Second 45 EWPC Blog Articles

This collection of the links, date/time stamp, and introductory words of the second 45 EWPC Blog articles (46-90) is available as an alternative source to the EWPC Blog. I believe that every article can be though of as a holographic image from a different perspective of the whole EWPC market architecture and design paradigm shift.

90 Uncertain Generation is Here to Stay
Posted At : February 11, 2008 3:28 PM

The discussion with Edward Bair in the EWPC article Two More Lessons from Denmark’s Wind Story ended with the statement “The third lesson is, thanks God, that uncertain generation (wind, solar, etc.) is here to stay!”

89 The Smart Grid Transportation Utility
Posted At : February 4, 2008 9:04 AM

Dramatic and radical change is coming to the electric utility industry as the utility itself evolves to the smart transportation grid, under a complete rethinking of the electric industry. Front and...

88 Two More Lessons from Denmark’s Wind Story
Posted At : February 3, 2008 3:53 PM

The Denmark Challenge - Lessons From an Emerging Wind Power - The people of Denmark have a story to tell in their own Nordic unassuming way. You hear it from quietly proud Per Volund, an engineer, as...

87 Value Creation for the Customers
Posted At : January 30, 2008 12:55 PM

To end value destruction at the interface between the utility grid and the utility enterprise and at the interface between transmission and distribution, a shift from financial to production capital...

86 Innovation and Risk Taking in the Power Industry
Posted At : January 25, 2008 9:58 AM

Open Transmission Access was a great mistake made at the outset of restructuring to preserve utilities rights. To introduce innovation, risk taking and create value for the customers, transmission m...

85 The End of Electric Monopoly Retail
Posted At : January 24, 2008 3:15 PM

By José Antonio Vanderhorst-Silverio, Ph.D. Systemic Consultant: Electricity Copyright © 2008 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article m...

84 PCT One of Many Business Model Innovations
Posted At : January 20, 2008 1:23 PM

California panel removes proposed mandate for utility-controlled thermostats - Bowing to public pressure, the California Energy Commission has removed its proposed mandate for utility-controlled therm...

83 Creative Destruction of the Old Electric Paradigm
Posted At : January 13, 2008 12:16 PM

The economic theory of creative destruction is the key force to the destruction of the vertically integrated industry and the emergence of a new paradigm of global or universal electric service. Com...

82 Vertical Integration/Deregulation Debate vs. EWPC Generative Dialogue
Posted At : January 12, 2008 11:52 AM

Thanks Bob, I know that I will not be able to convince anyone that has its own agenda. That is not my intention. I will only respond to clarify what I meant. Adding only that EWPC is about one...

81 Global Electric Service Shared Vision
Posted At : January 9, 2008 12:17 PM

By extending the suggestion of Martin Rosenberg, Editor-in-Chief, EnergyBiz Magazine, a global electric service shared vision is needed. Such shared vision is open to gain a foothold for company vs....

80 A Global Standard Market Architecture and Design
Posted At : January 6, 2008 11:46 AM

One of the BRIC countries (Brazil, Russia, India or China) is poised to be the enabler of a global Standard Market Architecture and Design, if U.S. companies decide to stay behind by keeping in plac...

79 Power System Operation Stocks and Flows
Posted At : January 4, 2008 9:07 AM

An important discovery about the non-trivial aspects of power system planning, operation and control is in the making, under a generative dialogue. Resources are needed to develop an update of Jason...

78 Nanosolar Breakthrough and the Old Paradigm
Posted At : December 19, 2007 12:52 PM

Nanosolar has made great progress as it has faced and apparently surpassed many barriers so far. However, they are still facing the most important barrier, which is the old electric power paradigm...

77 Making Electricity a Commodity
Posted At : December 17, 2007 2:01 PM

To make electricity a commodity, a proper market architecture and design has emerged in the last two years, as the electricity without price controls (EWPC) paradigm. The structural flaws in the cur...

76 Market Research Doesn’t Work Yet for Demand Integration
Posted At : December 15, 2007 7:42 AM

Demand integration is a discontinuous innovation and the reason why the responses of customers are way off with respect to the non-trivial concept of demand response. Politics should NOT continue to...

