servicio individualizado gracias a la Tercera Revolución Industrial.

Producto de un diálogo generativo en estado muy avanzado (ver el último artículo del EWPC Blog Can the Power Industry Eliminate its Price Controls to the End Customer?), la transformación del sector eléctrico puede servir para desmontar los subsidios y eliminar el control de precios a la electricidad, creando una regulación prudencial que evite el abuso a los sectores más vulnerables. La responsabilidad de administrar su consumo por parte de los consumidores hará que las facturas sean cada vez más asequibles.

Como se puede ver en el artículo HOY ECONOMÍA - El hurto no es el problema, “La solución que presenté en la SEIDE requiere una nueva Ley de Electricidad para implantar reglas de juego claras y estables… Al introducir competencia plena, tales reglas facilitan la reducción del hurto y otros elementos no menos importantes que pueden llevar al sector a ser nuestra marca-país.”

Can the Power Industry Eliminate its Price Controls to the End Customer?

The dead-end of regulator’s capacity for price controls shows up once again, while modeling the Smart Grid business case. Under today’s EPAct, price controls are designed for simple problems, when we are facing a very tough systemic crisis. A systemic solution requires a EWPC re-regulation EPAct that deregulates wholesale and retail commercial energy transactions, while keeping regulated the Smart Grid reliable transport.

Can the Power Industry Eliminate its Price Controls to the End Customer?


By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity

First posted in the GMH Blog, on May 13th, 2008.

Copyright © 2008 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

I have selected this article as the eight recommended reading associated with the overdue price control debate [1]. The introduction to the other seven recommended articles was summarized as “The regulation vs. deregulation discussion was about the wrong question. An undiscussed issue during the debate, price control is the key to a properly framed debate. As utilities keep wining rate cases to the regulators, customers are now facing a very large risk of increasing rates as unprepared regulators are part of a flawed system that pushes them to make incredible bets on Intelligent Utility Enterprise and Smart Grid investments.”

It is important to recognize that the “incredible bets on Intelligent Utility Enterprise and Smart Grid investments,” correspond to the combined utility rate case. Under EWPC, the Smart Grid investments will remain on price control regulation with the ordinary approach [2].

Building models for the Smart Grid business case gives another clear example of the systemic crisis of the power industry to contribute to the undiscussed price controls issue. This time, Jagoron Mukherjee brings to the fore in such models new complexity issues introduced to regulators by the systemic crisis [3].

Today’s EPAct legislative and regulatory system was designed for regulators to take an ordinary approach to face simple problems for revising rate structures that can be resolved by three processes: 1) in a piece by piece basis, 2) using existing solutions, and 3) under the guidance of experts and authorities [4]. That approach, which is valid in under normal and stable conditions, cannot be applied under the highly uncertain present environment of the Third Industrial Revolution, which is transforming the power industry with digital technologies. [5].

Referring to modeling Smart Grid benefits required by regulators, Jagoron writes that “Some of these benefits, such as increased customer satisfaction, though hard to quantify, are benefits nevertheless and, depending on the regulatory environment, may need to be considered in the regulatory review process. The rationale to include these benefits is that despite the lack of realization of some of these societal or non-operational benefits, the market or society at large benefits from various aspects of implementing Smart Grid technologies and needs to be considered in these discussions [3].”

The complexity of the regulatory problem is compounded, because utilities will be investing not only in the Smart Grid (SG) but also in the Intelligent Utility Enterprise (IUE) to replace their obsolete business model. [6] The US Government Accountability Office (GAO) is actually asking the FERC to consider cross-subsidization – unfairly passing on to consumers the cost of transactions between utility companies and their “affiliates” [7]. By reading about multi-state regulatory requirements, GAO concerns get multiplied as cross- subsidization complexity increases by involving several states regulators in one utility application.

Jagoron adds that “The costs and the potential benefits of these projects are inherently uncertain, and difficult to quantify, as is the case with any new technology and uncertainty in service level and customer acceptance” [3].This means that regulators have to face a very tough problem, which shows that the regulatory ordinary price controls approach should not apply at least for the very risky and costly IUE systems. The separation of the SG and IUE price controls is the key to solution of the systemic crisis, if most of the uncertainty of the new technology goes to the open market [6].

Adam Kahane, in his book “Solving Tough Problems: an open way of talking, listening, and creating new realities,” implies that legislators and regulators need an extraordinary approach for complex problems that include three different processes: 1) Systemic: the system as a whole (dynamics complexity), 2) Creative: emerging solutions (generative complexity), and 3) Participative: stakeholders and “stickholders” (social complexity) [4].

It is now clear that the simple problem (price control) process does not apply. However, thinking in a detached mechanistic way, instead of a systemic way, regulators seem to be unaware of the difference that involve them in very complex regulatory cost recovery system trap that should not result in revised rate structures. In fact, state regulators are actually calling for a systemic process as they require “that utilities include system-wide benefits into their business case [3].”

In addition, whether they like it or not, regulators are an integral part of today’s systemic crisis and one of the most important contributors to the solution. Their contribution is for state regulators to step aside from the ordinary approach of price control regulation of energy sales, to prudential regulations approach designed to protect customers from supply disruptions and unfair pricing, under the new EWPC market architecture and design paradigm that faces dynamic complexity. [8].

Under the EWPC, that emerged last year from a creative process under the Energy Central Network, complexity is reduced by dividing the system in two: an open commercial market and a closed transportation market, which are designed to mutually reinforce each other in a virtuous way to produce system-wide benefits, as described next [2].

System-wide benefits will be the result of least costs transportation (tightly integrated T&D) expansion plans of the transportation network that include and enable system-wide benefits to the open market. In other words, the least costs expansion plans will consider the investments, operation, maintenance and outage costs forecasts of the whole power system, including the value chain (generation, retail, customer) of the open market.

In the closed market, the smart grid transportation only utility will operate under a regulatory compact. The new compact will shift from the old utility obligation to serve to the new utility obligation to transport, in exchange for tolls that enable investors to get a prescribed regulated return on investment. The necessity, motivation, and incentives to expand at least costs are then part of the regulatory transportation only compact.

The difference to customers between the old and new regulations will be demand response as a condition of service. It is that condition of service that enables a vibrant retail market to be developed by Second Generation Retailers (2GRs) [9] to produce very large coordination saving that maximize system-wide benefits, as some customers are better able than others to contribute to produce the required aggregate demand response every time and everywhere.

That is how the breakthrough system-wide benefits will be the result of demand integration into power system planning, operation and control, which requires considering the large investments made by 2GRs, customers’, and generators, and not just the old utilities investments. The social complexity issue is then solved by 2GRs as they produce the large system-wide coordination savings under retail and wholesale competition by integrating demand.

Coordination savings can be considered in “valuation models… that … quantify societal benefits, such as avoided generation [and transmission and distribution] investment, reduction of greenhouse gases and overall carbon footprint… [3]”. That is also how the EWPC change brings 2GRs and customers’ as an integral part of the solution to the systemic crisis.

As can be seen above, regulators are then able to call for system-wide benefits and transport tolls, but are no longer able to define customers’ energy rates. One way to understand why regulators lose their price control power is the freedom customers should have to invest, or not, given the widely varying perception of benefits from electric power service that they will expect (such as “increased satisfaction due to better service and billing, and wider service and choices [3].”).

Another way to understand these new conditions is that regulators will not be able to control energy prices that depend on customers’ investments that impact their balance sheets and income statements in important ways. While some customers will be able to negotiate prices with 2GRs, most of them will be able to select from the competition the business plan that best fits their needs for low cost and/or high value. As every customer gets the best market deal, the total economy gets the maximum social welfare.

As far for modeling and uncertainty are concerned, the interface standards between the open and the closed markets will be the key. Since 2GRs will actually develop their competitive business models, they will need to invest at their own risk in their Retailers’ Enterprise Solutions that will have standard interfaces for the smart grid. That way, most of the technology uncertainty will be left to the market as is common practice in other industries.

