From: KHAN Ali -FIN PLANNING <[EMAIL PROTECTED]> Subject: Electricity restructuring in Canada Date: Wed, 24 Jan 2001 09:01:59 -0500 Dear LEADers I would like to thank Mehrdad for inviting us to participate in this discussion and to bring in the Canadian model/perspective to the table. I have been watching the debate from the sidelines up to now, given my current work commitments and time constraints. Both Adam and I (Ontario), and Gary Sandberg (Alberta) to a certain extent and another cohort from Manitoba Hydro have been at the centre of an on-going electricty restructuring and market opening process (there could be others involved in the process which I am not aware of). While I am tempted to write a long email explaining the phased-in restructuring that is in progress (with different timing and stages in different provinces) and its implications, I would like to hold my thoughts until a live chat is scheduled.......as this is an important issue with profound implications on sustainability. In the meantime, if I can find any articles summarizing pros & cons of the Canadian restructuring process, I will post it on the net. Best regards, Ali Khan (C4) Manager, Business Planning Ontario Power Generation Inc. 700 University Avenue, Toronto Ontario, Canada 416-592-4788 [EMAIL PROTECTED] -----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]] Sent: Wednesday, January 24, 2001 8:44 AM To: [EMAIL PROTECTED]; [EMAIL PROTECTED] Cc: [EMAIL PROTECTED]; [EMAIL PROTECTED] Subject: RE: California blackouts and conservation Dear Zoran, Vinnayak and other friends, I do enjoy this virtual chat and the opportunity to get back together (albeit without a drink or the rocky beaches of Vancouver!) for a continuation of our discussions... We don't really have any disagreements regarding the need for appropriate regulatory frameworks for utilities and - indeed - all other sectors (but it may be worth explicitly noting it here to avoid any assumptions or miscommunications about my position). You raised some important points from VDEW - but they don't seem to address security or sustainability issues directly. For example, the purpose of most utilities is presumably not to maximise employment but to generate electricity in an efficient way (otherwise, we should transparently indicate that part of the utility is some sort of a subsidised 'work programme' for which we could allocate some taxes, for example). You may also agree that not all the research & development has to be done 'in-house' or by each single utility provider. Outsourcing some R&D (or consolidated it under one jointly owned roof) does not seem to me a major threat to energy supply & related security issues. As you know, this approach to R&D is largely adopted by most other sectors already decades ago. And some of the increase in marketing expenditure, which hopefully includes improved customer service and dealing with people's complaints (in addition to 'fighting' for market shares etc), is perhaps not undesirable. In any case, none of the above addresses wider sustainability issues, such as reducing climate change impacts from this particular sector with the exception that increase in prices normally go hand-in-hand with improving energy efficiency which is surely needed in California! But perhaps I could close by inviting those of you more familiar with the Canadian 'hybrid' situation, where power generation is still 'owned by the crown' (is this the correct expression?) but an element of market pressure (benchmarking, etc) is introduced to improve efficiency. This is also an interesting model with its own pros & cons which may provide some useful insights and alternative choices for countries considering the privatisation option. Best wishes, Mehrdad (LEAD Europe, C7) Mehrdad Nazari Principal Environmental Specialist Tel: +44-20-7338 7729 e-mail: [EMAIL PROTECTED] > -----Original Message----- > From: Zoran Stanic [SMTP:[EMAIL PROTECTED]] > Sent: 24 January 2001 12:52 > To: [EMAIL PROTECTED] > Cc: [EMAIL PROTECTED]; [EMAIL PROTECTED] > Subject: RE: California blackouts and conservation > > Dear Mehrdad, > > How are you doing ? I am glad you are still interested in such an exiting > theme as global energy issues. > > I agree to some extent with your disucssion regarding energy markets > privatization and libaralization and the benefits you qouted. > > However, one has to be aware that energy has two distinct specifities that > should be taken into account when thinking about it's marketability: > > 1. It will never be a commodity just like any other (sugar, coffee etc.) > simply because its production base which is finite, unlike other infinite > commodities. > > 2. Because of its strategic importance it is very unlikely that > governments > will completely leave energy sector in the hands of private sector. It is > simply to risky as shown on numerous examples. > > Coming back to California example, I would agree to some extent with > Patrick > comments blaming "big bad private sector". > > Recent VDEW (German electricity association) report shows