75 To BE or NOT to BE Smart Metering
Posted At : December 13, 2007 9:04 AM

The lack of a consistent market architecture and design paradigm shift creates a Babel Tower in Ontario. There is a need to consider the whole power industry and not isolated incremental shifts maki...

74 Demand Integration is NOT the Province of Politics.
Posted At : December 6, 2007 1:43 PM

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...

73 Ohio Should Focus on EWPC
Posted At : November 29, 2007 7:44 PM

First Energy Corp. entered into a contradiction by handing a letter signed by prominent economists to show they believe in competitive markets. The contradiction is that the economists...

72 Does EWPC have a “Bystander Problem”?
Posted At : November 22, 2007 2:47 PM

Believe it or not, EWPC is about teaching leadership. As “human beings are a lot more sensitive to their environment than they may seem,” I would like to learn from the bystanders whethe...

71 EEI-ting Your Own Lunch
Posted At : November 22, 2007 1:12 PM

Edison Electric Institute members have empowered the government to take control of the power industry. They should stop dreaming, work hard to ban regulation and to let the market decide by followin...

70 Increased Sense of Urgency of EWPC
Posted At : November 20, 2007 12:38 PM

EWPC sense of urgency is reinforced. As the market architecture and design breakthrough paradigm, EWPC will enable the possibility to a superior development path for the power industry. However, put...

69 EEI California Dreamin’
Posted At : November 19, 2007 3:05 PM

The U.S. power industry is dreaming that it is safe, when in fact the leaves are brown and the sky is gray as the industry is in the NO PROFIT ZONE. To get it safe and warm into the PROFIT ZONE, EEI...

68 EWPC is NOT the Ontario Model Either
Posted At : November 18, 2007 7:36 PM

Just as EWPC is not the UK Model, it is not the Ontario market model either. However, probably with a hidden purpose, Mr. G keeps confusing the de-regulation market model of Ontario with the EWPC ma...

67 To EEI: “Let's Ban Regulation,” Starting in Ohio
Posted At : November 17, 2007 12:24 PM

Should we ban regulation? YES! Go for a paradigm shift to “moving energy” with the EWPC winning market architecture and design breakthrough. The next opportunity then is in Ohio. Now we...

66 We Need Demand Elasticity
Posted At : November 16, 2007 7:05 PM

Say fuel oil increase from $90 to $100 per Barril. 11% increase. What could one expect. The problem with deregulation is that fuel prices are amplified into electricity prices. Expect more than 11% i...

65 EWPC is NOT the UK Model
Posted At : November 15, 2007 8:38 PM

In EWPC there are 8 possible End-State (UK was developed on 4), only one of which is the generic market model paradigm: retail competition with active demand (UK had no active demand) and ultraquali...

64 A New Response to Adrian Lloyd
Posted At : November 15, 2007 3:01 PM

Adrian Lloyd’s is happy to listen. His opinions, which he may change, as he is a well versed and important person, are responded below. This is how EWPC completes the answers Adrian Lloyd c...

63 Financing and Developing Uncertain Generation
Posted At : November 15, 2007 2:33 PM

Another partial response to respond to Adrian Lloyd in this upgrade to Nov. 15, 2007, most viewed article. EWPC is the answer to the difficult question on how to finance and develop uncertain genera...

62 Integrating Uncertain Generation to the Grid
Posted At : November 15, 2007 1:09 PM

As a partial response to Adrain Lloyd, the article Wind Integration: An Emerging Paradigm, can be paraphrased almost entirely by interchanging “wind” with “UG (uncertain generation...

61 Storage is Ready to Cross the Chasm
Posted At : November 14, 2007 11:56 AM

As experienced in the Dominican Republic, the disruptive technology of distributed storage has been ready for prime time for quite some time, lacking a shift to the EWPC paradigm. The reason it has...

60 K2007 Retailers’ Enterprise Solutions
Posted At : November 13, 2007 7:01 PM

An affordable model for retailers’ enterprise solutions business model innovations, based on Free Open Source Solutions, is reported by Bill Opalka at Knowledge 2007. The model suggests how th...

