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October 18, 2013
NEM Fall Policy Leadership Roundtable

Please plan to attend NEM’s Fall Policy Leadership Roundtable to be held in Harrisburg, Pennsylvania on October 28-30, 2013. PA PUC Chairman Powell, Vice Chairman Coleman, Commissioner Cawley, Commissioner Witmer and Commissioner Brown are confirmed to participate as well as Staff. PA State Senator Gene Yaw, PA State Representatives Jeff Pyle and Bryan Barbin and Acting PA Consumer Advocate Tanya McCloskey will also participate. Other top State Officials and Stakeholders have also been invited. Registration is now available on the NEM website, and a special NEM rate of $139.00 per night is available at the Hilton Harrisburg (717-237-6408). The Agenda is available at this hotlink.

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Comments Sought on Supplier Billing

PURA was statutorily directed to conduct a review of the costs and benefits of supplier billing for all components of electric service and to report on this review to the General Assembly. In this regard, PURA has issued a series of questions for comment.

The questions are as follows:

“The following information is requested from the EDCs and the electric suppliers:

• Current billing practices for EDC customers receiving electric supplier service.
• Feasibility of electric suppliers’ billing of all components of electric service.
• The process and timeframe in which the EDCs would receive payment from electric suppliers for the EDC distribution charges on customer bills.
• Benefits and detriments to customers, EDCs and electric suppliers for the suppliers’ billing of all components of electric service.
• Tools and processes that would be necessary for electric suppliers to effectuate the billing of all components of electric service. Include the interactions that would necessary between the EDCs and the electric suppliers.
• Discuss statutory changes necessary to accommodate electric supplier direct billing.
• Other relevant information.

The following information is requested from the electric suppliers:

• Costs associated with the suppliers’ billing of all components of electric service. Include a discussion on the necessary resources to accommodate such a billing service.
• If already conducting billing in other jurisdictions, provide the following:
• sample copies of bills, notices, consumer rights, and terms and conditions;
• procedures for notifying customers of rate changes, including copies of sample notices and other written material used to notify customers of changes (variable and fixed rate customers); and
• method and frequency of issuing bills.
• Provide all information that would be included on bills, including customer contact information for billing questions.
• Explain how estimated bills would be determined and how often and under what circumstances estimated bills would be issued. Include any written materials that would accompany an estimated bill.
• Explain how customer requests for meter tests would be handled, and how customers would be notified of their rights in this regard.
• Describe how the following customer service obligations would be fulfilled:
• complaint handling and dispute resolution;
• collection process for overdue bills;
• termination process for delinquent accounts including notification requirements and the steps a customer may take to remedy the situation;
• compliance with the medical hardship customer special termination protections, including winter moratorium;
• forgiveness programs for hardship customers to help pay delinquent bills;
• process for notifying medical customers, customers that use life-support equipment, or a customer’s designated third party prior to weather events that could cause significant outages;
• the amount and process for charging late fees;
• how delinquent balances would be reported to credit rating agencies; and
• how customers would be notified of their rights with respect to bill adjustments.
• Discuss security deposit requirements from residential and commercial/industrial customers.
• Discuss the types of identification that would be required from new customers.
• Other relevant information.”

Comments are due October 31, 2013. The full text of the Request for Comments is available on the NEM Website.

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Retail Gas Market Conference

The Commission will convene its annual Retail Gas Market Conference to ascertain the gas utilities preparedness for the winter season. The Conference will take place November 5, 2013, at 2PM in the Commission's 16th floor hearing room. The conference will examine preparations made to meet winter demand and expected market conditions. The utilities are asked to provide infromation on costs of summer hedges for storage injection, other summer storage injection costs and the cost of any 2012-13 winter hedges for gas delivery. Also, information is requested on the costs and benefits of hedging for summer 2014 injections and other future periods given current gas pricing levels. Competitive suppliers are invited to participate as competitive conditions allow. The full text of the Notice of Retail Gas Market Conference is available on the NEM Website.

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MIPSC and Michigan Energy Office Release Draft Electric Choice Report

Following on Governor Snyder's Special Message on Energy and the Environment that was issued last year which charged the Commission and Michigan Energy Office with undertaking an information gathering process to formulate state energy policy, the third of four draft reports have been issued on the subject of electric choice. The Report discusses issues associated with three different electric choice policy outcomes, namely adjusting the current 10% shopping cap; moving to full regulation; or moving to full customer choice or full deregulation.

Policy considerations attendant with adjusting the shopping cap were described in the report as, "Should a modification to the cap be implemented, policymakers may consider the level of the adjustment to the cap as well as the possible implications of such an adjustment. In consideration of the adjusted cap, there could also be the potential of setting separate caps for different classes of customers. Policymakers could also consider granting the MPSC the authority to adjust the cap, which may provide for increased flexibility and responsiveness in the long run administration of the program. Although not required, policymakers could consider and address the additional loss of full-service load that a regulated utility may expect to experience and how the loss of such load should be handled for ratemaking purposes. Examples of these considerations may relate to the possible provision for immediate rate relief for large volume losses to customer choice or alternatively the requirement that a utility not be able to project customer choice load loss as part of a rate case before the loss has materialized. This option assumes that the generation assets of any affected utility operating under an adjusted cap would remain regulated by the MPSC, although that may be a policy consideration depending on the cap amount and other factors. Policymakers may also be confronted with issues related to allocation of certain types of costs to full-service customers versus all customers, including those on choice."

Regarding a move to full regulation, the report identifies these policy considerations: "A decision to move to full regulation would require policy considerations regarding the implementation process. Specifically, it would be necessary to determine what would be done with customers currently taking service from an AES. There are many paths that could be taken during the transition to full regulation. Customers being served by an AES could be allowed to continue the service through the end of their contract or could be asked to go back to full service by a certain date. Policymakers could also consider allowing current choice customers to remain on choice until a time when they choose to take full service from the utility, simply closing the door to new entrants. This provision could also be extended to customers currently waiting to move to customer choice. Although not presented in the public comments, policymakers should be aware of and consider the potential impact and ramifications of interference with contracts within a move to full regulation (or decrease of the 10% cap). The provisions outlined above may or may not impact current choice contracts in such a transition. These are just a few of the many possible paths policymakers could take to transition to full regulation."

Finally, with respect to a move to full customer choice or full deregulation (no regulated rate option), the policy considerations identified in the report include: "A move to full deregulation (no regulated rate offering) is an option that requires considerable policy consideration. The main points of consideration would be whether or not to require the divestiture of generation assets and the treatment of stranded costs, if applicable. Policymakers could consider requiring the divestiture of generation assets, whether such divestiture is to an unregulated affiliate of the utility, spun off to create a new public entity or a sale to an independent party. In lieu of this, divestiture may not be required but could be incentivized by other policy considerations. Should divestiture be required, policymakers may need to consider the treatment of stranded costs and whether these costs would be allowed to be collected from customers. In addressing stranded costs, policymakers may consider the option of allowing for securitization of the assets. Given the potential impact of the collection of the stranded costs, policymakers may also give consideration to temporary rate freezes or other rate structures for the default provider during this transition period."

Comments on the report should be submitted by November 1. The full text of the Electric Choice Report is available on the NEM Website.

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