While competition will be absent for the Smart Grid under EWPC, competitive 2GRs replace the regulated stillborn IUE monopolistic retail arms of the old utilities. Operating under the EWPC market architecture and design paradigm, multi-state regulatory requirements difficulties mentioned by Jagoron should disappear in the new EWPC EPAct legislation, allowing the development of the Smart Grid transportation utility under a minimum set of compatible federal rules.

Conclusion: The dead-end of regulator’s capacity for price controls shows up once again, while modeling the Smart Grid business case. Under today’s EPAct, price controls are designed for simple problem, when we are facing a very a tough systemic crisis. A systemic solution requires a EWPC re-regulation EPAct that deregulates wholesale and retail commercial energy transactions, while keeping regulated the Smart Grid reliable transport. A generic framework and valuation model for the Smart Grid might be developed under the EWPC market design and architecture as most of the legislative and regulatory uncertainty disappears under the EWPC EPAct.

References:

[1] An Overdue Debate: Customers’ Price Controls

[2] Free Market and Central Planning, Under R1E2

[3] Energy Pulse article Building Models for the Smart Grid Business Case, Jagoron Mukherjee, Senior Consultant, KEMA,…

[4] “Building Collaborations to Change Our Organizations and the World: System Thinking in Action,” December 1-3, 2004. The 14th Annual Pegasus Conference.

[5] The Electricity Revolution

[6] Leadership Answers What to do First

[7] To Congressional Requesters of Utility Oversight

[8] Shrinking the Regulator’s Jobs

[9] Second Generation Retailers - 2GRs

Dr. Molina Morillo Pequeños Grandes Cambios

Original del periódico EL DIA Pequeños grandes cambios, en Mis Buenos Días, por el Dr. Rafael Molina Morillo

“Nos caen sus comentarios como anillo al dedo”, nos escribe la señora Berenice Ramírez de Hermón, refiriéndose a mis recientes columnas sobre las actitudes que los dominicanos debemos cambiar.

“En nuestras manos está cambiar nuestro presente y el futuro de nuestros hijos –agrega-. ¿Cómo? No dejándonos llevar por la corriente con la frase que nos dice: ‘Si otros hacen lo incorrecto, yo también tengo derecho a hacerlo’.

“Debemos cambiar –prosigue- pero no solo cambiar a los políticos de turno, sino también cambiar nuestra mentalidad pasiva cuando no exigimos nuestros derechos; cuando vamos a un mercado o supermercado y aún a sabiendas de que el precio del producto no es real lo compramos para demostrar a los demás que tenemos poder adquisitivo aunque nos esté llevando quien nos trajo; cuando en un parqueo estamos esperando pacientemente que se desocupe un espacio y llega un bien educado hijo de su madre y nos atropella porque él cree que nuestro tiempo no vale y toma primero el parqueo y nosotros para evitar un problema no protestamos; lo mismo cuando hacemos fila para pagar algún servicio y llega un conocido de los empleados y es atendido sin pensar que nuestro tiempo vale igual que el de otro.

Prefiero no seguir con una larga lista pero estoy convencida de que los dominicanos honestos, de bien y respetuosos somos más que los dañinos, que hemos permitido que personas sin escrúpulos decidan sobre lo fundamental para la nación.

“Espero –concluye- que se pueda iniciar una campaña para que empecemos a tomar conciencia, pues los niños aprenden los anuncios que escuchan o ven y escuchan y eso podría ser el inicio de un cambio en la conducta ciudadana.

Ojalá algún canal o emisora de radio obvie lo que cuesta un espacio y empiece una campaña de educación y conciencia como aquella que había hace muchos años: ‘El agua es vida, no la desperdicies’. Yo aún la recuerdo, eso queda.”

(r.molina@codetel.net.do)

Energía Agrava Sostenibilidad Sector Turismo

Noticia original Energía agrava la sostenibilidad del sector turismo

El presidente y el vicepresidente ejecutivo de la Asociación Nacional de Hoteles y Restaurantes (Asonahores) fueron los invitados ayer al Desayuno Económico del periódico El Caribe, donde explicaron las proyecciones, expectativas y problemáticas que presenta la industria hotelera

Por Desirée Martínez / El Caribe

Miercoles 7 de mayo del 2008 actualizado a las 1:40 AM

A continuación un extracto de la noticia relativo al tema energía:

Una de las mayores dificultades que enfrenta el sector turístico hotelero de República Dominicana es el alto costo de la energía eléctrica, debido a que el gasto de una habitación le representa el 20 por ciento de su ingreso.

De esta forma lo explicó el presidente de la Asociación Nacional de Hoteles y Restaurantes, (Asonahores), Luis López.

Entrevistado en el Desayuno Económico de El Caribe, por Héctor Linares, editor de la sección Dinero de este medio y la periodista Desireé Martínez, citó que también afecta la competitividad del sector la falta de terminación de obras de infraestructuras viales.

López señaló "si logramos que los impuestos que paga el sector se focalicen en su beneficio, sin lugar a dudas seguiríamos creciendo". Planteó que de cada peso que facturan los hoteles, 20 centavos van a pagar la energía eléctrica, lo que es insostenible para la industria de la hospitalidad.

Aunque cuenten con autogeneración eléctrica, cuando tienen que pagar por alguna razón el servicio a empresas particulares, el kilovatio hora les cuesta 24 centavos de dólar.

El hotelero citó que sus competidores reciben la energía entre 10 y 12 centavos de dólares, diferencia que limita la competitividad del turismo dominicano.

Asimismo, refirió que una forma de paliar un poco el costo de la factura energética es comprando directamente a las generadoras, lo que según refirió está siendo bloqueado por "fuertes intereses dentro de la industria de generación eléctrica".

La energía eléctrica es el soporte fundamental para el sector hotelero. Para Asonahores reviste vital importancia el planteamiento de una solución a ese problema que inquieta al empresario hotelero. El turismo constituye uno de los fenómenos económicos más importantes del país.

An Overdue Debate: Customers’ Price Controls

The regulation vs. deregulation discussion was about the wrong question. An undiscussed issue during the debate, price control is the key to a properly framed debate. As utilities keep wining rate cases to the regulators, customers are now facing a very large risk of increasing rates as unprepared regulators are part of a flawed system that push them to make incredible bets on Intelligent Utility Enterprise and Smart Grid investments.

An Overdue Debate: Customers’ Price Controls

By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity

First posted in the GMH Blog, on May 5th, 2008.

Copyright © 2008 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

As old regulation is just obsolete and deregulation was flawed, the debate between regulation and deregulation was the wrong question. The right question is Can the power industry eliminate its price controls to the end customer?

We need to make a fundamental shift in perspective to increase efficiency of the power industry. The shift is that integrating demand to power system planning, operation and control in the next 15 years. In fact, that is the breakthrough.

As utilities are in a hurry to keep wining rate cases to the regulators to produce the shift, customers are now facing a very large risk of increasing rates as unprepared regulators are part of a flawed system that push them to make incredible bets on Intelligent Utility Enterprise and Smart Grid investments. Competition should be organized for the development of market business model for global retail market segments.

I have selected 7 articles on Electricity Without Price Controls (EWPC) for the customers, as recommended reading to initiate the overdue debate on price controls. Below, each of the EWPC article (ordered chronologically) is followed by its summary:

1. Demand Integration is NOT the Province of Politics (12/06/07)

Demand integration and system reliability are not the provinces of politics, but of engineering systems and competition. FERC’s demand response staff assessment begs the question of a properly restructured electricity market. The highly complex paradigm inherent on its market structure will become even more complex if FERC’s correct instructions are implemented. A paradigm shift to the EWPC market structure and design is expected to avoid getting the developed countries’ power industry into that of third world service.

2. Shrinking the Regulator’s Jobs (02/20/08)

There is a need for a shared vision to restructure the power industry, shrinking regulators jobs to price controls of the remaining transportation electric utilities and letting end-customers make their own investments and purchasing decisions of electricity. The shared vision needs to go to the public opinion so that high level political decisions are enabled to restructure the electricity industry and shrinking regulators jobs.

