https://www.euci.com/conferences/0608-dree/

Your articel hi-lights what I have been commenting on this website about for some time now. Smart Grid and /or AMI investments will only become widespread if the economics make sense to our utility companies. In other words they have to see a reasonable way to pay for them.

The implementation of Smart Grid and AMI systems are clearly stated as a 'business investment' that by definition must be paid for. In the case of our traditional regulated utility companies, and without government subsidies, it is the rate payer that will ultimately finance these investments over time through higher billing rates. Utility companies are not likely going to (want to) invest large amounts of money in infrastructure without recovering it from their customers or from government subsidies.

There is no doubt modeling the benefits and payback of any large utility investment is complex and diverse across various regions in North America. What is overlooked is the opportunity for utility companies to adopt more creative ways of recovering their money from consumers than simply higher energy billing rates for everyone.

Our cable-TV and telephone industries have for a long time now found creative ways to pay for infrastructure investments in their networks. It's done by offering targeted services and incentives to individual consumers, giving all consumers the choice to buy them or live with basic services. This works very well in these industries because there is always a portion of consumers willing to buy more than the basics if the optional choices are useful to consumers. It even lends itself to selling consumers optional in-home devices (like phones and cable boxes) that make use of optional services, where the devices are sold to consumers at a profit.

The utility industry would find it hard to swallow this approach because they traditionally have uniform billing for all their customers, and to diverge from this would necessarily complicate their businesses. As long as they have monopolies on their customers there is probably little motivation to change. And without this sort of change, modeling the business cases for large infrastructure investments will continue to be a rather difficult process without defined rate increases for all their customers.

The financial model used by regulators SHOULD be calculating the net benefits of various options to the CUSTOMERS. That instead it concentrates on the financial benefit to the utility simply highlights how much present VIU regulated monopoly systems have become captives of the entity originally intended to be controlled. Which fianancial model the utility wants to use to evaluate various options eg. in AMI / Smart Metering will certainly vary from utility to utility according to local circumstances, but IN NO CASE is it the same model which regulators should be using to decide what the AMI system should finally be like, in most cases a result which will have a lot more commonality across service regions.

Your article clearly highlights the present conflicts of interest in the VIU paradigm, which needs to be scrapped.

Independent Market for Every Utility Customer - Preliminary Business Case

Independent Market for Every Utility Customer - Part 2 - Market Operation

with discussion here:

Energy Central Blogs - IMEUC - Independent Market for Every Utility Customer

It is probably obvious to the utility industry that open standards for AMI systems would avoid a utility company getting locked into proprietary technologies. It would also lower AMI technology costs by permitting third parties to freely develop new consumer technologies that will need to interact read communicate with AMI systems.

In essence the existing regulated VIU paradigm with the lack of open AMI standards renders AMI systems as large risky investments. Why? Because the smart meters in current AMI systems will end up needing replacement in future to handle emerging new technologies over time. While this may satisfy AMI vendors' thirst for more smart meter business, ratepayers will end up paying a steep price for it, which is certainly not in the best interests of ratepayers.

If a citizen's demand for electricity is not being met and he is being "managed" by a state or utility, he will get very pissed off!

As Len mentioned, regulators are supposed to represent the customers, not the utilities. The rationale flows from Amory Lovins' fallaciy that rising marginal cost for new production justify forcing people to not use energy. That's not very free market, is it? Let's face it, the regulatory apparatus has been captured by environmentalists, leftists, and rent-seekers.

As a personal aside, when I left PG&E to get my MBA, I made sure I took all the marketing classes I could. After all, a regulated monopoly's marketing position is "take it or leave it." Looks like the same attitude still prevails.

We're not suggesting the utilities control DR directly, it should be consumer controlled DR, setup by consumers to react to real-time energy pricing. Agreed most consumers tend to view utility-controlled DR technology as an invasion of privacy, and are loathe to accept it even when it is touted as saving them money on their energy bills.

The real problem is who is going to pay for DR technology. If it must operate with AMI systems, utilities would have to be intimately involved in deploying it.

The electric power sector induced restructuring mistake apparently close the issue with the failure of deregulation and the ENRON debacle. Restructuring to integrate retail demand to power system planning, operation and control, however, is the breakthrough that will shift mindset permanently and thus key to innovation in the industry.

In the decade old restructuring debate it was highly overlooked the electricity without price control (EWPC) paradigm that emerged at the beginning of 2007. Read please the article The Electricity Revolution to see how utilities in the US and Europe are heading towards a dead-end, which has been resulting for quite some time in an accumulated value destruction of high proportions for customers and society.

EWPC creates a leveled playing field to demand side and supply side technologies, by replacing the utility enterprise with competing retails marketers (which I term Second Generation Retailers or 2GRs) and developing a “wires” only integrated (T&D) transportation utility, under a regulatory compact with a responsibility to transport.

The “Role of Models in the Smart Grid Business Case” under EWPC is the responsibility of a controlled market transportation utility. In those cases, the peculiarities in different geographies can be handled the way they were handled in the past. A non-issue, distinct from the incredible bets that regulators need to make under today’s regulations to let utilities win rate cases. As the history of reengineering projects attest, we should expect that 75% of all of those bets will result in project failure.

The business case for retail marketing (risk vs. rewards) under competition solves itself once the proper interfaces are defined between the free market Retailers’ Enterprise Solutions and the smart grid. The outcome retail marketing is to help reduce all investments and operation costs of the market agents and most importantly those of the customers. Coordination savings in the integration of demand to power system planning, operation and control is the key issue in The Electricity Revolution (see link above) for 2GRs.

The form that is most appealing theoritically is real time pricing with price information available to the end-users. However, this flies in the face of real-world marketing trends, specifically, cell phone pricing. It seems every cell phone ad now offers fixed price contracts - "anytime minutes" and the like.

Cell phones and electric service share many structural features so are reasonable economic analogues.

What this tells me is that customers PREFER a flat rate structure and the simplisity it brings to their lives. Few want to worry about common transactions that cost but pennies per event. The difference in the bill from washing a single load of clothes off-peak compared to on-peak is trivial to the harried housewife or second wage earnerer. Yet that freedom of scheduling can be priceless.

Again, the people pushing time-of-day rates and "smart grids" don't seem to have done their marketing homework and are far too caught up in their "mission" of demand reduction.

Few real people (i.e. customers) give a hoot.

"exploring exactly that issue" ... what issue? Pls. be clear.

What cross-subsidies?

Energy costs are increasing very much. Day, after day, there are more, and more, people that can't afford it. I don't see the analogue. Energy and water will need to be ration and soon, in more, and more, locations worlwide.

The real goal of such a system is to encourage the end users to implement automation (eg. in HVAC / thermal storage, PHEV's etc, etc,) to make the required investments in systems to alleviate the problem of costly short-run inefficient peakers using fossil fuels + T&D over-sizing v.s. eg. wind generation or baseload nuclear. Retailers offering hedged flat-rate pricing can get part way there but they'll spend the full amount of investment for only a partial solution, plus introducing a LOT of un-necessary complications regarding "who pays when I sell the house and the new buyer wants a different retailer?", "big brother intrusions" etc. etc.

The comparison to eg. cell phone flat rates is not valid because of the relative amounts of capital and variable O&M involved in the data transport network / end delivery network v.s. the electricity generation / delivery infrastructure.

Electricity rates are bound to trend upwards too, and as more consumers learn this they will eventually become much more interested in planning and budgeting their specific electricity uses. Granted most may not care much to save 10 cents to do a load of laundry off-peak instead of on-peak under TOU rates. What they WILL be concerned about however is how much they have cumulatively spent on their laundry machine over a month or two, and will then want the option to access off-peak energy sources and their lower rates. Tracking cumulative usage information is useful in making future decisions to replace an appliance with a more efficient one, or in changing their lifestyle habits. Home automation networks using smart appliances will make the usage planning and tracking much more practical provided a connection to utility real-time prices is part of the technology.

Emerging consumer technologies that place greater demands on the electricity grid like PHEVs will also demand better electricity use planning from consumers read automation with TOU rates. Len Gould's IMEUC market reform proposal should strongly be considered to enable this for consumers.

HAN technology that tracked their energy usage would answer their question and maybe save them their arguments.

I'd go so far as saying that it is based on a nanny state concept. When first hint of what's in store have hit popular consciousness, people have rebelled.

Now I'm not saying that there will not be a market for real time pricing and buyer information displays. I'm saying just because some factions on the industry and government and environmentalist side want it does not mean it will be accepted.

Smart Grid people need to get serious about what the customers want and I don't see it happening yet. Personally, I see no need for it in my life. My electric bill is still a bargain, even here in California, and I'd DON'T need another petty thing to worry about on a minute-to-minute basis. I don't think I'm alone.

As to cross-subsidies, how does one set rates that pay for the time-of-day infrastructure and distribute capacity, energy, and ancillary costs between flat rate customers and time-of-day meter customers? It will be impossible to put in place a rate structure that has ironclad logic. Look at the century of haggling on allocation of costs between industrial, commercial, and residential customers in rate setting. There just is no answer! The advocates of ToD rates will push to get rates that will encourage adaptation but those likely will RAISE rates for traditional customers.

Count on it.

I've done some research into what consumers want. Everyone WANTS what you currently enjoy - bargain electricity rates where you simply pay your bill every month without worrying about any time planning of your energy uses, and as long as it is a bargain not care that much how much you use.

Correct me if I'm wrong but our rates are likely to trend upwards. As more people feel the increased pain in their pocket books, more consumers will want to at least budget their energy uses with the help of monitoring their bill in real time. The other problem is most are totally ignorant of what variables in the electricity industry affect their utility bills, and many have no clue about the relative energy costs of their lifestyle habits in the home.

If Time-Of-Use rates are forced on consumers, as they will be soon in Ontario anyways, consumers will be forced into caring more about time planning when for example your neighbor uses the same number of kWhrs of energy as you do but your bills are considerably different. As far as increased rates with TOU, most consumers who know TOU rates are coming are already suspecting it will provide a convenient means for regulators to milk them with higher rates, but it will be easier for regulators to disguise because consumers will be told to simply use more energy at off-peak hours to lower their bills.

Given access to wholesale rates in a competitive market, as in Len's IMEUC market reforms with the appropriate in-home technology, I think consumers would gobble this up. It would empower consumers to be in total control of their energy purchases and energy use planning. Sure it would be extra work for consumers, but so is shopping for the best gasoline or grocery prices and trying buy at the most opportunistic times. The nice thing about IMEUC and its related technologies is that consumers could do this activity from the comfort of their homes and automate it to various degrees.

I do believe that IMEUC has something to offer in this discussion. And frankly, having large utilities decide how smart grids should be organized is akin the the fox watching the chickens.

However, that being said, and given the potentially great interest in IMEUC, I really think it needs to be documented a bit better. I've read your 2 articles over many times and while I get the gist of it, the explanation is really not as clear as I'd prefer. Is there any new revised explanation in the works? Have you written anything else about it, other than the blogs?

The whole discussion of incorporating new technologies in the demand side of the power industry is very important in the discussion. But as you will see, your generous “believe that IMEUC has something to offer in this discussion,” is unsupported. I humbly suggest that you take a close look at the EWPC article IMEUC False Facts, and read below, to consider changing that believe based on the many False Facts documented already.

In a series of posts under the article EWPC’s Tipping Point [a must read to get a proper response to your inquiry], in response to Len question “I can find no relationship between your last two posts and IMEUC. Clarfiy?” [my response was:]

The relationship is with "We have a saying in Spanish which I translate as 'that only the tree that gives good fruits gets stoned' (maybe the English version is 'Picked-to-perfection fruit is just a stone's throw away')." The point is that Don Giegler [and maybe Bob and Len] is defending the utilities status quo and has been using IMEUC to throw stones at EWPC, because he knows that IMEUC is not a threat to the California utilities excesses.

Relating that third article that never came, that was suppose to respond my convincing "generative dialogue synthesis (please read about IMEUC deficiencies in the article "EWPC's Tipping Point" [the link is in the second paragraph])," I repeat that you retracted with "Jose Antonio: Your cogent discussion raises some issues with IMEUC which I hope to clarify in a third article in the series here on EnergyPulse in perhaps a couple of weeks, provided I can submit it up to the high standards of the editorial staff. Thank you." All those issues were not clarified al all. Just like me[,] Jim Beyer is not throwing stones, but confirming the IMEUC is mostly a physical installation "market," that has not possibilities to replace the status quo. [this is what you wrote:]

To: Len Gould Subject: IMEUC

Len,

Based on your comment, I decided I should try to get my head around IMEUC. So I looked at your papers. I still find it a bit obtuse. Much text was devoted to the particulars of meters and their costs. I think people concerned with replacing the status quo would be concerned about many other matters as well [like those that Bob calls “Len's IMEUC market reforms,” which are totally absent].

Bob doesn't throw stones to IMEUC either [in fact there seems to be also a Bob’s IMEUC], because he is not "concerned with replacing the status quo [either, nor is he] … concerned about many other matters as well," that he has an opinion they [the many other matters] are religious . I have worked hard to get "techies," as he calls himself, and maybe [forget maybe] you, to unveil the business (not religious) and technical complexities of the power industry.

