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Eliminating the California Power Crisis with an "Intelligent Knowledge Management" Energy System

By GILLEM LUCAS

Solutions Coordinator of APARIQ, INC. (written during the electric utility energy crisis in California in 2001)

California has been looking for LOVE (less offensively valued electricity) in all the wrong places. This document will describe an "Intelligent Knowledge Management" process that should ultimately eliminate the California Power Crisis and mitigate the probability that the Power Crisis will ever return again in the magnitude of the present California Power Crisis, even as the cost of energy increases, the population in California continues to expand, and the competition for electricity outside of California increases.

As California mortgages its future and potentially the short term economic viability of America, few have recognized that the basic recovery tools and the fundamental approach for full recovery are available. The solution to this crisis partially lies in the unleashing of one of the largest knowledge sharing programs ever associated with the electric utility market and the usage of electricity.

The approach proposed in this document does not replace or preclude any actions or plans that might be in motion regarding the construction of new power plants or the ownership of transmission lines. This document addresses the ability to change the demand side of the California Power Crisis and complement those actions being taken to increase the availability of electrical power from the supply side.

This document is best viewed on a web browser, so that the hyperlinks can be used to quickly move to topics of interest within the document, move to other Internet sites referenced by the document, and enlarge the thumbnail pictures by clicking on the pictures. The concepts and the proposed "Intelligent Knowledge Management Process" will be described in this document and perhaps enhanced in sequel articles that may appear on the APARIQ website http://www.apariq.com as comments are received by APARIQ.

California and U.S. Department of Energy are Concerned about Power Shortfalls

On 29 March 2001, U.S. Department of Energy Secretary Spencer Abraham wavered again on the Bush administration stance that California's energy crisis was primarily the responsibility of state officials to solve. "California is likely to be about 10 percent short of the electricity to meet peak demand while maintaining a minimum amount of emergency generating capacity in reserve, according to some analysts." (Washington Post 3/30/01, http://www.washingtonpost.com). While the Federal Government would like to claim that California's power shortfall is California's problem, many realize that the California's problem could adversely affect the entire U.S. economy. The major newspapers in the U.S. have continued to track the concerns of California and the U.S. Department of Energy.

"California May Face Cash Crunch Despite an Electric-Rate Increase

"California's controller warned that the biggest electricity-rate increase (about 46%) in the state's history, approved Tuesday by utility regulators, won't produce enough revenue to prevent a multibillion-dollar cash crunch and that the state risks tipping into a deficit by October.

"Saying that the state government faces 'extraordinary exposure' to power costs it cannot control, Kathleen Connell said that despite the $5-billion-a-year rate increase and plans to float billions of dollars of new bonds (read California consumers will have to pay the interest on the bonds through higher taxes later and are basically mortgaging their future), California will have a 'cash flow deficit' that could force it to cut spending on other programs to make ends meet." (Wall Street Journal 3/29/01, http://www.wsj.com)

If There Isn't Enough Power and California is Headed Toward a Cash Crunch or Worse, What Can Be Done?

Consumers always have adjusted their buying habits in response to market prices that reflect real costs. If California is headed toward a cash crunch at current fossil fuel prices, the situation is only going to get worse as the demand for fuels for electric utilities goes up in the world and the price of fossil fuels is driven up. The world does not have an endless supply of fossil fuels and the average price of fossil fuels is rising. Even if we did have an endless supply offossil fuels that could be burned to provide ever increasing demands for electrical power in a world of growing population and higher energy uses, it is hotly debated whether our atmospheric temperature could withstand dramatic increases in carbon dioxide along with reductions in rain forests throughout the world. California may mortgage its future for the next few years, but the problem will continue to recur unless we start using some of the powerful knowledge sharing tools that can put California and America on a sustainable path of electric power stability.

The remainder of this document addresses a simple knowledge sharing process that can be implemented, along with prudent construction of more transmission lines, more power plants, increasing the efficiencies of current power plants, better scheduling of maintenance outages among independent power producers, changing the rate setting structures, and host of other initiatives already in progress. While simple in overall concept, the successful implementation with not be without challenges.

Combining Cable TV, Satellite TV, the Internet, Uniform TOU Billing, Actual Electricity Costs, and Web-Portal Knowledge Sharing

Through the combined use of installed cable television, satellite television, the Internet, uniform time of use ("TOU") electric power billing, actual electricity costs, projected electricity costs, and web-portal knowledge sharing; the demand curves for electricity will change.

