With respect to the utilities provision of Standard Offer Service (SOS) for residential and small commercial customers beginning June 1, 2007, the Commission recently adopted an approach using two procurement seasons per year. The first season will procure SOS contracts starting in June 2007 and the second season will procure SOS contracts starting in October. The procurement is to incorporate laddering of varying contract lengths, not to exceed two years.

Staff will convene a meeting on November 21, 2006, at 9:30 AM to discuss the SOS bid process changes necessary to implement the Commission's Order. The meeting will be held in PHI's offices on the 12th floor of 10 East Baltimore Street. The full text of the Order is available on the NEM Website.

ConEd has filed a gas rate case for rates proposed to become effective October 1, 2007. As part of the application, ConEd proposes unbundling the gas procurement function into separate Merchant Function Charges (MFC) for supply-related and credit & collection/theft components as well as a separate billing and payment processing function. ConEd proposes to set the billing and payment processing charge at $0.94 per bill. By the terms of the proposed tariff, "Full service customers served under SC 1, 2, 3 and 13 will be charged an MFC that includes both components. For Firm Transportation Customers taking Service under SC 9, only those Customers whose Marketer/ESCO participates in the Company's Purchase of Receivables ("POR") Program will be charged the MFC, which includes only the credit and collections/theft component." ConEd's proposed MFC factors by firm gas service class are as follows:

SC1 and SC3 customers (full service) - supply related $0.0234; credit and collections $0.0217; total $0.0451

SC2H, SC2NH and SC13 (full service) - supply related $0.0106; credit and collections $0.0062; total $0.0168

SC9 (SC1 and SC3) (POR) (retail access) - supply related $0.000; credit and collections $0.0217; total $0.0217

SC9 (SC2H, SC2NH, and SC13) (POR) (retail access) - supply related $0.000; credit and collections $0.0062; total $0.0062

SC9 (SC1 and SC3) (retail access) - supply related $0.000; credit and collections $0.0217; total $0.0217

SC9 (SC2H, SC2NH, and SC13) (retail access) - supply related $0.000; credit and collections $0.0062; total $0.0062

The current Competitive Retail Choice Credit of 24 cents per dekatherm will be eliminated. ConEd is also proposing to unbundle uncollectible expense.

ConEd proposes to contine its Power Move program with certain modifications. ConEd proposes to add an additional functionality to its referral program to permit ESCOs to enroll customers. With respect to its POR program, ConEd proposes to: 1) discount the amount of sales tax purchased; and 2) change the treatment of disputed charges. ConEd proposes that disputed ESCO charges that are not resolved within 90 days of initiation of complaint or the date when the customer's account is closed (whichever happens first), be returned to the ESCO through a debit to the amount paid for the ESCO's receivable.

ConEd also notes its plan to file a proposal to stop hedging for its largest firm gas customers by the end of the first quarter of 2007. It also suggests that should the Commission require it to implement a revenue decoupling mechanism in this case, that it utilize a "revenue per customer method" of determining the level of revenues to be retained or passed back to full service customers. The full text of ConEd's Filing Letter and Proposed Tariff are available on the NEM Website and the Accompanying Testimony is available from NEM headquarters.

The Commission initiated a proceeding to: 1) review hedging practices undertaken by the electric utilities that affect their residential and small commercial and industrial customers; and 2) to facilitate utility commodity price transparency by examining appropriate levels of disclosure of utility supply portfolio price information and the elements that should comprise commodity charges to customers. NEM noted that the importance of this proceeding has been heightened by the recent ESCO price reporting requirements and the corresponding need to provide consumers with apposite and accurate comparisons to utility rates. This entails providing consumers with market-based unbundled utility rates and also disclosing how frequently the utility rate is subject to change, that the utility rate is subject to adjustment for true-ups, and what current utility rate adjustments are in effect. NEM argued that since hedging is a competitive commodity-related activity, that the cost of that activity should be reflected in the utility’s commodity rate rather than the utility's delivery rate. NEM recommended that utility hedges, if prudent, be of limited duration and be shareholder-funded. Month-ahead hedging until the utility exits commodity functions minimizes the anti-competitive impact of the status quo. NEM also submitted recommendations for the utilities retrospective disclosure of supply portfolio information. The full text of NEM's Comments is available on the NEM Website.

NYSEG submitted proposed tariffs pursuant to the Commission's electric rate Order to become effective January 1, 2007. The filing addresses NYSEG's delivery rates, commodity and transition charges for its Fixed Price Option, and unbundling of electricity prices. The full text of NYSEG's Compliance Filing is available on the NEM Website.