3. Utilities and Regulators’ Value Destruction (04/09/08)

Excessive marketing costs are identified by Marty Agius, under today’s regulations, which make utilities and regulators unable to add customer value as will be done under EWPC. Added to his arguments is the large value creation waiting to happen with the emergence of business model innovations, to be develop by retail marketers (2GRs) to integrate demand to power system planning, operation and control, since market research doesn’t work yet.

4. Leadership Answers What to do First (04/16/08)

The answer to the question of what to do first is for the global power industry to get out of the wrong jungle to produce a EWPC based EPAct as soon as possible. That is the kind of leadership needed to face the inevitable fundamental changes required to significantly reduce today’s legislative and regulatory uncertainty.

5. Breakthrough Suggestions for Today's Utilities Environments (04/23/08)

Business model competition for retail services is the key to a breakthrough in utilities services. Economies of scale and scope of electricity, gas and water will enhance their business models. The general public should be aware of the harm of extending utilities business model of winning rate cases to the regulator as we enter the Third Industrial Revolution.

6. EWPC Can’t Be a Market Winner (04/29/08)

2GRs want to compete to develop market business model innovations for global retail market segments. On a given market segment, the market winner of the market vs. market competition can only be enabled after the EWPC EPAct is enacted. The EWPC EPAct should forbid state regulators from letting utilities win rate cases that involve Intelligent Utility Enterprise and Smart Grid investments, because of the high risks of failure involved.


7. To Congressional Requesters of Utility Oversight (05/02/08)

Being unnecessarily flawed, and complex, today's EPAct causes its own crisis. Under those circumstances, FERC utility oversight will not be able to produce the expected results. What’s needed is the simpler EWPC system to protect customers from supply disruptions and unfair pricing. The political answer is a EWPC EPAct.

To Congressional Requesters of Utility Oversight

Being unnecessarily flawed, and complex, today's EPAct causes its own crisis. Under those circumstances, FERC utility oversight will not be able to produce the expected results. What’s needed is the simpler EWPC system to protect customers from supply disruptions and unfair pricing. The political answer is a EWPC EPAct.

To Congressional Requesters of Utility Oversight

By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity

First posted in the GMH Blog, on May 2nd, 2008.

Copyright © 2008 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

The US Government Accountability Office (GAO) explains why it did the study “Utility Oversight: Recent Changes in Law Call for Improved Vigilance by FERC,” in response to Congressional Requesters, introducing it with “Under … PUHCA 1935 and other laws, federal agencies and state commissions have traditionally regulated utilities to protect consumers from supply disruptions and unfair pricing…” GAO has “… considerable interest in whether cross-subsidization – unfairly passing on to consumers the cost of transactions between utility companies and their “affiliates” – could occur.”

The investment in the rush signaled by “Utilities Full Speed Ahead on IUE/SG,” is the key to a kind cross-subsidization activity, which by the design of the system are just undetectable, as state commissions become heavily involved to sanctify the large bets of IUE/SG projects. Just as the reengineering experiments of the past, where 75% of projects became failures, in this case the value destruction will go into customers’ rates.

The large fines that the law provides just don’t apply in the cases where “the potential flow-through of any inappropriate costs to consumers of regulated utilities” bets. Instead of allowing such costly bets, “The EWPC EPAct should forbid state regulators from letting utilities win rate cases that involve Intelligent Utility Enterprise and Smart Grid investments, because of the high risks of failure involved.” (See EWPC article EWPC Can’t Be a Market Winner for details.)

The problem is that the federal agencies, the state commissions, and the utilities are all part of a flawed system. Peter Senge in the Fifth Discipline gave this lesson: “Different people in the same [system] structure tend to produce qualitatively similar results. When there are problems, or performance fails to live up to what is intended, it is easy to find someone to blame. But, more often than we realize, systems cause their own crisis, not external forces or individuals’ mistakes.

For example, FERC has been blamed for his part at the California crisis, as Ken Silverstein report on his energybiz insider article “FERC Oversight Attacked,” that says “FERC is still trying to shed its corporate lapdog image that it earned during the California energy crisis.” The attack should be to the system.

The system is so complex, that it makes it very difficult and involved to demonstrate oversight vigilance. Instead, by changing the system to EWPC such cross-subsidization disappears, since there is not an incumbent regulated retailer.

A new Energy Policy Act is needed to enable the EWPC market architecture and design paradigm shift. The political leadership of the Congressional Requesters is expected.

EWPC Can’t Be a Market Winner

2GRs want to compete to develop market business model innovations for global retail market segments. On a given market segment, the market winner of the market vs. market competition can only be enabled after the EWPC EPAct is enacted. The EWPC EPAct should forbid state regulators from letting utilities win rate cases that involve Intelligent Utility Enterprise and Smart Grid investments, because of the high risks of failure involved.

EWPC Can’t Be a Market Winner

By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity

First posted in the GMH Blog, on April 29th, 2008.

Copyright © 2008 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

This is another attempt to have a mature level 3, win/win communications mode. Level 3 win-win communications mode is nothing more than a generative dialogue. I am not my opinion, is a generative dialogue key principle that allows the separation of our opinions from us.

I have invested many posts trying to patiently explain myself as have many other persons that have responded. I have been writing about market architecture and design, and getting technologies responses that have slowly help the truth arise. I changed my opinion to accept a comparison between EWPC and IMEUC, because they are not at all comparable. EWPC is about market structures and rules. EWPC development is about consulting work, not about technology design of market business models.

Based on the above, I can also say that EWPC is not the winner of the market vs. market competition as it was suggested by Geoffrey Moore. In fact, EWPC was not supposed to be in the market vs. market competition in the first place. Once again, EWPC is just a market architecture and design paradigm that emerged to enable open retail competition on the U.S. federal level and at the global level.

In fact, Warren Causey wrote (see his complete comment in the EWPC article Breakthrough Suggestions for Today's Utilities Environments) : “In order to adopt EWPC, public utility commissions would have to let go of their authority to regulate rates at the retail level. This is a political issue. PUCs are political entities. Commissioners pretend to believe they are "serving the public interest" by protecting the public from nasty old utilities.” EWPC should be compared with price controls that regulators have.

That comparison is precisely the reason that I am assuming that a shift from today’s regulated markets (where utilities win rate cases to the regulators) to competitive markets is bound to occur at the global level. The market bridge between supply and demand on any given market segment can filled up by one of many market business models. That is part of the EWPC architecture. As simple as that!

In addition to the Intelligent Utility Enterprise and Smart Grid (IUE/SG) that Warren Causey reports (see please EWPC article Leadership Answers What to do First), another of many potential market bridges (a market switchboard business model) is IMEUC, which needs to have all customers on board. But the only way IMEUC can be adopted is when a regulator makes the same highly risky bet of utilities IUE/SG to select it.

There are also switchboards that don’t need to have all customers on board. In that case what’s needed is a market design that doesn’t allow free riders, as they will be poorly designed market rules if the allow free riders. The resulting market rules are very important for the required transition period to competition, where some customers remain under the old rules modified to eliminate cross-subsidies.

The particular example of how to avoid free riders in a transition, especially to open retail markets at the federal and global levels, was given by Nat Treadway, in his article The Dawn of Electricity Competition: Efficient Prices and Efficient Choices. Treadway explains that, “The design of default service (also called basic or standard service or provider of last resort) was identified as the most significant determinant of the success of retail electricity choice. A poorly designed default service undermines competition. If default service is designed to satisfy all residential consumers’ needs, or if it bundles and spreads risks among all consumers, or if it is priced below market, then it is unlikely that new retail electricity providers will enter the market. With few choices, consumers are left with only the poorly designed default service, and with limited benefit.”

There are many other potential alternative market business models that retailers can develop to bridge supply and demand and which customers have choice to select. I contend that today’s 1GRs will be replaced by 2GRs that operate at the Control Level and the Economic Level to integrate demand to power system planning, operation, and control. That I said is the market breakthrough, not a technology breakthrough. But, the real proof will be left to market vs. market competition, which will be ready to start as soon as the EWPC EPAct suggested in the above mentioned EWPC article Leadership Answers What to do First is enacted.