59 Let the Innovations Locate the Smarts
Posted At : November 13, 2007 9:36 AM

An effective smart metering system should develop under competition of business models for several market segments of the power industry. Innovations should be the jury. Let the Innovations Locat...

58 Disintegrating the Grid and Retail Worlds
Posted At : November 12, 2007 3:51 PM

Instead of trying to integrate the grid and the retail sides of the utilities, CIOs should take the results of an essential system analysis that supports the EWPC market architecture and design brea...

57 The EWPC Textbook
Posted At : November 12, 2007 9:04 AM

A textbook on electricity without price controls (EWPC) has been in the making for quite some time. The textbook will answer the paradox, “How much system reliability can you afford?” by...
56 Friendly Comments on Deregulation Update
Posted At : November 10, 2007 10:16 AM

This is an update of Some Friendly Comments on True Electric Deregulation Part 4, posted on Tuesday, December 27, 2005, on the BMH blog. The update is in square "[" "]" brackets,...

55 “Let the Market Decide” in Ohio
Posted At : November 9, 2007 6:29 PM

By endorsing the EWPC market architecture and design breakthrough paradigm shift, the EEI will tell Ohio’s policymakers that energy efficiency is the cheapest, quickest, and cleanest resource...

54 The BOTH/AND Assumption of EWPC
Posted At : November 9, 2007 8:42 AM
By using both the smart grid and distributed resources, EWPC will produce reliable electricity at affordable costs, just like Toyota does with cars. The BOTH/AND Assumption of EWPC By Jos&eacu...

53 The Lecture on EWPC Re-Regulation
Posted At : November 8, 2007 8:33 AM

The new lecture on the power industry is about EWPC re-regulation. With the same old lecture, Professor Banks is correct that E1R2 deregulation is a failure. Dear Prof. Banks, Mr. Somsel and ot...

52 Let EWPC Come to Fruition
Posted At : November 7, 2007 2:08 PM

As ‘the heat of combat is over, and a decision’ about EWPC can now be reached, ‘all the bitterness disappears, and people work hard to bring’ EWPC ‘to fruition in the b...

51 EWPC As The New Internet
Posted At : November 6, 2007 10:54 AM

EWPC is sufficiently flexible to enable a transformation ot the electric power industry into the new internet. EWPC As The New Internet By José Antonio Vanderhorst-Silverio, Ph.D. Sy...

50 The "Continuity" Scenario is Gone
Posted At : November 5, 2007 2:57 PM

The future of the power industry is now restricted to the "Tough Times" and "Rising Expectations" scenarios of Deloitte Research, as the "Continuity" scenario is no longe...

49 Positive Returns under EWPC
Posted At : November 3, 2007 10:18 AM

Positive returns in the power industry that existed under vertical integration are now gone. New positive returns will come from business model innovations of retailers’ enterprise solutions t...
48 A New Mistaken Experiment
Posted At : November 2, 2007 1:57 PM

As there are Only Two Stable Paradigms, the electricity-regulation bill approved by Ohio’s Senate is just a new mistaken experiment under economic first, reliability second, tinkering. Mr....

47 Can We Concentrate on Results?
Posted At : November 2, 2007 10:26 AM

Can we concentrate on results? I would say YES, as the knowledge required to decide that the decade old debate between great scams and the apparently lesser and more familiar customer wallet cleanin...

46 Customer Wallet Cleaning Problem and Solution
Posted At : November 1, 2007 9:55 AM
The vertically integrated utilities paradigm has been in a NO PROFIT ZONE for quite some time, letting utilities make a profit under regulation only by the “consumer having his wallet cleaned...

First 45 EWPC Blog Articles

This collection of the links, date/time stamp, and introductory words of the first 45 EWPC Blog articles is available as an alternative source to the EWPC Blog. I believe that every article can be though of as a holographic image from a different perspective of the whole EWPC market architecture and design paradigm shift.

45 Switching Retailers is NOT as Important
Posted At : October 31, 2007 3:02 PM
Dear Fred (Banks), Len, Mike, Fred (Plett), Jim, Steve, and Peter…I am glad that the dialogue is getting more balanced and rich, with the participation of all of you important and intelligent people, on three fronts.

