Good common sense article, the marketing principles in it are routine fare for many other industries that (develop and) market new products to consumers.

Another method to reach your target customers is to partner with common retailers like Home Depot type of stores. In your home insulation rebate example a utility marketer could advertise the rebate availability in a retailer that sells home insulation, right in the aisle next to the insulation products. The consumers that see the advertisement will likely be the ones shopping for insulation and eventually most likely to purchase, or likely to purchase in future after checking out the cost of insulation while browsing.

In your article, using demographics can certainly help to identify those types of consumers that would most likely be interested in upgrading their home insulation. But even if you identify them, persuading them to make the up-front investment is the most difficult part, and is the biggest barrier to ANY efficiency upgrade product or financial incentive.

Here in Ontario Canada our provincial government assists utility companies directly with paying for advertising campaigns to promote a culture of efficiency upgrades and energy conservation. Our federal government is already also offering large rebate incentives for consumer home efficiency upgrades, and links up with our provincial government and utility companies advertising campaigns to make consumers aware of them.

One way to effectively persuade eligible consumers to consider the up-front investment is to make the energy savings payback period palatable, meaning the shorter the better, and especially by making consumers aware of the payback period. A one- or two-year payback will usually get a substantial percentage of them to purchase provided they have or can get the money for it. Longer payback periods are tougher to sell.

Another problem with marketing efficiency upgrades is that predicting energy savings and payback periods is very inaccurate. The specific potential savings of any given consumer depends on the consumer's lifestyle choices, and how much energy they are currently using before implementing any upgrade. One way to mitigate this problem and make the predictions more accurate, and hence the marketing job easier, is to equip residential consumers with real-time in-home energy monitoring technology to measure the energy consumers currently use. The same technology could then be used to measure the effectiveness and savings after an efficiency upgrade. To deploy this technology however would require utility companies to help all or most consumers adopt it for their smart meter AMI systems, which is a large investment that is not on most utility company radar screens (yet).

Bob Amorosi, M.Eng., Resident of Ontario Canada

Your corageous article is a great contibution to society and for that reason alone deserves to be read by every utility executive and every regulators in the world. I have taken it to write the EWPC article Utilities and Regulators’ Value Destruction, whose summary reads as follows:

Excessive marketing costs are identified by Marty Agius, under today’s regulations, which make utilities and regulators unable to add customer value as will be done under EWPC. Added to his arguments is the large value creation waiting to happen with the emergence of business model innovations, to be develop by retail marketers (2GRs) to integrate demand to power system planning, operation and control, since market research doesn’t work yet.

Jose Antonio suggests "Excessive marketing costs" exist under today's regulations. I must agree with Jose on this point, since existing utility business models and business practices do indeed make it very difficult to justify adding or creating "customer value". Simply put, our existing utility companies under regulation cannot easily implement anything new for their customers' benefit, because they have no solid financial incentives to do it without implementing general rate increases or government subsidies.

What I disagree with is Jose's suggested means of implementing his EWPC market reforms to change the utility industry into different business models. Len Gould's IMEUC market reform proposal is the only logical suggestion that would among other things force open standards on smart meters and energy marketing. Open industry standards are key to successfully foster innovation and add customer value, as has been practiced in other industries for years.

Be aware of False Fact #9: "A never-ending series of confusions." Also read carefully because of False Fact #10 [it is actually #11]: My "constant eroneous comments about IMEUC." Please recall that "By no means am I saying that retail markets development [to integrate demand to power system planning, operation and control] will be easy."

Right now there are more than 110 EWPC articles, but I will try to condense the idea. If you don't understand something please ask and will try to answer it. Please concentrate on the difference between the market vs. market competition (which I don't mention below) won by EWPC at the beginning of last year (that might be a homework for you) and the company vs. company competition between competitive retailers. Such separation is a mean to reduce complexity.

What follows is an update of my suggestion of 12.21.05 and Len's response on the same date. A few updates within brackets:

The architecture [and design] of a "true" deregulated [now the re-regulated EWPC technology neutral market] model is centered on independent retail-marketers [now 2GRs], and a new value chain [different from the supply chain], whose mission is to segment customers [to deploy marketing expenses effectively] according to electricity value added services, which customers can select. The value chain is wholesale, retail, end customer, leaving the [physical] distributor [under a fully integrated T&D controlled market] as a pure transporter charging a toll [False Fact #8. The utility enterprise and the utility grid separation will never "get ever implemented politically." This is where your corageous article has a lot of value]. Retail-marketers then take control of the strategic [now Retailers'] Enterprise Solutions [see The Sixth Disruptive Technology, today's most viewed article on EnergyBlogs with 1110 hits], developing innovative [instead of just one regulated monopoly] business models. As each customer selects what he perceives [not what the utility thinks] is the maximum value addition [taking into account custumers' own long term investments], the economy as a whole maximizes welfare.... By no means am I saying that retail markets development will be easy [or inexpensive]. No; there is a lot of work needed to make it happen [in the company vs. company competition, instead of regulators bets under the monopoly business model of utilities winning rate cases]. Most [customers'] investment in energy efficiency needs to look to the next 5 years ... I will be very happy if one place in the world decides to initiate the experiments required for the development of new business models on retail marketing, and I wish to be there.

