The EWPC-AF is Missing to Enable Big Hairy Audacious Goals (as posted under the IntelligentUtility original Big Hairy Audacious Goals: Envisioning a Smart Grid Future, but without hyperlinks).

Jun 8, 2010 - 5:43 PM

Hi Kate,

I find your commentary is very valuable and in synchronicity with the emergent, holistic Electricity Without Price Controls (EWPC) Architecture Framework (EWPC-AF). I say that because the EWPC-AF can become a stepping stone to open the power industry to a series of BHAGs initiated by visionary companies.

According to Collins and Porras, visionary companies launch BHAGs "... toward those that reinforce their core ideologies and reflected their self-concepts." My suggestion to open the power industry is in the EWPC article State Governments Need to Unleash the Benefits of the Next Big Thing, whose summary says:

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As the utility business model has outlived by many years its useful economic life, state legislatures need to produce as soon as possible emergent regulations that enable the Next Big Thing - business model innovations - under a market-based approach.

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We sincered respect, I use the dialogue principle that "we are not our opinions." So in accordance with the above suggestion, instead of the "... opinion, that we ... start agreeing on some BHAGs," I say that we need to restructure the power industry to create the conditions for visionary companies to define and commit to (bold and often risky, as Collins and Porras suggest) BHAGs that reinforce their core and stimulate progress. For visionary companies to respond to the Hickman's challenge that says: "We have to envision a future that is different than the one we have propagated for the past 100 years," as I wrote above, state governments need to take the lead to remove important barriers that remain in place.

The main barrier to the EWPC-AF was recently mentioned by Bob Amorosi on June 7th, 2010, in a discussion on EnergyPulse.net that I repeated in the very graphic EWPC blog post Simplistic DynAMIc Pricing Will Cost Payers a Fortune, where he said "For the grid to become more demand driven as predicted in your EWPC vision, regulators would have to give up their tight controls on prices..." A more complete description of the barrier was then given by Jack Ellis, the author of the mentioned EnergyPulse.net article, when he wrote:

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I agree with Bob that it's very difficult to get regulators to surrender control over pricing. For one thing, if they didn't have prices to regulate, what would they do? For another, although regulators are supposed to be independent the reality is they are subject to political interference and cannot entirely ignore public pressure.

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My response was as follows:

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A little history on how regulators took control of pricing. At some point in time, under vertical integration, regulators did not need to control at all of pricing, because there was a virtuous circle that made the industry sustainable. Up to the end of the 60s or the beginning of the 70s, prices were lowered year after year. Customers and state governments were happy and regulators didn't need to do almost anything as the utility won the regulatory case.

At the end of that very happy period, the guarantees of lower prices disappeared and that is when regulators tried to take control under a vicious circle. The EWPC-AF is designed to make the industry sustainable once again, by enabling a virtuous circle. While regulators will no need to control prices, they still will have a lot of work on prudential regulations, as they do in other industries.

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Best regards,

José Antonio Vanderhorst-Silverio, Ph.D. - LinkedIn

This is a very interesting question.

Since the BHAG is generally considered a means to drive an organization toward a goal that is aligned with its vision and values, perhaps, the question of the appropriate Smart Grid BHAG is best answered on a utility-by-utility basis.

Barring that, I would ask, what is the vision and what are the values of the Smart Grid as an entity unto itself (or as our society sees it)?