44 Uno Lamm is a Leader Role Model
Posted At : October 29, 2007 2:50 PM

Dear Prof. Banks and readers, This is the quote about Uno Lamm in the article Handling Sweden’s Electric Reform Threats: As my hero Uno Lamm proved, when he introduced High Voltage Direct...

43 Response to Professor Banks
Posted At : October 28, 2007 8:01 PM

Dear Professor Banks and Mr. Gould, As promised, I just published the following articles in energyblogs.com in response to the article and the comments. The Natural Monopoly Transportation Sys...

42 A Little Silicon is Necessary but NOT Sufficient
Posted At : October 28, 2007 7:18 PM

There is more to markets than meter electronics. It is important to understand the need for retailers as the bridge between the retail and wholesale markets. A Little Silicon is Necessary but NOT...

41 A Futures Market under EWPC
Posted At : October 28, 2007 7:03 PM

The elements of a futures market under R1E2 EWPC to lead to an stable and competitive electric markets environment are explained. A Futures Market under EWPC By José Antonio Vanderhorst...

40 Handling Sweden’s Electric Reform Threats
Posted At : October 28, 2007 6:54 PM

Strong leadership is needed to complete the reform process in the Nordid countries to benefit end customers, by introducing a paradigm shift to EWPC, and making them active participants in the elect...

39 The Natural Monopoly Transportation System
Posted At : October 28, 2007 6:05 PM

EWPC provides a new configuration in which the natural monopoly is reduced to the transportation system of the electric market, where the old configuration produces much higher and more volatile pri...

38 The Old Response to Jack Casazza
Posted At : October 27, 2007 2:23 PM

It seems to me that the above comments help understand what has happen to the electricity business. I will use Jack Casazza’s comments and EPRI’s Framework to try to add elements to the di...

37 An Old Letter from Jack Casazza
Posted At : October 27, 2007 2:17 PM

On 12/29/05, Jack Casazza wrote: Dear Jose Antonio, I have been reading the discussions between you, Prof. Banks and others and did not comment previously because I did not have anything to add. I t...

36 The Magic Deregulation Formula
Posted At : October 24, 2007 6:57 AM

Dear Professor Banks, Thank you very much for your challenge (which I found by browsing your article): "I am thinking in particular of the consultant Jose Antonio Vanderhorst-Silverio. He admits...

35 Disruptive Technologies Convergence
Posted At : October 20, 2007 3:43 PM

Now that EWPC has emerged, it is to too little, too late, to try to extend the VIUs paradigm beyond its capabilities to integrate the grid and the enterprise. The availability of at least six disrup...

34 No Need for Regulated Price Caps - II
Posted At : October 20, 2007 1:37 PM

Customers’ price caps are the key to the infrequent rational rationing of service. During a transition to EWPC that ends with every customer defining its own price cap, it is important to unde...

33 No Need for Regulated Price Caps - I
Posted At : October 20, 2007 12:23 PM

Missing in the discussion under the article "Meeting Our Need for Electric Power," up to the 19th of October, 2007, are the huge coordination problems of short run unit commitment and long...

32 Full Retail Choice Emerges
Posted At : October 19, 2007 10:46 AM

As customer value migrates a paradigm shift of full retail choice emerges under EWPC from R&D discoveries that allows retail and wholesale competition without incumbent retailers. Full Retail...

31 The Sense of Urgency for EWPC Restructuring
Posted At : October 15, 2007 9:26 AM

There is a strong sence of urgency for the implementation of EWPC. Professor Alberto Ramírez Orquín writes "Soaring prices together with the perception of a deteriorating service/...

30 Give Engineers What Belongs to Engineers
Posted At : October 13, 2007 5:18 PM

Engineers no longer have any possibility to take back the whole industry for themselves. EWPC is a market architecture and design breakthrough discovery that gives engineers what belongs to engineer...

29 Rethinking Electricity Restructuring as EWPC
Posted At : October 12, 2007 3:11 PM

Strong EWPC market architecture and design recommendations to restructure worldwide electricity markets, superseed those proposed in 2004 by Peter Van Doren and Jerry Taylor of the Cato Institute by...