In response to the above, Len Gould wrote: “Jose: You're close, just not going quite far enough. You need to eliminate [False Fact #5. 2GRs are not needed] your "Retail marketers" by implementing intelligent software [who is going to pay for the marketing costs and customer investments costs or is the government to impose the solution on every customer at all costs - see "False Fact #4: IMEUC operates on the Economic Level," and can do it without retail marketers] within the customer's meters which takes over the simple task of selecting either a lowest-cost supplier from among all available in a [physical technology biased] central electronic "marketplace", or alternatively choose to not purchase, and shut down some of the customer's less critical loads if the price exceeds customer-set limits.”

With the intention of keeping the utility intact, Jeff Tolnar, Chief Technology Officer, BPL Global, with his article The Many Faces of Demand, has made a great contribution to EWPC market architecture and design paradigm second phase of competition. He has contributed to the art and practice of the holistic approach of Second Generation Retailers business model innovations, which is The Sixth Disruptive Technology (1117 hits so far. Please hit link here and below to read article) of EWPC.

Jeff introduces Demand Dispatch (DD) as that “ places a control device at direct load points in the premise – air conditioners, water heaters, pool pumps, etc. These devices are then monitored in real time by … [2GRs under EWPC]. When demand reductions are required, a central system will shed exactly the amount of load that is required and restore that amount when desired. This offers a program to match demand reduction needs with very predictive and verifiable results.”

DD is a great example of a retail marketing activity of 2GRs that is required to be performed at the economic level, under competition, and not under monopoly at the control level. Once agreed on a service plan contract, DD is not an invasion of privacy to those customers that perceive it as a good money saving opportunity, having a very large worldwide market segment potential.

Updating what Jeff wrote from the Demand Integration EWPC breakthrough perspective, the following results: “In order to maximize the investment in a demand … [Integration] solution, we must take into account as many parts of the value proposition as possible. A holistic demand … [integration] approach can be used to manage … [low reserves, in time and space,] and address [customers’ value creation and] other operational concerns.”

In the EWPC context of having the utitily enterprise replaced by competitive 2GRs, the article The Electricity Revolution is highly recommended.

That is why I wrote "DD is a great example of a retail marketing activity of 2GRs that is required to be performed at the economic level, under competition, and not under monopoly at the control level. Once agreed on a service plan contract, DD is not an invasion of privacy to those customers that perceive it as a good money saving opportunity, having a very large worldwide market segment potential."

Under Ithe original IMEUC every customer needs to particpate. If that isn't a metering monopoly, what is? If not all customer need IMEUC, then IMEUC is just one potential business model among many subject to competition

In the first case, most customers in Canada, the US, Europe, Brasil, Russia, India, China, etc., would need to invest in infrastructure that makes their percieved transaction (which include marketing) costs totally unaceptable. The mayority of those customer would strike DD deals as part of their service contracts in many parts of the world.

In Ontario, even w/out item e) above retailers are adding "i estimate" somewhere from 50% to 100% to wholesale prices, and doing nothing to level demand down from costly peakers to more economical continuous baseload units.

Even more important is the issue of real choice. Wise customers and public opinion, all over the place, will give such a proposal the same fate explained in the EWPC article PCT One of Many Business Model Innovations, where I wrote:

Under EWPC, PCT [or IMEUC] qualifies as one great [potential] business model innovation. As such, it should be open to competition with others business models in the making or that will emerge worldwide as the market evolves. The point is that PCT [or IMEUC] should not be allowed as a monopoly business model.

Customer choice should be enabled to a new level by introducing federal competition at the retail level. The remotion of the mandate by the Califonia panel is a strong signal of the end of the utility monopoly as we know it. Today's utilities have two main components: the grid and the enterprise. The enterprise as a state retail monopoly should be replaced by retail competition at the federal level of the U.S.

In a comment under that PCT article on 1/21/08, I added:

This is what I understand to the best of my knowledge, which is open to inquiry by persons willing to do the same. Maximum social welfare is not necessarily an optimum to everyone, but to society as a whole. EWPC is about enabling such idea, which is left to people perceptions' to approach it. No complex system can be optimum to all parties concerned, nor all functions optimized. If the open market is well set up, without monopoly power being exercised in the current case by one "business model innovation," called it PCT or IMEUC, customers will be able to exercise their choices not only initially, but also later on.

