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October 26, 2007
NEM Fall Industry Leadership Roundtable

NEM's Fall Industry Leadership Roundtable will be held November 15-16, 2007, in Green Bay, Wisconsin at the offices of NEM Executive Committee member Integrys Energy Services. This meeting is open to all NEM members and prospective members as well. The Agenda can be viewed at this hotlink.

NEM negotiated discounted room rates at the Ramada Plaza Green Bay at the rate of $84/night. You must call the Ramada at 920-499-0631 and request the NEM rate (it is not available on the internet). Please register for the meeting using this hotlink.

Many thanks to Integrys Energy Services for hosting the meeting.

2008 NEM Meetings

NEM will hold its Winter Executive Committee and Policy Development Meeting on January 17 and 18, 2008, at the South Carolina Research Authority in Charleston, South Carolina for a third time. Hotel accommodations have been arranged at the rate of $109 per night at the Hilton Garden Inn, Charleston Airport, 5265 International Blvd., North Charleston, SC 29418. Please call (843) 308-9330 to make your reservations.

NEM booked the new Embassy Suites Hotel Washington D.C. Convention Center for the Annual Spring Membership Meeting and Restructuring Conference on April 29 and 30, 2008. Hotel accommodations have also been arranged at this facility located at 900 10th Street, NW, Washington, DC 20001. NEM has secured preferred hotel rates of $259.00 per night. Please call (202) 739-2001 to make your reservations.

Please call headquarters for sponsorship opportunities for the Spring Event as advertisements are currently being developed. Your attendance, participation and sponsorship of these events are needed and would be greatly appreciated as would your input on speaker invitations and discussion topics.

EIA Electric Power Annual 2006

EIA released its Electric Power Annual 2006 report this week. EIA reported that the average retail price of electricity for the total electric industry for all sectors increased to 8.90 cents per kWh in 2006. The average price by sector for the total electric industry was as follows (cents per kWh): residential - 10.40; commercial - 9.46; and industrial - 6.16. Notably, the average retail price of electricity when supplied by energy-only providers for all sectors was 7.66 cents per kWh. The average price by sector from energy-only providers was as follows (cents per kWh): residential - 8.23; commercial - 8.36; and industrial - 6.25. In comparison, the average retail price of electricity when supplied by full-service providers for all sectors was 8.77 cents per kWh. The average price by sector from full-service providers was as follows (cents per kWh): residential - 10.36; commercial - 9.18; and industrial - 6.00.

The 2006 average delivered cost of fossil fuels used for electricity generation declined 7.1 percent from 2005 to 2006 to $3.02 per MMBtu. EIA reported that, "the cost of natural gas at electric power plants in 2006 was $6.94 per MMBtu, 15.5 percent less than the 2005 cost of $8.21 per MMBtu, but still 16.4 percent above the 2004 cost of $5.96 per MMBtu, and 94.9 percent above 2002 when the cost was $3.56 per MMBtu." Similarly, "the 2006 cost of petroleum was $6.23 per MMBtu, a 3.3 percent decrease from 2005, but a 45.2 percent increase from 2004 and an 86.5 percent increase from 2002."

The full text of the EIA's Electric Power Annual 2006 is available on the NEM Website.

Congressional Hearing, CFTC Recommendations and GAO Report on Energy Market Oversight

The House Agriculture Committee held a hearing this week to consider expansion of CFTC's authority and budget. CFTC Acting Chair Lukken testified at the hearing and recommended that the Commodity Exchange Act be amended so that, "upon a determination than an ECM [exempt commercial market] futures contract serves a significant price discovery function, the Commission would have four new authorities: 1) Require large trader position reporting for that contract; 2) Require an ECM to adopt position limits or accountability levels for that contract; 3) Require an ECM to exercise self-regulatory responsibility over that contract in preventing manipulation; and 4) Provide the ECM and the Commission with emergency authority over that contract." CFTC released a report this week detailing these recommended legislative changes.

The CFTC Report also discussed its intent to establish an Energy Markets Advisory Committee to conduct public meetings on matters pertaining to energy producers, distributors, market users and consumers as well as its intent to work with FERC to develop best practices for utilities and others that use NYMEX settlement prices as hedging instruments and benchmarks in pricing energy products.

Finally, CFTC announced a change in its recordkeeping regulations intended to clarify that traders holding reportable positions must keep information relating to those positions, including information on positions and transactions held or executed outside of the regulated market, and make the information available to CFTC upon request. The amended regulation is also meant to clarify what constitutes hedging activity regarding a reportable position. The full texts of the CFTC Congressional Testimony and the CFTC Report on ECMs are available on the NEM Website.

GAO issued a report recommending that Congress, "consider further exploring whether the current regulatory structure for energy derivatives, in particular for those traded in exempt commercial markets, provides adequately for fair trading and accurate pricing of energy commodities." GAO also offers three recommendations for CFTC. First, it recommends that CFTC examine whether refinements to commercial and noncommercial categories in the Commitment of Traders reports would enhance the transparency and accuracy of public information available on trading activity in energy futures markets. Second, it recommends that CFTC examine ways to "routinely maintain written records of inquiries into possible improper trading activity and the results of these inquiries." Finally, GAO recommends that CFTC pursue methods to better demonstrate the effectiveness of its enforcement activities. The full text of the GAO Report is available at

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Commission Approves Competitive Declaration of ComEd Customers Between 100 kw and 400 kw

The Commission approved ComEd's petition to declare competitive the provision of electricity to retail customers with peak demand in the range of 100 kw up to 400 kw. State statute defines the terms under which a competitive declaration can be made: 1) the petitioner served at least 100,000 customers on December 31, 2005; 2) at least 33% of its customers with peak demand between 100 kw and 400 kw that are eligible to take the class of tariffed service instead take service from an alternative retail electric supplier; and 3) at least three alternative retail electric suppliers provide comparable service. The Commission found that ComEd serves approximately 3.8 million customers; that 43% of customers with peak demand in the 100 kw to 400 kw range are served by an alternative retail electric supplier; and that there are currently fifteen certified alternative retail electric suppliers to serve said customers. Therefore, ComEd satisfied the statutory requirements. The full text of the Order is available on the NEM Website.