28 How TXU Can Take the Lead
Posted At : October 11, 2007 2:30 PM

The Texan’s Market is one of the most likely candidates to start the paradigm shift to EWPC, ending demand forever as an externality. It has been shown that the days of the obsolete VIUs parad...

27 Only Two Stable Paradigms
Posted At : October 11, 2007 12:37 PM

There are two stable paradigms: vertically integrated utilities (VIUs) and electricity without price controls (EWPC). Both have a Reliability First, Economic Second (R1E2), as their non-trivial essent...

26 Financing and Developing Wind Projects
Posted At : October 5, 2007 10:38 AM

EWPC is the answer to the difficult question on how to finance and develop wind projects for all stakeholders to win. The underlying problem is found on the successive extensions of the inefficient...

25 Strategy is NOT Enough to Reach the End-State
Posted At : October 3, 2007 8:22 PM

As he is not his opinion, Dr. Stephen Lee can easily separate the objective, or strategic side of leadership, from the subjective, or culture side of leadership, as to what affect human behavior in...
24 Slicing the Last of the Regulated Monopolies
Posted At : October 1, 2007 5:02 PM

The sense of urgency has arrived to introduce competition in the power industry, with a paradigm shift to EWPC. The shift will sliced the last of the regulated monopolies. Enough insights are now avai...

23 Demand Integration Under EWPC
Posted At : September 30, 2007 3:37 PM

Fred C. Schweppe said that “The demand forecast is always wrong!” To mitigate forecasts errors and introduce stability in the power industry, EWPC integrates demand to power...

22 The Sixth Disruptive Technology
Posted At : September 30, 2007 3:06 PM

A set of 6 disruptive technologies can be identified “To do a better job of managing our dwindling energy resources…” AMI and the Smart Grid are the fourth and fifth disruptive te...

21 Synthesis Proposal Agreement of EWPC
Posted At : September 28, 2007 2:41 PM

There are "8 possible End-State, only one of which is the generic market model paradigm: retail competition with active demand and ultraquality transportation. That is the essence." This i...

20 Conspiracy Theory Against Mr. X
Posted At : September 27, 2007 9:14 AM

A conspiracy theory against Mr. X being a Nobel Prize candidate is written to provide an ordered framework to understand the chaotic events that happened or will happen in the Energy Central Network...

19 2nd Disruptive Technology Crossed Chasm
Posted At : September 26, 2007 8:52 PM

Distributed generation joins demand response as disruptive technologies keeps penetrating the power industry. It is shown the need to change from an incremental change to a breakthrough pace, and fr...

18 Engineers Needed for Lower Prices
Posted At : September 25, 2007 8:03 PM

The paradigm shift from the vertically integrated utilities to the electricity without price control paradigm will lead to lower costs, lower profits and lower prices after a reasonable delay. To ac...

17 Take EWPC Lead & Reap Large Benefits
Posted At : September 25, 2007 9:32 AM

The US Congress, the European Commission, the state of Ohio, and the Dominican Republic, are some the most likely candidates to start the paradigm shift to EWPC, ending demand forever as an external...

16 Utility Trends and Real Paradigm Shift
Posted At : September 24, 2007 2:03 PM

A paradigm shift to EWPC is urgently needed to change the status quo and start integrating distributed resources and good ideas into power sectors all over the world. To all writers and readers,...

15 Free Market and Central Planning, Under R1E2
Posted At : September 24, 2007 8:34 AM

This is my synthesis of the EWPC paradigm shift that maximizes social welfare. Although it is a non-trivial subject, it seems that many intelligent and important readers of earlier posts may just un...

14 IMEUC: Unreliable Service and Price Spikes
Posted At : September 23, 2007 5:45 PM

In response to the suggestion by Mr. Jeff Presley about simulations, it is shown that there is not a need to look further, as a simulator already exists, and its information’s confirm the EWPC...

13 So Far Just ONE Objection to EWPC as Winner
Posted At : September 22, 2007 10:07 AM

As tomorrow's deadline approaches, only Mr. Len Gould has provided a dissent to EWPC as the winning market for the first phase of competition. The second phase is the company vs. company competition...

12 Wind Integration: An Emerging Paradigm
Posted At : September 21, 2007 7:59 PM

Republished from Aug. 20th, 2007. There is a need for a change in mental models to integrate wind to power systems operation. Several generative dialogue suggestions are given to apply the f...