Under the EWPC EPAct, regulators will no longer be making the large bets on markets business model (Intelligent Utility Enterprise and Smart Grid investments), that like those 75% of projects that end-up in failure in the reengineering revolution.

Dialogue, Reliability/Ultraquality & What to do First?

To answer ‘What to do First?,’ a generative dialogue insight is that in the EWPC EPAct to be enacted, all market business models should compete in a truly open market (except from the controlled transportation market) that doesn’t favor any party, nor control all customers. System adequacy and system security are non-trivial processes to implement system reliability and ultraquality transportation that should enable social maximum welfare in the open market.

Dialogue, Reliability/Ultraquality & What to do First?

By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity

First posted in the GMH Blog, on April 27th, 2008.

Copyright © 2008 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

1. On Generative Dialogues

I thank Todd for his “skillful conversation (SC),” in which he still defending IMEUC. Defending is not a level 3, win-win communications mode, as Todd forgets the “Unjustified Universal System” part of the GMH post A Universal System with Price Spikes. By ignoring that IMEUC should compete on the open market, instead of being selected as a risky bet of a regulator, as Jim seems to assert, the conversation could get stocked with a disagreement on the What to do First question to go forward.

According to Dr. William Isaacs, the author of “dialogue and the art of thinking together,” the ‘SC’ is part of “productive defensiveness,” as opposed to “unproductive defensiveness.” For more than 28 months, I have faced a lot of “unproductive defensiveness” and also every once in a while some “productive defensiveness.” The problem is that while the former is more productive than the latter, it is still very ineffective.

Dr. Isaacs suggests that deliberation in a different way is more productive. His dialogue process goes through three stages: suspension (listening without resistance; dis-identity), reflective dialogue (explores underlying causes, rules, and assumptions to get to deeper questions and framing of problems), and to generative dialogue (invents unprecedented possibilities and new insights; produces collective flow). That is the sole reason why I have promoted the level 3, win-win communications mode to enable a generative dialogue, since November 2006, when I recorded an EnergyPulse post as the GMH post Let's Get Out of Back Rooms to a Generative Dialogue.

2. On Reliability and Ultraquality

I want to ask again, do we all want to shift from defend to suspend? If we do, we should suspend our opinions on how the non-trivial engineering planning should be accomplished in these conversations. Assuming we are willing to suspend, so we can get to more important matters, like “What to do First?,” I will respond to Todds’ questions on (system) reliability and ultraquality as follows:

System reliability involves system security (for the short run – i.e. operations planning) and system adequacy (for the long run - i.e. investments planning). The ultraquality imperative is the concept behind system reliability which under EWPC becomes transportation ultraquality.

System security was defined above on 4.25.08 in the paragraph that stars with "To fulfill its responsibility to transport, the transportation utility performs a non-trivial operations planning process (which I have named as reliability constraint generation and demand commitment)."

The process to implement system adequacy is also non-trivial and is aimed to produce the expansion planning of the transportation system at least costs, taking also into consideration all of the investments forecasted in the open market (by customers, retailers and generators) to enable the potential for maximum social welfare. At planning intervals, the interdependent transportation controlled market and the open market reinforce each other to produce maximum social welfare.

In the open market, the potential of maximum social welfare is handled at the Economic Level, not at the Control Level as Todd have proposed. It is at the Economic Level that we optimize the capital and operating costs to have both system security and system adequacy. If we don’t execute the Economic Level transactions between customers and 2GRs, we may end up having a very costly system.

If the power market operates at ultraquality, under the coordination of demand integration to power system planning and control, then less customers will justify investing in back-up power supplies. The maximum social welfare will be then be the result of large coordination savings at the Economic Level by 2GRs, instead of the large value destruction expected by the highly risky regulators bets.

3. On What to do First?

Todd wrote that “I don't see the point in promoting any 'what to do first' conversation until it's agreed upon that a) it's truly open in all parts (except maybe the natural monopoly of distribution) b) it's not favoring any party to a given competition and c) it's technically feasable (including economics).” My response in the same a, b, c order is as follows:

a) EWPC is truly open except for the natural monopoly of (tightly integrated transmission and distribution) Transportation compact.
b) EWPC doesn’t favor utilities or IMEUC to have all customers, as 2GRs want to compete by developing market business models.
c) The way to enable that a system is technically and economically feasible is not by regulators’ edits, but by a real market vs. market competition.

As all the elements of the 'what to do first' conversation are satisfied, the only thing in the way is the political will to enact the EWPC EPAct suggested in the EWPC article Leadership Answers What to do First, whose summary reads:

“The answer to the question of what to do first is for the global power industry to get out of the wrong jungle to produce a EWPC based EPAct as soon as possible. That is the kind of leadership needed to face the inevitable fundamental changes required to significantly reduce today’s legislative and regulatory uncertainty.”

Reference and context: Building Models for the Smart Grid Business Case, by Jagoron Mukherjee, Senior Consultant, KEMA

A Universal System with Price Spikes

An Unjustified Universal System

Jim had responded himself earlier by writing “regarding a market innovation, rather than a technical one, I can see his point to some extent. If IMEUC is meant to be for all customers, then it might have to prove itself pretty thoroughly for that to be accepted. A system that could allow for multiple strategies might be more easy to get approved, as long as no free rides are allowed, as Jose has indicated.”

Len had also responded himself too on December 25, 2006. In very rare level 3 win-win communication mode participation, he wrote: “Agreed Jose Antonio on Switchboard model. The point is, once the transaction costs are zeroed with full automation, the large generating entities have no reason to object to selling directly to the smallest customers as well as "large customers". And the market manager is not monopolizing retail, simply the means of recording transactions. IF any would-be retailer can come up with a model which can attract customers away from the generating entities, then they are entirely free to enter the market with offers right alongside the originating generating entites.“

The problem to get to full automation of all of the customers entails investments by many customers, especially a “little old lady” who can perceive she afford a system to respond to real time prices. Her protection from price spikes isn’t pointless. EWPC prevents catastrophic price gouging without the need for price controls, as can be seen in the next post.

Price Spikes (and Unreliable Service)

I have spent time trying to make a clear level 3 win/win communications mode to show how under EWPC service is reliable and without price spikes. I think I got it as intellectual property, unedited, an uncorrected, draft material of The EWPC Textbook.

Price spikes result from incomplete markets and lack of operations planning and demand elasticity. Under EWPC the utility responsibility to serve is shifted to the transportation (T&D natural monopoly) only utility responsibility to transport and for customers to have demand response as a condition of service to enable demand elasticity.

To fulfill its responsibility to transport, the transportation utility performs a non-trivial operations planning process (which I have named as reliability constraint generation and demand commitment). That process results in a time ahead (hour, day, week) supply demand market clearing price, that commits generating units and demand reductions by 2GRs that will be available during real time operation to guarantee reliable service, by having sufficient reserves in time and space. Any generator or 2GRs, that after committing to perform don’t perform, will pay real time prices in that separate market.

The opportunity for the real time (balancing market as it is called as a result of forecasting errors) market segment depends on generators and 2GRs missing their commitments to perform. In a sense this is the other side of the EWPC article IMEUC: Unreliable Service and Price Spikes.

So, under EWPC “little old ladies” don’t need to fear price spikes and are also protected from abuse by prudential regulations. However, if government finds that they require subsidies; those may come from the public welfare system.

Todd: in the open market, I identified earlier three modules: 1) 2GRs compete with 2GRs; generators compete with generators; and 3) 2GRs demand reductions compete with generators supply increases. It is obvious that the survival of 2GRs and generators requires they handle economic transactions very closely.

Jim got it right: price spikes are unreliability are intimately related. EWPC flies like the DC-3 of the great depression, by being the market architecture and design paradigm with commercial quality service. The EWPC EPAct should be expected ASAP to solve the global systemic energy crisis.