False Fact #16: EWPC is Ontario's market architecture and design model. Please read the EWPC article EWPC is NOT the Ontario Model Either.

Starting today, readers will easily find all posts with False Facts, where they belong, under the article IMEUC False Facts.

After reading the [IMEUC] article suggested and its follow up, I find that after looking closely IMEUC does not corresponds to the new integral reform paradigm. IMEUC is based on mechanistic thinking about fundamental electricity economics, as can be found under the heading “Metrics” a statement that says: “[E]very consumer of utilities will benefit from a system such as this in three ways: [only the firts is quoted] first…every entity at every stage in the supply chain will be constrained to making their own good investment and operating decisions or be out-competed by a more efficient operator.”

Please take that as IMEUC False Fact #17. "...every entity at every stage in the supply chain will be constrained to making their own good investment and operating decisions or be out-competed by a more efficient operator,” as explained right after the above first quote:

"As the result of efficiency on every stage of the supply chain, any competent electric power system planner would see a repetition of the fault found in the deregulation experiments of the last decade: the system is also fractured. Hence IMEUC does not lead to the maximum value expected by society as is EWPC where the system architecture is modularized at the proper interfaces on the value chain. For example, retail marketing is an essential service for the development of the resources of the demand side that is disintegrated in the IMEUC. A fault on market architecture is evident on IMEUC that becomes a barrier to emerging retail marketing business model innovations under competition."

A special case of IMEUC False Fact #17 applied to transmission is "'And BTW IMEUC also provides a potential opening for competitive / merchant transmission, if occasions arise where that makes sense, as opposed to EWPC's gold-plated T&D monopoly strategy."

However, we can say that it results also as IMEUC False Fact #18: "IMEUC also provides a potential opening for competitive / merchant transmission, if occasions arise where that makes sense, as opposed to EWPC's gold-plated T&D monopoly strategy," and can be seen in the EWPC article IMEUC: Unreliable Service and Price Spikes, where I wrote:

"... the R1 part [of R1E2] is the key to develop the optimal transportation system, which results from the minimization of the sum of all the costs of investments (included those of supply and demand), costs of operation, costs of maintenance and costs of outages, so in a sense “reliability first” is about developing the best economic transmission system for the expected supply and demand of society."

You have raised the main problem with consumers - most cannot easily relate their utility energy bills to specific energy uses, conservation measures, efficiency upgrades to their homes, or even think about what the variables are in the electricity industry that affect their bills. As a result most consumers just blindly pay their bills and don't care to know any more.

However, utility bills will continue to climb as energy prices soar moving forward, and so more consumers will surely want to know more if their pocket books are in greater pain. The discussions here are all about energy market reforms and technology that would give consumers more information and energy retailing mechanisms to afford them choices in managing their energy costs more wisely, and also how the utility industry might afford adopting them.

Your "Reliability First" transmission model implements a false assumption about transmission, which is that you alone know more than any other person or group in the world can now or ever know about how transmission should be operated. Free competitive markets are in the business of demolishing such, and should be encouraged wherever possible including transmission, as I stated. Metering and data management is the one place where and isolated monopoly is required in order to implement a fair and equitable free market in electricity.

All IMEUC does is enable the free market. The objections to IMEUC are all based on a presumption that "customers don't want a free market to participate in". Well, in that case then we have long-standing evidence that the only alternative is an absolutely fully regulated monopoly system, such as prior to the 1990's. It work, but poorly. All the rest, eg. EWPC, are simply attempting to deny this "Fact".

I suggest, to readers interested in the generative dialogue, the book “Blackout: How the Electric Industry Exploits America,” by Gordon Weil, whose purpose “is to reveal much of what has been hidden from the general public and to suggest how matters may be improved. Much consumer apathy results from ignorance about electric industry and the sense that consumers have no power to bring about change. Because the voice of the consumer is weak and because of the pernicious effect of campaign contributions by the industry, politicians do not take up the consumer’s cause but instead acquiesce in the growing power of the major electric industry companies.”

The vertically integrated utilities (VIUs) true and non-trivial paradigm led to a highly reliable electric service for many jurisdictions that understood and applied the paradigm. At many other locations that didn’t understand the non-trivial paradigm, usually known as third world electric service, unreliable service was offered. The knowledge accumulated behind of the true and non-trivial VIUs controlled market paradigm (for example by PJM) was based on the development of the theory and practice of physical risk management for an industry without energy storage that considered reliability and demand as externalities.