some ilustrative > privatized industry trends: > - significant cut in manpower resources > - significant cut of investments in new generation, transmission and > distribution capacities > - significant cut in R&D funds > - 200 % increase of investments in marketing etc. > > Above mentioned definitely does not improve security and long term > sustainabilty of energy supply as shown on California example. I am sure > you > have heard President's Bush comment saying that California should neglect > "unnecessary" environmental conditions in its atempt to secure enough > generation capacity in this emergency situation. > > The issue is very complex and very often only market benefits are > emphasised > whereas potential drawbacks are neglected (mainly by economists not > engineers), so I agree it is definitely valid theme for LEAD discussion. > Personaly, I would be happy to actively participate in it. CSD's new > meeting > is dedicated to sustainable energy supply and we will see the outcome. > > Best regards, > Zoran Stanic, C7 Europe > > Mr Zoran Stanic, MEM, EE > Environmental Development Coordinator > Hrvatska Elektroprivreda - HEP > Development Department > > UL. grada Vukovara 37, 10000 Zagreb > Croatia > > Tel: + 385 1 6322 857/6322 225 (secretary) > Fax: + 385 1 6170 478/6322 143 > Email: [EMAIL PROTECTED] > INTERNET: www.hep.hr > > > -----Original Message----- > From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]] > Sent: Monday, January 22, 2001 12:44 PM > To: [EMAIL PROTECTED] > Cc: [EMAIL PROTECTED]; [EMAIL PROTECTED] > Subject: RE: California blackouts and conservation > > > Dear Adam, > Thanks for your response which takes the more difficult route of not > simply > posting the blame on the 'big bad private sector' but looking more closely > at the issues which have contributed to the outcome in California. About a > year ago, we engaged in discussions on a similar topic during a most > interesting interregional session organised for & with C7 Associates from > CIS, Europe, and India (in Moldova & Romania: looking at Climate Change, > Joint Implementation, and the Hungarian experience in the energy sector > privatisation process). Reflecting on the session and the recent e-mails, > I > would like to express my agreement with Adam's comments and add the > following: > > The process of privatisation and deregulation, normally improving the > efficiency in the sector, does not automatically mean that energy becomes > cheaper to the end-users. Take the central and eastern Europe and the > former > Soviet Union. Although experience shows that energy production, transfer, > management, and capital allocation certainly becomes more efficient. > However, deregulation & privatisation often also result in erosion of > subsidies (hidden or open), improving payment collection, etc. The end > consumer may actually face an increase in costs (and the burden on > government coffers may be reduced). I also note that this may raise some > equity concerns (noted in a more recent e-mail from India) and that the > price paid by consumers in many parts of the world does not reflect the > 'true price' (including environmental externalities, such as climate > change > impacts, in addition to the 'true' production and distribution costs which > can be subsidised). This may be a suitable topic for discussion at the > upcoming international LEAD session for Cohort 9 in Pakistan? > > Cheers, Mehrdad (LEAD Europe Fellow, C7) > > Mehrdad Nazari > Principal Environmental Specialist > Tel: +44-20-7338 7729 > e-mail: [EMAIL PROTECTED] > > > -----Original Message----- > > From: [EMAIL PROTECTED] [SMTP:[EMAIL PROTECTED]] > > Sent: 19 January 2001 01:17 > > To: Patrick O'Heffernan > > Cc: [EMAIL PROTECTED] > > Subject: Re: California blackouts and conservation > > > > > > Patrick, > > > > I'm sympathetic to your plight and those of other Californians suffering > > through the "dangerous and colossal failure" that is California's > attempt > > at electricity market de-regulation. However, I must disagree strongly > > with > > your first statement. I would also suggest that we view this process as > > one > > of changing regulations, rather than de-regulation, which is a misnomer. > > All legitimate markets are regulated. Think for example of the New York > > Stock Exchange, or the Chicago Board of Trade's commodity exchange. > These > > "free markets" are heavily regulated, by state authorities, by the > > Securities Exchange Commission, by the body of contract law which > supports > > transactions, and, in the example of commodities, by product quality and > > safety standards. Many jurisdictions are changing the regulation of > > electricity markets to allow for competition; none are creating > > free-for-alls which provide for no protections. > > > > My understanding of the situation is that the California has a very > tight > > supply demand balance, with no new generation (clean or dirty) having > been > > developed in the past decade. Electricity transmission inter-connections > > into the state are constrained