The two above comments were posted under the EnergyPulse article Building Models for the Smart Grid Business Case, by Jagoron Mukherjee, Senior Consultant, KEMA

Yaqui y la Revolución de la Riqueza

HOLA NUEVO DÍA

A mis amigos, Radhamés Segura y José Carlos Isaías

En estos días en que el alza del petróleo es alarma nuestra de cada día y los organismos internacionales pronostican que lo peor no ha llegado en estos años de vacas flacas, globalizando así el pesimismo, viene bien que haga esta apretada síntesis del nuevo libro de los futurólogos Alvin y Heidi Toffler, la Revolución de la Riqueza. Hay bases científicas para mirar hacia el futuro con optimismo. Por lo pronto, la vida no terminará por falta de energía. Craig Venter, quien dirigió exitosamente la descodificación del genoma humano, trabaja hoy en la creación de organismos artificiales que puedan eliminar la polución y crear energía.

Él sostiene que la biología puede cambiar nuestra dependencia de los combustibles fósiles. Y en la universidad de Stanford se trabaja en la producción biológica de hidrógeno partiendo de bacterias creadas genéticamente y Howard Berke desarrolla un material tan fino como cinta de película para transformar la luz del sol en electricidad capaz de recargar celulares, GPS y otros aparatos.

En Europa y Asia se está extrayendo energía de las mareas de los océanos. Agregan los Toffler que cada día el sol transfiere a los océanos la energía térmica equivalente a 250 mil millones de barriles de petróleo.

En fin, hasta el pesimista Matthew Simmons admite que la creatividad del hombre da lo mejor de sí en tiempos de grandes crisis. Y la economía del conocimiento traerá la revolución de la riqueza y pobres con saberes tendrán poderes de un nuevo tipo de empresario. Amén o así sea.

columnayaqui@gmail.

Publicación original del Listín

Breakthrough Suggestions for Today's Utilities Environments

Business model competition for retail services is the key to a breakthrough in utilities services. Economies of scale and scope of electricity, gas and water will enhance their business models. The general public should be aware of the harm of extending utilities business model of winning rate cases to the regulator as we enter the Third Industrial Revolution.

Breakthrough Suggestions for Today's Utilities Environments

By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity

First posted in the GMH Blog, on April 23rd, 2008.

Copyright © 2008 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

Instead of the utility centered "Modest Efficiency Suggestions for Today's Energy Environment, proposed by Philip Hanser, Principal, The Brattle Group, the article EWPC Leadership (w/o links) is offering breakthrough suggestions that “brings absolute clarity and direction to enable a cultural shift to the power industry of the Third Industrial Revolution. Demand Integration by 2GRs [will] result in large coordination savings for society as a whole, both in customers' multiyear investments and operation costs.”

Until recently, utilities have concentrated on the development of the resources of the supply side, where modest incremental results can be expected. Breakthrough is about the development of the resources of the demand side in electricity, gas and water.

I interpret the author’s “Utilities must be made financially whole if they are expected to be a means by which energy efficiency is achieved,” as begging to help utilities develop the resources of the demand side to extend their business model of winning rate cases to the regulator. In that regard, Len Gould asked a question whose answer is already available under EWPC: “For some reason item 4) in your article bothers me. Is electricity service so unique that governments must employ only the services of the seller of the product to encourage customers to buy lees [change to less] of that product?”

The answer is in the EWPC article Shrinking the Regulator’s Jobs, whose summary says: “There is a need for a shared vision to restructure the power industry, shrinking regulators jobs to price controls of the remaining transportation electric utilities and letting end-customers make their own investments and purchasing decisions of electricity. The shared vision needs to go to the public opinion so that high level political decisions are enabled to restructure the electricity industry and shrinking regulators jobs.”

In the Third Industrial Revolution, that same answer applies to gas (GWPC) and water (WWPC) market architecture and design paradigms. Three different independent regulated transportation utilities companies and Second Generation Retailers that will be able to increase their federal economies of scale by developing economies of scope in gas and water will be the result, here and below.

Demand today is still an externality to the power system in a wide open market for customers’ investments in energy efficiency (EE) products, among other products available, making EE (integration to system planning, operation and control) a power system disruptive technology in its own right.

As soon as the EWPC EPAct described in the article Leadership Answers What to do First is adopted, R&D on EE and other disruptive technologies will all be pumped with a lot of R&D money. In fact, those are well known technologies also waiting to become power system disruptive technologies all the way to Main Street (as Geoffrey Moore calls it). As the most viewed EnergyBlogs article The Sixth Disruptive Technology (with 1218 hits at the time of this writing) explains, business model innovations developed by 2GRs will tightly integrate the other five technologies. In gas and water, similar disruptive technologies will be available.

A Decent Response to Jim Bayer

Jim wrote, “… sorry I brought the whole [IMEUC] thing up,” when he wrote earlier “I do believe that IMEUC has something to offer in this discussion. And frankly, having large utilities decide how smart grids should be organized is akin the the fox watching the chickens… However, that being said, and given the potentially great interest in IMEUC, I really think it needs to be documented a bit better. I've read your 2 articles over many times and while I get the gist of it, the explanation is really not as clear as I'd prefer. Is there any new revised explanation in the works? Have you written anything else about it, other than the blogs?” He actually didn’t mention EWPC at all, so I don’t understand why he no polite with respect to EWPC, while being very polite with IMEUC. In the next post I will refer him and all readers to three very succinct EWPC articles, which speak very well of the EWPC market architecture and control paradigm, a very complex subject trully simplified.

Maybe “IMEUC has something to offer in this discussion ... ” but it is NOT as a market architecture and design paradigm. It is only for that reason that I have interacted by using the EWPC article IMEUC False Facts as a recipient of very insidious False Facts against EWPC. In fact, after hundred, and hundred, IMEUC False Facts, diffused in many directions by IMEUC promoters, since the end of 2005, to distract the attention of readers away from EWPC, I have documented 29 False Facts in the past three weeks (that is about 10 a week as a possible representative statistic). A quote from George Santayana is the perfect message that says it all: "Fanatism consists of redoubling your efforts when you have forgotten your aim."

I started the ideas of what in now EWPC in 1996 following the aims of late M.I.T. professor Fred Charles Schweppe (please hit the hyperlink get to his bio as an M.I.T. EECS Great Educator) and his research team (work done from 1978 to 1988). The aim is best taken from Schweppe's just mentioned bio, which says that he “… is now regarded as one of the visionary people who foresaw changes to the electric-power industry to permit competition, long before others.” I have found and documented, in the Central Energy Network, since the end of 2005, that the problems with deregulation and the continued value destruction by today's utilities, were and are, respectively, the result of disregarding his spot price regulated energy marketplace as the first required step. Schweppes’s visionary leadership on Spot Pricing of Electricity is the basis for the EWPC market architecture and design leadership.

Competition in the power industry requires a shift from today's utility business model of winning rate cases to the regulators with monopoly Utilities Enterprise Solutions to competitive Retailers' Enterprise Solutions to develop vibrant, complete, open, and fully functional wholesale and retail markets in the global economy.



Very sharp descriptions of EWPC can be found in the EWPC articles Synthesis Proposal Agreement of EWPC (in response to a similar question to yours, which I named Todd’s Test; there was not an IMEUC response at the time), Power Markets Essential Requirements and EWPC Leadership (w/o links).

Add to those three articles that, looking at the EWPC restructuring from the interface point of view, “EWPC is an integral reform paradigm that results is a robust emergent market architecture and design that divides the vertically integrated utility at modular interfaces, with two modules in the controlled market and three modules on the open market. 1) Long run and short run system planning, operation and control natural monopoly functions are also kept integrated. 2) The T&D wires natural transport monopoly is kept integrated. 3) Supply - generation - natural competitive functions compete with each other 4) Demand - retail - natural competitive functions compete with each other. 5) Supply and demand (Megawatt/vars vs Negawatt/vars) compete with each other. All competition is in time and space.”

Since I am now writing, the first draft of the introductory chapter of The EWPC Textbook, I know there are minor upgrades needed from insights that have evolved after I wrote them. Any comment in the third level win/win mode of communication about EWPC, but unrelated to the second phase of company vs. company competition, is welcomed.

