The dilemma for and against AMI innovation's timing is solved by restructuring. The "utilities have adopted a common argument against the implementation of Advanced Metering Infrastructures (AMI)," becomes a non-issue if Electricity Without Price Controls (EWPC) market architecture and design is the vision adopted. The concept of the utility becomes transformed to a wires only transportation utility, which will get “significant operational benefits that allow utilities to improve critical aspects of their internal operations.”

For more details on EWPC restructuring see the recent posts Synthesis Proposal Agreement of EWPC, Second Generation Retailer - 2GR, NERC Compliance and Power Sector Structure, and EWPC a Customer Orientation, all of which are part of an Ongoing Generative Dialogue in energypulse.net.

A correct and critical statement. Stakeholders, particularly present regulators, must avoid "wasting the budget" on steps which are not on the path to "near-realtime meter communication". Any step in that direction will eventually help to bring about the required end-state.

Overall, good article.

Two questions for the generative dialogue: Should or can EWPC avoid integrated wholesale and retail oligopolies (i.e. the oil industry example) to service end customers from emerging, as they will be a dead end to make electricity similar to many other industries in the open market? Is that what will eventually occur at the end of 50 years?

Obviously that is not possible, because of the service Walmart offers. (demand aggregation, producer aggregation and standardization, storage, product warrantying, etc. etc.) but none of those services are of any use or in some cases even possible regarding electricity, and in fact would be a detriment. eg. aggregation simply results in having customers fail to respond rationally to peak load pricing which then results in totally irrational market pricing at peaks, which then results in debates for price caps etc. etc.

Those are good concerns for a generative dialogue on prudential regulations, based on the 7.31.07 questions. 2GRs should aggregate negawatts (in the neighbordhood of high marginal costs) to compete with generators and reduce LMPs to reasonable values for all parties. The little guy is just not capable to compete on par in the wholesale markets as the retailers will.

In reality, 2GRs will do demand aggregation for the wholesale market, while offering differentiation in the retail market. 2GRs should also diversify their generation purchase mix; they will develop service innovations, offer customers warranties, etc., etc. In sum, there is a higher probability of Wal*Marts in the making if true retail competition does not actually develop, and instead integrated wholesale & retail worldwide oligopolies are allowed unchecked, following the oil industry model.

If you know of some service they are or should be providing, please inform.

It's also easy for an inhouse calculation to occur which influences the operation of any device based on that price in real time. If you scale this over a large geographical region, you'll find it becomes a very smooth ratcheting of both supply and demand that keeps them within a hair of each other. The only hard part is the tuning of the feedback signal.

Any shortfall in supply with steadily move the price in that region ever higher. This is the signal that utilities need to learn that they need to build another plant.

On 4.6.06 you said "In a deregulated world, which is coming soon, the generation would be market driven and separated from T&D. The physical structure of our grid will only support regulated lines, but the spot pricing would be determined by a number of factors which include distance, contract longevity, dispatchability and the reliability terms agreed upon in the contract." Now it seems more complex than what you stated.

I like the statement "contract longetivity," because it might signal a middlemen and also "the reliability terms agreed upon in the contract," because it seems to contradicts the comment just posted.

At the end of the same post you added "I'm reminded of Len Gould's articles in here. Very good info and darned close to what I envision being the structure in 40 years. Why fight it? Early adopters profit the most, right?"

It is price controls that categorize customers on a few neat average classes. Differentiation is the opposite, to promote electricity without price controls. In that respect, please take a look at the post Please Blame the Deregulation and Regulation Fiascos Parte 35 to learn what Bob Lieberman show that the conventional wisdom (you defend) of residential response to real time prices won't work is wrong.

Power plant build up involves often costly systemic delays. A response based on short run electricity prices is a formula for adequacy problems, in which long run boom bust behavior leads to overbuiding and underbuilding capacity.

To implemented both of those requirements you need competitive 2GRs as explained on The Purpose Retailers Serve Customers.

As long as you can only think of how things were in the past, you will fail to see the future. I might also point out that, in your original proposal for a "generative dialogue" it was supposed to be a process where we ALL learned in the process. You've proven that Todd and myself can learn and change our thinking over a period of years, ...... Has your position changed?

I still do not see the service provided by retailers of electricity, unless you believe it is contracting with new builders of baseload generation for new construction. Do you really believe that as soon as baseload requirement exceeds supply by 1 kw, any retailer will have previously contracted for the construction of a new 1 gw nuclear plant? I see that sort of risk being entirely unacceptable to private equity, which is why I propose the "Market Manager" must take it on and, if necessary, fairly spread out the costs among all customers by a legislated formula.

These are my humbled conclusions, open to be enhanced, about the article, which complement my initial post Solution to AMI's Intelligrid Dilemma:

1) Smart meters are necessary, but not sufficient. To reduce customer transaction costs under complex trade arrangements to reasonable values, small consumers need to select a retailer of choice, which should be bound to operate under very clear [global] prudential regulations that also apply to generators to protect all customers, generators and retailers with fair competition regulations.

2) For the intelligrid to be the ultimate goal, it needs to follow a superior path to the End-State of the power industry to ensure the physical and human resources needed for the next 30 years. Such path is available with the market design and architecture based on Electricity Without Price Controls (EWPC), a work in progress.

To support in part such conclusions and to answer your statement: “… how separate organizations will do their part to facilitate the process is still under debate throughout the industry,” a synthetic one page explanation can be found on the post EWPC is Pragmatics' Winning Market Architecture and Design. Skeptics, like Fred Banks in the post Let's Get Out of Back Rooms to a Generative Dialogue, may not agree with those conclusions. For those technologies enthusiast, visionaries, and pragmatics, who believe, this should end the debate and be followed by a generative dialogue to reach the End-State of the electricity industry.