as are natural gas pipelines. In those 10 > > years, demand has grown considerably. > > > > When California restructured its electricity system it provided for > > wholesale competition, allowing the wholesale price for power to vary > > according to the forces of supply and demand. However, California did > not > > allow these prices to be passed on to consumers, shielding consumers > from > > efficient price signals. In efficient markets, remember, high prices are > > signals for scarcity; if consumers see high prices we expect them to > > modify > > their behaviour, reducing consumption during peak hours (e.g., turning > off > > the lights, washing clothes in the evening, and setting electric water > > heaters to operate during off-peak night-time hours). Since consumers > were > > insulated from these signals in California, we might have expected that > > they would have no incentive to conserve. A recent poll suggested that > > almost half of Californians felt that there were no problems with > > electricity supplies in the state. And why should they? They haven't had > > to > > pay the true cost of power; for the most part, they would have no idea > > what > > the situation was. > > > > At the same time, responding to political expediency, the California > > system > > operator imposed caps on maximum wholesale prices, providing further > > disincentives for generators to develop new supplies in the state. > > Combined > > with some of the most stringent siting requirements in the world, this > > situation has effectively barred the construction of new generation in > > California, where (as the current situation illustrates) it is needed > > most. > > > > Of course, it's complicated and I'm giving the counter-argument in > simple > > terms; but I hope you will agree that there is at least a > counter-argument > > to the one you presented. In any case, I'm sure we can agree that > > California has blundered, and blundered badly. > > > > In other jurisdictions, it has gone much better. In Australia, prices > are > > stable and declining since market restructuring and privatization. Also > in > > Scandinavia and Great Britain. In the United States, succesful market > > restructuring has already occurred in Pennsylvania, New Jersey, > Maryland, > > New York and the New England states. We're not seeing these stories in > the > > newspapers. > > > > If we want conservation, the most direct way to influence appropriate > > behaviour by consumers is at a minimum to allow them to see the true > price > > of the products and services they consume. > > > > In LEAD Canada, there are a number of us employed in the energy > industry. > > I'm sure we'd be delighted to continue this conversation. > > > > Regards, > > > > Adam White > > LEAD Fellow (Cohort 4) > > and > > Manager, Regulatory Affairs > > TransAlta Energy Corporation > > > > > > > > > > WHAT WE CAN LEARN. > > > > 1. Private markets work well for some things but not for a > > necessarycommodity like energy. Government regulation is necessary to > > preventpredatory supplier behavior (the power suppliers were willing to > > riskthe welfare and jobs of 40 million people and the sixth largest > > economyin the world to continue making obscene profits. > > > > 2. Conservation is absolutely necessary. > > > > 3. Sustainable economic development must include conservation of energy > > and alternative sources. > > > > 4. There is a sustainable business in energy conservation and > > alternative sources. > > > > 5. There are some lessons here that can be useful to LEAD, and > whichwill > > undoubtedly be taught when LEAD USA starts up later this year. > > > > > > > > Dr. Patrick O'Heffernan > > Director of Development > > LEAD International > > www.lead.org > > 415-721-0738 > > > > > > > > > > > > > > EBRD SECURITY NOTICE > > > > This Email has been Virus scanned by LDN1VS2 > > > ********************************************************************** > This email and any files transmitted with it are confidential and > intended solely for the use of the individual or entity to whom they > are addressed. If you have received this email in error please notify > the system manager. > > This footnote also confirms that this email message has been swept by > MIMEsweeper for the presence of computer viruses. > > www.mimesweeper.com > ********************************************************************** ********************************************************************** This email and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed. If you have received this email in error please notify the system manager. This footnote also confirms that this email message has been swept by MIMEsweeper for the presence of computer viruses. www.mimesweeper.com ********************************************************************** --------------------------------------------------------------------- Mulai langganan: kirim e-mail ke [EMAIL PROTECTED] Stop langganan: kirim e-mail ke [EMAIL PROTECTED] Archive ada di http://www.mail-archive.com/envorum@ypb.or.id