Hence, the answer to your question: "Is there any new revised explanation [of IMEUC} in the works?" is that there is no longer a need at all to keep playing games to explain IMEUC anymore.

The means to replace the status quo can be found in the EWPC article Leadership Answers What to do First, whose summary says: “The answer to the question of what to do first is for the global power industry to get out of the wrong jungle to produce a EWPC based EPAct as soon as possible. That is the kind of leadership needed to face the inevitable fundamental changes required to significantly reduce today’s legislative and regulatory uncertainty.”

Jim doesn't need "A detailed document covering all the steps to implement IMEUC," that requires a sufficiently broad set of skills. He is "concerned with replacing the status quo" he thinks you should "be concerned about many other matters as well [like those that Bob calls “Len's IMEUC market reforms,” which are totally absent]."

Competition is divided in two phases: One) market vs. market and Two) company vs. company.

In Phase One all interested parties cooperate in the generative dialogue to select the emergent winning market. Phase Two is not part of the generative dialogue.

EWPC – an integral reform paradigm - is an open and robust emergent market architecture and design that divides the vertically integrated utility at modular interfaces. 1) Long run and short run system planning, operation and control natural monopoly functions are also kept integrated. 2) The T&D wires natural transport monopoly is kept integrated. 3) Supply - generation - natural competitive functions compete with each other 4) Demand - retail - natural competitive functions compete with each other. 5) Supply and demand – Megawatt/vars vs Negawatt/vars - compete with each other in time and space. Module 1 commitments on planning, operation and control are to be executed by the other modules.

Based on mechanistic thinking, IMEUC is one close and fractured strategy, like any other experienced deregulation efforts, that suggests retaining one of the key elements of retail business model innovations – the metering function – as a monopoly. The intermediary Market Manager is designed to contract base load units based on long run forecasting under uncertainty, arising from improper market signals.

IMEUC as a switchboard intermediary is just one of the many potential business models. It is only through execution – high dynamic complexity – of the development of the resources on the demand side that the potential will be realized. Other potential business model innovations won’t be able to be developed if IMEUC is unfairly and prematurely selected, by giving it market power over other intermediaries. It is no correct to assume how customers will behave – and evolve - beforehand. Instead, there is a need for a customer orientation.

While incremental costs might become negligible, sunk costs might be comparatively prohibitive for all customers. As a “right” solution, IMEUC becomes a strong barrier to emergent – high generative complexity - creative destruction. The best way to find out what the real overhead costs will be is in Phase Two with the right strategy and flawless execution under competition.

Module 1 is to take decisions for the health of the whole system as they unfold. The forward looking statement suggested to Prof. Banks and Mr. Carson on the generative dialogue goes in that direction. The Market Manager does not have such integral perspective.

I want to keep my opinions on Phase One. I am open to review the general open market design and architecture, if there are unfair elements associated with it. I have “listened” carefully to Len’s opinions and perceive that his interests, by going farther than necessary, go well beyond Phase One. Other parties representative of the larger whole – high social complexity - with different interests – regulators, generation of differing kinds, wholesale, retail, transmission, distribution, fuel supply, manufacturers of systems and equipments, etc. - are invited to participate in the generative dialogue.

I know that you were asking a simple explanation of IMEUC. As someone that said, "I've read your 2 articles over many times and while I get the gist of it, the explanation is really not as clear as I'd prefer," the above unanswered critique should sufice.

EWPC a true and non-trivial paradigm emerged last year as the winning market architecture on the first phase of competition. It is only normal that many intelligent and important persons, especially "techies," have the right to say it is not the winner.

We already have Transportation only utility companies in Ontario. There is no ultraquality requirement and there are regulated price controls, so it is not your EWPC as such. But even if the regulated price controls were lifted, the fact remains the residential billing meters are owned by the utilities, and they have zero economic incentive to add more DR or DD functionality to them, even if the government demanded they must adopt an "ultraquality" transportation system, unless the utilities passed on the costs to all rate payers.

The meters are crucial here because they are a direct measure of instantaneous demand and past energy consumption, and the two-way AMI smart meters provide a direct communication link into the electricity grid. They legally belong to the utility companies, and no visionary preaching by you about EWPC will be able to change this. Your refusal to acknowledge the central importance of AMI smart meters is also a clear indication of your lack of understanding of the technical AND economic issues.

Len's IMEUC proposals specifically require customer-owned smart meters, and it would give consumers the freedom to upgrade them with new functionality of their own free choice. Without similar proposals for the meters by you, EWPC is nothing more than a scam perpetrated by you, with the only possible intention to block revolutionary changes in the industry. Is it perhaps there are vested interests in the industry who want to block changes paying you to do this Jose? I don't expect you to admit to this, but it wouldn't surprise me one bit.

Keep on dreaming Jose.

You write that “There is no ultraquality requirement and there are regulated price controls, so it is not your EWPC as such.” The EWPC market architecture and design has a tightly integrated T&D transportation utility. Those new transportation only utilities can be though to arise from a restructuring of the old vertically integrated utilities (vintage 1970), that had a responsibility to serve, into one with a responsibility to transport under regulated price controls. Wholesale and retail sales go to a completely open market without price controls for the customers, which have demand response (in a wide sense, including DR, DD and EE) as a condition of service. False Fact #27: EWPC has transportation without price controls.

You write that “But even if the regulated price controls were lifted, the fact remains the residential billing meters are owned by the utilities, and they have zero economic incentive to add more DR or DD functionality to them, even if the government demanded they must adopt an "ultraquality" transportation system, unless the utilities passed on the costs to all rate payers.” As regulated price controls need not be lifted for distribution (as part of transportation), the integrated T&D transportation utility will receive tolls (controlled prices) as part of their regulated compact. However, one very most important fact is that under EWPC there are no incumbent retailers, as structural separation is forbidden.

It doesn’t make any sense at all for the utility to keep their meters and customers to take the risk to buy duplicate smart meters (many of them don’t need IMEUC as they invest in DD and EE instead under a 2GR contract) than can become obsolete in a few years or result in early system failure. Standards interfaces will resolve all hardware and software difficulties mentioned. Legal problems will be resolved by legislative and regulatory decisions. False Fact #28: “Your refusal to acknowledge the central importance of AMI smart meters is also a clear indication of your lack of understanding of the technical AND economic issues.”

In response to my suggestion “If you and Bob don't respond to the utilities status quo and would like to change it, I strongly recommend that both of you should concentrate on shifting from a win-lose level 1 communications mode to a level 3 win-win mode by helping push for the new EPAct. Now is time for real entrepreneurs to support a leadership move to expect a new EWPC EPAct that removes the legislative and regulatory uncertainty that will kick off company vs. company competition,” I received False Fact #29: “Without similar proposals for the meters by you, EWPC is nothing more than a scam perpetrated by you, with the only possible intention to block revolutionary changes in the industry. Is it perhaps there are vested interests in the industry who want to block changes paying you to do this Jose? I don't expect you to admit to this, but it wouldn't surprise me one bit.” Don’t forget to read very carefully the EWPC article Leadership Answers What to do First.

Keep on dreaming Jose. Thank you. Please read the EWPC article I Have a Dream Too.

But given the pushing of these programs (EWPC, IMEUC) the fact that neither of you has succinct, separate PDF files for download does not speak well of either of you in this area. If you have time to write endless drivel on Energypulse (esp. Jose) then you have time to put together a paper.

Maybe “IMEUC has something to offer in this discussion ... ” but it is NOT as a market architecture and design paradigm. It is only for that reason that I have interacted by using the EWPC article IMEUC False Facts as a recipient of very insidious False Facts against EWPC. In fact, after hundred, and hundred, IMEUC False Facts, diffused in many directions by IMEUC promoters, since the end of 2005, to distract the attention of readers away from EWPC, I have documented 29 False Facts in the past three weeks (that is about 10 a week as a possible representative statistic). A quote from George Santayana is the perfect message that says it all: "Fanatism consists of redoubling your efforts when you have forgotten your aim."

I started the ideas of what in now EWPC in 1996 following the aims of late M.I.T. professor Fred Charles Schweppe (please hit the hyperlink get to his bio as an M.I.T. EECS Great Educator) and his research team (work done from 1978 to 1988). The aim is best taken from Schweppe's just mentioned bio, which says that he “… is now regarded as one of the visionary people who foresaw changes to the electric-power industry to permit competition, long before others.” I have found and documented, in the Central Energy Network, since the end of 2005, that the problems with deregulation and the continued value destruction by today's utilities, were and are, respectively, the result of disregarding his spot price regulated energy marketplace as the first required step. Schweppes’s visionary leadership on Spot Pricing of Electricity is the basis for the EWPC market architecture and design leadership.

Competition in the power industry requires a shift from today's utility business model of winning rate cases to the regulators with monopoly Utilities Enterprise Solutions to competitive Retailers' Enterprise Solutions to develop vibrant, complete, open, and fully functional wholesale and retail markets in the global economy.

Add to those three articles that, looking at the EWPC restructuring from the interface point of view, “EWPC is an integral reform paradigm that results is a robust emergent market architecture and design that divides the vertically integrated utility at modular interfaces, with two modules in the controlled market and three modules on the open market. 1) Long run and short run system planning, operation and control natural monopoly functions are also kept integrated. 2) The T&D wires natural transport monopoly is kept integrated. 3) Supply - generation - natural competitive functions compete with each other 4) Demand - retail - natural competitive functions compete with each other. 5) Supply and demand (Megawatt/vars vs Negawatt/vars) compete with each other. All competition is in time and space.”

Since I am now writing, the first draft of the introductory chapter of The EWPC Textbook, I know there are minor upgrades needed from insights that have evolved after I wrote them. Any comment in the third level win/win mode of communication about EWPC, but unrelated to the second phase of company vs. company competition, is welcomed.

I have news for you Jose. Many large utility companies in North America are currently entertaining or have in some cases accepted proposals for AMI smart meters already. The new meters and their supporting AMI systems will soon be deployed without any standards for interfaces in place yet. There is indeed a very big risk of system obsolescence and system failures because the current meters will not satisfy future needs of DR, DD, and EE, and smart grids.

It’s reasonable to assume AMI systems and their smart meters will over time require replacement and / or future upgrades to handle emerging DR, DD, and EE, and smart grid requirements.

Let's say your predictions come true and governments force utility companies to give up ownership of the meters. As a consumer, suppose I had a choice whether to pay a 2GR under contract to get my upgraded meter as in your EWPC, or pay for one and own it myself under IMEUC. Under EWPC a 2GR is effectively a middleman that will profit from selling (or renting) me new AMI smart meter capabilities under a retailing contract. Under IMEUC I would buy and own a new meter myself at any time I choose to buy one.

It's clear to me that buying and owning meters myself under IMEUC will in the long run cost me less than EWPC’s middlemen 2GRs selling or leasing them to handle emerging requirements.

Bob,

Thank you for suspending False Fact #23: "EWPC is made obsolete by the utility tech revolution," when you wrote "Let's say your predictions come true and governments force utility companies to give up ownership of the meters."

I suggest that meters should be standard commodity items that will replace today’s meters. One meter gets installed and changes should not involve replacing the meter later on for quite some time. So, in the interim, all meters installed by "many large utility companies in North America [that] are currently entertaining or have in some cases accepted proposals for AMI smart meters already," will generate a waste of resources because of the uncertainty and the costly risks of obsolescence and systems failure. Those risks and system failures will go into the base rates of the states and provinces where regulators make those silly mistakes.

With the introduction of a new EWPC EPAct, as described in the article Leadership Answers What to do First, the legislative and regulatory issues resolution is the key to reduce the great uncertainty in the power industry and the costs of the above risks and failures.

EWPC is an open market architecture and design paradigm that gives costumers choice of middleman. Your statement (suspending for the moment False Fact #8. The utility enterprise and the utility grid separation will never "get ever implemented politically" and False Fact #5. 2GRs are not needed. ) “… suppose I had a choice whether to pay a 2GR under contract to get my upgraded meter as in your EWPC, or pay for one and own it myself under IMEUC,” is not a proper statement regarding EWPC. 2GRs (or any middlemen for that matter that wants to compete with 2GRs) under EWPC will develop business models, which could include customers paying and owning a metering system. The critical point is those customers don’t have choice of middlemen under IMEUC. If that is not a case, then several middlemen will be able give customers’ choice, meaning that we are talking about the EWPC open market.

The statement “Under EWPC a 2GR is effectively a middleman that will profit from selling (or renting) me new AMI smart meter capabilities under a retailing contract,” is incomplete because EWPC operates at the (Control and) Economic Level (False Fact #4: IMEUC operates on the Economic Level.). The contractual relationship between a customer and a middlemen involves (Economic Level) investments and operating costs of the customer and the middlemen (see the EWPC article The Sixth Disruptive Technology), no just “selling (or renting) me new AMI smart meter capabilities.”

If any middlemen are able to come up with an actually useful service, they are still free to market it to the customers directly (instead of bundling it in a long-term energy supply contract subsidized by markups on the energy and making it difficult or impossible for the customer to evaluate said services separately).

Many on the GridWise [AC] side start out with a control orientation, a continuation of the load limiting approaches most recently in the news in California's short-lived thermostat proposals. As they work the problem, and become more aware of the complexity and diversity of the problem, they inevitably migrate more toward an agent-based approach. (Someone, I think it was Apperson Johnson, once said, "an agent is an object that can say no!").

