The great American educator Stanley O. Ikenberry, Ph.D., responded a question about the university future [4], using conventional political wisdom that can be applied very differently to the power industry future, when he said that:
No one can see clearly the outlines of the university future. Fortunately, we tend to make big strategic decisions incrementally. We take a small step in the direction of our vision, see what happens and then take another step, and another, taking the opportunity to correct the strategic course as we go along. I suspect that this will be this century’s formula for change as well.
That is exactly what has been happening so far in the evolution of the power industry to keep extending, through a powerful political lobby, the Investor Owned Utilities (IOUs) Architecture Framework (IOUs-AF), in which the vision has not changed to what is actually emerging. Why should then Dr. Ikenberry’s reflection apply differently to the power industry?
The reason is given by Eberhardt Rechtin and Mark W. Maier [5]: in the case of the university future, social system quality depend on “the public interest which are unavoidable diverse and often incompatible,” whereas in the case of a power system future, social system quality depends on the ultraquality imperative [6] that enables a vision of the future that is now crystal clear [7]. Such imperative gives first priority to the purpose of maximum social welfare, ahead of the required market institutions [8].
Retained as a power industry expert with American taxpayer money, in 1996 I wrote a Spanish whitepaper, when I first propose the elements of a vision for the Dominican Republic that has emerged full blown as the global Electricity Without Price Controls (EWPC) Architecture Framework (EWPC-AF). At that time, I followed the suggestion of Odgers Olsen Jr., who was at the time with the prestigious consulting firm Ernst & Young, and had said something like this to guide me:
In the discussions that we had with people in the power industry some visions are clearly defined, others are quite clouded. For those that are clouded, some say: ‘let’s go forward and refine the vision as we go; we need to have certain flexibility.’ Others don’t understand that the vision itself is clouded. Those people will start, and restart, again and again, until they are behind in the game.
There should be not doubt that the vision selected, as the result of a very early architecting flaw, was the quite clouded vision of the Investor IOUs-AF [9]. To definitely convince yourself of the need to shift to the EWPC-AF, please take a close look at a series of 5 comment posts with the headings “So Long IOUs-AF [3, 10],” that gives a conclusive proof that by incrementally extending the IOUs-AF under a quite cloudy vision, the U.S. has fallen well behind the global game, generating a huge and very costly IOUs-AF legacy. However, it is not too late to avoid wasting billions even more taxpayers’ moneys, if the Obama administration and the State regulators acts real fast to open the power industry to innovation by introducing the EWPC-AF to finally win the global sustainability game.
All EnergyBlogs.com references below have hyperlinks.
[1] Chris Dreibelbis, Gr8 Expectations, July 10, 2009.
[2] Martin Rosenberg, Holy Cow - Have You Checked Out D O E ???, July 10, 2009.
[3] Jose Antonio Vanderhorst-Silverio, The Deadly Sin of State Regulators on the Smart Grid, July 5, 2009.
[4] Stanley O. Ikenberry, “New Deal, Big Deal: Higher Education in a Conceptual Era,” Twenty-first David Dodds Henry Lecture, November 2000, University of Illinois at Chicago.
[5] Eberhardt Rechtin and Mark W. Maier, The Art of System Architetcing, CRC Press Inc. 1997.
[6] Jose Antonio Vanderhorst-Silverio, A Question to the State Secretary at the Santo Domingo Digital Town Hall, April 20, 2009.
[7] Jose Antonio Vanderhorst-Silverio, Shared Vision: Consumer Driven Electricity System Reform, February 29, 2009.
[8] Jose Antonio Vanderhorst-Silverio,
[8] Jose Antonio Vanderhorst-Silverio, Dialogue, Reliability/Ultraquality & What to do First? (http://www.energyblogs.com/ewpc/index.cfm/2008/4/2... ), April 27, 2008.
[9] Jose Antonio Vanderhorst-Silverio, Leadership Answers What to do First (http://www.energyblogs.com/ewpc/index.cfm/2008/4/1... ), April 16, 2008.
[10] Jesse Berst, Why Control4 Is the Company to Beat in Home Energy Management (and Why Microsoft, Google, Intel, and Sony Are Lining Up to Do the Beating) (http://www.smartgridnews.com/artman/publish/compan... ), July 6, 2009.
We are now being driven by such strong unconventional forces that makes false the statement "...What do you think that Chu and/or Obama can do about states' recalcitrance? Nothing whatsoever. Everybody knows that, except you."
I advice you, and anyone else that wants to keep extending forever the IOUs-AF, not to underestimate what President Obama and Secretary Chu can do to get the United States of America back in the global sustainability game.
You are now also underestimating what State regulators can do to help get the United States of America back in the global sustainability game. I guess you did not the whole EWPC article The Deadly Sin of State Regulators on the Smart Grid (http://www.energyblogs.com/ewpc/index.cfm/2009/7/5... ) including all the comments.
James adds: "The reality is that the first thing any legislative committee considering retail de-regulation will do is look at what has happened in de-regulated states, starting with Texas and New York. Then, I assure you, they will say, 'not yet'."
I am in strong agreement that legislative bodies should not consider deregulation under the IOUs-AF, which is based on organized wholesale markets as they have a architecture flaw. What I am suggesting is to develop retail and wholesale markets that mutually reinforce each other under which the ultraquality "... imperative [that] gives first priority to the purpose of maximum social welfare, ahead of the required market institutions [8]," as can be seen in the main text.
The topic is not just US national security, but even more important global sustainability.
I guess discontent and usurped sound negative words. I prefer to talk about opening the power industry to innovation to get the US back into the global sustainability game.
There is a lot of work that DOE will be doing throughout the balance of this year in order to facilitate the agreement in Copenhagen that replaces Kyoto. I am sure that the State legislatures will need to get involved in the implementation of appropriate mitigation and adaptation actions, of which the EWPC-AF will be a great help.