11 Extra, Extra… Goliath is Defeated Once Again!
Posted At : September 21, 2007 7:40 PM

Reprinted from Sept. 17th, 2007 for completeness. David has won! The Electricity Without Price Controls (EWPC) Breakthrough paradigm has finally beaten the Vertically Integrated Utilities (VIU) Para...

10 EWPC - Winner 1st Competition Phase
Posted At : September 20, 2007 1:30 PM

After nearly two years of downloads, debates, reflexive dialogues and generative dialogues, EWPC declared itself as the winner of the first phase of competition in EnergyPulse.net. Dear writers and...

09 Solving Smart Grid Cost Recovery
Posted At : September 20, 2007 8:49 AM

To solve the Smart Grid cost recovery dilemma requires a restructuring of the electric industry in such a way that the regulator gets the right signals. A shift from The Anti-System Utility to EWPC so...

08 A Warning to the US Congress and the European Commission
Posted At : September 20, 2007 6:36 AM

US Congress and the European Commission need to digest EWPC very fast. The political distortions in the power industry at the state level in the USA and at the country level in Europe can be strongl...

07 The Anti-System Utility
Posted At : September 19, 2007 4:35 PM

Vertically integrated utilities don't operate as a system because of a monopoly mindset of incumbents investor owned utilities and political interference. To operate as a system a paradigm shift to...

06 Divine Dispensation of Electric Markets is Gone
Posted At : September 19, 2007 9:32 AM

As a result of David killing Goliath, US Congress has the great opportunity to introduce EWPC to the USA. In addition, the state of Ohio has the first opportunity to reap the benefits of retail comp...

05 The BIG California LIE
Posted At : September 18, 2007 1:56 PM

The BIG LIE is that retail competition is impossible in electric markets. The implementation of a competitive retail market was the center of the debate in California. Instead of cooperating t...

04 Great Opportunities Under New Energy Bills
Posted At : September 17, 2007 1:54 PM

In the copyright protected link Extra, Extra… Goliath is Defeated Once Again!, you may find out how vertically integrated utilities will very soon start to be erased from the face of the e...

03 Breakthough
Posted At : September 16, 2007 8:03 PM

EWPC is a breakthrough that is poised to transform the electricity industry. As the state of Ohio is in the process to re-regulate the industry, they should make the transition to the EWPC market...

02 David and Goliath
Posted At : September 15, 2007 6:49 PM

David is EWPC re-regulation and Goliath is the Vertically Integrated Utilities. Both markets architectures and designs are non-trivial paradigms of the power industry. It is argued, that the paradigm...

01 EWPC Superiority in Carbon Emission Reductions
Posted At : September 13, 2007 8:31 PM

A comparison between the power industry vertical integration and electricity without price controls (EWPC) non-trivial paradigms, will show that EWPC should be adopted in the new US Energy Bill, as pa...

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PCT One of Many Business Model Innovations

California panel removes proposed mandate for utility-controlled thermostats - Bowing to public pressure, the California Energy Commission has removed its proposed mandate for utility-controlled thermostats from its 2008 energy efficiency building code. A hearing on that code is set for Jan. 30.

NOTE: The  article link expires on: 02/17/2008).

Under EWPC, PCT qualifies as one great business model innovation. As such, it should be open to competition with others business models in the making or that will emerge worldwide as the market evolves. The point is that PCT should not be allowed as a monopoly business model.

Customer choice should be enabled to a new level by introducing federal competition at the retail level. The remotion of the mandate by the Califonia panel is a strong signal of the end of the utility monopoly as we know it. Today's utilities have two main components: the grid and the enterprise. The enterprise as a state retail monopoly should be replaced by retail competition at the federal level of the U.S.

The grid is evolving to the smart grid utility to offer ultraquality transportation only electricity services, but the monopoly enterprice is acting as a restraing force on its progress.

Open Transmission Access is to evolve to Open Transportation (integrated transmission and distribution) to be developed at least costs under a controlled smart grid market to enable maximum welfare in the open retail and wholesale markets, as envisioned under EWPC market architecture and design.

