This follows up the comments on the EWPC article
The Good, the Bad and the Ugly. I certainly agree with Warren Causey that the idea of demand response as a condition of service seems to be emerging. EWPC is about ending the rampant value destruction to generate large value creation.
Don,
Be a good sport. As you will see below, this is "a fascinating time-period in which to live."
EWPC is no about the left or the right. It’s about ending the rampant value destruction originated in the Old System, the Bad System, and even more the Ugly System. The Good EWPC System is about developing the resources of the demand side for innovation to flourish and generate a lot of value creation in the benefit of ALL stakeholders.
I certainly agree with Warren Causey that the idea on mandatory demand response seems to be emerging. As part of the Sierra Energy Group, his idea is to be taken seriously as he is in close contact with the private sector of the industry. It used to be called earlier in California as “demand response as a condition of service.” I don’t see how that has anything to do with left win. I think it has ALL to do with Law of the Situation: the utilities don’t understand.
This is what Warren Causey also wrote in the post
All the issues crux of the matter :
With regard to good ideas dying at the utility/commission staff interfaces, I don’t disagree at all. In fact, I consider that as proof of the argument in my original post, and as both the crux of the issue and the fly in the ointment of Dr. Silverio’s, and other bloggers’, restructuring proposals. My educational training actually is in history and that’s why I consider this a fascinating time-period in which to live.
Over the last couple of generations, the U.S. has become increasingly socialist (regardless of the party in power) and people increasingly expect the government regulate everything and solve every problem. The issue with that is that government bureaucracy (and state-controlled enterprises are extensions of that bureaucracy) is inherently the worst possible way to solve any problem. You can ask the Russians what a long, slow dive into an empty swimming pool feels like. Of course don’t pay to much attention to what they say because now they seem intent on climbing, dazed, back up onto the board and trying it again.
When you introduce government planning into any operation at any level of government (local planning commissions and their interventions into private property are a nightmare) and remove or distort economic incentives, you produce a horse designed by a committee—it looks a lot like a camel. Add politics (most state regulators are elected and national politicians’ raison d’etre is to get elected regardless of the consequences) and the possibility of allowing free markets to work out problems via trial-and-error disappears.
During so-called “deregulation,” not one regulator or one “staff,” which by Mr. Pullin’s description constitutes the bureaucracy, disappeared. Don’t blame the staffs, they’re just doing what bureaucrats do!
The following is taken from the WTO Website:
Virtually all decisions in the WTO are taken by consensus among all member countries and they are ratified by members' parliaments. . . At the heart of the system — known as the multilateral trading system — are the WTO’s agreements, negotiated and signed by a large majority of the world’s trading nations, and ratified in their parliaments. These agreements are the legal ground-rules for international commerce. Essentially, they are contracts, guaranteeing member countries important trade rights. They also bind governments to keep their trade policies within agreed limits to everybody’s benefit.
It is very clear that you either run out of arguments or are avoiding to give substance that may boomerant to the generative dialogue. Please remember, "Our commercial history is filled with examples of companies that failed to change in a changing world, and became tombstones in the corporate graveyard."
EWPC is about value creation, as a breakthrough. Today I wrote under the article "A Fresh Approach to Managing Peak Demand" (hit link http://www.energypulse.net/centers/article/article... ) the following:
The FRESH approach is in the breakthrough EWPC market architecture and design paradigm shift. "NONE of today's utilities should be allowed to take as inevitable a bare bones approach to increase efficiency, introducing [EWPC for] a high leverage shake-up to the industry."
Quoting Donna Karlin, "... Breakthrough.. It's very different than making small changes... that might or might not be sustainable; it's the tipping point that shifts paradigms permanently. It changes the way you process thought, the way you tackle something and interact, deal with issues, lead others,... it's all of it. You will never be the same or 'go back' because the fundamental way you think will come from a different place altogether."
The utilities paradigm comes from demand as an externality (inactive demand and no competition). EWPC comes from - a different place altogether - Demand Integration (which come from Active Demand and Retail Competition) to power system planning, operation and control.
