The EWPC EPAct is a sensible contribution to provide fair electricity prices to customers. Things have gone horribly wrong in the power industry, because policy makers did not consider critical non-trivial knowledge in the industry by analysts making al sorts of reports. We need a – highly relevant - EWPC EPAct, as soon as possible, to enable a highly competitive, pro-consumer, complete and fully functional market architecture and design paradigm shift.

Campaign for Fair Electricity Rates

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

First posted in the GMH Blog, on July 6th, 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.

Without making any sensible contribution to the debate, Don Giegler keeps responding all the articles written about EWPC under the mistaken assumption that people can vote, based on being right or wrong. In the interview “Scientists Know Better Than You--Even When They're Wrong,” the sociologist of science Harry Collins responded “We believe that you can work out whether someone has the right scientific expertise and experience to make some sensible contribution to scientific debates. It doesn't mean they're right. What you have to do is not sort out the people who are right and wrong; what you have to sort is the people who can make sensible contributions from those who can't. Because once you stop doing that, things go horribly wrong.” Things have gone horribly wrong in the power industry, because policy makers did not consider critical non-trivial knowledge in the industry by analysts making al sorts of reports.

Under the highly recommended expert article, EWPC EPAct will Provide Fair Electricity Prices, Don Giegler has suggested that I consider one of such reports: “A CRITICAL ASSESSMENT OF ELECTRICITY AND NATURAL GAS DEREGULATION,” posted on the Energy Central News.

Read the conclusions of the “critical assessment,” and you will find that it is based on the existence of “interaction of market power and market failure,” lack of standards of service, and the environmental problems induced by deregulation. It is precisely issues like those that support the Campaign for Fair Electricity Rates that the EWPC EPAct will provide.

The “interaction of market power and market failure” is designed out of EWPC by the following sensible contribution, which although I have made great effort to explain it may be not understood by some people lacking the proper tacit knowledge (that can’t be written out) or experience. Market power was introduced on deregulated markets by the E1R2 [economy first, reliability second] policy and by keeping retail markets completely undeveloped. In fact on my post of 6/20/08, in the mentioned EWPC article, I wrote that “Phasing in deregulation is to enable the E1R2 policy (see earlier posts and their links), which leads to a systemic crisis (when the power system gets into its limits on E1 events that disrupt R2 – most price spikes are correlated with low reliability - like that of the 2003 blackout arise that reduce stakeholders confidence) and as a result a vicious circle. All the complexity introduced for example by capacity markets and NERC mandatory requirements need to be dismantled by going back to the essence which is on what EWPC is based on…”

The post 6/20/08 adds on the R1E2 policy that complies with the standard of service, which is to operate the power system on the normal state (R1 is reliability first, which requires the power system no to be operated under the alert or emergency state). “One of the most important benefits of the EWPC approach, which you [Dick Maclay] consider purist, is the R1E2 policy. See on my post of 5.19.08 that Van Doren and Taylor ‘... 'previously unknown' problems arose because of the non-trivial nature of the vertically integrated utilities (VIUs) paradigm which is preserved under EWPC with R1E2.’ In practice, the implementation of the open and the closed ideal markets reference will be impacted by the reality of its approximations.”

With regard to environmental issues, I suggest to read EWPC Superiority in Carbon Emission Reductions (the first EWPC article posted), to see how EWPC is superior that vertical integration and deregulation. First, “as fuel costs increases, customers pay the increment, with no reduction of fuel consumption at all.” Second “in the deregulation paradigm, fuel costs increases lead to an amplification of fuel use…” And third, “in the EWPC non-trivial paradigm as fuel costs increases lead to a mitigation of fuel use, as demand is no longer an exogenous variable. This results as demand elasticity is increased with the development of the resources of the demand side. Carbon emission reduction is much larger than under the VI paradigm.”

I repeat once again, that regulators should not be allowed by legislative action to make the technology bets - incredible tinkering - they are currently doing. That is why we need a – highly relevant - EWPC EPAct, as soon as possible, to enable a highly competitive, pro-consumer, complete and fully functional market architecture and design paradigm shift.