Reference article and context: Building Models for the Smart Grid Business Case, by Jagoron Mukherjee, Senior Consultant, KEMA

Many Market Matters to Change the Status Quo

Jim,

The whole discussion of incorporating new technologies in the demand side of the power industry is very important in the discussion. But as you will see, your generous “believe that IMEUC has something to offer in this discussion,” is unsupported. I humbly suggest that you take a close look at the EWPC article IMEUC False Facts, and read below, to consider changing that believe based on the many False Facts documented already.

In a series of posts under the article EWPC’s Tipping Point [a must read to get a proper response to your inquiry], in response to Len question “I can find no relationship between your last two posts and IMEUC. Clarfiy?” [my response was:]

The relationship is with "We have a saying in Spanish which I translate as 'that only the tree that gives good fruits gets stoned' (maybe the English version is 'Picked-to-perfection fruit is just a stone's throw away')." The point is that Don Giegler [and maybe Bob and Len] is defending the utilities status quo and has been using IMEUC to throw stones at EWPC, because he knows that IMEUC is not a threat to the California utilities excesses.

Relating that third article that never came, that was suppose to respond my convincing "generative dialogue synthesis (please read about IMEUC deficiencies in the article "EWPC's Tipping Point" [the link is in the second paragraph])," I repeat that you retracted with "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." All those issues were not clarified al all. Just like me[,] Jim Beyer is not throwing stones, but confirming the IMEUC is mostly a physical installation "market," that has not possibilities to replace the status quo. [this is what you wrote:]

To: Len Gould
Subject:
IMEUC

Len,

Based on your comment, I decided I should try to get my head around IMEUC. So I looked at your papers. I still find it a bit obtuse. Much text was devoted to the particulars of meters and their costs. I think people concerned with replacing the status quo would be concerned about many other matters as well [like those that Bob calls “Len's IMEUC market reforms,” which are totally absent].

Bob doesn't throw stones to IMEUC either [in fact there seems to be also a Bob’s IMEUC], because he is not "concerned with replacing the status quo [either, nor is he] … concerned about many other matters as well," that he has an opinion they [the many other matters] are religious . I have worked hard to get "techies," as he calls himself, and maybe [forget maybe] you, to unveil the business (not religious) and technical complexities of the power industry.

Len ended his "techie" answers to you with “Anyway, just a few thoughts. It's very possible I'm missing something [the “many other matters as well…”] about your plan. It wouldn't be the first time.” Now he writes "Also could use any help available from anyone out there willing to collaborate / contribute expertise in the many [other missing matters] areas where [Bob too] I'm lacking."

Hence, the answer to your question: "Is there any new revised explanation [of IMEUC} in the works?" is that there is no longer a need at all to keep playing games to explain IMEUC anymore.

The means to replace the status quo can be found in the EWPC article Leadership Answers What to do First, whose summary says: “The answer to the question of what to do first is for the global power industry to get out of the wrong jungle to produce a EWPC based EPAct as soon as possible. That is the kind of leadership needed to face the inevitable fundamental changes required to significantly reduce today’s legislative and regulatory uncertainty.”

Leadership Answers What to do First

Third update. Contrary to a strong west back, should #GlobalDebout aim to strengthen the whole world? What follows is a response to the artícle How the west was lost – and why we need it back, written by Timothy Garton Ash for theguardian, with the subtitle "The ties between Europe and the US have loosened, but there are still huge global challenges – Russia, China, the Middle East, climate change – we can only face together." It is easy to conclude that such a viewpoint reinforces the negatives identified in the article The Global Crisis Of Leadership, written by Alon Ben-Meir. Instead of why we need a strong west back, the first update of this post concentrated on why we need to strengthen the whole world. Let's see a few views:

Contrary to strong west back, should #GlobalDebout aim strengthen the whole world? https://t.co/FXvimCeOcN #EuropeIN pic.twitter.com/w34yWiCNqS

— Jose A Vanderhorst S (@gmh_upsa) May 3, 2016

@gmh_upsa ya formas parte de mi web https://t.co/isTwDwk9ZH https://t.co/KZbm2odiV8

— AntonioVallejoChanal (@AntonioVChanal) May 4, 2016

Mr. Garton Ash's introduction is as follows: "Whatever happened to the west? Barack Obama just visited Europe to praise and strengthen the west, urging Britain to stay in the EU and Germany to support the proposed Transatlantic Trade and Investment Partnership (TTIP). Reactions in Britain, Germany and the United States suggest that he was praising a ghost. Or at least, a ghost of a former self."

In contrast, Mr. Ben-Meir argues that: "Although President Obama falls in an entirely different category — he restored to the Presidency the dignity and the stature it deserves, and demonstrated unwavering commitment to human rights — he never appreciated the US’ indispensable global role to lead... Instead, he led from behind, creating the perception of weakness and vacillation allowing other powers, especially Russia and Iran, to fill the vacuum he created, raising serious doubts in the minds of America’s allies whether the US is still up to the task."

While Mr. Garton Ash and Mr. Ben-Meir argue by learning from the past of independent countries of the industrial civilization, the first saying that "The real-life alternative is not something more progressive, but rather some ghastly amalgam of Putin, Trump and Le Pen: the Putrumpen," there's a real.life alternative that comes from learning from the emergent future of interdependent countries of the systemic civilization as can be seen in the first update that suggest what to do first.

Second update. Del 90% #GlobalDebout a representantes en la Cumbre de Energía EE.UU - Caribe y Centroamérica. Como los celulares que saltaron (leapfrog) los teléfonos fijos, los votantes queremos un Servicio eléctrico sobresaliente, que salte las redes inteligentes, lo cual se logra con el pensamiento disponible para redactar una Ley Sistémica de Electricidad, que servirá como patrón para una Ley Sistémica de Energía. Debajo de la nota Hacia un futuro sostenible del sistema eléctrico, escrita por Juanjo Gabiña, colocamos el siguiente comentario:

De 90% #GlobalDebout a representantes Cumbre Energía #USA-#Caribe y #Centroamérica https://t.co/FXvimCeOcN #EuropeIN pic.twitter.com/VLaONRi4f5

— Jose A Vanderhorst S (@gmh_upsa) May 3, 2016

Hola Juanjo,

Muy interesante y oportuna tu nota que nos sirve como "feedback." La misma llega cuando el vicepresidente Joe Biden será el anfitrión de la Cumbre de Energía de los EE.UU con el Caribe y Centroamérica, los días 3 y 4 de mayo en Washington, D.C.

Concentrando la atención en el último párrafo de tu nota, cuya última oración versa sobre la "gran importancia para analizar la importancia de las plantas de energía en relación con la seguridad del suministro en el futuro," se centra en los países avanzados que tienen centrales instaladas. Saltando hacia arriba en tu nota, la situación es muy distinta a países con capacidad instalada insuficiente, en los que no sucede que "cualquier interrupción de corriente se debe a la red de transporte y se espera que siempre sea en este nivel." En esos casos el ejemplo de las redes celulares telefónicas es muy valioso porque permiten saltar (leapfrog) las centrales con redes distribuidas.

Pero para dar ese salto se necesita hacer una reestructuración profunda del mercado, como la que aparece en la actualización de la nota [esta misma] "Leadership Answers What to do First," que ahora tiene su primera actualización "Mr. Joe Biden: voters need a global framework change to a systemic energy policy act for maximum social welfare." Dicha actualización tiene una traducción de los tres primeros párrafos que empieza así: "El liderazgo responde a qué hacer primero" y "Primera actualización. Sr. Joe Biden: los votantes necesitan un cambio de marco de referencia global a una Ley Sistémica de Energía para el máximo bienestar social."