Why do you think such a rush to merge retailers with generators occurs? Who bans such mergers? How? Please try to avoid climbing up the gum tree with competing 2 GRs, rational rationing, prudential regulation, maximized social welfare, WTO, generative dialogue, good, bad, ugly, inspirational quotes, etc. Let's see your $/kWh at ratepayer's service entrance comparisons (estimates, of course) for the paradigms you're pushing and criticizing.
Thanks for the opportunity to complete once and for all the generative dialogue.
My local experience in the power industry with 1) restructuring worldwide and 2) global mergers and acquisition, is that they run counter each other, foreclosing very early the opportunity to develop competition in the power industry. That question must be interpreted as progress beyond the market vs. market competition in the generative dialogue.
Your list of EWPC characteristics "... competing 2 GRs, rational rationing, prudential regulation, maximized social welfare, WTO, generative dialogue, good, bad, ugly, active demand..." is the result of a good research to show that confirm that you were "... avoiding to give substance that may boomerang to the generative dialogue."
I forgot to quote Donna Karlin above as writing that breakthrough is "... the epitome of the 'AHHA!' moment bringing absolute clarity and direction." Such clarity and direction comes to the power industry for both the open market and the closed transportation market in the essential requirements of Active Demand, Retail Competition, Demand Integration, and Ultraquality Transportation.
Your black and white perception of the world, as a math ideal gum tree, doesn't apply at all in real life to visionary, ethical and courageous decision making. This is what the business philosopher Peter Koestenbaum will respond to your quest for having clear answers:
Adaptation means that you make up your mind that chaos, ambiguity, uncertainty, conflict, paradox, diversity, and, in a word, polarity, together represent one fundamental aspect of human existence. It is the aspect of confusion and pain. The world is ambiguous, whereas I may prefer to think of it as having clear answers, being black and white, digital.
It is in my perception where the problem lies. Demanding monism where there is dualism, that is where the problem lies. Ignoring the truth of polarity stops me from making leadership progress. That is the problem with people who have trouble making decisions. They think they must have answers before they can decide. Little do they know that they create the answers as they choose. First I choose and then that becomes the answer.
Please remember, once again that,"Our commercial history is filled with examples of companies that failed to change in a changing world, and became tombstones in the corporate graveyard."
You should follow closely the escalation of Don Giegler's posts that at some point tried to get me into the political area and now seems to be starting a direct personal attack. I add some selected quotes of recent articles that have led to this point. This is the way I respond to the apparent personal attack, in order no to downgrade myself, nor escalate the discussion into unnecessary areas.
I hope you the reader will concentrate on the merits of EWPC. If you have gotten this far, thanks for considering EWPC Blog, the most commented and highly read EnergyBlogs blog up to now. I hope that will not change!
José Antonio Vanderhorst-Silverio, Ph.D.
Under EWPC article "Another EWPC Discovery"
-- "Thanks to Don Giegler for helping me inquire further into the essential elements that are generating uncertainty in the power industry, and that are fueling higher than necessary risks as a consequence of the restructuring experiments implemented.[
Under EWPC article "High Leverage Shake-Up in California"
-- "Don,... Thank you... Please help the CPUC consider the EWPC article High Leverage Shake-Up in California."
-- "Jose, you're entirely welcome. Vis a vis EWPC, the only help I can offer you or Mr. Stone is to suggest you both strive, as you say, for greater "eloquence".
-- Don wrote "Just to make sure that anyone who reads the foregoing gets both sides of the story, the following is added:..."
-- "Thank you Don, . . .There are three stories: 1) EWPC is about the good story; 2) the oponents of direct access (incumbent utilities) have a bad story; and 3) the advocates (the coalition) of direct access have an ugly story..."
Under EWPC article "The Good, the Bad and the Ugly"
-- Don wrote "...but if TXU can show them that there is a two-year return on an energy-efficiency project, they'll be more likely to do it. . . My translation of this gobbledygook is: "Let us show you how to pay more and receive less." Its resemblance to EWPC is striking. I believe both strategies are based on speculative, untried ideas. It would not be surprising if the two-year returns are higher electric energy rates and inflated customer monthly bills."
-- Don wrote "This is not possible with structural separation..."
