This was a presentation made to the Berkeley China Review in April 2005

1. Unity in Diversity - A Third Way Alternative to Capitalism or Central Planning? Stephen Lee Technical Executive Power Delivery & Markets Electric Power Research Institute April 15, 2005 Berkeley China Review Seminar

10. UDi-ism (Unity in Diversity) Tier 1 Costs (Direct Costs) UDI Cost = Tier 1 Cost + Tier 2 Cost * Best UDI Decision Tier 2 Costs (Public Good) Decision is not optimal if Tier 2 costs are ignored

12. How Boom and Bust Cycles Can be Moderated by UDI-ism 3 Incentive Structures Scales = Economic Health Years The UDI profit motive would also dampen the boom and bust cycle of markets because the Tier 2 costs are typically long term and corporate governance would be influenced by Tier 2 stakeholders, i.e., States and residents who contribute Tier 2 capital in return for UDI capital ownership Tier 1 Short-term Profit Only UDI Profits Central Planning

15. Assumptions on Power Plant Types and Fuel Prices

16. Levelized Annual Costs to Determine Optimal Generation Mix without CO2 Cost CT (combustion turbines) Gas Coal

17. Levelized Annual Costs to Determine Optimal Generation Mix with CO2 Cost = $40/ton CT (combustion turbines) Gas Nuclear Fuel Cell Power Plants Comb Cycle

18. Levelized Annual Costs to Determine Optimal Generation Mix with CO2 Cost = $40/ton Load Duration Curve Hours of Operation Duration Per Year 0 Load (Electricity Demand) Area = Electric Energy Produced by FCPP

23. Market Shares of Producers A and B in a Normal Year

24. Market Shares of Producers A and B in a Normal Year With Water Costing $1 per gallon

25. Revenues of Producers vs. Cost of Water

26. Effect of Tier 2 Water Cost on Rice Shortage and Prices of Rice Price of rice went from $14 to $20

27. Economic Benefits of UDI-ism Over Each Five-Year Drought Cycle

35. Example Summarized State A State B State C Customers Customers Customers Transmission Company $7.98 $1.14 $13.68 $0.74 $2.12 $1.48 Keeps $18.46, was guaranteed $15.06