First update. Mr. Joe Biden: voters need a global framework change to a systemic energy policy act for maximum social welfare. The update of this post ‘Leadership Answers What to do First’ is intended for Vice President Joe Biden, because of the timely opportunity for voters of the USA, Spain and Dominican Republic that emerged as he will host the U.S.-Caribbean-Central American Energy Summit on May 3 and 4 in Washington, D.C.  As designed as an institutional innovation, the purpose of the systemic energy policy act is maximum social welfare. Such purpose is needed to start to fill today´s empty global leadership vacuum with a sharp strategy in the Dominican Republic with a global framework change that will serve for pattern changes elsewhere.

Mr. Joe Biden: Voters need a #SystemicEnergyPolicyAct for maximum social welfare https://t.co/FXvimCeOcN #EuropeIN pic.twitter.com/y2b7r8S6Lj

— Jose A Vanderhorst S (@gmh_upsa) May 1, 2016

@gmh_upsa buen contenido el tuyo. Digno de ir a mi web https://t.co/isTwDwk9ZH https://t.co/KZbm2odiV8

— AntonioVallejoChanal (@AntonioVChanal) May 2, 2016

With ongoing speech acts proposals, like “we will go to the moon,” being developed under an action oriented scientific attitude, a lot has emerged in the past 8 years after the main text of this post, as the architecting scope has been increased all the way to the global social, cultural, political, and economic spheres.  As complemented below, the Dominican Republic has developed the systems architecting thought required to give every poor and rich global stakeholder the opportunity of a great, mature and reliable energy service to be offered by servant leaders. The above strategy is based on the “Second update. Do voters need #Fordism transitions or #Jobsism transformations under #GlobalDebout?,” of the @gmh_upsa paper Minimalists governments with fair global free deregulated markets must arrive soon, in which we suggested:

For starters, we are proposing the first three global leaders: USA transforms itself to set the pattern change for other countries unions, Spain transforms itself to set the pattern change for other countries and the Dominican Republic transforms its electric power sector to set the pattern change for other public sectors. Any other countries ready to execute those kinds of transformations please let us know.

That is in sharp contrast with the Big Shift global leadership vacuum that have voters facing electoral processes that are so naïve, unreliable and dangerous. Such leadership vacuum is reflected, for example, in the USA, Spain, Brazil, Puerto Rico, Dominican Republic, Greece, Argentina, as well as UK’s Brexit with EU, migrations towards Europe and the USA, as a result of a flawed framework change started (according to Thomas Frank’s assessment explained below) by the Democratic Party two decades ago, which we strongly believe favors global crony capitalism.

This is a reinterpretation of what can be considered a key piece of the global leadership puzzle that we believe is our artistic conclusion of the Harvard Business Review Online blog post The Innovative Coworking Spaces of 15th-Century Italy, written by Piero Formica on April 27, 2016. Piero’s post is a welcome contribution to solve said puzzle based on what emerged in the above mentioned “Second update.” This is what we said about how to address the leadership vacuum:

To get a better understanding why we need framework change, which is supported by the great and timely article The Global Crisis Of Leadership, written by Alon Ben-Meir, Senior Fellow, Center for Global Affairs, NYU, we need to consider from the main text of this paper what "Thomas Frank associates... with the emergence of a meritocracy that failed," to which we immediately added that "It failed not by being a meritocracy, but by the money led Groupthink consensus under the primacy of the parts." An additional explanation of the failure comes from the April 21, 2016, article Not All Practice Makes Perfect: "Moving from naive to purposeful practice can dramatically increase performance," by Anders Ericsson & Robert Pool.

Such global leadership vacuum is being filled with candidates lacking the needed leadership capacity at every level of society. The reinterpretation that follows goes back to explain why electoral debate processes besides being naïve, are so unreliable and dangerous. While soaring inequality tell us that we are heading to the Second Middle Ages, Piero seems to help us believe that we have the great opportunity to be heading to a Second Renaissance.

To me the idea of a renaissance is very familiar. One of the owners of a company that I worked at during the 90’s and until 2010, the late José Vicini (of Italian origin of course) saw in me a Renaissance man. The late management guru Peter Drucker would have said that the renaissance was the result of the third information revolution brought by the printing press, being a precedent to the fourth information revolution renaissance brought to us by the microprocessor. The most probable self-explanation comes in a blog post of April 11, 2012 [1], which says:

A very attractive insight on an issue of the IEEE Power Engineering Review, published more than 30 years ago, started to change my life for the better. Showing “A New PES Award” in the issue’s cover, you can also find in it the above engineering concept. Inside that issue is the story “Renaissance Man: Uno Lamm, ASEA’s ‘Retired’ Electrotechnical Director, Leads a Remarkably Active and Inquisitive Life.”

The insight in that story that really altered my life was his example “… there’s the opportunity to work on ideas quite outside one’s owned special field of expertise. I can then enjoy the enthusiasm built on partial ignorance which, as you know, is greater and fuller than any other enthusiasm.”

In my current process, I am using Google’s Blogger for production of quality collaborations [2] and Twitter for distribution with a few valuable citizens so far retweeting (and giving feedback) those collaborations. I learned of the existence of Piero’s article because John Hagel gave a 'like' on Linkedin to Heather McGowan's suggestion "We need a return to the #renaissance to create #neogeneralists and #scaleable #learning John Hagel Chris Shipley."

In their website edgeperspective.com, John Hagel and John Seely Brown say that "We developed the ‘Shift Index,’ a new economic indicator that suggests the current recession is masking long-term competitive challenges for U.S. businesses,” which they introduce as:

Corporate returns are under pressure from far more than the recession. The patterns we’ve uncovered span decades and deeply affect even the highest performing companies, with the single greatest driver of these challenges, and indeed future opportunities, being our underlying digital infrastructure. Regardless of when the economy shifts back to an upturn, the long-term implications for continued erosion of return-on-assets will continue.

We suggest that such Big Shift can be understood as the result of the transition from Alvin Toffler's Second Wave (an industrial civilization that must include the earlier developments that led to the industrial revolution) to the Third Wave (what we have been calling the systemic civilization). A thought experiment thesis on the need for scalable learning suggested by Hagel and Seely Brown would have the Big Shift as a change in waves: accordingly, the Renaissance as a transition from the First Wave to the Second Wave would be a precedent to the current renaissance transition from the Second Wave to the Third Wave.

The above is one way in which Piero’s contribution fits well into the leadership vacuum puzzle. Regarding his selling point, that mutually reinforce each other, besides “Turning ideas into action,” that we aim here to produce with proposals of “speech acts,” we will deal below with the selling points “Facilitating the convergence of art and science” and “Fostering dialogue.”

After reading Piero’s article, I went back to Linkedin to see what Heather had to say on the issue. To our surprise we should partially love (more below) her most recent post Education Is Not The Answer (Part 1), whose introduction says:

The notion of education implies that there’s a path towards a definitive, finished state wherein an individual has become “educated.” But in a world of accelerated change, with rapid disruption cycles in industry and with rising automation, that end state of being “educated” is just no longer meaningful. An individual must have learning agility - the ability to learn, adapt, and apply in quick cycles. Part One of this piece discusses the learning-over-knowing imperative, and Part Two will examine the specifics of learning agility.

Part One’s introduction aspect fits quite well with a new strong argument: the Democratic Party meritocracy’s failure as a result of a mistaken framework change which relied on educated experts that served as pattern change for left leaning political parties all over the world that generated said global leadership vacuum. As given in the @gmh_upsa paper mentioned above, that argument says that: “about the main difference between representative and direct democracy can be associated with complexity and simplicity respectively. After I heard Thomas Frank talk about complexity, we search his book and found this two paragraphs, the first of which is under the section “Consensus of the willing:”

All the things mentioned so far – the fascination with complexity, the desire to preserve existing players, the genuflection before expertise – all of them arise from one of the deepest wellsprings of liberal thought and action: the longing for a grand consensus of professional class that never seems to come.

A forgotten school of left-wing historians used to argue that the regulatory state began not with public-minded statesmen cracking the whip and taming big biz, but just the opposite – with business leaders deliberately inviting federal regulation as a way to build barriers to entry and give their cartels the protection of law. Long-ago giants of steel, tobacco, telephones, and meatpacking all welcome federal regulation because of the effects it would have on smaller competitors. That old style of regulation brought ancillary benefits to the public, of course: better food, a standardized phone system. But its main objects were stability for existing businesses and guarantee profits in perpetuity.”