I thank all skeptics and especially Len Gould for his great interest in EWPC since the end of 2005, when my first and only energypulse.net article An Alternative Business Case for Demand Response was published.

States, provinces and countries where many industrial and commercial users are facing intense global competition and that have not deregulated are the main candidates for EWPC to replace financial capital with production capital (refer to slide 31). Future contracts of reliable deliveries are the key work performed by 2GRs, which may serve as marketers, brokers and aggregators.

I suggest that it is time to find funding for a worldwide generative dialogue with teeth. Help from readers’ suggestions on how to materialize is sought. Please comment, forward it to friends that might be interested to get involved in the project initiative and/or write in private to me at javs@ieee.org.

P.D.: For those interested in a response to the latest observations by Len, please read the post We Need 2GRs as the Forecast is Always Wrong.

For that to work at all, it assumes full public knowledge of all the details of all contracts among your 2GR retailers and their customers, a possibility which I find to be highly unlikely given competition among them. Without that knowledge, the indeterminate "planners" whom you propose shall identify approaching shortages and begin in advance to build, eg. new baseload nuclear or clean coal etc. will simply be guessing in the dark. I propose that the contractual TERMS of the customer's arrangement with generation need to be standardized, public, and available to all customers equally. Without that, and especially if the "Resources of the Demand Side" are actually effectively exploited, there is no reliable way to predict future shortages or get private equity to take the risk to alleviate them. EWPC as you describe it is a recipe for quick, short-term solutions like increased dependence on Nat. Gas generation or other minimal investment approaches to marketing electricity.

The statistical detail does not imply full public knowledge. Only the aggregate values are transferred to the system engineer and become available to other 2GRs. We are getting into a dialogue that belongs to the second phase of competition - company vs company. Please recall the “generative dialogue synthesis” of the post Playing With Fire and Collapse Part 20, which explains my remmark "not details given on purpose. "

Not, I'm not wrong, because task like those are not longer impossible! Now, as you are starting to discover, there is a lot contractual data to be processed as part of the company vs. company competition. That is one of the areas needed for the development of business model innovations by 2GRs.

Before going any further, I feel entitled to request you whether you prefer to continue as an skeptic after many patient explanantions on the need for retailers. The whole point is after saying at the end of 2005 "Jose: You're close, just not going quite far enough. You need to eliminate your "Retail marketers" ... And as you accept that you are not your opinion, have you change your opinion? Are you still a skeptic about EWPC being the winning market design and architectural model?

Anyway, I've grown bored with this dialogue and consider EWPC to add nothing novel at all to any design I've seen, all IMHO failed bacause the a) add large overhead costs to energy with no value added and b) isolate the customers from the price signals which alone can provide the basis for an unregulated market.

I won't be interacting further.

This is such a waste of time.

That is a good point to show that there are alternative solutions to develop business model innovations for 2GRs that satisfy certain market niches. Since that is part of company vs. company - second phase of - competition, I will not consider it part of the generative dialogue.

All readers,

As Len has decided to drop out from the generative dialogue, any remaining reader is advised to question EWPC as being the emergent winning market design and architecture paradigm for pragmatics in the first phase of competition.

However, looking closely that after he wrote “I won't be interacting further,” it seems that he missed a comment against retailers and added another post, to which I produce the following post 2nd Time: Ontario is Far From EWPC.

Our company Telepathx has been working on this issue and all of the variables involved for the last five years, and yes I can confirm there where several key hurdles that needed to be cleared before anyone would consider adopting new technologies.

At the most basic level what kind of sensors need to be developed

You would think that monitoring power assets would mean having an unrestricted supply of power, this is not the case, connecting assets together via wires is the quickest way to cause an outage or get electrocuted, take your pick, you are either dead or out of business so sensors needed to be wireless sensor networks (WSN) with ultra long term DC or self powered.

Data overload

If you are managing a distribution network of say 100,000 utility poles the thought of bringing every asset on line (insulators, fuses, transformers and cables) would mean monitoring 500,000 to 675,000 plus individual assets, the good new is you got them online the bad news is your going to have to hire new staff to manage it.

Beyond the power and EMI issues this is one of the main reasons why we abandon true mesh network technology such as the 802.15.4 Zigbee protocol, to much useless data. Energy managers just want to know when, where and exactly what is having a problem.

This is why inexpensive re-active sensors based on RFID are ideal for monitoring the grid, because they activate at a known threshold and are completely self managing.

WSN to Cellular/mobile/Sat nets or fiber / BPL / PLC for backhaul

First adapting any of the above for the single purpose of bringing intelligence to the grid would cost U.S. energy companies alone 500 plus billion dollars just to procure and install, BPL/PLC technology is very expensive and labor intensive and the return on investment may never be realized. WSN’s to Cell or Sat networks are by far much easier to implement but still used for a single purpose would still be cost prohibitive.

Multi functional WSN can handle AMI data easily

This was perhaps the biggest hurdle of all, and we have overcome this issue by developing a business model that will bring intelligence to the distribution grid at virtually no cost to the energy distributors, for the simple reason we go well beyond grid management to monitor other assets and infrastructure.

So bringing intelligence to the grid does not need to be troublesome or expensive in our case it just provides energy companies with new sources of income.

James Eades President & CEO Telepathx Ltd Melbourne, Australia