Doctor Dan, the Econ Man.

Dan Hamblin has used economic theory and operations research methods to disclose impacts of policy and solve business problems for over 30 years. His doctoral thesis used the Slutsky Equation to predict how President Carter’s National Energy Act would change demand for luxury cars and other cars distinguished by size class.

During his career, Dan has

• managed interdisciplinary projects of the fire drill and multi-year variety – with as many as 25 scientists, engineers, and market analysts
• wrote and distributed an award-winning industry newsletter
• organized and hosted, as a turnkey operation, industry workshops at different conference sites
• directed impact assessments of a broadleaf herbicide and a transgenic grain

• built and applied energy forecasting/technology and policy assessment models for the residential and commercial buildings sectors; for industrial plants and processes including pulp and paper, glass, Portland cement, and petroleum refining; for generic and specific blast furnaces with competing techniques for reducing metallurgical coke consumption; and, for the U.S. Energy Economy

• developed and published programming algorithms.

In 2005, Dan developed Escalator P for managing 7x24 wholesale electricity, bilateral contracts for geothermal power. It uses a market-based pricing mechanism conceived by Mike Warwick, and a clustering algorithm Dan developed in 1980 – to predict the ratio of future stock splits for the Stock Market Game. Escalator P is a tool brokers can use to buy and sell geothermal at market-based wholesale prices. It determines a mutually advantageous green tag distribution and timing to reduce seller dry hole exploration and development risk and buyer risk from adverse selection and moral hazard. The clustering algorithm minimizes CFD settlement payments for this highly volatile wholesale price environment.

Escalator P manages or brokers the demand for geothermal electricity as a base load resource while it augments the return to supply through green tags. Without green tags, the competition for new base load power generation between combined cycle gas turbine and geothermal depends critically on the natural gas price and the O & M expenditure for geothermal. For a low-heat-rate gas turbine, and overnight and O & M cost data describing the Roosevelt Hot Springs Blundell geothermal plant in Utah, a nomograph discloses preferred regions for geothermal and CCGT, and a trading range between the two:

The nomograph competition for new base load generation is described in a paper Dan presented in September 2006 at the annual meeting of the Geothermal Resources Council. The paper tells how to use Mike Warwick's innovative pricing scheme and green tags to make money for geothermal supplier, utility, and power broker. You may also want to connect the dots between geothermal, natural gas combined cycle, and coal-fired generation by contrasting utility profitability from a coal and nuclear (low) base load power cost regime versus a natural gas-fired and nuclear (high) base load power cost regime.

Dan presented results of and conclusions from the base-load-power- cost-regime competition in a poster session at the INFORMS Winter Simulation Conference held in December 2006 in Monterey, California. His most stark conclusion was that, under current environmental regulation enforcement practice, California's accelerated Renewable Portfolio Standard will export pollution to states that generate and export electricity from coal.

In October 2007, Dan presented a paper written by Lance McKinzie and him to the First European Geothermal Review, sponsored by BESTEC GmbH in Mainz , Germany . A sequel to Dan’s September 2006 paper presented at the Geothermal Resources Council annual meeting, the new paper described a Latin Hypercube Sample diagnosis of Escalator P’s vulnerability to insurance hazards. These could (1) induce geothermal power producers or vendors to default on contract obligations before a contract matures, or (2) accommodate fraud by brokers who have better information about present and future wholesale electricity price than other contract stakeholders. Dan and Lance show how a simple expert system and a password-protected web site accessible to stakeholders and independent audit can eliminate the first hazard and expose evidence of brokerage fraud – in the real-time context of Escalator P’s contract management. In 2007, the U.S. Supreme Court (reversed itself and) sided with the EPA in ruling that changes in power plants that may contribute to air pollution, calculated on an annual basis, can be done only by permit. Further, a 2007 American Electric Power settlement agreed to pay at least $4.7 billion to reduce the utility’s chemical emissions by two-thirds over the next decade. The reversal and settlement, which occurred after Dan and Lance’s paper was completed, apply to electricity generated from coal, and should make geothermal more attractive, and Escalator P’s use for real-time contract management more attractive as well.

Dan can be reached at danhamblin@shadowprice.com.

DANIEL M. HAMBLIN received his Doctorate in Applied Economics from the State University of New York at Buffalo , where he was awarded three University Fellowships to support his graduate training. He earned Bachelor of Arts degrees in Mathematics and Economics with Honors from the University of Kansas , where he was awarded the Domenico Gagliardo Scholarship as the Outstanding Senior in Economics, the John Ise Scholarship for excellence in Economics, and elected to Pi Mu Epsilon--the National Honorary Mathematics Society. Dan was one of 40 junior faculty selected as post-doctoral program participants, to attend seminars describing recent developments in applied economics, conducted by business and economics faculty at the University of Chicago .

In 1979 and 1980, Dan enhanced the Stock Market Game software, by figuring out how to detect the value of stock splits from When Issued and When Declared prices on the ticker tape, and subsequently and automatically adjust game-player portfolios for the split. He also developed a simple program for discerning blocking factors on the Francis Emory Fitch stock price tape, thus solving a problem that had been a mystery and plague to other institutions trying to use the information. His version of the Stock Market Game was purchased by the Security Industries Association.

Before forming his own business, Dan was projects manager for Battelle Memorial Institute, research scientist and group leader for Oak Ridge National Laboratory (ORNL), and an Assistant Professor of Economics at the University of Wisconsin-Parkside. His interest and experience in simulation focuses on energy, technology, and policy issues. He has developed industrial process simulation models for EPRI and GRI, as well as optimizing simulation residential and commercial sector energy forecasting models for ORNL and the Bonneville Power Administration (BPA). Dan has led and conducted risk/benefit assessments of the need for electric power, broadleaf herbicide use, and bt corn; worked on assignment for the BPA Division of Power Forecasting; and developed models for BPA, the U.S. Department of Energy, the Northwest Power Planning Council, Ontario Hydro, EPRI, and GRI. Dan has led and participated in several projects related to technologies for electric power generation -- including micro- and miniturbine distributed generation systems, stationary fuel cell and hybrid systems, natural gas combined cycle and renewable energy systems. With Mike Warwick, in 2005 Dan developed Escalator P - a software tool for managing geothermal bilateral contracts.

Dan Hamblin & Associates, Inc. is in its eighteenth year - engaged in economic consulting, project management, business communications, and modeling and simulation. In addition, Dan offers independent services on a free-lance basis to business firms and institutions needing economic analysis, risk analysis, mathematical programming, systems analysis, and business communications' support.