Eventually these agents have to be able to negotiate around the issues of scarcity and value; and of the desires of their owners. Such complex negotiations cannot be handled at the control level, but only at the economic level. This will push things toward the EWPC model. My view of the GWAC is that they are trying accelerate that realization and that transition.

Like many on Gridwise AC, IMEUC started with a control orientation and remains becuase it doesn't want retailers. EWPC, however, emerged to have 2GRs that have both Control and Economic Level. The complex negotiations will include retail marketing activities that add much more value. The investments in business model innovations will allow federal (no state) jurisdiction in the U.S and the whole European, instead of individual countries.

Mr. Gould,

Our fight is over. If you and your friends want to fight, you will have to do it alone.

From now on, I will only answer questions that are at level 3 win/win communications mode about EWPC. Level 1 win/lose communications mode, based on False Facts, are no longer acceptable by me and I will no waste time to documents them. EWPC is no to be compared with IMEUC at all. Level 2 is a compromise mode that is no needed anymore as EWPC already emerged.

I am available for Level 3 win/win communications, not related to the company vs. company competition phase, which will help us learn something, increasing our energy levels. Such is now the case, now that you suspended False Fact #4, giving me the benefit of the doubt.

The definition of “Economic Level” comes from a comment added by Toby Considine that was posted under the GMH Blog as Missing From Gridwise and that I copied under the EnergyPulse article A Fresh Approach to Managing Peak Demand, you were supposed to have read, but instead wrote a False Fact.

Please recall that after I defined “IMEUC False Fact #4: IMEUC operates on the Economic Level”, you responded under the same EnergyPulse article with post that said, “Of course it does. It is actually a MARKET system, as I've pointed out previously, and I think you'll need to get an independent economist to agree with you that market systems design is not in the realm of economics. The discussion of the implementing technology is simply to prove that the market system proposed is feasible and can be economically implemented.”

I am glad that you change your mind, and now ask me to define “Economic Level,” instead of calling IMEUC False Fact #4, “A lot more confused verbiage,” as you did. This is what Considine wrote in the GMH Blog to define “Economic Level” and “Control Level:”

Many on the GridWise [AC] side start out with a control orientation, a continuation of the load limiting approaches most recently in the news in California's short-lived thermostat proposals. As they work the problem, and become more aware of the complexity and diversity of the problem, they inevitably migrate more toward an agent-based approach. (Someone, I think it was Apperson Johnson, once said, "an agent is an object that can say no!").

Eventually these agents have to be able to negotiate around the issues of scarcity and value; and of the desires of their owners. Such complex negotiations cannot be handled at the control level, but only at the economic level. This will push things toward the EWPC model. My view of the GWAC is that they are trying accelerate that realization and that transition.

Like many on Gridwise AC, IMEUC started with a control orientation and remains becuase it doesn't want retailers. EWPC, however, emerged to have 2GRs that have both Control and Economic Level. The complex negotiations will include retail marketing activities that add much more value. The investments in business model innovations will allow federal (no state) jurisdiction in the U.S and the whole European, instead of individual countries.

As far as I can understand about IMEUC, it is basically real-time metering with some market restrictions (or 'rules') added. Mostly, these restrictions prevent high level B2B deals from occurring and allowing for large users to cherry-pick low cost electricity. There is also something about paying less for slightly less reliable electricity, though I think more verbiage on that was expended than necessary. Am I missing any other big pieces? If that is what IMEUC is, then it is a quasi-logical outcome of real-time metering, but definitely with some interesting ideas there.

What I am trying to reconcile is the real and credible concerns about unregulated electrical markets as voiced by Fred Banks and the apparent unregulated nature of IMEUC. I think this could be resolved, but I think a bit more work needs to be done to achieve this. What I like most about IMEUC is that it provides a mechanism for the consumer to limit electricity use, especially during peak times. The existing (regulated) market actually works pretty well, but it doesn't have any mechanisms to discourage consumption, just the opposite, in fact.

FACT #1: IMEUC and EWPC are both energy market reform proposals at this point in time, and not adopted by anyone yet. Ontario's paradigm has similarities to the EWPC model, but not entirely.

FACT #2: EWPC has not been proven by anyone to be a "breakthrough" market architecture design paradigm. (If some jurisdiction has adopted EWPC, please let us know who it is.)

FACT #3: Many utilities in North America are plunging forward with investing huge dollars in AMI systems and smart grid technologies, but none are appearing to even consider adopting EWPC. They are surely not telling us about it on this website forum if any are.

FACT #4 : Len Gould's IMEUC in my opinion has the best chance of being adopted some day by some jurisdiction in North America. Why? As I write this there is a new affordable consumer residential smart metering technology being developed that will be marketed directly to consumers, not utility companies. It will be a wireless technology that one can retrofit on a house WITHOUT installing meter sockets for a traditional utility meter, and it will have the capability to record specific energy transactions like for future PHEV type of applications etc. This technology will be sold directly to consumers as real-time in-home energy use monitoring and bill tracking for consumers, and potentially also to appliance manufacturers for measuring energy efficiencies. Our utility regulators may even take notice of it and want to access it as a practical means to acquire consumption data for specific residential uses of electrical energy. And, they might just view it as a practical way to implement IMEUC.

And guess what Jose, I am personally involved in developing it.

EWPC emerged for the world of the third industrial revolution, where demand is no longer an externality and there is a need for a power system that should operate at ultraquality, with the help of demand response, in a wholesale, retail, customer value chain.

The essence of EWPC is "the generic market model paradigm: Retail Competition, Active Demand, and Ultraquality Transportation," which includes wholesale competition, as 2GRs link both markets.

Such essence is the basis for a breakthrough, which is the tipping point that shifts paradigms permanently. The breakthrough is … the epitome of the 'AHHA!' moment bringing absolute clarity and direction… that now … comes to the power industry for both the open (retail and wholesale) market (with competitive incentives for the development of business model innovations) and the closed (transportation) market (the new utility, with a responsibility to transport).

I agree that the new smart metering technology I am developing to market to consumers may not necessarily be adopted by regulators or utility companies. But I disagree with you saying that unless the utilities and regulators let me, I will have nothing without the barriers being taken down on the demand side. In essence I don't care whether the electricity industry or regulators adopt it or not because consumers want this technology and are willing to pay for it, making it a potentially commercially viable technology.

What I have learned about regulators and the utility industry is most are all generally risk averse, meaning most avoid participating or investing in the development of any new technology concepts. They much rather prefer to let technology suppliers bear all the risks in new technology development, and then go shopping for what has been perfected and is ready for commercial use.

If my technology becomes commercially successful by selling it to consumers and possibly appliance manufacturers, then and only then will it have a chance to even be CONSIDERED by regulators and utility companies to be adopted. Sure they may not want it, and there may be a whole host of vested interests that may want to block it from being used by the electricity industry, but its commercial success will not depend on it being adopted by them is my whole point.

When Len's IMEUC market reform proposals are recognized by the utility industry as being a desirable path to take, which you will surely disagree with, regulators and industry players will only consider adopting it if they can see practical ways to implement it. Regulators will not force anything on the industry that has not been demonstrated, or has no practical means to implement it. I could potentially resolve this with my technology.

Also, your definition of a "breakthrough" is a change in traditional ways of thinking. In the world of engineering, breakthroughs must be proven technically and economically before anyone will agree that a new way of thinking is a breakthrough, because without proving it practice, it is nothing more than an idea. Remember Jose, for every breakthrough idea that is proven successful in practice, there are hundreds that are failures because they are flawed.

Good luck with your EWPC Jose, you're going to need it.

Taking my 'new paradigm' concerns to their ultimate, I've come up with a few questions for the group. Say hypothetically, I'm a DG retailer and my systems penetrate a given market to 50% or so with significant penetration of other alternatives, including DR and PHEV. Each of which has strategized their operations for greatest consumer savings. Also given is that my systems have internet strategy-change capability with 1-2 day's worth of energy storage and a capacity exceeding my customer's needs (surplus). What would happen under each 'market plan' should I decide to game the system? For example, say I reprogrammed them to not soften the peak, but rather to buy max power at peak and sell it back at night. Obviously, his would create havoc in balancing supply and demand if it all happened simultaneously. How would each 'market proposal' respond? Is it a criminal offense? Should it be? What disencentives would I incur? How would the grid compensate and would it survive? Who would pay for the tremendous costs involved or would it not cost extra? Who would end up profiting and who goes under, if any?

How do each market plans answer these questions?

From my naive perspective as an electrical engineer, I think what you are talking about is the potential for larger than usual potential demand peaks when unregulated pricing forces are permitted to control energy flow and storage in relatively short time periods.

If prices are allowed to feed back into and control the system in real time, and prices are also affected by supply and demand, it is directly analogous to a feedback control system in electrical engineering. Any feedback control system is potentially but not necessarily unstable, where an unstable one can exhibit wild oscillations in energy flow read higher than desired peaks.

In our regulated price environments, all price 'changes' are heavily dampened over very long periods of time, which is essentially a brute force way to stabilize any feedback control system and prevent it from becoming unstable. So there is some merit in being concerned about completely unregulated pricing of any kind.

The key to IMEUC is its real-time communications between consumers and the system, via the internet and AMI systems. Given this connectivity, it would be relatively easy for the system to place soft limits on demand peaks and price valleys and communicate them to all consumers, such that instabilities can be avoided if stability becomes a problem. Putting limiters on the component stages of an unstable feedback control system is another method to stabilize them.

I think this could be fixed by somehow distinguishing between big and small users and producers. The same rules should not restrict a homeowner from adding a 50kW DG unit versus a 100MW peaking plant. The large plants need some regulation to keep from stepping on each others feet, but they should be able to accommodate the random installation of smaller units. That would be in the noise.

The system has to also deal with the current "bigger is better" mentality, which subtly pushes more energy use by the consumer, which is exactly what is not needed.

It probably makes sense to work out these issues on paper rather than simply unleashing it on a state. I think California failed because a few people had great control over the market. You can't game a market that you can't control. It might be interesting to see what would have happened in California if real-time metering had been installed, and the consumers were aware of the large price fluctuations that were occurring. At the very least, they'd have at least been aware that something odd was going on earlier than they did.

Real-time metering of a whole house and sub-metering of consumer appliances and future specific loads like PHEV is the key to empowering consumers, provided they have price and system information made available to them in real time.

When consumers buy gasoline for example, many go out of their way to look for the lowest prices, but the same consumers will occasionally pay transient high prices if they are desperately running on empty. Here in Ontario we are getting more real-time feedback of gasoline prices over the radio media and over the internet, partly because gas prices are lately a never-ending source of increasing pain to our pocketbooks. A result of this feedback is the ability to identify price change trends - in Ontario many of our gas stations offer the lowest short-term prices on a Tuesday night and Wednesday morning, permitting some consumers to plan their purchases for these times accordingly.

Another benefit of real-time communications between consumers and the electricity system is the potential to inform consumers of changing limitations in the system for generation capacity and local supply availability at all times. For example if consumers are made aware that say a nuclear plant is going down for maintenance upgrades, or a critical transmission line has been just taken out by an ice storm (or terrorist), the change in supply availability to their local area can be communicated in the form of price warnings, some might call these “critical peak prices”. The same can be applied to intermittent renewable sources like wind and solar.

I have invested many posts trying to patiently explain myself. I have been writing about market architecture and design, and getting technologies responses. I am sorry to have made the mistake to accept a comparison between EWPC and IMEUC, but they are not at all comparable. EWPC is about market structures and rules. EWPC development is about consulting work, not about technology design.

I am assuming that a shift from today’s regulated markets (where utilities win cases to the regulators) to competitive markets is bound to occur at the global level. The market bridge between supply and demand can filled up by one of many business models. That is what the EWPC architecture is all about. As simple as that!

One of many market bridges (a switchboard business model) is IMEUC that needs to have all customers on board. There are also switchboards that don’t need to have all customers on board. In that case what’s needed is a market design that doesn’t allow free riders. The resulting market rules are very important for the required transition period, where some customers remain under the old rules modified to eliminate cross-subsidies.

There are many other alternative business models that retailers can develop to bridge supply and demand and which customers have choice to select. I contend that today’s 1GRs will be replaced by 2GRs that operate at the Control Level and the Economic Level to integrate demand to power system planning, operation, and control. That is the market breakthrough, not a technology breakthrough.

To make progress, please avoid a technology oriented response.

I think a large problem here is that is a problem where technology absolutely dictates above all others. You can hardly list the possibilities without a discussion of what is possible vs. practical. Everyone has their own idea of what's available and they're all different. Some here put little faith in computer decision making. I personally have tuned those feedback loops that Bob refers to beyond the accuracy that anyone thought was possible. I'm probably not alone in my contention that any repetitive decision made by humans, if broken down to small enough sub-parts, can be made better, faster, and more accurately by computers. (That strongly hinges on the words "small enough") So basically, the point is that the retailers are only transaction traffic cops. This means that there is true competition amongst all members of each group (generators including DG, energy users, transmission links).