Joseph Somsel, a former utility engineer who opposes the [original PCT] plan, said he was pleased to hear of the official change of heart at the commission.

"I'd call this a victory in the first battle since they've shifted venues in strategic retreat -- but a victory nonetheless," said Somsel, who raised awareness of the plan's mandatory nature in the Jan. 4 issue of the American Thinker, an online magazine.

However, Michael Shames, executive director of San Diego's Utility Consumers' Action Network, a critic of the plan's mandatory nature, wasn't impressed with the energy commission's statement.

"Most of the announcement is garbage," Shames wrote in an e-mail. "For us, the most important part of the announcement was the last line: 'Technology can be a powerful tool in managing our energy use. However, it is of utmost importance that consumers make their own energy decisions.'

"It is my plan to use this sentence again in the future when the next CEC or some other agency attempts to use good (remote energy services) for evil (non-overridable remote commands)," Shames wrote.

"Emerging advanced energy services will only be embraced by consumers if they have confidence that these technologies will not be used against them. It appears as though the CEC got that message this time around. We'll see if the message sticks," he wrote.

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We Need Demand Elasticity

Say fuel oil increase from $90 to $100 per Barril. 11% increase. What could one expect.

The problem with deregulation is that fuel prices are amplified into electricity prices. Expect more than 11% increase in electricity prices. Sometimes much more.

The problem with regulation is that fuel clauses transfer fuel prices. Expect an 11% increase.

EWPC mitigates fuel prices by introducing demand elasticity to the industry. Expect less than 11% increase. Sometimes much less.

So the message is "we need demand elasticity in the power industry."

As simple as that.

The Old Response to Jack Casazza

An EWPC Post

It seems to me that the above comments help understand what has happen to the electricity business. I will use Jack Casazza’s comments and EPRI’s Framework to try to add elements to the discussion and maybe suggest some insight to a produce new mental model which is closer to today’s reality and opportunities. However, please correct me if I am wrong in my understanding:

1. I recall the question “How much reliability can you afford?” posed by the Editor of Electrical World in April 1978, as incremental costs stop declining.

2. Economist entered the picture and found that engineers in the power industry were designing and operating electric systems using excessive reserves, without understanding the risk management of systems failures.

3. The world was stating to make a transition from an industrial society to an information society, which we are now experimenting.

4. The power industry did not seek deregulation in the 1980s as Fred C. Schweppe et al, “Spot Pricing of Electricity” became available to the general public.

5. It was expected that transaction costs would decrease as the information society would come to be the dominant paradigm.

6. Spot Pricing of Electricity explained how to develop a market of electricity where end customers with interfaces that enlarged the meters would be able to respond to prices, even without Electricity Without Price Controls (my replacement for true deregulation). I completely agree with Thomas Tanton that there is no evidence of deregulation anywhere.

7. Today it is clear that Spot Pricing of Electricity is centered on a new paradigm of at the wholesale and retail level, which by “Unleashing Technology” for price demand responsiveness would lead to “Empowering Customers,” and in turn result in “Stabilizing Markets” and “Protecting the Environment.” Demand responsiveness is a complementary risk management innovation to mitigate system failures, which replacing otherwise excessive investments and operating reserves in generation, transmission and distribution.

8. As Mark and others comment that the industry did not seek deregulation, a large threat was in the making for the power industry. That was when as Bruce points out that lobbyist and senior executives came “to the rescue” of the old paradigm. As the new paradigm would mean stranded costs, the result was a double gain by neutralizing the new paradigm.

9. Jack’s comments have merit insofar as the inexistence of price demand responsiveness in the industry

a. No. 1 is historically correct.

b. No. 2 addresses “a severe decline in the coordination needed...” However, such coordination was integral in the Spot Pricing of Electricity, but which avoids the incomplete and faulty deregulation that resulted.

c. No. 3 is correct in the old paradigm, but with demand responsiveness to excessive quoted prices of generation would lead to non-dispatch of such generators.

d. No. 4 reflects the old minimum cost for integrated resource planning, which I suggest should be replaced with an infrastructure that adds maximum value, by using demand responsiveness and energy efficiency to develop an efficient rationing system to satisfy “Providing for the Public Good.”

