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November 20, 2015
NEM Winter Executive Committee Meeting

NEM is pleased to announce that it will be hosting its Winter Executive Committee Meeting on January 20-22, 2016, at the Hyatt Regency Hotel in Orlando, Florida. During the Winter Executive Committee Meeting, we review our advocacy priorities for the coming year. A golf outing and welcome reception for members will be held on January 20, 2016. A block of hotel rooms has been reserved at an NEM Rate of $229. Please use this link for hotel reservations. Discount tickets to Disney World, Universal Studios and Sea World have been reserved for members. The Meeting will also include the new business speed dating feature that was introduced at our New England Energy Policy Summit. There is no fee for Executive Committee members to attend. Please use this link to register. A detailed agenda is forthcoming.

2015 Report on Enforcement

FERC's Office of Enforcement issued its annual report. Of particular note, "staff opened 19 new investigations while bringing 22 pending investigations to closure either with no action or through a Commission-approved settlement. During FY2015, staff negotiated settlements allowing it to recover a total of almost $26.25 million in civil penalties and disgorgement of nearly $1 million in unjust profits. These settlements also included provisions requiring the subjects to enhance their compliance programs, and periodically report back to Enforcement regarding the results of those compliance enhancements." The 19 investigations staff opened pertain to market manipulation, violations of the market behavior rules, tariff violations, gas capacity releases, violations of natural gas posting requirements, and false statements to the Commission.

In addition, "counting all pending federal court and ALJ litigation, as of the date of this report, staff is seeking to recover $544,600,000 in civil penalties and $42,242,999 in unjust profits through seven litigation proceedings."

The Report also shed additional light on the rationale behind the recently issued Connected Entities NOPR. "[T]his information will assist the Commission’s screening and investigative efforts to detect market manipulation by providing it with a more complete view of the relationships between electric market participants and the incentives underlying their trading activities. More complete information about market participants’ Connected Entities will also reduce the number of informal inquiries that DAS would otherwise have to conduct in response to false positive surveillance screen trips that may result from an incomplete picture of market participants’ incentive structures. The information should also assist the market monitors for the RTOs and ISOs in their individual and joint investigations of cross-market manipulation."

The full text of the 2015 Staff Report on Enforcement is available on the NEM Website.

FERC Requires RTO/ISO Reporting on Price Formation

FERC issued an Order requiring the RTOs/ISOs to file reports on price formation in their energy and ancillary service markets. Specifically, the reports must address pricing of fast-start resources, commitments to manage multiple contingencies, look-ahead modeling, uplift allocation and transparency. The reports should detail current practices and the status of any efforts to address the five issues. The reports are to be filed in seventy five days after which comments will be accepted. This will aid FERC in determining whether further action on the issues is warranted. The full text of the Order will be posted on the NEM Website when made available electronically.

Click here to view all past updates.
Revised Proposal on DTD Marketing Standards

The Department issued a revised proposal on door-to-door marketing notification and reporting requirements, including a Notice of Door-to-Door Marketing – Filing Template. Under the proposal, Suppliers would be required to file a Notice of DTD Marketing with the Department by 5pm the day before the start of a campaign. The notice would be required to include each city and town in which the Supplier expects to conduct DTD marketing the following day, as well as "backup cities" in which such marketing may occur. If exact dates of the DTD marketing campaign for a city or town are known, those dates may be provided and only one Notice then need be filed. Contact information of the supplier's employee overseeing the campaign would be required to be provided. A new notice would be required before the DTD marketing campaign could be expanded to additional towns or cities.

It is proposed that the Supplier be required to attest that it, or its third party agent, have obtained all required municipal licenses and permits and will comply with municipal notice requirements. The Supplier would also be required to attest that it, or its third party agent, have performed nationwide background checks for each person participating the DTD marketing campaign. Suppliers would be responsible for the actions/inactions of third party agents acting on their behalf.

The Department also requested comment on the information that should be covered in the background checks (e.g., criminal records history, Department of Justice sex offender records, social security number/address history locator).

It is proposed that Suppliers maintain a complaint database for complaints received during the DTD marketing campaign. The data would be retained for a year and provided to the Department upon request.

It is also proposed that suppliers and third party DTD agents adopt the following standards of conduct:
"1. All door to door marketers shall produce and display identification clearly stating the Supplier’s legitimate trade name and logo, and the marketer’s name, photo, and identification number.
2. Door-to-door marketers shall provide a phone number on request that the customer can call to verify the door-to-door marketer’s identity.
3. Door-to-door marketers shall identify the Supplier which he/she represents upon commencement of the sales call.
4. Door-to-door marketers may not represent, in any way, that he/she is affiliated with the local distribution company serving the customer."

Comments are due December 1, 2015.

The full text of the Revised DTD Marketing Proposal is available on the NEM Website.

Click here to view all past updates.
Commission Order on Fixed Rate Contracts with Pass Through Clauses

The Commission issued an Order in its inquiry into electric suppliers offerings of fixed rate products with pass through clauses. The Commission ordered that, "in all CRES contracts, whether residential, commercial or industrial, fixed should mean fixed." Accordingly, "on a going-forward basis, CRES providers may not include a pass-through clause in a contract labeled as 'fixed rate.' While CRES providers may continue to offer products containing pass-through provisions, they must be labeled appropriately as variable or introductory rates."

The Commission did recognize, however, circumstances arise over which an electric supplier has no control and no ability to hedge. The Commission explained, "that the fixed-means-fixed axiom should be balanced by continuing to permit regulatory-out clauses that would be available for CRES suppliers in very limited circumstances, which must be delineated in plain language in the clause. Regulatory-out clauses allow a supplier to revise a contract by proposing new contract terms to the customer. If the customer affirmatively consents to the new terms, the contract would remain in place with the new terms. However, customers could affirmatively reject or passively reject the proposed terms by inaction." Such regulatory-out clauses must be clearly and conspicuously stated in the contract, with any included acronyms being defined, and an explanation of the circumstances under which the clause may be invoked.

CRES providers must be in compliance with the "fixed-means-fixed guidelines in marketing of contracts by January 1, 2016.

The Commission found that consumers would benefit from the inclusion of certain definitions in the regulations and directed Staff to draft proposes rules and begin a proceeding toward that end. The Commission found that the following definitions should be utilized:

Fixed price: An all-inclusive per kWh price that will remain the same for at least three billing cycles or the term of the contract, whichever is longer.

Variable price: An all-inclusive per kWh price that can change, by the hour, day, month etc., according to the terms and conditions in the supplier's disclosure statement.

Introductory price: For new customers, an all-inclusive per kWh price that will remain the same for a limited period of time between one and three billing cycles followed by a different fixed or variable per kWh price that will be in effect for the remaining billing cycles of the contract term, consistent with terms and conditions in the supplier's disclosure statement.

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

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