Keep in mind that there's no difference between any two electrons so we should only be paying a generic electron price. However how many we get when we want them is subject to competition. Those equate to generation and transmission. I see the only player not needed as being the retailer. What's he going to do, advertise green electrons or faster spinning ones or even high potential ones? Nope. He's got one kind to sell. It's in how he sells them and that's easily taken care of by technology. Any retailer mandated system is akin to trying to do the same to the travel reservation industry. Who still goes to a travel agent when they can book it all in minutes from home - cheaper? I'll tell you who. It's the volume purchasers that have yet to hire an in-house agent and a few non-tech people left in the world. Those types are still free to have representation in the future of electricity purchasing.

So what I'm saying is sort of answering Jim's 'try before you buy' caution. In my opinion, any real time pricing solution can be implemented piecemeal in tandem with any market structure with the level of unstability proportional to the level of adoption. Initially that first group of people will have wildly swinging trends but they won't have the numbers to affect the entire system hardly at all. More people will only jump onboard after the initial people stabilize more. Thus the grid maintains it's stability the entire time. To find out how fast and cheap this can begin, pursuade a utility to RSS feed a live price online and wait a few months. Simple as that.

Technology design intimately affects everything old and new in the electricity industry, from power generation, distribution, electricity system information systems, to how consumers use electrical energy. The use of electrical energy is a commercial activity, as is also the commercialization of new technology, and their courses are / will be deeply rooted in economics as opposed to any idealistic vision of how commercial markets should be structured.

If you believe that a 'market design' is possible that will work and will have longevity in the electricity industry without considering new technology design and its trends Jose, best of luck to you.

Bob, The larger the group of respondents to a signal, when added together, the more stable it becomes as long as they have fast enough response time and high enough signal resolution. I would think that the answer ins't necessarily limits or dampening but better tuning of the feedback factors (P, I & D) on each sub-part. After all, wouldn't the grid be very stable if it could restabilize in seconds after an event rather than half an hour? Wouldn't instability in one part, say transmission cost, be a good indicator that their are either problems in the feedback tuning or on the actual hardware?

I see it as broken into parts and subs and 2nd level subs. The main ones might be:

Generation Quantity Generation reliability Generation dispatchability Transmission Variable Transmission Quantity Distribution Quantity Distribution unforseen Load Quantity Load predictability

Any others? What sub categories would any of those break down to for us to determine what part each plays in making up the customer price?

(Hmmm, this nearly resembles the OSI layering of computer networking. Layer 4? Neat.)

If consumers could buy the proper tools to monitor in real time their total and specific energy uses while being simultaneously connected to the electricity system for energy pricing and system information, many consumers would quickly learn how to practice better energy use management, adopt more efficiencies, and practice more conservation from time to time These results are possible even in our current regulated price environments with our separate utility-owned billing meters working in parallel.

If these consumer tools are designed to permit upgrading of their software in the future, and provide accurate reliable (sub-)metering, they would provide regulators the option to adopt it for billing purposes and ultimately an IMEUC market paradigm.

Say PHEVs become very popular with the public and occasionally other consumers top up their PHEVs from electrical outlets at my residence. My utility billing meter and billing system currently has no way to identify what energy was provided during these top-ups, but these new consumer tools do. If enough consumers had these tools, it wouldn't take long for consumers to demand that utility billing should redirect these energy transactions to the PHEV owners (using transaction data from these tools). Once consumers realize what is possible technologically, heavens they may even put political pressure on their regulators to implement change.

I agree that was probably Jose's clearest post to date. Thank you, Jose.

Are MOUs allowed under IMEUC? Maybe they are. In re-reading Len's papers, I can see that the "Market Maker" has quite a bit of responsibility. It all seems fairly balanced, but one could argue that trying to influence the Market Maker would be tempting to some.

So who gets to build the plant? The first one to request it? What happens when a request is approved, but then they sit on it, saving the cost of the plant build, and at the same time, keeping prices high? I'm not saying these things can't be worked out, but they should be, well, worked out.

Taking what Jose is saying, regarding a market innovation, rather than a technical one, I can see his point to some extent. If IMEUC is meant to be for all customers, then it might have to prove itself pretty thoroughly for that to be accepted. A system that could allow for multiple strategies might be more easy to get approved, as long as no free rides are allowed, as Jose has indicated.

I think one downside to the real-time metering is the cost, especially when one starts speaking of monitoring individual appliances. That would be really expensive, and 99% of the consumers wouldn't want to mess with all of that. 90% of home electricity use is probably A/C and some major appliances like fridges, electric dryers, etc. No one cares (or should care) about the few watts devoted to lighting, etc.

I think what this all amounts to is electricity "re-regulation", not "de-regulation". That's probably a good sense, but a new system of regulation could fail just as much as a deregulated one.

California failed because the unregulated structure allowed unscrupulous traders like Enron to legally "game" the system. It was rife with exploitable loop-holes that the regulators could not close fast enough. The main sad lesson here is that a system was put in place that such post-deployment fixing was even needed.

One way to combat this would be to limit the profits achievable with a system. If you are making money by selling power at $5 per kw-hr to little old ladies, then something is wrong. If the system is that skewed that such profits could be made, then it should be shifted back to regulation mode. There's not a whole lot of money to be made with such optimizations anyway, so that shouldn't be an objectionable constraint. (Another example would be the consumer that sets his A/C to be "any price" and then is shocked that he paid $100 to cool his home for the night. Reasonable maximum prices could be set to bound the consequences of inattentive consumers.)

If you assume that utility companies will bear 100% of this cost, it should be included as perhaps a sub-category under Distribution. But if consumers bear even some of it, it's more difficult to determine costs and prices. If consumers were to bear ALL of it, then energy pricing might be totally unaffected by it.

At least one large utility in Ontario I know of is currently considering offering consumers the option to pay for part of the cost of an in-home real-time energy display monitor (of whole house consumption) that works with their utility billing meter. They are for the first time thinking this way because they realize to force it on all consumers may not be a good idea - they would rather get the tools in the hands of consumers who WANT it and are prepared to pay something for it, and hence most likely to use it.

Want an example of how low cost technology can be ? GE has a division in the US "jasco Products" selling on-line consumer products for residential use. A basic wired electronic thermometer with miniature LCD display and min/max memory using a remote wired temperature sensor is available for only $3.39 in unit quantities. What do you think the manufacturer's cost for this has to be make it commercially viable ? I would estimate a dollar !

Granted metering is a much more sophisticated sensor with more memory requirements etc., but it certainly doesn't have to cost more than a bottle of wine for each point you want to meter.

We should come to a realization that, in fact, whether in the short term or the long run, customers DO eventually pay actual real prices (if they get the product), and stop implementing complex, often foolish and exploitable, "protections" from real prices. Instead, we should concentrate on implementing a) systems which allow rapid and immediate responses to real-time prices. b) systems which help customers achieve that rapid response. c) standards which make it easier for manufacturers of electrical equipment to help customers respond automatically to real prices.

Arguing that a system should not be implemented without price caps; because (if poorly designed) it has a potential to cause unaceptable hardships to "little old ladies" who don't understand it or want to learn how to interact with it is incorrect. What that is actually saying is that those customers should be cross-subsidized by all the other customers. No "rate caps" or "price controls" should be allowed. If it is agreed that certain group or individuals have, through no fault of their own, gotten inordinately high bills from the realtime system and need to be cross-subsidized, then that subsidy should be a direct payment from government, and separate from the energy utility system.

However I don't believe it will happen with IMEUC, because the default software provided at meter installation, will be easily capable of getting every customer, even those who ignore it's signals and make no changes in their lifestyles, a lower rate than they previously paid, by accessing the wholesale market directly, seriously reducing use of costly (and high-priced) peakers, and seroiusly reducing the amount of time that low-cost base-load stations are paid at the higher peaker rates each day. Those who actually respond to prices and help the above initiative will be significantly rewarded for the effort.

Jim, "If you are making money by selling power at $5 per kw-hr to little old ladies, then something is wrong. " How is that even possible. My understanding is that whatever the price is, that's what everyone pays. Surely with that kind of price you'd have people in Central America eating the costs to ship their electricity to that market. I doubt it would stay that high (barring a large gen shutdown or major transmission line outage) for more than a couple seconds before load died off and DG kicked in. After 10-20 minutes of that price, you'd have 100 mw generators online as well.

Bob, Wouldn't you suppose that with the appropriate communication standards in place, all those major appliance manufacturers would add this dollar feature to their appliance as a selling point? Most microwaves these days run a full blown Linux operating system. How expensive could it be to add one sensor? They've been talking about the 'internet connected refrigerator' for 20 years.

Great question about appliance manufacturers. The problem is they don't integrate the metering function into the appliance let alone the communication link. Why ? Because there are no electricity industry standards for them to follow, and they don't want to waste cost on features that utilities may never use.

Gee, if consumers used these features, appliance manufacturers might very well jump on the bandwagon in short order. There would be big marketing wars on whose Energy Star appliance is most efficient because consumers could actual measure it !

What you're proposing is what Ontario is now actually attempting, though I'm convinced it'll prove a failure.

Please, forget my response to some detailed questions, which have somehow been cancelled out already by yourselves, and some of which I answered before. I will try to be crystal clear once again focusing at the market level and responding the leadership question “What to do First?”

Part of the open architecture of EWPC is based on a market where business models can compete and which customers can select eventually at the global market, where a multiplicity of business models will be adopted initially according to the level of development, the culture of the region, the capacity mix of base load generation (i.e. mostly thermal vs. mostly hydro), etc., Initially also, we should expect several market segments to be served by corresponding business models available to each customer.

Any business model where all customers are forced to adopt it is a closed architecture not open to competition and thus a regulated architecture, where rates will be approved by a regulator.

Todd’s traveling reservation system is a great example of a mature 2GR business model innovation. The point is that several reservation systems (or in our case 2GRs) are available to the customers in the open market where airlines compete. I think that is also the case the world of the electronic industry.

Part of what Warren Causey wrote under today the EWPC article Breakthrough Suggestions for Today's Utilities Environments helps this dialogue. He said that “In order to adopt EWPC, public utility commissions would have to let go of their authority to regulate rates at the retail level. This is a political issue.”

So accepting that the market architecture and design technical and economic elements are solved, what is missing as suggested in the EWPC article Leadership Answers What to do First, is the political will to adopt a EWPC EPAct.

That is exactly the case of the great depression of the 1930s, when both the financial and electrical industry were restructured as a result of large changes like the ones were are experimenting in fuel prices and the environment, while a new technological revolution is underway to reduce customers transaction costs to make electricity a very familiar business environment.

It looks like Len sees IMEUC as the universal system, whereas Jose sees EWPC as the broader system. OK, whatever. I guess I could see multiple business models working in theory, if not in practice. An alternative to IMEUC would be some system that did not employ real-time metering. I can see the ads now: "Why pay for expensive computer-controlled meters? Use Jim's no-frills electric strategy! Pay for your power, not your meters...." (Again, I'm just talking in theory....)

My "little old lady" comment was based on the recorded Enron trader conversations wherein the traders commented they were making money by stealing from little old ladies. They did such things as orchestrate plant shut-downs during peak usage to raise the price of electricity that they had bought previously with futures contracts. A properly running IMEUC would not allow this to happen, if another utility could provide power at a lower price. I guess you could look at this from either side. If IMEUC would prevent catastrophic price gouging from happening anyway, then what's the harm in having some reasonable bounding of prices? Even 2X of nominal values for that time-of-day.

It's a little naive to think that a system that could blow up on stupid people would yet still be poorly received. (I think this is very unlikely with IMEUC unless some very odd thing happened.)

Of course I know you understand that and are simply trying to confuse readers who haven't closely read the documents, for your own purposes.

Jim: Your "little old lady" protection is pointless if it is accurately set to 2x what the market price will ever achieve, and nearly impossible to maintain and very costly to continually re-set. It's only effect will be to transfer wealth from customers to lawyers who argue cases continually before well-paid bodies of regulator assistants, as now. Besides, who can predict where the market "should" go if eg. a large transmission line should fail? More acceptable would be a capability for individuals to set an "upper limit price" where the meter will completely disconnect their service if the price reaches that upper limit, which would default (for those unwilling to interact with the meter) to a very high price contained in the central database and updated occasionally by the market manager (regulator).

Isn't this the very definition of economic growth due to technology? If we're in such a rec[dep]ession and can't keep any jobs at home, wouldn't it be a good idea to incentivize our local appliance manufacturers, distribution and sales force jobs and even add a few in a new 'home energy consulting' industry? Just think of the people who would pay to have all their new Intelli-EnergyStar appliances optomized for their lifestyle.

Most consumers in North America do not have real-time pricing or Time-Of-Use rates, yet. Some do but they are a minority I believe. So traditionally most consumers THINK they only pay for the power they use and don't have to pay for utility infrastructure that is already paid for.

You are correct implying that consumers will be loath to pay for computer-controlled meters or any form of AMI smart-meter or smart grid upgrades. In Ontario our provincial regulators have mandated all 5 million or so Ontario residential consumers must be on smart meters and TOU billing by 2010, in part to encourage demand curve flattening to help to mitigate peak demand growth. But the Ontario government is not funding these AMI investments. Our utilities have little choice but to finance it with borrowed bank money and got regulatory approval to recover these funds with an added fixed charge on our bills that will likely never disappear over time.