Legislation and Rulemaking on Licensing of Electric Agents, Brokers and Consultants

The legislature passed SB1366 providing for the licensing of "agents, brokers, and consultants engaged in the procurement or sale of retail electricity supply for third parties." This legislation defines the term to include "any person or entity that attempts to procure on behalf of or sell retail electric service to an electric customer in the State." However, the legislation specifically excludes licensed alternative retail electric suppliers (ARES), a person acting exclusively on behalf of a single ARES provided that the exclusivity is disclosed, as well as those attempting to procure on behalf of or sell retail electric service to an entity with aggregate billing demand of its Illinois electric accounts in excess of 1,500 kW. Those required to be licensed as agents, brokers or consultants must disclose anticipated remuneration from third parties, maintain copies of marketing materials disseminated for at least three years, and refrain from the use of false or misleading materials amongst other requirements.

The legislation requires the Commission to establish licensing requirements pertaining to technical and managerial competence, financial reporting and annual reporting requirements. The Commission has announced that Staff will host a workshop to facilitate the rulemaking process and has requested that interested parties identify issues for discussion to be included in the workshop agenda. Requests to participate and comments should be forwarded to Staff at Further details about the date and location of the workshop will be forthcoming.

The full text of SB1366 is available on the NEM Website.

Click here to view all past updates.
Commission Approves Annual Aggregate Reconciliation

A provision of the partial settlement of Consumers gas rate case required that Staff would convene a collaborative to examine the current pool by pool reconciliation method and the possible move to an annual aggregate reconciliation method for reconciling gas deliveries and consumption. Collaborative participants included Consumers, MichCon, NEM and its members. As a result of the discussions, Staff reported to the Commission in favor of changing to an annual aggregate reconciliation methodology which is perceived as "fairer, accurate and competitively neutral." Additionally, Consumers and MichCon did not believe the change would cause operational problems and that a GCR impact would be at a minimum. The Commission considered Staff's recommendations and approved the change. Accordingly, Consumers and MichCon must file tariffs implementing the change within thirty days of the Commission's Order. The full texts of the Commission's Order and Staff's Report are available on the NEM Website.

New York
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Garry Brown Nominated to Serve as Commission Chair

Governor Spitzer announced that Garry Brown has been nominated to serve as the Chair of the Public Service Commission. Brown is currently the Vice President of External Affairs at NYISO. Brown previously worked for Sithe Energies, served on the Board of Directors of the Independent Power Producers of New York, and was a Senior Policy Analyst for the New York State Energy Office.

Click here to view all past updates.
Vectren Gas Base Rate Filing and Technical Conference

Vectren filed an application with the Commission to increase its gas delivery rates as well as alternative regulation plan proposals. Vectren proposes to transition toward a fixed variable rate design for its distribution rates from the current volumetric rate design. As part of that process, Vectren requests approval of a new Sales Reconciliation Rider to recover the difference between its actual base rate revenues and the revenues approved in its rate case, adjusted for customer additions. Also related, is Vectren's proposal to fund demand side management programs that could decrease the average annual use per customer. Vectren also proposes a Distribution Replacement Rider to recover costs associated with a twenty year infrastructure replacement program. As part of the infrastructure replacement program, Vectren proposes to assume ownership of the portion of service lines that are currently considered customer-owned upon their replacement, such as the property line-to-meter portion, including the riser.

The Commission has ordered that a technical conference be scheduled to discuss Vectren's filing. The conference will be held November 13, 2007, at 10AM in the Commission's 11th floor hearing room. The full text of the Vectren's Filing is available on the NEM Website.

Order on Duke Energy Rate Stabilization Plan

The Commission reviewed Duke Energy's Rate Stabilization Plan (RSP) settlement on remand from the state Supreme Court. The Commission found that the settlement should be rejected based on its determination that there was insufficient evidence that the parties had engaged in serious bargaining. This stemmed from the Commission's review of side agreements executed by certain parties that required their support of the Duke settlement and limited evidence of the supportive parties continued presence and participation in negotiations.

Because the Commission rejected the RSP settlement, it went back and reviewed the original RSP plan that Duke Energy had proposed. The Commission found that the original RSP, with certain modifications, provided Duke customers, "on a comparable and nondiscriminatory basis within its certified territory, a market-based standard service offer of all competitive retail electric services necessary to maintain essential electric service to consumers, including a firm supply of electric generation service." The modifications include not allowing the Rate Stabilization Charge as a portion of the POLR charge; increasing the generation charge from 85 percent of little g to 100 percent of little g; and not including environmental compliance, tax and homeland security costs in the POLR charge. The full text of the Order on Remand is available on the NEM Website.

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