I will be glad to talk to Ron Paul. My email is javs@ieee.org
Can I consider the legislative discussion over? Looking at it with an open mind, Does DOE and the States have mutually reinforcing ways to influence each other?
In Texas and New York prices are still developed based on organized wholesale markets. Only recently in Texas they are beginning to consider "integrated" whole offerings, but they are still incremental extensions of the IOUs-AF in that those demand side offerings are separate from electricity sales. The huge IOUs-AF legacy in those markets will keep the US behind in the global sustainability game.
States that are "behind" have the the smallest legacy and thus the better conditions to deliver a win-win, big deal outcome at the global sustainability game, as they will start very close to a clean slate.
NY prices are indeed derived from a centralized market operated by NY-ISO. I am not sure why you oppose that since that framework delivers power at a minimized cost. The retail providers (more or less) freely access the wholesale markets to acquire their power for sale.
However, you are simply wrong about Texas. Their market is NOT centralized like NYISO. 95% of their power is sold bilaterally, and only 5% is delivered through the central balancing market. Actually, Texas is the one market in the world that looks most like your EWPC. Nevertheless, they are moving towards a centralized wholesale regime similar to NY.
I am not sure what you even mean by demand side offerings being somehow separate from electricity sales. As for the US being "behind" in the global sustainability game, Texas leads the world (except for maybe Denmark).
After hundreds of posts interchanged between us, since the end of 2006, it seems that your opinion, which is different from you, as a very intelligent and important person of course, could certainly change to say So Long IOUs-AF.
When I asked you "Can I consider the legislative discussion over? Looking at it with an open mind, Does DOE and the States have mutually reinforcing ways to influence each other?," I meant to get an input from Williams' post above, which had some negative words that I didn't like. Using the Code of Ethics of the IEEE, I now use truly positive words to explain that I try: "To avoid injuring others, their property, reputation, or employment by false or malicious actions." A question remains as to whether IEEE experts that defend the obsolete IOUs-AF are aware that they are not following that Code.
The EWPC-AF is different from the IOUs-AF being practiced anywhere in the world, because of an architecture mistake in EPAct 92 that has spread all over the place. That mistake has generated a huge multimillion dollars legacy under Open Transmission Access that makes already the US a laggard in the sustainability game in reference to EWPC-AF development. That also explains why the US will get even further away, if the Smart Grid deployment is continued as planned, by injuring not only the US, but the global economy.
Organized wholesale markets do not provide electric power at minimum costs, simply because the resources of the demand side are highly undeveloped and thus inefficient and ineffective in many ways. By the way, Texas wholesale system is similar to what we have in the Dominican Republic, in which the central balancing spot market expected value is the reference for all electricity sold bilaterally.
As can be seen in the EWPC article Engineers Needed for Lower Prices (please hit the link http://www.energyblogs.com/ewpc/index.cfm/2007/9/2... ), the IEEE Life Fellow Jack A. Casazza spent incredible effort trying to explain the costs involved in the mistaken effort of incrementally extending the IOUs-AF. Updating that must read article, Jack's "basic reality" that claims "Reliability and commercial interest cannot be separated" is now superseded under the EWPC-AF.
The new basic reality is based on the architecting insight of the ultraquality imperative, which is one of the essential elements of the EWPC-AF. It is that imperative that allows the separation of the highly complex power industry into a regulated power transportation system and an open market business system, as can be seen in the EWPC article A Question to the State Secretary at the Santo Domingo Digital Town Hall (please hit the link http://www.energyblogs.com/ewpc/index.cfm/2009/4/2... ). It is interesting to note that, in the discussion under the article, James though that such a separation into two highly cohesive and lightly coupled systems had already been done. I think it is about time that after two years and a half he should change his opinion, instead of just repeating "Perhaps I should just ignore your posts...."
Best regards,
José Antonio
2> "Does DOE and the States have mutually reinforcing ways to influence each other?" Of course not. What makes you think that the states pay much attention to the DOE? The DOE has little power over them.
3> If your point is that the markets would work better with lower prices and volatility if there were some demand side activity, then you are correct. However, your point as stated is silly. The current arrangement does provide the lowest overall cost given current behavior. What's more, the current arrangements are more than sufficient to induce demand side behavior given enough time. We are already seeing a lot of that.
4> Your point about incremental extension is ridiculous, as I have pointed out before. Nobody in their right mind would implement substantial change any other way but incrementally. The consequences of a misstep are too great.
5> The power system in much of the US has already been separated "into a regulated power transportation system and an open market business system". Haven't you been paying attention?
6> I think it is about time that after two years and a half he should change his opinion, instead of just repeating "Perhaps I should just ignore your posts...." Why should I change my opinion when I am right???
2. The mutually reinforcing effort will be for example the result of States following DOE money and also of global sustainability effort in which States will ask DOE for help on GHG emissions.
3. No! The point is that with the policy systems reliability first, economic second, transmission and distribution can be develop at least costs expansion of integrated T&D from the beginning. That is why states that without organized wholesale markets are better off as they will avoid a lot unnecessarlly complex baggage.
4. Agree that the consequences of a misstep are too great when the vision is mistaken as it happen with the IOUs-AF. The ultraquality imperative enables a simple vision of two highly COHESIVE systems that mutually reinforce each other through lightly COUPLED interfaces.
5. While demand is integrated to power system planning, operation and control from the beginning, under the IOUs'AF demand integration is just an afterthought that is still an externality. Neither transmission, nor distributions, should be made independent activities, which have created the huge and costly legacy. See also 1,3 and 4.
6. Your opinion is wrong as is explained in 1 thru 5.