The perception by many Ontario consumers is the smart meters and the new added fixed charge for them will just be another mechanism for regulators to milk higher rates from us. Part of the problem is consumers will not SEE any visible benefits to themselves of getting TOU rates and smart meters.

Staying with legacy flat billing rates is not going to be an option in future for utilities that adopt AMI and smart grid technologies. So why not engage consumers much more by a) making financial benefits visible to consumers (with the proper in-home technology) when they must surely pay for AMI and smart grid investments and, b) empower consumers to access competitive energy sources at the wholesale level with an IMEUC type of system - that would actively involve consumers' purchases and management of energy use.

Your last post is precisely what my electronics industry has been able to do over and over again throughout its history - create new markets, new industries, and economic activities by introducing new high-tech products to consumers and industry. Invariably the new technology eventually gets marketed outside North America as well, creating more wealth in our economy.

If transmission is a seperate entity from generation and the proposal for new generation needs a corridor, wouldn't they have to include available transmission capacity in their projections? Wouldn't they call for the cost of it's use to be estimated by the tx entity and wouldn't that lead to comparisons between the competing generators? I don't know, but it just seems that it's going to come down to whomever offers up the best numbers.

Also, many large companies have recognized the potential to help consumers with EE and energy use management, and are salivating developing or have already developed in some cases home automation technologies for DR, etc. The missing link for much of it is the communication with metering functions and energy use data - traditionally viewed as being confined to utility meters and utility billing systems.

Existing real-time in-home display products have all been stand-alone devices that rely on the consumer to manually make use of its information. While tracking your total utility bill with them has great merit in raising consumers' awareness, which usually results in more conservation behaviors, there is much more that could be done if this information was connected to real-time TOU prices and specific energy transactions in appliances, etc.

I appreciate your sentiments, and this is unlikely in practice, but it would not be good for a system to be constantly hooked to the grid that could potentially put a customer on the hook for a huge bill for their energy use due to a sporadic dip in generation. I assure that this happens once and the system would be dropped.

Once again, if there is a generation problem and the cost of electricity jumps to $2 per kw-hr, then something is WRONG. You should just cut power at that point. Using real-time monitoring to smooth out demand is one thing, but this is something else.

If there was ever an electricity glut, would consumers ever be paid to use it? I don't think so. So if there is a bound on the low end, it would seem reasonable that some bounds would exist on the high end. For a system to be used in practice.

I don't see the point in promoting any 'what to do first' conversation until it's agreed upon that a) it's truly open in all parts (except maybe the natural monopoly of distribution) b) it's not favoring any party to a given competition and c) it's technically feasable (including economics). I don't see any politicians here so putting the cart before the horse won't fly.

Regarding your $2/kwh price jump question. I'd like to rearrange it to ask a different one. What if there is a generation problem and you should just cut power, but you just jump prices to $2/kwh to better match the demand to the new reduced supply? Which one would the meat locker or grocery store owners want if they'll lose their entire inventory after 2 days with no power? It just seems to be a decision that's still better left to the consumer. Regarding your 2X cap, all that would be needed is for every smart meter or appliance to be default-set to turn off at $0.50/kwh price. If you knew you valued your power as much as $2, you could override that. The elderly person with a breathing machine might set it as high as $50/kwh but how many kwh will that machine really use in two days? There's never really a full guarantee for them to keep power on, but the smart meter way would definitely give them the the best chance of not losing it.

Jim and Len, Adding to the $2 discussion some more. Wouldn't higher rates bring in more power automatically from another new source? Sure, the local DG that's routinely been counted on for peak shaving would kick in, but wouldn't the surrounding regions' DG also kick in and collectively sell to this region? That would basically increase the amount of 'emergency' backup available for any one region to many times more than what the 'load shifting' backup is calculated as.

Notes:

a) I much prefer an individual-settable price maximum where the meter simply disconnects if prices exceed, rather than something like a flat 2x upper limit. Todd's point about "how much is electricity worth to someone with a freezer full of meat and no backup?" says it all. I do like something like Jim's proposal for certain individuals, approved by application to the Market Manager, where the meter is programmed to never shut off (the person with the iron lung, say) AND the price to them is capped at a maximum in a month or something. That's most easily implemented in the billing software which accumulates readings in the central database at month end though.

b) Power flowing from market to market based on best prices. That's part of the core design of IMEUC. It's also why I've left the issue of transmission ownership up for discussion. It hardly seems right (to me) that eg. Bruce Power, building another 2 to 4 GW of nuclear way out in the boodocks on Lake Huron, should be allowed to compete directly with a micro-CHP unit in my neighbour's basement while having their required 300 miles of HV transmission paid for by a flat-rate levy on every customer, including my neighbour who never buys from them. At least some if not all transmission costs should be assigned specifically as part of the individual sellers costs. (IMEUC can of course do this, though it adds complexity to the central software which may not be justified).

Price caps don't work, for many reasons. They distort markets, from a supplier investment planning POV, and they add costly and un-productive rate-setting negotiations.

I think a) is a good idea as well. Maybe the default setting. My concern was an individual that sets-and-forgets it "any price" and then get burned for it. People with iron lungs would be signing up to the 99.9% service anyway, right?

With respect to pricing, I guess I don't understand when pricing would get so high, yet the whole system wouldn't collapse. In the case of a brownout situation, most customers would use the pricing mechanism properly, so many would tune out and bring the price down to some value that was merely high. If the power flow was so severe that even that didn't help, then the chances are the whole grid would be dead anyway. (I assume they need a certain flow rate just to overcome line resistance.) Again, probably better to think about this now than after such a system was implemented.

I don't think power flows much from different markets. Moving power 300 miles is about the limit, unless you have a special line set up to serve a distant plant (like Bruce).

The transmission line use savings from DG such as CHP could be significant. Concerns are already being raised on neighborhood grids being stressed if several families own PHEVs on the same street. 10 kW x 20 cars x 12 hours adds up to some substantial power flow.

Utilities seem to want it both ways when they state that the transmission system is a significant asset that needs subsidized support, yet DG, which avoids use of some of that asset, should not be rewarded for this attribute.

The "fair" thing to do would be to charge for transmission line use as part of the cost of the electricity. This fee would be sent to the transmission line owner. I guess the line owner could even set their own rates. The lines traversed would be the lines used from the consumer to the plant from which the power is being purchased. So a micro-CHP might be a bit more affordable than the nuclear power 300 miles away. Or maybe not.

In the $2/kwh problem scenario you guys are discussing above, any consumers equipped with real-time in-home monitor displays that communicate with the grid via their smart meters can be alerted to them almost immediately. Most new display proposals being tabled to work with AMI systems will likely include programmable alarm features - that visually and /or audibly alert the home owner when prices, or instantaneous demand, or cumulative kwh since the start of billing period exceed settable limits, or simply alert to an urgent message from the utility. And, here's a wild one, future goodies could be interfaced to a display through its wireless in-home network to send out an alarm message to a consumer's cell phone if they’re away. Lots of possibilities exist.

If one area has a problem getting power for whatever reason and does want to pull it from the neighboring areas, it's most likely that no power is actually being sent from the big generator 300 miles away. Say the problem happens in area 'A' and their wanting some from 'B' to their North. If B supplies it at a higher rate than their norm, their average price would rise by that amount minus the transmission cost of B to A. Their suppliers kick in to bring that back down and much of it actually goes to A. This would still leave B with higher prices but further North 'C' is eyeing the opportunity to sell to all them Southerners paying them high prices so they send more down to B. Assuming 3 equal sized communities, if A reduced demand by 50% due to their resulting price, then B would send half their power to A and make up that shortage plus transmission losses by DR, DG and receiving more from C. And so on and so on, but in all directions.

The question becomes how long did A have $2 prices. If companies are profiting from $0.10 prices, wouldn't the other $1.90 be total profit? How long do you think it would take for them to automate the system so they can tap that instantaneously? That's a million dollars extra profit per megawatt every 32 minutes they get that price.

Len, I'm sure all of this goes on all over North America with our interconnected grid, but IMEUC must potentially automate it to some degree. So one would have to assume for IMEUC to work most efficiently and properly, every generator and every consumer within range of borders for power exchanges on both sides need to participate in IMEUC. Is this correct ?

On your para 3 above, that actually describes an ideal situation (where suppliers implement intelligence to maximally exploit opportunities. It means maximum load capacity on equipment, therefore given competition, minimum prices to customers.) The trick is that customers systems need to be jsut as smart as the supplier's.

The customers systems transitioning to being smarter is definitely the roadblock in implementation which is why I suggested the initial step might best be to offer a realtime price and TOU rates to those that want to jump on first.

Interesting that none here from the energy industries are commenting.

Jim had responded himself earlier by writing “regarding a market innovation, rather than a technical one, I can see his point to some extent. If IMEUC is meant to be for all customers, then it might have to prove itself pretty thoroughly for that to be accepted. A system that could allow for multiple strategies might be more easy to get approved, as long as no free rides are allowed, as Jose has indicated.”

Len had also responded himself too on December 25, 2006. In very rare level 3 win-win communication mode participation, he wrote: “Agreed Jose Antonio on Switchboard model. The point is, once the transaction costs are zeroed with full automation, the large generating entities have no reason to object to selling directly to the smallest customers as well as "large customers". And the market manager is not monopolizing retail, simply the means of recording transactions. IF any would-be retailer can come up with a model which can attract customers away from the generating entities, then they are entirely free to enter the market with offers right alongside the originating generating entites.“

The problem to get to full automation of all of the customers entails investments by many customers, especially a “little old lady” who can perceive she afford a system to respond to real time prices. Her protection from price spikes isn’t pointless. EWPC prevents catastrophic price gouging without the need for price controls, as can be seen in the next post.

Price spikes result from incomplete markets and lack of operations planning and demand elasticity. Under EWPC the utility responsibility to serve is shifted to the transportation (T&D natural monopoly) only utility responsibility to transport and for customers to have demand response as a condition of service to enable demand elasticity.

To fulfill its responsibility to transport, the transportation utility performs a non-trivial operations planning process (which I have named as reliability constraint generation and demand commitment). That process results in a time ahead (hour, day, week) supply demand market clearing price, that commits generating units and demand reductions by 2GRs that will be available during real time operation to guarantee reliable service, by having sufficient reserves in time and space. Any generator or 2GRs, that after committing to perform don’t perform, will pay real time prices in that separate market.

The opportunity for the real time (balancing market as it is called as a result of forecasting errors) market segment depends on generators and 2GRs missing their commitments to perform. In a sense this is the other side of the EWPC article IMEUC: Unreliable Service and Price Spikes.

So, under EWPC “little old ladies” don’t need to fear price spikes and are also protected from abuse by prudential regulations. However, if government finds that they require subsidies; those may come from the public welfare system.

Todd: in the open market, I identified earlier three modules: 1) 2GRs compete with 2GRs; generators compete with generators; and 3) 2GRs demand reductions compete with generators supply increases. It is obvious that the survival of 2GRs and generators requires they handle economic transactions very closely.

Jim got it right: price spikes are unreliability are intimately related. EWPC flies like the DC-3 of the great depression, by being the market architecture and design paradigm with commercial quality service. The EWPC EPAct should be expected ASAP to solve the global systemic energy crisis.

Todd has already posted the solution to potential price spikes above on 4.24.08, when he points out the IMUEC feedback parameters can be fine tuned to guarantee a stable system.

You have this habit of ignoring posted solutions when restating concerns about potential problems unless it is specifically directed at your EWPC. This is typical behaviour of someone who "cannot see the forest because of the trees", and perhaps this is why most everyone else in the energy industry reading these posts is ignoring you and your EWPC.

"IMUEC feedback parameters can be fine tuned to guarantee a stable system," is just about the Control Level, which is good for the balancing market niche mentioned above. 2GR contracts that consider customer investments (long term) planning stage is just one example of what is needed to integrate demand at the Economic Level. In fact, only at the Economic Level it is possible to coordinate large saving for society as a whole in customers investments and operation costs.

I will add below another quote from the same article to signify the need to start way before operations time to integrate demand to power system planning, operations and control, which is the real meaning of the R1E2 criterion.

"Because of the lack of the R1E2 criterion, the thesis leads the untrained observer to the false general conclusion of “pernicious effect from… increase price volatility due to reductions in generation capacity reserve margins.” The R1E2 criterion prevent the possibility of price spikes occurring under EWPC, but which will occur under IMEUC, making it just another faulty deregulation experiment candidate."

To understand IMEUC better in this regard and with regard to price 'spikes', think of a large swimming pool where some people make money adding water while others pay money to drink from it. If this price is closely tied to the water's level, how much do you think the level will ever change. What if 3 people are filling while 3,000 are drinking. How about if you add 1,000 people filling a little bit? Now consider if someone decides the price is too high and brings a hundred GPM pump from a city supply? They all end up balancing out in both level and short term spikes and the longterm price follows the TREND of suppliers vs. drinkers. That trend (and the knowledge of other planners' intentions) is what planners can use to estimate the viability of new large pumps. Simple.

