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October 28, 2005
Accent Energy Nominated to NEM Executive Committee

NEM is pleased to announce that Accent Energy has been nominated to the Executive Committee. Accent Energy is one of the nation’s fastest growing independent energy marketers serving natural gas and electricity customers from coast to coast. Accent Energy will be represented within NEM by Lance Schneier, Chairman and Chief Executive Officer, and Tony Barnhart, Senior Vice President.

NEM Fall Leadership Roundtable

NEM's Fall Leadership Roundtable was held last week in the U.S. Capitol. A standing room only crowd was privy to remarks from NYPSC Chairman Flynn and MADTE Chair Afonso on the importance of promoting the value of choice to consumers, regulators, legislators, press etc., particularly given expected high prices for energy this winter. U.S. Congressman Tim Murphy discussed important provisions of the federal Energy Policy Act. Maryland's Lieutenant Governor Steele (who has since announced his intention to run for the U.S. Senate) joined our VIP reception, noting his support of competitive markets.

Thanks to all of the members in attendance for a lively discussion of the pressing matters in our industry. A follow-up conference call on a NEM press initiative will be announced shortly. The presentations of Bob Block and Tom Tamarkin of USCL Corporation and Rick Jones of Intel Corporation highlighted the exciting implications of technology for energy consumers.

Many thanks to Kevin Swenke and Rob Roy of Excelergy for sponsoring the event.

Report on Wholesale and Retail Electric Competition

The Energy Policy Act requires a taskforce comprised of members from FERC, the Department of Justice, FTC, DOE and the Rural Utilities Service to submit a report to Congress on wholesale and retail electricity competition. FERC has issued a series of questions for comment in furtherance of this responsibility. Overview questions include:

1. What are the critical elements or attributes of competition in wholesale electricity markets that the Task Force should examine?

2. What are the critical elements or attributes of competition in retail electricity markets that the Task Force should examine?

3. What benefits have occurred because of competition in wholesale and retail electricity markets? What additional benefits are expected? What benefits were forecasted and have not occurred? Why? What harms have occurred because of competition in wholesale and retail electricity markets?

4. What are the major public policy concerns that the Task Force should examine in its review of competition in wholesale and retail electricity markets?

5. In what significant ways do wholesale and retail electricity markets differ from other energy or commodity markets? What implications do their differences have for public policy?

Comments are due November 18, 2005. NEM will convene a conference call this Monday, November 1, 2005, at 2PM EST to discuss its response. The conference call number is 913-643-5111 and the passcode is 209213. The full text of FERC’s Request for Comments is available on the NEM Website.

Rulemaking on Energy Market Manipulation

Pursuant to its authority under the Energy Policy Act, FERC issued a proposed rulemaking on energy market manipulation. FERC modeled its proposed regulations on the SEC's rule 10b-5 and its prohibition of manipulative and deceptive conduct. Under the proposed rules,

"It shall be unlawful for any entity, directly or indirectly, in connection with the purchase or sale of electric energy or the purchase or sale of transmission services subject to the jurisdiction of the Commission, or in connection with the purchase or sale of natural gas or the purchase or sale of transportation services subject to the jurisdiction of the Commission, (1) to use or employ any device, scheme, or artifice to defraud, (2) to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, or (3) to engage in any act, practice, or course of business that operates or would operate as a fraud or deceit upon any person."

The proposed rules would apply to "any entity," in other words not just jurisdictional market-based rate sellers, natural gas pipelines or holders of blanket certificate authority, but also governmental utilities and other market participants. The proposed rules do not create a private right of action.

FERC notes that its Market Behavior Rule 2, that also prohibits manipulative conduct, is retained for now. However, it will address the possibility of revising or repealing it in the future.

Initial comments are due November 17, 2005, and reply comments are due November 25, 2005. The full text of the NOPR on Energy Market Manipulation is available on the NEM Website.

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ALJ's Draft Decision on Demand Response

The ALJ in the demand response proceeding issued a proposed decision closing the proceeding. The proposed decision also directs that: 1) each utility must file a real time pricing tariff as part if its next comprehensive rate case as well as other price responsive tariff options including critical peak pricing and time of use pricing; 2) the Commission's Executive Director is to explore opening a rulemaking to develop customer friendly bill formats; 3) by April 3, 2006, staff is to prepare a set of draft protocols for estimating load impacts for price responsive and reliability demand response programs; and 4) staff is to conduct a workshop to study issues associated with developing cost-effectiveness tests for demand response programs and process options for developing the cost-effectiveness tests.

The proposal to require that any meter deployed as part of utility advanced metering infrastructure project include a universal, nonproprietary LAN to WAN bi-directional interface as a new minimum functionality requirement was rejected. However, this does preclude advocating this functionality at the individual utility level inasmuch as "minimum functionality criteria are just that, minimum criteria that are not meant to limit any party's ability to advocate for selection of a technology that incorporates additional functionality." The full text of the Draft Decision is available on the NEM Website.

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Commission Orders Detroit Edison Report on A&G Expenditures

The Commission noted a "remarkable" disparity in the administrative and general (A&G) expenditures of Detroit Edison and Consumers Energy based on their annual reports. "For the year ended December 31, 2004, Detroit Edison's total A&G expenditures were $523,947,785, while Consumers' electric total A&G expenditures were $125,189,532." The Commission further notes that the disparity is not confined to a single year. The Commission directed Detroit Edison to file a report explaining the higher A&G expenditures by December 1, 2005. The full text of the Order is available on the NEM Website.