The result is a highly developed long run and short run supply side physical system risk management body of knowledge to offer commercial reliable service even without electricity storage, which is known under the terms system adequacy, supply security constrained economic dispatch, contingency analysis, loss of load probability studies, etc.

As the electric industry has develop its own risk management methodologies, which are true and non-trivial, it seems much more complex for other intelligent and important people, just as “Paul Samuelson said that a doctrine is non-trivial when ‘it is attested by thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them.’ The EWPC doctrine is logically true, coherent and non-trivial. Reform should be based on knowledge and facts, not only on the political processes. See EWPC is a True and Non-Trivial Doctrine.

Today the responsibility for system reliability is divided into federal and state regulators, NERC, and RTO/ISO under a political process. However, under EWPC it is just the transportation institution that is responsible, like it used to be under the original VIUs paradigm. That institution is the controlled transportation (transmission and distribution) utility market, being responsible for transportation ultraquality.

By doing so, those institutions are way into the true and non-trivial aspects of electric power systems, which are not the province of politics, but of engineering systems.

You are the best example of what Paul Samuelson said that a doctrine is non-trivial when "it is attested by thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them.’"

By writing "Your "Reliability First" transmission model implements a false assumption about transmission, which is that you alone know more than any other person or group in the world can now or ever know about how transmission should be operated," after 28 months of discussion you, an important and intelligent men, have "have never been able to grasp the EWPC doctrine for yourself or to believe it after Ivery patienly have explained it to you many, many times.

In the power industry there were many things hidden that I have uncover and a few I have discover. I have tried very hard to explain very difficult subject matters, but no one can deny that the vertical integration and EWPC are true and non-trivial paradigms, as you have attested.

You also state that using DR to achieve segmentation of customers would provide supply security, which becomes your Retail Competition. This begs the questions WHO would bear the cost to develop DR technologies, and WHO will control DR, consumers or the industry players? Among other concerns, there will be massive public opposition if industry players are allowed to control DR.

From what I can tell, Len's IMEUC proposal is the only proposal that provides the economic incentives to industry to bear these development costs to achieve all the above, while giving consumers full control over DR and enjoy competitive retailing.

The vertically integrated utilities paradigm developed those risk management tools for the supply side to operate at ultraquality. The transportation only utility will arrange to update them, to include the demand side. They will use them, with inputs from generators and retailers. Yes they come at a cost that like all software development purchase by utilities, in this case transportation only utility.

The obvious first means of segmentation is the wide range of customers' reliability requirements. 2GRs will invest to develop that and other market segments in the second phase of company vs. company competition. Some customers will agree to DR (contractual agreement to respond) others to DD (contractual agreement to interrupt) and others might be just price takers, etc.

No opposition will develop if customers have choice of 2GR and choice of service plans that satisfy their needs. Opposition will certainly develop if customers have no market choice, like having to purchase an IMEUC, one size fits all system that many don't need. The California PCT example is a precedent of such opposition developed under public pressure.

False Fact #24: "IMEUC proposal is the only proposal that provides the economic incentives to industry to bear these development costs to achieve all the above, while giving consumers full control over DR and enjoy competitive retailing."

Go ahead "enjoy competitive retailing" and read carefully the other 23 IMEUC False Facts - the link is above. If you are in a hurry, don't forget to check the EWPC article behing FF#18.

EWPC can only be trivial and non-trivial.

EWPC is trivial is IMEUC False Fact #21,which attest that even though you are an intelligent and importante person, that have never been able to grasp yet the ultraquality imperative of vertical integration and EWPC for yourself or to believe it after I explained it to you several times. Conclusion: "no one can deny that the vertical integration and EWPC are true and non-trivial paradigms, as you have attested."

The California PCT example is exactly the public opposition to UTILITY-controlled DR that I have been describing.

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.

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.”

Not that I anticipate any coherent response, based on past experience....

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.

Fine, but we're also hoping that means no further pointless promotion of the hopeless EWPC here.

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.

FACT #4. That's an unfeasible dream. Unless the utilities and regulators let you, by taking down the barriers on the demand side, your have nothing. The only way new business models will replace the utilities business model of winning rate cases to the regulators is by separating the utility grid and the utility enterprise, opening the latter to the competitive market.

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).

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.

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.

If your EWPC proposal is meant to be totally independent of technology design, it is a very admirable proposal indeed, and would certainly be a desirable concept. However few markets in any industry are totally independent of technology design, or totally independent of society culture and political forces. In my world of the electronics industry it has been commonplace throughout its history to open whole new consumer markets with new technology introductions.

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.

Could you please define "Control Level" vs. "Economic Level" for us?

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.

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.

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.