My response to your "skillful conversation" as defined in the EWPC Article “Dialogue, Reliability/Ultraquality & What to do First?,” covers all points and more. The article summary is "To answer ‘What to do First?,’ a generative dialogue insight is that in the EWPC EPAct to be enacted, all market business models should compete in a truly open market (except from the controlled transportation market) that doesn’t favor any party, nor control all customers. System adequacy and system security are non-trivial processes to implement system reliability and ultraquality transportation that should enable social maximum welfare in the open market."

As reflected in the title, the article is divided in three sections:

1. On Generative Dialogues 2. On Reliability and Ultraquality, and 3. On What to do First?

I will post next the first, and the other two in successive posts.

1. On Generative Dialogues

I thank Todd for his “skillful conversation (SC),” in which he still defending IMEUC. Defending is not a level 3, win-win communications mode, as Todd forgets the “Unjustified Universal System” part of the GMH post A Universal System with Price Spikes. By ignoring that IMEUC should compete on the open market, instead of being selected as a risky bet of a regulator, as Jim seems to assert, the conversation could get stocked with a disagreement on the What to do First question to go forward.

According to Dr. William Isaacs, the author of “dialogue and the art of thinking together,” the ‘SC’ is part of “productive defensiveness,” as opposed to “unproductive defensiveness.” For more than 28 months, I have faced a lot of “unproductive defensiveness” and also every once in a while some “productive defensiveness.” The problem is that while the former is more productive than the latter, it is still very ineffective.

Dr. Isaacs suggests that deliberation in a different way is more productive. His dialogue process goes through three stages: suspension (listening without resistance; dis-identity), reflective dialogue (explores underlying causes, rules, and assumptions to get to deeper questions and framing of problems), and to generative dialogue (invents unprecedented possibilities and new insights; produces collective flow). That is the sole reason why I have promoted the level 3, win-win communications mode to enable a generative dialogue, since November 2006, when I recorded an EnergyPulse post as the GMH post Let's Get Out of Back Rooms to a Generative Dialogue.

System reliability involves system security (for the short run – i.e. operations planning) and system adequacy (for the long run - i.e. investments planning). The ultraquality imperative is the concept behind system reliability which under EWPC becomes transportation ultraquality.

System security was defined above on 4.25.08 in the paragraph that stars with "To fulfill its responsibility to transport, the transportation utility performs a non-trivial operations planning process (which I have named as reliability constraint generation and demand commitment)."

The process to implement system adequacy is also non-trivial and is aimed to produce the expansion planning of the transportation system at least costs, taking also into consideration all of the investments forecasted in the open market (by customers, retailers and generators) to enable the potential for maximum social welfare. At planning intervals, the interdependent transportation controlled market and the open market reinforce each other to produce maximum social welfare.

In the open market, the potential of maximum social welfare is handled at the Economic Level, not at the Control Level as Todd have proposed. It is at the Economic Level that we optimize the capital and operating costs to have both system security and system adequacy. If we don’t execute the Economic Level transactions between customers and 2GRs, we may end up having a very costly system.

If the power market operates at ultraquality, under the coordination of demand integration to power system planning and control, then less customers will justify investing in back-up power supplies. The maximum social welfare will be then be the result of large coordination savings at the Economic Level by 2GRs, instead of the large value destruction expected by the highly risky regulators bets.

a) EWPC is truly open except for the natural monopoly of (tightly integrated transmission and distribution) Transportation compact. b) EWPC doesn’t favor utilities or IMEUC to have all customers, as 2GRs want to compete by developing market business models. c) The way to enable that a system is technically and economically feasible is not by regulators’ edits, but by a real market vs. market competition.

As all the elements of the 'what to do first' conversation are satisfied, the only thing in the way is the political will to enact the EWPC EPAct suggested in the EWPC article Leadership Answers What to do First, whose summary reads:

“The answer to the question of what to do first is for the global power industry to get out of the wrong jungle to produce a EWPC based EPAct as soon as possible. That is the kind of leadership needed to face the inevitable fundamental changes required to significantly reduce today’s legislative and regulatory uncertainty.”

??? "b) EWPC doesn’t favor utilities or IMEUC to have all customers, " -- where does that little complete misunderstanding of IMEUC come from? In what way does measuring the customer-to-generator transactions amount to "having customers" ???

c) Why should we allow some theoretical hoped-for "market vs. market" competition when the obviously most beneficial market design for all customers is to purchase directly from the generating entities, esp. when the promoter cannot even define any of the rules under which such theoretical "market vs. market" competition would occur?

One rule of such complex business software is "Though it costs millions of dollars to service the first customer properly, it then costs nothing to service the next million customers". I know, I currently make my living writing such software for energy distribution entities, who presently think it's smart (???) to each write unique custom versions of it for each adjacent distribution entity under a single regulator. It's dumb from the customer's POV, though the regulators make sure all participants still profit, but that's what will also happen under EWPC. Just wasted overhead. IMEUC is designed so that that costly item of overhead, and the skills required to operate and maintain it, can be shared among all IMEUC market regions worldwide, with little or no changes required. One large and compex unit of middeware implemented in C++, with an option of one of four database server backends (DB2, Oracle, Sybase, MySQL depending on size of market).

As Bob wrote, In "the electronics industry it has been commonplace throughout its history to open whole new consumer markets with new technology introductions," why are you then afraid of market vs. market competition?

Jose, enough with the generative dialogue cr*p. We get it, win-win conversations are best. We don't need more endless paragraphs on that stuff. At least I don't.

It seems that IMEUC is basically conferring wholesale-type cost management down to the customer level, and assuming that can be accomplished via modern software and and data management techniques. I don't have any doubts that this could be accomplished.

I do have doubts that the utilities would go for it. In the least they will want to back out some of their costs now covered with fixed fees to the delivery of electricity. This could very well raise costs for the typical consumer.

I still don't know how this would work, either. Let's say big utility sells 100 MW of electricity for 10 cents per kw-hr. Small DG owner can sell 50 kW at 8 cents (continuously). So what happens? Who gets the cheaper electricity? How does the locale of the DG unit play into the price? Does everyone get a bit of the electricity? Assuming the big utility doesn't bother to change its price, does the small DG owner simply raise his price to match it? If so, then what is really accomplished? The devil is in the details, and I don't understand what would really happen here. I am thinking the the small utility's net price would rise as the electricity moves out from the DG site, due to the usage cost of the network lines, but I don't know how or why multiple consumers would get pieces of this power. Plus, a detailed bill of costs might be many pages long, with different micro-utilities supplying tiny fractions of power to thousands of customers. How would this really work?

The solution to your last question is to understand the SMD (Standard Market Design) as currently used in every de-reregulated wholesale market to set wholesale prices, eg. Ontario, Texas, etc. IMEUC uses exactly the same strategy to set market prices, a day in advance. The only difference between those systems and IMEUC is that the customers are then allowed to purchase at those prices, rather than having some retailer pay those wholesale prices and then charge the customers a flat rate plus a risk margin for underestimation of the average market price for the term of the retail contracts, plus retailer overheads, plus marketing costs, etc. etc. (which process also hides costly daily peak prices from customers who should be adjusting their usage to reduce on-peak consumption and shift the usage from costly low-efficiency simple-cycle gas turbine peakers onto large efficient low-cost baseload generation) The basis of the SMD is that for each interval, all generation entities post into the market what price they're willing to run their unit at. (eg. modifying your example a 50 MW DG CHP unit may post 8 cents, a 50 MW coal plant may post 10 cents, and a 20 MW gas turbine may post 20 cents. As long as projected load will remain below 50 MW, then the market price closes at 8 cents. As soon as it goes above 50 MW but remains below 100 MW, then both the DG CHP unit and the coal-fired unit are dispatched and BOTH get paid at the 10 cent rate of the highest marginal price accepted. When projected load goes over 100 MW and the gas turbine is required, then they ALL THREE get paid at the 20 cent rate of the gas turbine. It works well, and can be proven mathematically to always provide the market with the lowest prices possible. I know, I too took quite a while to accept that, but it works.)

I think the point you are raising is the fact that it is impossible to identify which generator or combination of generators any given consumer's power flow is coming from at any given instant in time given our interconnected grid.

If I understand how IMEUC would work, and Len please correct me if I am incorrect, the smaller DG would simply feed his 50kW out onto the grid and sells kw-hrs or energy to first-come first-serve consumers. Obviously in one hour the DG only puts out 50 kw-hrs of energy, so the software running the financial transactions must limit the number of consumers purchases from that DG to a total $4.00 per hour 'on average'. (8cents/kw-hr X 50kw).

Forgive me for trying to tease this out, but I don't see 100% how the SMD pricing scheme directly maps to IMEUC. For one, it seems the retailer does take on some risk for handling peak events, and it's not clear how the SMD is applied where prices vary from minute to minute over the course of the day. At first glance it doesn't appear the user has any input it all (directly) as the price is determined by the demand draw at any point in time.

If we allow that a future market would still be dominated by large producers, then the customer would really only see these price jumps when the demand rises above certain limits. So the "market" from the customers viewpoint is pretty choppy. electricity is 10 cents, then at 3:15 PM, it just to 20 cents. Do you want to pay that? That seems to be the real choice here. Also, SMD does not take into account the path of electricity, (grid usage) so a plant really can't say they are 10 cents, unless its the electricity equivalent of a "wellhead price". For a consumer, each utility would have an added grid cost for them to access it. Again, I'm not saying this can't be done, but it needs more fleshing out for me to understand it.

What if a local unit says they will provide 50 kW and then do not? Are they fined? SMD seems based on a beginning of the day plan, whereas IMEUC is more of an instantaneous, constantly updated process. I'm not saying these can't be reconciled, but again, I think this needs to be fleshed out. I think you know more how IMEUC would work than you've been able to write down for us to read.

What if a local unit says they will provide 50 kW and then do not? Are they fined? -- Yes. Contracts to deliver into the market are absolute and 100% reliabity assumed. Either sufficiently deterrent penalties for non-delivery, or threat of suit for breach of contract from customers as a class (most surely settled out of court). However, IMEUC also provides a third option, that is a mechanism where a generator who contracted into the market the day before but who get's hit with a station failure can request the Market Manager to organize substitution (either additional generation or for-payment additional customer load shedding), with the failing generator paying all costs of the arrangements made.

I thought IMEUC was supposed to tune (and reduce) peak use based on real-time pricing so customers could avoid electricity use during high peak times if they were able. No one is going to place daily bids on their electricity use. Not going to happen. Maybe that could be tracked based on their usage trends, but that's far too much interaction than is reasonable for a typical user, to save a few cents on electricity.

Unless I'm missing something.

It is true most end use consumers are not likely to want to schedule their use a day in advance each and every day. That would be a lot of work and time for most consumers, educated or not. But with software and automation, why couldn't I as a consumer program my purchases to say repeat a pattern every day for a week at a time automatically.

For example say I know will probably use my stove in the kitchen 5 out of 7 days a week, Monday through Friday, but not on weekends, and want a reliable generation source during that period. During business hours I conversely don't need reliable power necessarily went I'm at work. With software under IMEUC why couldn't I program my meter to automatically switch to a highly reliable perhaps more expensive generator source for the dinner hour (or two) when my stove's likely to be in use, and automatically switch to a less reliable one during the daytime hours at a lower price.

Programmable thermostats let you do exactly this sort of thing, and the schedule repeats day after day until after you decide to change its program - like when the weather patterns change.

The response to Bob posts and to Len's second paragraph is already posted on the reference of the GMH post. Readers should know by now the answer to Len's first paragraph. If you don't know write to me. Len Gould 4.26.08 Jose Antonio: The only use of the word "economic" in the link "A Universal System with Price Spikes" referenced is in the sentence "It is obvious that the survival of 2GRs and generators requires they handle economic transactions very closely."

You ARE just trying to snow the readers, right? I guess pretty much everyone here has caught on to that by now. I KNOW I'm no longer willing to try to follow up on any more of your fuzzy stuff any more. Len Gould 4.26.08 Also just a quick comment on "The R1E2 criterion prevent the possibility of price spikes occurring under EWPC, but which will occur under IMEUC, making it just another faulty deregulation experiment candidate." contained at one of your blog posts criticising IMEUC. My question is, what means does EWPC use to enforce continual availability of sufficient generation to implement "Reliability First imposed by the grid operator" if investors choose to not invest in generation? Is it military dictatorship, or what else.

Len Gould 4.25.08

Jose Antonio: "separating the utility grid and the utility enterprise," -- If that's the core design breakthrough of EWPC (so little information available) sorry, it's alreay been done. See Texas, Ontario, California, etc. etc. Also, what remains of the "utility enterprise" but generation once the "utility grid" is separated? Or are you thinking that the generation entities also become your "2GR" retailers? Could you please define "Control Level" vs. "Economic Level" for us?

Jose Antonio Vanderhorst-Silverio 4.25.08

Readers are urged to take a look at the GMH post A Universal System with Price Spikes. The response to Bob posts and to Len's second paragraph is already posted on the reference of the GMH post. Readers should know by now the answer to Len's first paragraph. If you don't know write to me.

Len Gould 4.26.08

Jose Antonio: The only use of the word "economic" in the link "A Universal System with Price Spikes" referenced is in the sentence "It is obvious that the survival of 2GRs and generators requires they handle economic transactions very closely." You ARE just trying to snow the readers, right? I guess pretty much everyone here has caught on to that by now. I KNOW I'm no longer willing to try to follow up on any more of your fuzzy stuff any more.