e. No. 5 is debatable. The power industry could be restructured to satisfy all 5 EPRI’s main conclusions. One such restructuring is Electricity Without Price Controls, which I commented on Prof. Banks article.

f. No. 6 states correctly that the greatest harm has been the loss of cooperation and coordination, as expanded by Rich Marrano comment. While Jack’s comment is certainly a way out it may be distorted on contracts and designs based of perceptions by powerful interest. Recently I came to the conclusion that a big mistake has been allowed in the restructuring processes by introducing a political decision process. Now, I understand that a power system must be architected with the imperative of ultraquality to preserve the reliability that results in maximum value to society.

g. As for Jack’s conclusion, I think it is clear from the above comments that we may aim to have both an excellent power system and an excellent complete and functional market without any price controls. While under E-WPC prices also move both ways, all customers can be approached with the idea of receiving maximum relative value added in the long run. For instance, in the case of retail customers, every retail marketer will produce several plans, one of which offers the customer the better value. Retail competition gives customers the opportunity to select the plan which they perceive to be the one with the most value in the market from all retailers. If every customer can select the plan with the highest value, then providing for the public good is satisfied in the long run.

José Antonio Vanderhorst-Silverio, PhD

Interdependent Consultant on Electricity

Dominican Republic

Reference and context: What a surprise: Prices move both ways, by Mark Gabriel, President, Positive Energy Directions.

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An Old Letter from Jack Casazza

On 12/29/05, Jack Casazza wrote:

Dear Jose Antonio,

I have been reading the discussions between you, Prof. Banks and others and did not comment previously because I did not have anything to add. I thought perhaps I could be helpful at this time by providing a few comments, as follows:

1. The restructuring and deregulation of the electric power industry was a serious mistake in the USA and in many countries, harming the general public.

2. Competition has produced some benefits, particularly in the improvement in the operation of generation plants, but caused a severe decline in the coordination needed between the participants in the planning, design and operation of the generation and transmission systems of electric power grids. The reduction in the number of companies involved can produce some future savings.

3. Generation dispatch is based on quoted prices rather that incremental production costs, increasing total production costs.

4. Present and long range costs have been increased significantly since each company made decisions based on its own profits and not what was best for the overall grid in the long run, i.e., the overall public interest. (In the USA past studies have shown that the savings from coordination exceeded $20 billion a year before restructuring. Many of these prior benefits have been lost.)

5. In most cases the changes that have been made in the industry structure and procedures cannot be undone, so we have to proceed by trying to use what is good from restructuring and removing or correcting the many harmful things that have resulted.

6. I believe the greatest harm has been the loss of cooperation and coordination between those involved in the power industry. A way to correct this learned from the past is through "coordination contracts" signed by the participating companies that provide for the planning, design and operation to be performed as if they constituted a single company. In such contracts the long range lowest total cost solution and lowest cost operation procedures were selected even if it meant that one company had to spend extra funds or give up some profits, as long as it resulted in a lower overall cost or was necessary to preserve reliability, even if in another system. These contracts provided for the compensation of a company for its extra costs or profits foregone plus a share of the overall benefits resulting to the public. (I have negotiated such contracts as far back as 50 years ago.)

There is much more analysis needed, but perhaps the comments above will get you thinking about the power system, not the markets.

Best regards,

Jack Casazza

Note to others receiving this message. Please feel free to quote or use it as you wish.

Jack Casazza

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Another Look at the California Deregulation Debacle

This post was not published in EWPC Blog.

In this slide 30 of the Carnegie Mellon University presentation, entitled “Another look at the California Deregulation Debacle,” It is proper to add that “The Wepex steering committee and technical teams have representative of investor-owned and municipal utilities as well as consumers, independent power producers, and marketers. A collaborative process is being used to provide an opportunity for filing to address the concernes of as many interested parties as possible and to seek a broad base of support among expected market participants.” However, “Only the investor-owned utilities, who will be making the application for the ISO and PX to the FERC and putting their transmission under the control of the ISO, are voting members of the steering committee. But all parties have been given an opportunity to actively participate in the discussions underlying the design of, and the implementation plan, for the new system.”

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