I do not need to read the French document to tell that I really understand what is at stake: the obsolete Investor Owned Utilities Architecture Framework (IOUs-AF) and all of its family of incremental extensions are a dead-end. Please take a look at an English language article “Strong Evidence of Why Utilities as We Know Them Will Fail,” at the link http://www.energyblogs.com/ewpc/index.cfm/2009/7/26/Strong-Evidence-of-Why-Utilities-as-We-Know-Them-Will-Fail

I am one of the very few people that have study inside and out in the last 40 years or so the old paradigm and have architected the emergent one, in the last 14 years, which is the Electricity Without Price Control Architecture Framework (EWPC-AF). The EWPC-AF is a basic organizational innovation.

http://www.cre.fr/fr/content/download/8808/155078/file/090709Effacementsdiffus.pdf

If the link doesn’t work, google Délibération du 9 juillet 2009 portant communication sur l’intégration des effacements diffus au sein du mécanisme d’ajustement.

Make sure you read the annex carefully.

The poor French are actually at the forefront when it comes to demand response, just take a look at the Tempo tariff!

Some powerful new forces are at play in the energy industry, and these are not from within the energy industry. Their people are used to working out in the wilds, and in their path lay many damaged and broken corporates. One industry that hasn’t coped so well with the influx of these new forces that comes to mind is the newspaper industry.

And you know what? The single biggest reason to have a smart grid, believe it or not is to reduce energy consumption. AND this is also a significant objective of the people driving the smart grid start ups – I should know…

At the fundamental level, the smart grid and the utilico are incompatible, period. No amount of regulatory instrumentation or monopoly mollycoddling will fix it. Sorry. Utilico makes money from the energy you use, and critical peak pricing will just drive customers to use less. The only way out for utilico is lower prices, and guess what? That ‘ain’t going to happen.

What’s going to be really interesting for the future of IOU’s is the emergence of the cheap solar technology that will come online around 2013 which for the first time will cost competitive with coal. Then we are going to see some real interesting times.

Remember – energy is in fact a public good, not the right of a monopoly corporation.

Sam,
@samotage

Thank you for the lead that helped me add evidence to write the EWPC article “Strong Evidence of Why Utilities as We Know Them Will Fail,” which can be read at the Internet hyperlink
http://www.energyblogs.com/ewpc/index.cfm/2009/7/26/Strong-Evidence-of-Why-Utilities-as-We-Know-Them-Will-Fail

In addition to my earlier post under yours “Smart Grid: We Still Need to Change Utility Regulations,” which I introduced with “the regulatory flaw is actually a system architecture flaw that originated in the Energy Policy Act of 1992,”, I add the following:

“… until the problem get’s fixed” is just an illusion, which you wisely anticipate by adding “we’ll be seeing more cases like the one between Voltalis and EDF.” The reality is that we have disruptive technologies taking footholds of the power industry Investor Owned Utilities Architecture Framework (IOUs-AF) that are here to stay.

The obsolete business model of IOUs winning cases to the regulator has its days counted, as the problem will not be fixed with artificial decoupling or any other business model incremental extensions, because it is not a mechanical problem that requires fixing. It is a systemic socio-technical problem and its holistic solution has already emerged in a transformation as a paradigm shift away from the IOUs-AF.

Ongoing business models development should follow the Electricity Without Price Controls [first level] Architecture Framework (EWPC-AF) that will enable a second level architecture competition, between Second Generation Retailers (please hit the hyperlink http://grupomillenium.blogspot.com/2007/07/second-generation-retailer-2gr.html ) under the Silicon Valley Model. That way natural decoupling becomes available as customers will be able to freely choose in the competitive marketplace the best one stop service and investment deals.

A parallel between the IOUs-AF and the railroad highlights the reality versus illusion as a result of the big change being experienced in the business environment. John Naisbitt’s 1982 Megatrends, explains under the section “Law of the Situation: the railroads did not understand,” the illusion IOUs and regulators are, with the quote of Walter B. Wriston, chairman of Citicorp, who in 1981 said:

“The philosophy of the divine right of kings died hundreds of years ago, but not, it seems, the divine right of inherited markets. Some people [IOUs and regulators for example] still believe there’s a divine dispensation that their markets are theirs – and no one else’s – now and forevermore. It is an old dream that dies hard, yet no businessman in a free society can control a market when the customers decide to go somewhere else [under EWPC-AF for example]. All the king’s horses and all the king’s man are helpless in the face of a better product. Our commercial history is filled with examples of companies that failed to change in a changing world, and became tombstones in the corporate graveyard.”

Under the new situation, regulators will go back to the good old days of doing almost nothing, when a virtuous circle existed that led to rate reductions year after year. That is I believe something that President Obama, Secretary Chu, DOE staff and State regulators must understand as soon as possible.

Best regards,

José Antonio Vanderhorst-Silverio, Ph.D.
EWPC System Architect