Len Gould 4.26.08

Also just a quick comment on "The R1E2 criterion prevent the possibility of price spikes occurring under EWPC, but which will occur under IMEUC, making it just another faulty deregulation experiment candidate." contained at one of your blog posts criticising IMEUC. My question is, what means does EWPC use to enforce continual availability of sufficient generation to implement "Reliability First imposed by the grid operator" if investors choose to not invest in generation? Is it military dictatorship, or what else.

For the benefit of a generic reader interested in my post, I will assume the above was a respectful message like “José Antonio: I couldn’t find your response.”

My respectful response is: in my post I wrote "...already posted on the reference of the GMH post...," meaning that old information has been "already posted" on one GMH post while I was responding. The post "A Universal System with Price Spikes," was new information that had not been posted already. So to find my response, please check the GMH post "Missing From Gridwise" of 4.22.08 to see the response.

That same 4.22.08 he had asked “Jose Antonio: Would you please define "Economic Level" in your usage for us?...,” under the article Building Models for the Smart Grid Business Case, which I responded with “…The definition of “Economic Level” comes from a comment added by Toby Considine that was posted under the GMH Blog as Missing From Gridwise…”

Fred C. Schweppe and his colleagues wrote: “Generating electricity is a risky business. At present, regulatory action or inaction, in response to changes in demand and costs, increase these risks to a regulated utility. Under the deregulated marketplace … the total risks are the same. However, the risks borne by private generators and users are distributed differently…” The high risks due to legislative and regulatory uncertainty can be eliminated by enacting the EWPC EPAct, as suggested in the article Leadership Answers What to do First, whose summary says:

“The answer to the question of what to do first is for the global power industry to get out of the wrong jungle to produce a EWPC based EPAct as soon as possible. That is the kind of leadership needed to face the inevitable fundamental changes required to significantly reduce today’s legislative and regulatory uncertainty.”

Schweppe et al continue saying “Long-term … contracts permit private generators to hedge some of the risks of power generation. Such contracts are purely financial instruments, just like commodity futures contracts in agricultural and metals markets. They may be purchased by producers, customers, or speculators. The energy Broker … ca expedite such transactions by bringing buyers and sellers together.” 2GRs will be able to share also some part of the risk allowed under the prudential regulations. Initially, at least, I suggest considering carefully the introduction of speculators and brokers.

The system adequacy process mentioned in the EWPC article “Dialogue, Reliability/Ultraquality & What to do First?,” is key to the risk sharing that 2GRs introduce by integrating demand to long term power system planning based on the Economic Level contractual relationship with retail customers.

IMEUC doesn't have Ultraquality Transportation; IMEUC doesn't have Retail Competition; IMEUC doesn't integrate demand to power system planning, operation and control; and IMEUC only operates at the Control Level. IMEUC is not just a very risky proposition; IMEUC is the old deregulation experiment. IMEUC’s solution to power system adequacy is to have regulated long term contracts, just in case!

The Third Industrial Revolution that we are experimenting today needs a EWPC EPAct ASAP.

Overall I will simply state that I have found your endless incorrect assertive statements about IMEUC, here, in the blogs and on your own websites, to be very offensive. If honesty, accuracy and willingness to answer direct questions were editorial criteria, you'd have been banned from here long ago. I merely pose questions, and only draw conclusions based on your responses, or lack of same.

Estimations of load profiles are made automatically by the controller based on it's collected data of site characteristics (effects per degree of outdoor temperature rise / fall, insolation levels etc. on load profile in the past + next-day weather predictions etc.). If you simply ignore the system and continually over-undershoot it's estimations, the worst that happens to you is you may pay a 25% to 50% penalty compared to your neighbours on your peak kwhrs (mostly by failing to collect available rebates), but that's still only on WHOLESALE prices, so you're still ahead compared to eg. Retailer prices, as experience here in Ontario indicates.

If your particular load profile happens to be too difficult to match up, then you may consider investing in a micro-CHP water heater which can put out 1 to 2 kw of electricity when requested to match up your profile by running eg. 20% time during a day while storing waste heat in the hot water tank ready for your showers in the morning. or a micro-CHP swimming pool heater, or home furnace, or a PHEV which can sequence it's charging to match up. There are many useful possibilities which will not likely be able to penetrate the market without a system like IMEUC.

Bottom line is, under IMEUC EVERY customer's bills should go down, but the most aware and actively supportive customers bills will go down the most. Word will travel.

Agreed, some crude form of "total load estimation by interval" system could be worked out but I doubt it could get any closer than what's now used by ISO's eg, in Ontaraio, typically 15% "excess spinning reserve" always dispatched (and paid for by customers). IMEUC is a strategy to exploit customer's capability to manage their load profiles to eliminate "spinning reserve", and once customers can demonstrate a capability to respond at approximately 15% of peak, then the need for "spinning reserve" goes away. The prediction strategy is simply the fairest way to allocate costs, and works well.

Len,

I hope you don't mind me probing IMEUC further, but I guess I just don't get the profiling thing at the customer level, even with microprocessor control. Like I said, most consumers would not want to program a microcomputer to do that even once, and 90% won't take the time to re-program to accommodate changes. Maybe I'm thinking from the lazy American perspective, but I don't think its unreasonable.

I guess I'd been assuming that these profiles would be better set by the retail level, as they had been. I don't assume they change much over time, with some obviousl seasonable variation. So why worry about profiling at the consumer level at all. If consumers can actively alter their behavior: "Hey electricity is cheap/expensive right now!" then over time, this will be reflected in the larger profile of actual use (from the multitude of customers) over time. This actual use pattern would be much more accurate than program estimations from customers at the single family unit level.

If IMEUC has no retail level to develop profiles, then perhaps it needs one. I don't think relying on millions of end users to accurately program in their daily needs (even via computer) to be a reasonable replacement for this need.

There's a big potential for load profiling of end users at the single family unit level to occur without any intervention by the consumer. Most new AMI smart meters will be logging consumer interval data, some as low as 15min. resolution intervals of energy use. Several weeks of user data are by design retained in the meter's local memory primarily as a means of utility data backup in the event the AMI system goes down temporarily.

Most consumers wont have access to this profile in real time, although here in Ontario under our government-mandated smart meter initiative, all consumers will be given access to hourly bucket load profile data 24 hours old i.e. the previous calendar day's data will be added to the utility database when the meters are read each day after midnight, and users must be able to log into their secure account webpage at their utility website to view it by 8:00am the next morning. Now most consumers wont even be bothered to view it, and those that do would have to resolve its details with what they did the day before. So this data will not be overly useful to the consumer because it is not real-time data anyways, but the government felt at the time they mandated the system that SOME consumer feedback was required.

Real-time in-home energy monitor displays could easily access this data in the meter in real-time if it communicated directly with the meter in real time, as most are proposed to do. It would be relatively easy for software to do all the work for the consumer, and even ‘adapt’ to consumer load profile changes over time such that consumers wouldn’t have to do any programming if they preferred not to.

I agree with all you said, maybe a tad creepy for the utility to be monitoring my every watt used, but whatever.

But this is totally contrary to the dat-ahead planning that Len specified. Maybe its very similar in practice, but not at all the same in spirit. One is a measured daily estimate, the other is a real-time estimate based on continuous data feed.

Again, I'm not saying any of this is unworkable, but I think it does show that the details of what IMEUC really is and how it is to be implemented are still a bit vague.

If a user, or better yet, 10,000 users suddenly decide at 4pm that the electricity is too costly to run their A/C, so they turn it off, and the load profile is not accurate, I don't think all those users should be penalized for not going with the plan. An end-use customer is not a wholesale buyer, and does not act like one and will not accept these rules.

Maybe Jose was right in that something is missing with IMEUC. I saw the interactive aspect of the customer (responding to price changes) as a way of tuning the profile to more efficient use. But this can't be done by penalizing the customer in any way. The producers already have some say in that they can reset the price instantaneously (based on overall demand use) The customer needs and deserves the same power to limit their own consumption without penalty.

Now before you send me back a note saying "No Jim, it's not that way...." then maybe you should agree that this whole thing really hasn't been fleshed out very well. Maybe I'm too inexperienced with electricity retailing to understand all the nuance, but I'm am beginning to believe that my notion of IMEUC is far different from others.

I assumed:

1. Electricity price is changing constantly.

2. Customer can see price, can change usage constantly.

3. Price is set by supply/demand interaction from producers and suppliers.

4. Perhaps fees added for grid access by producers.

And that's it. No day ahead planning, etc.

The day-ahead planning eliminates that sort of activity while still delivering a better overall average price to every customer.

I think there are multiple motivations for adopting the technology behind IMEUC. The biggest is Len's original purpose of lowering prices for consumers, especially in the times we face of growing energy prices for the foreseeable future, and appearance of new consumer electric products like PHEVs. The other reasons are empowering consumers (who want) to better educate themselves about their energy use and costs, and how they can, if desired, change their behaviors to save money on energy - whether it be from EE upgrades, Time-Of-Use planning, home automations with smart appliances, or simply conservation measures with enough real-time feedback to measure all these with.

I agree IMEUC may not have been totally fleshed out yet, and there may very well be bugs in it to iron out yet. But as in any new design of anything, ‘the proof is in the pudding’ - it will take pilot projects of field trials to test it out and work out any bugs.

One thing is clear to me; IMEUC is ultimately a deregulated system, and any pilot trials of could ultimately lead to some compromise design perhaps with limited regulations, no one really knows. The bottom line is with the totally regulated system and no empowerment of consumers as most of us now have, the growing energy prices we face will be the basis for a lot of growing consumer unhappiness and pain unless SOMETHING changes.

Then, if they wish to help the program make smarter decisions for them, they may choose to inform the system, using eg. Bob's peripheral system, occasionally of unique circumstance changes which will affect their furure load profile (mother-in-law visiting for a weekend, I'm at home on vacation next week, I've just purchased a new larger A/C unit, 2 kids off from school tomorrow, etc.)

you wrote: "Why not simply the proposal, included in the IMEUC documents, for the development of specialist businesses who compete to take over responsibility for managing the programs in the IMEUC meters for users with remote-login managed proprietary strategies, for a nominal monthly fee?"

There's a typo in there, but even then, I can barely understand what that means. But it definitely means that things have gotten harder for the consumer; now in addition to a getting real-time meters, and perhaps metering all their major appliances as well, they have to contract with some 3rd party to perform a task they can barely comprehend, and perhaps interact with that 3rd part on an on-going basis.

The retailers obviously perform a task, which is accommodating the risk needed by the energy producers to function. It sounds like this day ahead planning is an essential element. Maybe it is, maybe it isn't. You don't want the retailers, but then who bares the risk? It can't really be the consumer, and you can't get around it that much with automation. It just gets too complicated - at least in my estimation.

It would seem to me that the average homeowner consumer should be left out of this mess. They don't use that much power, and en masse they can probably be statistically estimated fairly well. I don't think their the big issue with power planning anyway. Maybe larger users of power (such as a supermarket) could 'opt in' with the strategy if they think its worth their time to save the money for their energy use. Probably all energy producers (contributors to the grid) would also have to play, though one could argue that small producers of power could opt out as well.

I think this aspect of IMEUC suffers from micromanagement to no significant benefit, and highly significant hassle. Small users and producers (1kw ave.) are much different elements compared to large users and producers. The system should reflect that.

It also sounds like prices shouldn't 'jump', as this could cause the consumers to 'jump' as well, in this case, off the grid. So perhaps prices should move slower to give a chance for consumers to decide to drop loads. This need not be THAT slow, as many of these decisions are automated. Maybe 1 cent per minute or something. That would prevent the oscillation problem cited above.

I'm sure regulators also believe home owner consumers should be "left out of this mess" as you say, and that's probably a big reason why we have regulated and insulated and thus 'protected' consumers from the wholesale side of the market now. I think cumulative consumer load profiles are statistically predictable under ANY system, and could be theoretically altered collectively under IMEUC with many consumers participating.

As for price jumps in your example when we reach a large central station's limits and a gas-fired peaker kicks in, perhaps a partially regulated IMEUC system would resolve this. The rate of price rising as the gas-peakers kicked in (or dropping when they cut out) could be limited to a few percent per hour or whatever.

If there are no incentives or mechanisms in place for average consumers to access lower priced energy based on Time-Of-Use and generation availability, then everyone will likely simply plug in their PHEVs as soon as they get home from work every day making peak demand even higher in late afternoon, because it will make no difference to their pocket books.

I'm not saying the consumers should be left out of the opportunity in accessing real-time energy prices. I am saying they should be left out of the profile planning, because as you say, they are statistically predictable over time.

Even with participation in real-time pricing, the consumers will adopt a predictable profile, that will probably change only slowly over time. I do think the end consumer, even the small consumer, should be given an incentive by being given access to real-time prices. I am also saying it is probably unnecessary to include them directly in the profile planning process.

OK, so real-time pricing access is key here. The question then arises is do all consumers pay the same price at any point in time, and who sets this price. IF one body or regulator is setting this price, they could use it to modify consumer behaviors over time. Indeed our regulators in Ontario are going to be watching for falsely created demand peaks when off-peak prices kick in every night at 10:00pm, and thousands of ‘smart’ consumers program their dishwashers and laundry machines to start up at 10:00pm simultaneously.