As an example, the graph to the right (click to enlarge) was produced by EPIS, Inc. (http://www.epis.com) and shows the daily and weekly variances in $/megawatt-hour. Many organizations track and forecast the electric power demand/usage in the State of California and many other states. One should note that the daily power usage curves vary by day of the week, by time of the year, by region, etc. No single curve or graph of daily power usage correlates completely with all 24 hour cycles.

The graph to the left is a representative curve, that may vary in shape significantly, that shows when demand peaks, the cost of the last bit of electricity is astronomical. To make matters worse, as late as November 1, 2000 FERC only recommended the elimination of "the single price auction rule" which pays all bidders (suppliers of electricity) the price paid to the last seller whose output is needed to clear the market.

The combination of the "hockey stick" shape for the cost of power during peak periods (shown in the graph above) and the diurnal variations in demand for power can dramatically change the actual average cost of power averaged over half-hour intervals during any given day. Given this phenomenon and a requirement that the consumers ultimately will have to pay the real cost of power, then there are several ways to lower the average real cost of power from the suppliers. Build more power plants which takes a long time, build more transmission lines which takes a long time, and selectively flatten the daily demand curves so that the most expensive power is not required.

Retailers Learned Long Ago that Many Shoppers will Change their Buying Behavior and Shop during Advertised Sales

While some consumers seem to be insensitive to pricing and purchase what they want, when they want it. Many consumers selectively pay attention to the price of goods and services. On Sunday's before retail sales and automobile sales, newspapers are filled with advertisements for the various sales and consumers change their buying habits. Large retail changes like Wal-Mart, K-Mart, and Costco/Price Club draw a set of consumers that might be characterized by bargain hunters, and K-Mart recently resurrected its famous "blue light special" to entice consumers to suddenly buy when the prices are low.

PREMISE: Consumers will Change the Way that They Use Electricity when A Useful Electric Power "Intelligent Knowledge Management" System is Available and All Electricity Consumers are Charged Based Upon the Real Cost of Electricity by the Time of Use ("TOU").

Similar to the retail market, consumers will change their behavior:

If they have useful information that provides a basis for prudent decisions, and
If the price of electricity to the consumers represents the real cost or projected real cost of electricity on a half-hour or quarter-hour time segments over the next 24 hour -96 hour period.

Cable television networks and satellite networks have the transmission bandwidth to provide short-term, near-term forecasts, and long-term forecasts of electrical power usage and rates. This same information could be made available over the Internet.

If consumers have the Internet web-portal ability to easily share their stories about and methods for reducing their electricity bills and their energy demand, then a key part of an "Intelligent Knowledge Management" Electricity Usage System would have been created.

PROPOSED ACTION PLAN:

General Step in Implementation	Desired Short-Term Results	Desired Long-Term Results
1. State of California ("CA") needs to select a coordinating company to guide the cultural changes within CA and the knowledge sharing to mitigate or eliminate the need for rolling blackouts in CA, now and in the future.	Get the program underway, in the right direction, quickly.	Ensure that the program is well coordinated, the positive effects from the program are adequately described, and metrics are put in place.
2. CA needs to make sure that both historical electric power usage and forecasted hourly power costs are made available to cable TV, satellite TV, and Internet capable companies.	Access the forecast information from those companies, like EPIS, Inc. and the utilities.	Make sure that the information that is available for electronic publication is as accurate and as timely as possible.
3. Convince a select number of cable TV, satellite TV, and a number of Internet capable companies (perhaps the utilities themselves) to carry the historical electric power usage and forecasted hourly power costs.	Make the information available to the public.	Hopefully, adequate numbers of the media companies will create energy shows that are analogous to the weather channel shows.
4. Change the way that all users of electricity are charged for their use of electricity to the actual cost of electricity by hour, and for those who do not have meters that allow actually measuring the usage by hour, charge them a flat rate that reflects the real cost of power averaged over the entire period.	Regulators must change the regulations to allow actual TOU charges, when the customer has a TOU meter. As long as the consumer does not have a TOU meter they will continue to be charged a flat real rate when they do not have a TOU meter.	Consumers must be educated that they can save 20%-40% on their electric utility bill, when they install a TOU meter and begin to change their energy use patterns..
5. Inform all users that they can lower their electric utility bill by at least 20-40% changing their electric utility meters and changing their patterns of use of electricity.	Get the word out about the potential savings	Suppliers, distributors and consumers will find innovative ways to lower energy consumption.
6. Encourage all consumers to share their innovations and practices that have provided them with the greatest savings, and provide prizes for those who share the most effective and most creative methods.	Provide prizes early and use low cost electronic advertising on the energy channels.	Develop a marketing, information, and knowledge sharing program, that is effective. Create a Web-Portal that will become a living knowledge forum for energy savings.
7. Create an entire "Intelligent Knowledge Management" Energy System approach that will allow CA to continue to improve up the interaction among the suppliers of electrical power, the distributors of electrical power, and the various consumers of electrical power.	Create and begin to implement the first phases of an "Intelligent Knowledge Management" Energy System Plan	This will be a living process that will improve and change as the needs and demands for electrical energy consumption changes in future years.
8. Share the approach, advantages and disadvantages with adjacent states and power providers.	The CA "Intelligent Knowledge Management" Energy System can become the basis for these communications	Ensure that the CA System links with the electric usage information and knowledge systems in other states.

