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October 30, 2010
NEM Sponsors Annual NARUC Conference

NEM is one of the sponsors of the 122nd NARUC Annual Conference. The Conference will take place November 14-17, 2010, in Atlanta, Georgia at the Omni at CNN Center. Please come by and visit the NEM booth. Contact NEM headquarters with any questions.

You can register for the NARUC conference online at

FERC NOI on Capacity Transfers on Intrastate Natural Gas Pipelines

FERC issued a Notice of Inquiry, "to consider whether and how holders of firm interstate capacity on section 311 and Hinshaw natural gas pipelines should be permitted to allow others to make use of their firm interstate capacity." The NOI stems from petitions for rehearing of FERC's APS/Sequent Order. The APS/Sequent Order found that the prohibition on buy/sell transactions applies to interstate open-access transportation services provided by section 311 and Hinshaw pipelines. The Commission had reasoned that, "the absence of a capacity release program for section 311 and Hinshaw pipelines means that their tariffs contain no provisions to ensure that capacity reassignments by shippers are transparent and non-discriminatory. In these circumstances, a blanket authorization of buy/sell transactions would allow holders of capacity on such pipelines to privately contract to allow another party to make use of their capacity without informing the pipeline or publicly disclosing the transaction. This, the Commission stated, would create the same potential for discrimination and inability of the Commission to monitor capacity reassignment which led to the adoption of the capacity release program as the sole method for capacity reassignment on interstate pipelines." However, the Commission would consider requests for waiver of the buy/sell transaction prohibition. The full text of the NOI is available on the NEM Website.

FERC Rulemaking on Credit Reforms in Organized Wholesale Electric Markets

FERC issued final rules on credit reforms in organized wholesale electric markets. The Commission determined in the final rules that:
1) each ISO/RTO must include tariff provisions to establish billing periods of no more than seven days and settlement periods of no more than seven days after issuance of bills.
2) each ISO/RTO shall reduce the extension of unsecured credit to no more than $50 million per market participant. For each ISO/RTO, a maximum level of $100 million of unsecured credit for all entities within a corporate family shall be established.
3) each ISO/RTO shall eliminate the use of unsecured credit in its FTR, or FTR equivalent, markets.
4) each ISO/RTO shall provide one of the following options: a) establishment of a central counterparty; b) requiring market participants to provide a security interest in their transactions in order to establish collateral requirements based on net exposure; c) another alternative to provide the same level of protection as "a" or "b"; or d) establishment of credit requirements for market participants based on their gross obligations.
5) each ISO/RTO tariff shall specify minimum participation criteria to be eligible to participate in the organized wholesale electric market, such as requirements related to adequate capitalization and risk management controls.
6) each ISO/RTO shall specify in their tariffs the conditions under which they will request additional collateral due to a material adverse change.
7) each ISO/RTO shall include in the credit provisions of its tariff language to limit the time period allowed to post additional collateral. Each ISO/RTO shall allow no more than two days to “cure” a collateral call.

The full text of the Credit Reforms Order is available on the NEM Website.

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