Commission Orders Staff Report on Energy Efficiency Measures

The Commission directed Staff to report on energy efficiency programs currently being utilized in the natural gas and electric sectors in Michigan and elsewhere. "The Staff should identify what can be done to achieve gains in energy efficiency in Michigan within the Commission’s existing regulatory authority, as well as identifying other programs that could be implemented with appropriate changes in regulation. The Staff’s inquiries should include, but not be limited to, educational and technical assistance programs, utility rate restructuring, efficiency incentive programs, grant and loan programs or other innovative financing options." Staff must file its report by January 31, 2006, and conduct public meetings to receive feedback on its recommendations thereafter. Staff must file a subsequent report on the results of these meetings. The full text of the Order is available on the NEM Website.

New Jersey
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Order on 2006 BGS Auction

The BPU issued an order modifying the 2006 Basic Generation Service Auction Process as follows:

"For the supply period beginning June 1, 2006, the CIEP line will not change. Customers currently required, should they take BGS, to do so on a CIEP tariff (i.e., all customers in certain rate classes, as well as all customers above 1250 kW) will continue to be required to do so. All other customers will continue to be eligible to take BGS on an FP tariff or rate.

Beginning with the supply period that starts on June 1, 2007, the CIEP line will change. In addition to customers currently required, should they take BGS, to do so on a CIEP tariff, starting June 1, 2007, all customers above 1000 kW will be required, should they take BGS, to do so on a CIEP tariff or rate.

For the period June 1, 2006 to May 31, 2007, the retail margin will remain at a level of 0.5¢/kWh. All BGS-CIEP customers and all BGS-FP customers 750kW and above will be required to pay the retail margin."

The full text of the Order will be posted on the NEM Website when made available electronically.

New York
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NEM Comments on Staff's Metering Report

NEM noted Staff's recommendation that, “utility investments in advanced metering hardware and software should be allowed, and the Commission’s competitive metering policy should emphasize access to and use of metering data, and the fostering of greater competition in the provision of meter data services.” NEM cautioned that it would be inappropriate for utilities as competitors to be given: (1) a free technological competitive advantage, particularly while they are still engaged in other competitive markets, (2) a technology purchasing monopsony position, (e.g., the purchasing decisions of a handful of utilities can have a significant impact on the competitive landscape of the future of these and related technologies), and (3) the market power to select the next round of technology “winners and losers” which could have a major “transformational” impact on the State of New York. NEM urged Staff to expand its definition of "Enhanced Metering Technology” (EMT) to include technology that is far superior than the decades old meters currently in place and yet currently available. Truly “Advanced Metering Technology” (AMT) on the other hand may require more rapid cost recovery provisions to offset the higher technology risks to make it a competitive use of capital in the shortest timeframe possible.

The full text of NEM's Comments is available on the NEM Website.

Mandatory Participation in NYPSC Power To Choose Comparison Chart Considered

Ron Cerniglia of the NYPSC's Office of Retail Market Development reports that the Commission's Power to Choose Web site for residential customers has been enhanced and can now be accessed directly via Cerniglia also states that, "due to concerns expressed by the public regarding the lack of pricing information as well as similar concerns expressed by others, that we may ask the Public Service Commission to direct ESCOs to provide this and other information each month so that the Power to Choose chart will be more complete," but, "we have decided to reach out one last time to the ESCO community, as Chairman Flynn did last Thursday at a NEMA Conference, to encourage full voluntary compliance." Cerniglia requests ESCO feedback on concerns with the site's current configuration, i.e., the display of the utilities' "price to beat" each month may not be an "apples to apples" comparison with ESCO offers. Cerniglia also offered to arrange a conference call in the next week to discuss the issue if it is thought to be useful.

NYPSC Staff Survey of ESCO Interest in Utility Commodity Contract Information Disclosure

Staff issued a survey to assess ESCO interests and requirements in utility commodity contract information disclosure that would contribute to the transparency of monopoly utility contracting, without unnecessary release of information that may be considered confidential to the contract parties. Staff requests proposals on: "(1) the types, frequency and format of data to be disclosed to ESCOs, (2) details of how this information will be used to benefit the competitive market, (3) why disclosure of such information will not be harmful to the utilities, their commodity customers, and contract partners, and (4) a process to provide access to this information (e.g., web site, etc.) and a process by which that data could be protected (where necessary) from unauthorized access, taking into consideration the utility resources needed to design and maintain such a process."

Responses are due November 18, 2005. Contact headquarters for a copy of draft comments. NEM will convene a conference call to discuss its response on Tuesday, November 1, 2005, at 10AM EST. The conference call number is 913-643-5111 and the passcode is 209213.

Click here to view all past updates.
PUC Rejects Columbia Gas Fixed Price Offering and Finds NEM Standing in the Public Interest

The Commission voted to reject Columbia's proposed Rider OSS. Vice Chairman Cawley stated, "It is apparent from the record that Rider OSS is a competitive offering, by either Columbia's utility marketing division or marketing operation, that exceeds its Supplier of Last Resort (SOLR) obligation, and, as such, it is likely to have an adverse effect on retail gas competition." Cawley further noted that, "parties have raised important issues about the competitive fairness of the OSS proposal, including but not limited, administrative cost assignment, rules applicable to delivery service, billing inequities, and code of conduct issues. Many of these same issues have been referenced as raising barriers to competition in the Report to the General Assembly on Competition in Pennsylvania's Retail Natural Gas Supply Market. It is therefore prudent to address some of these issues in the Natural Gas Industry Stakeholder process before potentially causing any harm to the development of competitive markets."

NEM is also pleased to report that the Commission voted to grant NEM party status in the case, contrary to the decision of the ALJ. Cawley stated, "To deny NEM's standing in this matter flies in the face of the public interest. NEM's participation would ensure that energy marketing companies, which otherwise would not be able to participate due to economic constraints, can enjoy the shared costs of advocacy and ensure their interests are heard."

The Commission's Motions in this case are available from NEM headquarters, and when final Orders are issued they will be posted on the NEM Website.

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