While we agree with Heather that we are under a Big Shift where “Education in Not the answer,” Education may well again become the answer in the future as a result of the selling point “Facilitating the convergence of art and science,” as suggested, for example, in the “Ninth update. Countries must leap into Hagel's electoral strategy of trajectory on Handy's curve of systemic civilization [3].” The Big Shift could be seen from one civilization curve to another, for example, after the framework change from the Fordism of the industrial civilization to Jobsism of the systemic civilization. This is where ‘Fostering Dialogue’ comes in, where Piero says:

Today, we often recognize the need for these kinds of illuminating conversations without really making space for them in our organizations, either because organizations are too afraid of conflict or because people are simply too busy to try to expand their understanding of each other. But Renaissance workshops offer proof of how important it is for collaborative workplaces to draw on sources of opposing ideas and controversial opinions.

With regard to those kinds of ‘illuminating conversation,’ Verganti responded with "Jose Antonio, thanks for your reference to Otto Scharmer, indeed one of our most precious inspiration," the following paragraph of my comments to another of his blog post that says:

In addition, by using Otto Scharmer’s “Four Fields of Conversation,” next is a reinterpretation that values Verganti’s four step process insights, based on the difference between the approaches of art of ideation and those of the art of criticism. The art of ideation approaches is set in the third field under reflexive dialogue and the primacy of the parts, while the art of criticism is set in the fourth field under generative dialogue and the primacy of the whole.

[1] First Draft: Let’s Emulate Uno Lamm’s Accomplishments Through Imagination and Truth, @gmh_upsa blog post, April 13, 2012.
[2] Roberto Verganti, Harvard Business Review Online, Quantity versus quality in collaborations, June 15, 2011.
[3] Can we agree with the Second Curve, while not with Handy?, @gmh_upsa blog post, October 2, 2015.
[4] Roberto Verganti, Harvard Business Review, "The Innovative Power of Criticism," January-February 2016.

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The answer to the question of what to do first is for the global power industry to get out of the wrong jungle to produce a EWPC based EPAct as soon as possible. That is the kind of leadership needed to face the inevitable fundamental changes required to significantly reduce today’s legislative and regulatory uncertainty.

Leadership Answers What to do First
By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity

First posted in the GMH Blog, on April 16th, 2008.

Copyright © 2008 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

I agree with Warren Causey’s article Utilities Full Speed Ahead on IUE/SG: The Question is What to do First that “the consensus is correct: ‘fundamental changes are inevitable… the paradigm is going to have to change.’” M.I.T. professor Fred C. Schweppe, and his research team, knew that in the 1980s. The EWPC effort that extended Schweppes work is about facing those inevitable fundamental changes, as can be seen in the EWPC article The Electricity Revolution, which is summarized as:

“Warren Causey is [also] reporting a technological revolution in the power industry, which is ahead of legislative and regulatory uncertainty and is heading for a very costly dead-end. Utilities in the US and Europe are trying to extend their obsolete business model of winning rate case to the regulators. Customers, [the general market] and society should not have to pay for such large value destruction, by adopting the EWPC market architecture and design paradigm that removes the uncertainty.”

The most important reason why the existing paradigm – the system - is failing is because of architecture and design flaws. Eberhardt Rechtin and Mark W. Maier, in their book “The Art of System Architecting,” have a descriptive heuristics that explains what happens: “In architecting a new [the paradigm in this case] program all the serious mistakes are made in the first day.” Leaving out utilities native loads, Open Transmission Access of EPAct 92 was such a serious mistake, which initiated the incremental path of the California crisis, the 2003 blackout, etc., that have taken us to today’s mess of costly and complex capacity markets, NERC mandatory requirements, etc.

Looking at the mistake from another perspective, legislators and regulators were trying to get efficiency from wholesale, when the breakthrough paradigm is all about business model innovations at retail to integrate demand to power system planning, operation and control. Such breakthrough is enabled by the Third Industrial (communications) Revolution. Most investments to develop the resources of the demand side will be customers’ investments, that need to be well coordinated to produce large savings. Such coordination should be the result of competition of innovations among open market Retailers’ Enterprise Solutions and the development of the smart grid transportation utilities, instead of monopoly Intelligent Utility Enterprise/Smart Grid solutions.

In the EWPC article Slicing the Last of the Regulated Monopolies (an update of an article with the same title by Lester P. Silverman, a director of McKinsey & Company, on The New York Times of July 21st, 1996.) it is very clear that at the outset “‘The wires business - the transmission and distribution of electricity - will remain regulated but will be operated by [transportation only] utilities … with access to the wires open to all [generators, retailers and customers] ... Many of today’s electric utilities will be little more than regulated wires companies, but some will have grown by acquiring neighboring wires and other [gas and/or water] operations... The energy service business [under Second Generation Retailers], which involves the packaging of energy and other services [to integrate the resources of the demand side to power system is the key to the breakthrough.]"’

Why Silverman’s vision didn’t happen? We have a strong case of lack of leadership to enable a robust system that protect consumers from supply disruptions and unfair pricing. Even though, as Warren says “there still are a lot of questions about what to do first … according to most experts – Congress failed to so in an Energy Policy Act (EPAct) adopted in December,” the real make or break answer is all about legislative and regulatory leadership, which I now discuss.

In the chapter on Habit 2, of “The 7 Habits of Highly Effective People,” Steven R. Covey tells a story about the difference between Leadership and Management to explain that leadership – “What are the things I want to accomplish?” – is the first question to ask, while management is the second question “How can I best accomplish certain things.”

Covey wrote “You can quickly grasp the important difference between the two if you envision a group of producers [the utilities] cutting their way through the jungle with machetes. They’re the producers, the problem solvers. They’re cutting through the undergrowth, clearing it out.”

“The managers [the legislators and regulators] are behind them, sharpening their machetes, writing policies and procedure manuals, holding muscle development programs, bringing in improved technologies and setting up working schedules and compensation programs [rate cases to be won by utilities] for machetes wielders.”

“The leader is the one who climbs the tallest tree, surveys the entire situation [see more than 110 articles in the EWPC Blog], and yells, “Wrong jungle.”

“But how do the busy [Utilities Full Speed Ahead on IUE/SG], efficient producers and managers often respond? ‘Shut up! [José Antonio] We’re making progress.’”

So, the simple answer to “What to do First” is that the power industry should get out of the wrong jungle and adopt the EWPC market architecture and design paradigm. The controlled market transportation utility with their regulated responsibility to transport will be aiming for ultraquality transportation and thus providing “the benefit of localizing disturbances and fragmenting responsibility and expense” with those of the non-real-time open market.

The modernization of the nationwide grid will then be done under a least cost transportation (tightly integrated T&D) expansion plan, considering the investments, operation, maintenance and outage costs forecasts of the whole power system including the value chain (generation, retail, customer) of the open market. The regulatory compact will shift from the utility obligation to serve to the utility obligation to transport in the closed market. The difference between the two will be demand response as a condition of service in the open market.

So, what to do first? Forgetting today’s mess, and starting from a clean slate from the ‘previous, historic paradigm,” as Warren calls it, the legislative and regulatory bodies need the vision and the courage to separate the regulated wire business, from the competitive retail and wholesale businesses of the open market. To go forward, they should take into account all the great insights that have emerged on EWPC market architecture and design paradigm, during the discussions on EnergyPulse and EnergyBlogs.com of the past 28 and 7 month, respectively. EWPC provides the required leadership to reduce the legislative and regulatory uncertainty to acceptable levels.

As Warren says “the next 10 to 15 years will see mayor changes – perhaps classified as upheavals by future historians…,” if the FERC, the administration and Congress of the US don’t take the leadership challenge head on, and produce a EWPC based EPAct to control the destiny of the global power industry, then as Jack Welch and Noel Tichy wrote, in their lessons in mastering change, “someone else will.”