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November 23, 2010
NEM Winter Executive Committee Meeting

NEM's Winter Executive Committee will take place January 17-19, 2011, at the Doral Hotel and Resort in Miami, Florida. An agenda will be forthcoming. Many thanks to Doug Marcille and U.S. Gas and Electric for hosting the Winter Meeting. Hotel reservations should be made at this hotlink.

You may register for the Winter Executive Committee Meeting at:

NOPR on Integration of Variable Energy Resources

FERC issued a NOPR proposing changes to the pro forma OATT on the integration of variable energy resources (VER). Based on its finding that certain existing operational procedures are unduly discriminatory and lead to unjust and unreasonable rates for transmission service, the NOPR addresses transmission scheduling practices, VER power production forecasts, and the recovery of capacity charges associated with generator imbalance service (i.e., generator regulation service). Specifically, FERC proposes to: "(1) amend the pro forma OATT to require intra-hourly transmission scheduling; (2) amend the pro forma Large Generator Interconnection Agreement to incorporate provisions requiring interconnection customers whose generating facilities are VERs to provide meteorological and operational data to public utility transmission providers for the purpose of improved power production forecasting; and (3) amend the pro forma OATT to add a generic ancillary service rate schedule, Schedule 10—Generator Regulation and Frequency Response Service, in which public utility transmission providers will offer to provide regulation service for transmission customers using transmission service to deliver energy from a generator located within a public utility transmission provider’s balancing authority area." The full text of the NOPR is available on the NEM Website.

Order 743 on Definition of Bulk Electric System

FERC issued Order 743 directing the Electric Reliability Organization (ERO) (NERC) to revise its definition of the term “bulk electric system.” Specifically, "we find it is best for the ERO to establish a uniform definition that eliminates subjectivity and regional variation in order to ensure reliable operation of the bulk electric system. We further find that the existing NPCC impact test is not a consistent, repeatable, and comprehensive alternative to the bright-line, 100kV definition we prefer. By directing the ERO to revise the definition of “bulk electric system,” through the approach proposed by the Commission, or through an equally effective alternative proposed approach, the Commission is fulfilling its responsibility to ensure reliable operation of the grid.104 Any alternative proposal from the ERO must be as effective as, or more effective than the 100 kV threshold at ensuring facilities necessary for reliable operation are captured in the definition while also addressing the issues outlined in this Final Rule." The full text of Order 743 is available on the NEM Website.

Investigations into Pipeline Rates

FERC initiated investigations into the rates of two gas pipelines, Kinder Morgan and Ozark Gas Transmission, to determine if they are charging unjust and unreasonable rates. The investigations follow FERC review of the pipelines' Form 2 cost of service and revenue information for 2008 and 2009.

FERC estimates Kinder Morgan’s return on equity for calendar years 2008 and 2009 to be 27.10 percent and 29.25 percent, respectively. When the value of the excess fuel retained by Kinder Morgan is factored in, FERC estimates that Kinder Morgan’s return on equity for 2008 and 2009 was 27.10 percent and in excess of 29.00 percent, respectively.

FERC estimates Ozark’s return on equity for calendar years 2008 and 2009 to be 27.81 percent and 31.01 percent, respectively. When the revenue for the gas sold by Ozark is considered, FERC estimates that Ozark’s return on equity for 2008 and 2009 totals 27.81 percent and 31.01 percent, respectively.

The full texts of the Orders Initiating Investigation into Pipeline Rates of Kinder Morgan and Ozark are available on the NEM Website.

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