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
This is not about votes; it is about relevance.
Readers interested in the positive results of the debate in favor of EWPC should concentrate on why Dick Maclay ended his relevant participation. Then Fred Banks added a comment which was only for Dick. Next Don changed the subject. Readers should go to the start of Dick's relevant participation and will conclude that an EWPC EPAct will provide fair electricity prices.
This was what I wrote that Dick has not answered:
Dick,
I will tell you where we agree and where we need to inquire further on your last post.
We agree that "Regulated rates misrepresent the costs of providing service. Therefore, we find customers installing equipment that makes sense given the rates, but that often is clearly not the economic choice when both customer and utility costs are taken into account... Unfortunately, regulated prices are so misleading that it is impossible to correct the effects of bad price signals on a significant scale. This is what is depressing capacity utilization and it is limiting our ability to reduce air emissions as well ... No system that is applied only on the utility side of the meter can cure the biggest problem in the electric industry – customers optimizing to misleading retail prices" In a sense, we need a way to maximize social welfare.
We also agree that "Unfortunately, regulators are proving incapable of fixing their prices. ... The regulatory problems in the electric industry are much more extensive than they were in transportation. That makes it very easy to point out on a micro scale how to improve efficiency by removing the influence of regulators. When macro and micro analyses reach the same conclusions that increases confidence in the results." That is just another way of saying "Readers need to concentrate on all the post above on one thing: the basic debate underneath the explanations is that of the overdue price controls. Regulators should not be allowed by legislative action to make the technology bets they are currently doing."
Both of those agreements suffice to support the statement "Since we have achieved conversational clarity, the power industry can eliminate its price controls to the end customer." Next this is where we differ. I suggest that we dialogue to inquiry to get in balanced with advocacy. Your comments are invited for a generative dialogue.
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.
One of the most important benefits of the EWPC approach, which you 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.
The R1E2 policy is required to develop a futures market, which is not possible with the E1R2 policy, as just one critical event might disrupt them. The futures market will be enabled by the smart grid transportation only utility. Instead of the vicious circle that the E2R1 policy produces, the systemic interaction of the open and closed market should aim to a virtuous circle.
Regards,
José Antonio
How high did you say those "fair electricity prices" would be? Was that with or without cooling centers?
COMMISSION STAYS FIRM ON ENERGY RATES
A divided Public Service Commission on Tuesday rebuffed
manufacturers' pleas to reconsider a decision against electricity
rates that would rise and fall with seasonal demand. - (YellowBrix)
--> http://www.energycentral.com/global/news_text.cfm?...
One example at other locations is that regulators should not be allowed by legislative action to make the technology bets - incredible tinkering - they are currently doing. Your have added another example, that of regulators' tinkering on price controls. 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.
Here's another sad commentary on the results of introducing competition and electric energy markets by artificial insemination:
A CRITICAL ASSESSMENT OF ELECTRICITY AND NATURAL GAS DEREGULATION
Economic deregulation of electric and gas utilities has failed to
achieve its proposed objectives of lowering price, promoting
greater consumer choice, constraining market power, and improving
infrastructure performance. - (YellowBrix)
--> http://www.energycentral.com/global/news_text.cfm?...
My response can be found on the EWPC article "Campaign for Fair Electricity Rates (please hit the link http://www.energyblogs.com/ewpc/index.cfm/2008/7/6... )." The summary is: "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."
It seems that you truly have discovered yet another way to introduce electric energy price spikes without Tand D failures, R1E2. Who did you say will pay for R1? Perhaps that is why E1 has become E2. Or are you operating under the premise that the consumer won't have pay for what he can't have? Or do "demand integration", "rational rationing" and "prudential regulation" fall once again into those tacit properties of EWPC that defy explanation or, as I understand you, can only be experienced? Regulator "bets" seem tame in comparison.