If under some other system like IMEUC, consumers don't all pay the same price at any point in time, then the chances of false peaks are probably less likely.

I am not convinced that having prices jump from $0.06 to $0.20 for everyone is a problem. That's the reality of the present wholesale market which we in "re-regulated" market systems all pay, so what is the issue? Hiding that jump behind some regularly negotiated averaging formula or etc. simply removes genuine incentives for desired actions on the part of consumers.

However, strictly in the interest of harmony and being open to inputs, if it's widely agreed that such is for some reason required then i'm open to modifying the IMEUC strategy. Calculating a moving average market price over time intervals could be used to smoothly level out customer's tendancy to react sharply to market conditions, thus providing some stability to the grid and allowing elimination of the forward prediction of consumption. Perhaps the better strategy would be to make the meters sensetive not only to market price, but to local voltage and frequency sags, though how to reward re-actions by customers then would be complicated again.

Ken

Meanwhile, all the little DG guys would have held off on supplying because they learned 'yesterday' that the price will return to its daily highs sometime 'tomorrow'. I contend that this will make both the price and the supply/demand matching very stable after only a day or two of learning how many players of each size there are on each side of supply/demand.

It doesn't bother me at all that the coal plant gets paid 20 cents with the gas-fired peaker turns on. It bothers me that the consumer market is not made aware of this pending event, and thus allowed to react. I think that is fair and proper and even good.

Let say we are are 95/100MW capacity, with the peaker about to turn on. It's in every consumers' best interest to delay this turn on for as long as possible, so raising the rate is not, at first glance at least a bad idea. If the rate is raised from 6 cents to 10 cents, and then the peaker NEVER turns on, who gets the money? Does the peaker get some of it, even though it never turned on? I'm not sure.

Also, how would this price be set? Could a 3rd party arbitrage the price in the hopes they'd save money overall by delaying the turn on of the peaker? Maybe.

Also, I think it's reasonable and fair that if the peaker does turn on, it may have to stay on for several minutes or however long it is to be reasonable and profitable for them. That might be in the rules for using their power.

Maybe this is all ridiculous compared with how the existing system works, but I think some of this has to be hashed out a bit more.

Ideally, under no condition would demand die off enough to shut off the big generator. This entire process would be expected when the big generator made their case to be built and the final price is what they would have had to use in their business proposals.

Jim wrote, “Jose, I don't see "please don't keep wasting your time trying to fix IMEUC" as a win-win communication.” I contend that it is and I will give a second proof.

The first proof, in the above post, is based on my research which is being defended with “unproductive defensiveness” and with “productive defensiveness.” That proof is that since IMEUC does not satisfy the essential requirement of the power industry, the whole discussion is real a waste of time. So far there are no counterproofs that those are the essential requirements are invalid. I suspect that the all the “unproductive defensiveness” is actually aimed as a debate to beat down EWPC. A third proof of that is the bias against the proposed process: 1) suspend, 2) reflective dialogue, and 3) generative dialogue.

The second proof does not depend on my research. Warren Causey wrote: “In order to adopt EWPC, public utility commissions would have to let go of their authority to regulate rates at the retail level. This is a political issue. PUCs are political entities. Commissioners pretend to believe they are "serving the public interest" by protecting the public from nasty old utilities.” If retail energy rates are already without price controls, and what we are writing about is price controls on distribution lines and meters, then it is ok for the price controls on the distribution lines, but not on the meters.

The real problem is restricted to the first case of retail energy rates. Then, it is not whether the utilities favor or not IMEUC, but whether “public utility commissions would have to let go of their authority to regulate rates at the retail level.” If what you are doing is not wasting time, then what is it?

Now if a regulator will not favor IMEUC (it will need to compete against other market business models) and there is a need to solve the legislative and regulatory uncertainty that centers on public utility commissions authority to regulate rates at the retail level, then the only way out is a EWPC EPAct.

EWPC Can’t Be a Market Winner is the latest article which I summarized as “2GRs want to compete to develop market business model innovations for global retail market segments. On a given market segment, the market winner of the market vs. market competition can only be enabled after the EWPC EPAct is enacted. The EWPC EPAct should forbid state regulators from letting utilities win rate cases that involve Intelligent Utility Enterprise and Smart Grid investments, because of the high risks of failure involved.”

My message thus is a win-win message, now with two hard proofs.

Jose Antonio: Do NOT consider any of the above to be yet any part of my IMEUC proposal, which DOES work as written, even though the logic of it is complex to grasp, obviously even for yourself.

Everyone can continue to waste their time and forget that regulators that do not control energy rates (i.e. Ontario) should by no means be controlling metering infrastrucres that help enable open markets business models. The meters to be replaced are just obsolete: since they need to be replaced anyway, their value is negative.In those circunstances, it should be a crime to let regulators make bets that involve Intelligent Utility Enterprise and Smart Grid investments.

It is a most for regulators to control (natural tightly integrated T&D monopolies) transportation prices (tolls).

Thank you for the guidelines. I guess I could glean them, but they are not unexpected, and they are reasonable. Especially a) and c); b) is a bit vague, but I think everyone has trouble with that one.

I'm still trying to figure out the fairest way to allow for c) (peakers need to stay on for awhile). I suppose if the have the advance plan, they should just know (at least within a half hour or so) just when they need to turn on or turn off. Maybe there is nothing to worry about.

It would seem that a nominal schedule could be developed automatically with a controller, perhaps based on day of the week, but also allow for manual input/update. 3rd party interaction does seem excessive, but I guess possible. This does make the controller hardware or at least software quite a bit more complicated, in my opinion.

I really don't know how much residential power is in play during peak times. Maybe its a lot, especially on hot evenings. I am concerned that IMEUC benefits mostly the super-savvy, who can get their loads programmed appropriately.

Which gets me thinking; why wouldn't the system allow for consumer-consumer trades? Automatically of course. In a way, the previous-day committment is sort of a future sale, and the actual use is the final purchase. If consumer A bought too much power to the next day, and consumer B too little, why couldn't they reconcile their needs between themselves? (And close the future, in stock trade parlance.) Since the utilities don't have to change their production, they shouldn't care.

If these sorts of trades were allowed, a natural after market would develop for those who can plan better than those who can't. This would fix the 'fining' problem and also fix the lazy customer problem.

Also, agreed about the several markets. Unless a consumer signed with a particular one for some substantive period of time. And even then, the grid use would get all screwed up. FWIW, I'm becoming more supportive of the notion of "pay as you go" for grid access. This is the only fair way to reconcile the cost of connectivity and a value (which should be emphasized) of DG.

The economic theory is that these companies will not earn excess profits on their investments, because the value of the capital of the plants will rise to reflect the increased selling prices or the electricity, and therefore the amount of "capital in use", and that capital's "lost opportunity cost" increases sufficiently to keep profits to a small and fair amount. However, this still seems like an enormous windfall gain for the companies, and a huge unjustified wealth transfer from ratepayers to that relatively small select group of investors who have sufficient excess wealth to be able to own shares of any sort. It actually amounts to an approximate $5.3 billion / year in Ontario of excess profit (eg. difference between $0.046 and $0.090) from ratepayers to shareholders, and IMHO a GOOD market design should not allow it.

One could argue that the depreciation of hard assets is a tax break that everyone enjoys. But I guess some a bit more than others....

1) Wasting time to fix IMEUC.

2) "It should be now crystal clear that EWPC should be compared with price control regulation."

3) And "... it should be a crime to let regulators make bets that involve Intelligent Utility Enterprise and Smart Grid investments."

All day I had a second take, until I read Len's response. I was expecting the answer that Ontario was still under price controls, so retailers were just there to win very thin profits that added no value whatsoever to customers. I like better my first take, because the crime in #3 is totally unacceptable.

There is no problem technical or economic with having two or more markets business models competing at the same time.

Technical: it is just several 2GRs selling negawatts at dispatch time.

Economic: the EWPC EPAct is not restricted to the states or provinces, but for the federal and global markets, making R&D of markets business models very affordable for a very large number of customers.

Jim: Sorry, i didn't see you post 2nd back until now. Interesting you've thought of customers trading "rights to consume" also. I think there's solutions to several problems in there, though i've hesitated to include it due to adding complexity. On the subject of concern for unsophisticated customers having to deal with market complexity, i'd make two points, 1) the meter's programming, even default as delivered, can do a good job of shielding customers from market complexity, with customers only needing to learn how to inform the program in general terms of unusual circumstances affecting consumption in advance, and perhaps occasionally observing a display to decide when to run the self-cleaning cycle on the oven. 2) Many other free markets are also very complex. We don't worry about protecting consumers from the complexities of having to negotiate selling prices with auto dealers, and in fact our governments have sued Toyota for trying to implement a simpler "MSRP is the actual non-negotiable price at every dealer" system which was intended to not allow dealers to exploit unsophisticated customers unprepared to negotiate. Neither do we worry about the complexities of customers trying to deal with stock markets, though most of us will claim it a given that "every citizen should own a stock portfolio for retirement".

I'm not advocating a stronger complexity though. I'm still trying to resolve all the transactions and the predictive signals needed in my head so that we can eliminate all the person to person purchasing. I just don't see a place for the scams, advertising games and hype that retail sales competition allows when each electron is the same as the next. All people care about is the ability to purchase (availability / reliability) and price. It's really that simple for them. If price signals them to conserve or become more efficient, then that feedback should be brought to light.

1) Wasting time to fix IMEUC.

2) "It should be now crystal clear that EWPC should be compared with price control regulation."

3) And "... it should be a crime to let regulators make bets that involve Intelligent Utility Enterprise and Smart Grid investments."

FWIW, I don't think the SMD can accommodate the future changes that will be occurring. So something has to be done.

Jose has a minor point with 3). Before smart grid stuff is added, someone needs to connect the dots, all of the dots, to show how it will save money, perhaps with IMEUC. If many of the devices are automated, then one should be able to simulate smart grid behavior fairly easily (no "personal profile paradigms" are needed...). I think most of the smart grid stuff out there now has been fairly naive in how they actually save money.

It eliminates the need for each customer to do foreward estimating in advance of each day, still reduces running reserves to a minimum though not quite as low as the other, and eliminates most of the "$5.2 billion / yr overpayments" issue from above. The key would be for the ISO to do accurate load curve estimates based on statistics, and carefully set the "Ramp Up Rate Charges" to collect enough each day to break even regularly.

Also in the last 2 hours of the day any remaining Incentive Amount balances not yet refunded could be completely refunded to customers just to make sure the net balance is very close to zero.

There is, however, a problem in this design of determining how to compensate customers for emergency load reductions enacted due to emergency conditions, eg. an unexpected generator or transmission failure. Perhaps not needed, just set the "Incentive Amount" very high, assuming all customers will respond immediately to the price spike. Could catch some unwary customers off guard though.

The smart meters in Ontario will all be capable of communication with the utility through the AMI network every 15 min. if necessary, but there were never any plans originally or currently to do this. Pushing customer data out to all meters was envisioned as a possible future function for things like messaging customers for TOU rate changes, or critical peak prices when they occur, and even real-time-prices if they were ever adopted here. But for the most part data push was pictured to happen very infrequently and only carry very small amounts of customer data. Reading them for billing purposes would happen at least once per day after midnight, and in some typical utility applications it may happen twice or more a day.

My point is there are severe limitations on communications bandwidth with most current smart meters.

Also, most smart meter systems will not allow in-home devices to talk to the meters on its AMI network or over an installed Zigbee radio gateway device very frequently either - because it ties up the meter's main processor taking it away from its other routine functions like continuous digital metering. The only smart meters that do have a potentially high bandwidth to handle frequent communication with in-home devices are ones that have a second processor to handle a Zigbee gateway device, or as in the case of Trilliant's technology, two separate processor boards for network communications and digital metering.

Smart meter manufacturers have avoided putting lots of bandwidth into smart meter communications primarily because utility companies have never asked for it or even thought of needing it, and hence have been unwilling to pay extra for it.

Any real-time system implemented that uses smart meters as the link from utility to consumers must be aware that much of the current generations of smart meters being deployed or already deployed may be incompatible, and ultimately need total replacement to handle anything demanding of bandwidth or frequent data exchanges.

A more difficult issue remains, which is "does this market design provide sufficient incentive to investors to get new generation built in a timely fashion?" I contend that it provides axactly the same incentives as does the SMD market design, so there shouldn't be any problem (If SMD can get new generation built, then this market can do so also). If one works through the decision process for eg. Ontario to build another 3 to 4,000 MW new nuclear, as is currently in planning, they can see that this market design provides the new generation exactly the same prices and run times as the SMD market does, so no problem, assuming the new generation is more costly to operate due to unretired debt than any of its direct competitors, as it very likely would be.

I suggest to readers to look at the EWPC article To Congressional Requesters of Utility Oversight, whose summary says: “Being unnecessarily flawed, and complex, today's EPAct causes its own crisis. Under those circumstances, FERC utility oversight will not be able to produce the expected results. What’s needed is the simpler EWPC system to protect customers from supply disruptions and unfair pricing. The political answer is a EWPC EPAct.”