A Long as There are No Real Financial Incentives to Conserve Energy or Change Energy Usage Patterns the Specter of Blackouts will Continue into the Future

While everyone wants the blackouts to end, the challenge associated with the building sufficient power plants and transmission lines will remain daunting. Few consumers want new power plants or new transmission lines in their backyards. Many electric utility companies have been sued by special interest groups over electromagnetic radiation from transmission lines. The current forces against matching adequate electric power supplies with growing demand are discouraging. The graph to the shows the near linear growth in the San Francisco Bay Area since 1940.

As long as goods and services that are in demand are priced below their real costs, the demand for those same goods and services will continue to exceed the supply. If suppliers, investors, and entrepreneurs believe that they receive a superior profit in a market, they will be drawn to the new market segment in sufficient numbers to dramatically change the technical and business approaches practiced in the new inefficient market.

Today there is no efficient energy saving knowledge sharing mechanism in place in California that can easily be accessed by many, even though many organizations have a bevy of valuable lessons learned. For example, how many organizations know that Eisenhower Hospital learned in the 1990's that they could substantially lower their air-conditioning costs and fuel costs in the summer by starting their air-conditioning plants much earlier in the day. Eisenhower Hospital learned that they had to run their air-conditioning systems at much higher levels to maintain required temperatures in the hospital, if they waited until the afternoon sun had heated the wings of their hospital to unacceptably high temperatures.

Large companies may hire energy conservation consultants and companies to lower their electricity demand because they are already being charged on a TOU basis, but few small businesses or homeowners have been given the incentives to look at their own small businesses or homes. During the summer months, how many homeowners in California turn down or turn off their home air-conditioners while they are gone in the day; because they forgot or never even thought about it. When the cost of electricity reflects its actual costs, then it may become more reasonable for many homes and small businesses to change the way that they consume electricity. This will not happen without financial pain and an overall public awareness that they do have choices and they can live a high quality life while changing the consumption patters of the way that electrical energy is consumed.

Our Clean Air and Environment Cannot Bear the Linear Growth of Old Technology Fossil Power Plants to Support our Population Growth

The aggressive and successful efforts to bring California into compliance with the Clean Air Act has limited the ability and desire to add new fossil power plants in California. The enormous public sentiment against nuclear power plants has essentially put a moratorium on the siting and building of new nuclear power plants across America. Renewable energy sources, such as solar and wind, serve a purpose, but they cannot meet the overall growth needs of the demand in California.

Even if sufficient new fossil electric power plants were being built, the questions remains, could the California air bear the additional loading of CO₂ and other hazardous air pollutants. As a society we must begin to place a value on everything so that we can, in this case, tradeoff our desire for adequate electrical power verses clean air.

The Choices in California are Clear, and Should be Guided by the California Leaders and an "Intelligent Knowledge Management" Energy Program

The choices (not all good choices) before California are:

1. Remain a net consumer of electricity, without sufficient power plants to support the needs of California

2. Continue to price electricity below its actual costs, and mortgage the future of California.

3. Keep homeowners and small business owners in the dark about how they can help conserve electrical energy, and do not provide useful "Intelligent Knowledge Management" Energy Support.

4. Do not give the ultimate consumers of electricity in California the necessary financial incentives to change their energy consumption behaviors.

5. Do not give suppliers and developers of innovative technologies and services the necessary financial incentives to enter the market with products and services that will help reduce the average electrical energy consumption per capita in California.

6. Do not tackle the California blackout problem from both the supply side and the demand side at the same time.

7. Create an overall business electrical power supply environment that will drive more businesses out of California, because they cannot afford to periodically afford to be inadvertently shutdown.

OR

The leaders of California can aggressively marshal the services and leadership necessary to initiate an adequate "Intelligent Knowledge Management" Energy Program to attack the current problems in California on the demand side, while continue to work toward prudent solutions on the supply side. Most of the technology and services to accomplish these goals are already available. The challenge is to bring them together and initiate the program.

The leadership of California must make some tough choices to eliminate the power crunch in California.

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