Interesting that you find the integrated nature of the VIU necessary. Now if you work a little harder on "returns to scale" and what works best in markets with "imperfect competition" may be we can generate some dialogue.
-- I responded "TXU Energy is the TXU retailer that operates under structural separation in Texas. Structural separation is a term where the utility grid and the utility enterprise are kept in the property of the incumbent utility separated only with by a Chinese wall. Given that the utility grid becomes part of the transportation utility a real separation occurs. . . The integrated nature of the Vertically Integrated Utilities is no longer necessary. . ."
-- Don adds "So much for "generative dialogue"! It must be in the throes of "rational rationing"."
-- "Don, . . .Although many times antigonistic, your inputs in the generative dialogue have helped clarify EWPC, being invaluable. Such is the case of the opportunity to write about "The Good, the Bad and the Ugly," instead of "only an advocate and an opponent." Thanks, once again. . . It is not possible with structural separation, because there is a need for real separation between the utility enterprise and the utility grid. Integration is for Demand Integration to power system planning, operations and control, as well as transmission and distribution integration that results in the transportation utility compact. . . On the need of rational rationing that competitive 2GRs will be able handle as they replace the regulated enterprise side of the utilities, Warren Causey wrote that "Here are some examples of customer concerns utilities and their CISs will have to deal with in the future (which they are not able to do, just as it is not possible to teach new tricks to an old dog) : . .. • As electricity becomes more scarce--something that is predicted by virtually everyone knowledgeable about the state of the industry--residential customers are going to have to deal with reduced supplies... As the shortages become more acute as carbon constraints continue to drive out the 50% of U.S. electricity currently generated by coal, demand response likely will have to become mandatory. When it is mandatory, it becomes rationing. . . • As demand response/rationing takes hold, utilities are going to have to know a lot more about the lifestyles of their customers. To see the complete article "Customer care is about to become much more complex for utilities. Current systems can't handle it,"
-- "My apologies, Jose. I didn't mean to give you the idea I agreed with any of your EWPC propaganda. To me it is unsupported, wishful thinking - at best. At worst, it may influence
some of our more left-leaning politicians and cost all of us a bundle!"
-- I responded "On the contrary, EWPC Good, Simple, and very Familiar System is neither unsupported, nor wishful thinking. It is a very Familiar System that separates the real natural transportation monopoly market from the real commercial and competitive free market. . . Free market, no left-leaning, nor-right-leaning, powerful California commissioners need to show the required leadership, entrusted to them by the general public, to base their actions . . . Our commercial history is filled with examples of companies that failed to change in a changing world, and became tombstones in the corporate graveyard.@
-- "Jose, . . . If "...demand response likely will have to become mandatory. When it is mandatory, it becomes rationing. . . • As demand response/rationing takes hold, utilities are going to have to know a lot more about the lifestyles of their customers." and WTO intervention to break up VIUs comprise your ideas of a neither left- or right-leaning free market, your concept of markets is even further out on the left tail than I thought!"
your opinions with their wonderful circular reasoning and say-it-enough-and-maybe-it-will-stick arguments have become all too familiar. The kindest response I can make to your mistaken impression of being personally attacked is to state again my great anticipation for your increased "eloquence".
"I am not my opinion" is not a license to "describe your [or my] real-life." "I am not my opinion" is the key to the generative dialogue. It means something else than the processes of downloading and debating when everything is known, that led to Thomas Jefferson write that: "I never thought an instance of one or two disputants convincing the other by argument." Don seems to be just disputing, and shows up when California is mentioned, but he also brings occasionally inputs to the generative dialogue for which I have given thanks.
Generative dialogue is about thinking together, not against each other, so you and I can change our opinions to grasp what's emerging as the world undergoes big changes, i.e. from the 2nd industrial revolution to the 3rd industrial revolution. It means that the Old System based on demand as an externality, needs to evolve to an emergent Good and Simple System, with demand integrated to power system planning, operation and design, by using the design mantra simplify, simplify, simplify. That is what I have been trying to do with many peoples help, starting with my experience, and articles, papers and books written since the 1970s. Maybe the EWPC System is not just about being Good (ethics), it may also emerge as being True (science) and Beautiful (art) as the Greeks would have it.
