The recent headline article in the Wall Street Journal, "ELECTRICITY PRODUCERS RUN SCREAMING FROM REALITY" identifies the predictable response to the marketing revolution in progress in the United States-a revolution that rivals both the Ma Bell break-up and the history of anti-trust in the United States.
The movement is characterized as "Restructuring," "Open Access Transmission" and in California as "Direct Access," meaning that consumers will be allowed to purchase their power from a competitive market rather than the monopolistic utility company whose wires service them.
The purpose of this paper is to offer a practical solution that undercuts the bewildering array of obfuscation being practiced by a multiplicity of self interests.
The Public Utility Commissions and legislatures of all of the states are being subjected to intense pressure to serve vested interests. Unfortunately, the vested influence is frequently proportional to their fiscal clout. Some of the David and Goliath forces arrayed against each other are:
Consumer groups: residential, low income, mobile home parks, chain stores, shopping centers, manufacturing and food processing groups, food production (irrigation), power marketers (aggregators) and many others with special interests or organizational ties
The electric power industry and those companies that have built their business supporting the industry, and are best served by sustaining the utility companies in their current monopolistic role.
This writer hastens to express sincere admiration for the objective work that has been done by so many participants in the restructuring process; however, all of the considerations advanced are "churning" because the system is unaware of - or not including - the digital-age solution presented herein. (In some instances this solution is known, but has been deliberately avoided because of competitive interests.)
In California the electric utilities have been generally ordered to split into to two functions-power generating, and power distribution. Power will be marketed through a complex structure which contains the Independent Systems Operator (ISO), a Power Exchange (PX), the Utility Distribution Companies (UDCs) which own and maintain the transmission and distribution lines, and Power Marketers (Aggregators). The UDCs, still monopolies, will receive payment for the power "wheeled" over their transmission and distribution lines to consumers-but they will remain under the control and oversight of the California Public Utilities Commission (CPUC).
The CPUC has established overall guidelines for the changes to come, and has encouraged interested parties to cooperate in the formulation of recommendations for optimum solutions to problems associated with the transitioning to Direct Access. A forum is provided for these discussions under the "Direct Access Working Groups" (DAWG), split into four committees, to examine portions of the problem. Although interrelated and overlapping, the committees are generating pro- and con- positioning and recommendations which will be compared, reworked, refined, and delivered to the CPUC and staff by the 30th of August.
The Electricity Revolution
Melvin L. Fuller
June 17, 1996
Page 2 of 4
There is great interest on the part of the UDCs to maintain their positions and to continue servicing consumers now connected to their systems. However, Direct Access means that consumers must have the right to purchase their power from the least costly supplier.
In California, competitive sourcing of power has been permitted by the CPUC for large consumers such as irrigation districts and large manufacturing plants. These consumers have been permitted to import less expensive electricity from sources other than the generating facilities owned by the utility company servicing them, by paying a "wheeling" charge to the UDCs transporting the power.
The DAWG committees have accepted the necessity for collective purchasing by aggregators for significant-sized businesses such as chain stores or organizations such as mobile home park associations, apartment owners, etc.
However, competitive pricing must be achieved for all consumers. Accomplishing this is a serious and complex business. It is the purpose of this paper to help introduce a paradigm in the metering process which will affordably convert all of the metering processes to digital data management.
For the full system to function smoothly, power from a generating source must be delivered to the national grid on a schedule that fits the usage curve of all consumers. This requires that the usage curve be known and predictable, and/or must be measured at short intervals, and the load forecasted so that the ISO can "know where the edge of the cliff is."
Digital technology and telecomunication are now so advanced that the complexities of a fully competitive market, for all consumers, can be accomplished. Changes will be required, but, as will be shown, redistributing the revenue from sale of electrical power by the introduction of competition will enable vast system improvements, and end the mismanagement by monopolies.
This paper describes a key ingredient to total system management, i.e., the Intelligent Utility Metering System (IUMS). The owners of this technology have made a generous decision to offer the technology, wholesale, to all meter manufacturing companies by delivering to them a proprietary digital printed circuit board which can retrofit all of their meters worldwide seamlessly integrating them into system-wide digital management.
The IUMS is so inexpensive and practical that Aggregators can, in exchange for a one or two year contract, afford to give all comsumers new meters-or by a less expensive route, establish a retrofit program that recycles reusable hardware, if freed from repressive "stranded costs." (Attempts to justify, save, salvage, and service antiquated metering systems which should have been fully depreciated and written-off years ago, must not be allowed to represent stranded cost. Justifying the continued use of these antiquated systems is like justifying the use of mechanical typewriters and XT computers today.)
The IUMS is capable of meeting the foreseeable future metering needs for all of the players; UDCs, Schedule Coordinators, the ISOs, PX's, and aggregators.
A sharp distinction must be drawn between functioning of the UDC as a distributor, and the UDC as an aggregator. It is anticipated that the UDC's will, under the new order, become competitors in the game of aggregation, but will find that there are many unclustered consumers who will, for their own reasons, want to use the services of competitors, e.g.,. consumers who will pay, extra if necessary, to buy "green" power, or to support their organizational grouping which will benefit from the available profits.
The Electricity Revolution
Melvin L. Fuller
June 17, 1996
Page 3 of 4
There are three basic services that virtually all Americans share-electric utility systems, telecommunications systems, and banking systems. The IUMS introduces a new player heretofore not involved, the banking systems as database managers. The IUMS incorporates the services of all three.
The IUMS provides for the display of any or all of its data to the consumer on an inexpensive monitor which plugs into any electrical outlet, as does an electric clock. Using its patented and proprietary software, the IUMS can interface by modem with any telecommunication system.
Key information can be down-loaded as often as justifiably necessary to a central processing facility. The information can then be made available on a need-to-know basis throughout the industry. Since banks already maintain such central data processing facilities, they can, with simple programming, add this capability to their systems. There is no requirement for any one bank to have exclusive authority or responsibility, but each will be required to compete with other banks for this function. The magnitude of the cash flow will make it practical and profitable for banks to provide significant benefits to consumers at all levels of management
Digital communications have become pervasive. In the interest of the public at large, public utility commissions can give the banks permission to access and download the stored meter data. It is recommended that the already installed telephone lines simply be integrated into the data handling process. A modem can be integrated into the meter by the meter manufacturer in concert with the communications companies. It is intended by this writer that competitive means of requesting and handling of download data be encouraged.
The banking industry is unusually well positioned to provide the data management needed to fully integrate the digital management of the power utility on a competitive basis. Consumer rights of ownership and the right to access, modify, and move all elements of customer data has evolved over years of inter-bank transfers. The UDCs may have systems in place for billing, etc., but billing in the conventional sense is also being revolutionized by the digital process. Further, the UDCs would have difficulty adapting to a competitive environment that could place them on an equal footing with banks.
In Summary - The technology exists to provide an even playing field, effectively solve or resolve the technical problems, and evolve a smoothly running and cost effective national power distribution system. The limits this writer sees are those which may be imposed by an unrealistic and unreasonable stranded cost recovery, and, of course, the human failing of greed and influence peddling.
(Melvin L. Fuller, Utility Systems Corporation, 12424 Main Street, P.O. Box 1020, Fort Jones, CA 96032. E-mail: mfull@snowcrest.net. Web site: http://www.snowcrest.net/iums/index.html)