Jose Antonio,
Your EWPC proposal requires the separation of the "Utility Grid" from the "Utility Enterprise". What you are suggesting is all the wires, transformers, and all the other distribution infrastructure be removed from the ownership of the exisitng Utility companies. Good luck without governments forcing this to happen, since much of it is paid for and owned by the utility companies already. You cannot simply just confiscate it all from them without compensating them for it financially.
Even worse, much of the new smart meters and their infrastructure that many large utilitiy companies all over North America are now buying is being purchased with borrowed money from banks. Do you think for a minute that the lenders will tolerate their loans being pulled away from the borrowers ? Who would assume the liabilities for all these debts ? There would have to be massive government intervention in the banking industry to effect such a change, because banks require their loans to have designated ownership and responsibility for paying them back.
I really suspect your EWPC proposal is a pipe dream at best.
After many, many, interchanges with me, you truly have surprised me this time, as apparently not having understood what EWPC is all about. Please recall the EWPC article Innovation and Risk Taking in the Power Industry ( hit link http://www.energyblogs.com/ewpc/index.cfm/2008/1/2... - notice that you should also have seen the EWPC article K2007 Retailers' Enterprise Solutions hit link http://www.energyblogs.com/ewpc/index.cfm/2007/11/... ), which started like this:
Kevin and Bob,
Kevin's article is a welcome contribution on the future of the electricity industry. Bob's comment reflects the difficulties of utility monopolies to innovate and for regulators unable to take on technology risks. My comment will show a necessary shift on the utility of the future to become just a transportation utility. As can be seen, I am taking the opportunity to integrate a few of EWPC articles to show how to create value by introducing innovations and risk taking to the electricity industry after making a necessary paradigm shift."
In fact, your opening statement on Kevin's article was "Kevin, Your last paragraph about innovation available today is a massive understatement. . . Utility companies however have usually relied on their technology vendors to do all the developing and innovating for them, and then evaluate what they have to offer. This is what must change first to realize the bright future that you suggest is possible."
Sooner or later the utilities will be restructured in the U.S. (please see High Leverage Shake-Up in California - hit link http://www.energyblogs.com/ewpc/index.cfm/2008/3/1... ), Canada, Europe (please see Utilities vs. Neelie Kroes) - hit link http://www.energyblogs.com/ewpc/index.cfm/2008/3/4... , the BRIC countries and elsewhere. When that happens, the immense value destruction the utilities will have caused will be born by their societies, which will by then be way behind centered on the low leverage monopoly intervention that keeps intact the obsolete utility business model of winning rate cases to the regulator.
It is in the best interest of stakeholders to go for breakthrough value creation with the open development of the resources of the demand side, by introducing all sorts of innovations around the industry as the GridWise Architectural Council enhanced with EWPC provides (this time please see slowly the EWPC article Missing From Gridwise). If you are really interested in developing high leverage solutions, instead of just disputing, I think you should also go back and follow all of my recent articles after the high leverage shake-up article (I guess you already saw the words "pipe dream" in one of the comments) in the EWPC Blog to get up to date.
You are correct that the only places I have written "running reserve" in EnergyPulse have been quoting Len and you. However, I suggested that you read it slowly because the idea behind it is contained is the probabilistic term "traditional "LOLP" supply side risk management." So the whole expression "DR is poised to be the demand side risk management tool to complement the traditional "LOLP" supply side risk management tool," means that some of the "rotating" (that is what most engineers used instead of 'running') reserves are supplied by demand response to complement generation "rotating" reserves. As demand response penetration increases (as a result of customers' perceptions of benefits from incentives given), rotating reserves decreases. That is why I wrote the EWPC article Well Beyond Low Reserves Managing (hit link http://www.energyblogs.com/ewpc/index.cfm/2008/3/1... )in response to the author's article.
Finally, If you don't understand something, don't hesitate to ask.
New relevant comments are also posted under the EWPC article "Missing From Gridwise" on the link http://www.energyblogs.com/ewpc/index.cfm/2008/3/2...