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November 2, 2007
NEM Fall Industry Leadership Roundtable

NEM's Fall Industry Leadership Roundtable will be held November 15-16, 2007, in Green Bay, Wisconsin at the offices of NEM Executive Committee member Integrys Energy Services. This meeting is open to all NEM members and prospective members as well. The Agenda can be viewed at this hotlink.

Many of the issues that are before Commissions throughout the country will be addressed and your input on NEM's positions would be greatly appreciated. Additionally, the dinner on Thursday evening will be held at Curly's Pub at the famous Lambeau Field.

NEM negotiated discounted room rates at the Ramada Plaza Green Bay at the rate of $84/night. You must call the Ramada at 920-499-0631 and request the NEM rate (it is not available on the internet). Please register for the meeting using this hotlink.

Many thanks to Integrys Energy Services for hosting the meeting.

2008 NEM Meetings

NEM will hold its Winter Executive Committee and Policy Development Meeting on January 17 and 18, 2008, at the South Carolina Research Authority in Charleston, South Carolina for a third time. Hotel accommodations have been arranged at the rate of $109 per night at the Hilton Garden Inn, Charleston Airport, 5265 International Blvd., North Charleston, SC 29418. Please call (843) 308-9330 to make your reservations.

NEM booked the new Embassy Suites Hotel Washington D.C. Convention Center for the Annual Spring Membership Meeting and Restructuring Conference on April 29 and 30, 2008. Hotel accommodations have also been arranged at this facility located at 900 10th Street, NW, Washington, DC 20001. NEM has secured preferred hotel rates of $259.00 per night. Please call (202) 739-2001 to make your reservations.

Please call headquarters for sponsorship opportunities for the Spring Event as advertisements are currently being developed. Your attendance, participation and sponsorship of these events are needed and would be greatly appreciated as would your input on speaker invitations and discussion topics.

State of the Natural Gas Industry Conference

FERC issued an agenda for its upcoming State of the Natural Gas Industry Conference on November 6, 2007, beginning at 9:30AM. The conference will begin with opening remarks from Chairman Kelliher followed by three panel discussions. The first panel will focus on natural gas markets and their changing nature, newer sources of natural gas, exports/imports with Canada and Mexico and potential changes to the supply/demand balance. The second panel will examine LNG's role in U.S. gas supply, including LNG procurement, how to encourage contractual arrangements for LNG, and how our country's role in the LNG market is changing. The final panel will discuss natural gas infrastructure issues such as future infrastructure needs and financial/capital impediments to infrastructure construction. The full text of the Conference Agenda is available on the NEM Website.

FERC Decisions on "Shipper Must Have Title" and Capacity Release Rules

FERC entered into a settlement agreement with BP Energy Company and its affiliates for violations of posting and bidding requirements for capacity release (by "flipping," which is "repeated short-term releases of discounted rate capacity to two or more affiliated replacement shippers on an alternating monthly basis in order to avoid the competitive bidding requirement for discounted long-term capacity releases"), the shipper-must-have-title requirement, and the prohibition on buy-sell transactions that occurred in 2005-06. The Commission noted that BP's transactions affected the transparency of the secondary market for natural gas transportation and storage and also negatively effected its pipeline open access policies. The Commission stated that, "BP's flipping violations were particularly serious in nature. These transactions were a deliberate attempt to circumvent the Commission's rules requiring posting and competitive bidding for discounted, long-term releases of capacity." BP will pay a civil penalty of $7 million and implement a compliance monitoring plan.

FERC also entered into a settlement with MGTC for violations of the shipper must have title rule. The violations stem from a transportation agreement under which MGTC provides intrastate transportation service for Kinder Morgan that relies upon upstream transportation by MIGC under a transportation agreement between MGTC and MIGC. MGTC transported gas owned by Kinder Morgan customers and did not have title to the gas it transported on MIGC. The Commission noted that MGTC did not profit unjustly from the violations and the lack of demonstrable financial harm to third parties. MGTC will pay a $300,000 civil penalty.

The Commission noted in both cases that the companies' self-reporting and cooperation with enforcement staff were important factors in determining the penalty. The full texts of the BP Order and MGTC Order are available on the NEM Website.

Click here to view all past updates.
Ameren and ComEd File Electric Procurement Plans

As required by recently passed legislation, Ameren and ComEd filed electric procurement plans. The plans are for the period beginning June 1, 2008, and ending May 31, 2009, the period prior to the Illinois Power Agency assuming responsibility for electric procurement activities. The procurement plans apply to service to retail customers traditionally known as bundled customers. The law requires Ameren and ComEd to utilize an independent procurement administrator to conduct an RFP process to solicit offers to provide electric resources during the subject period. Ameren and ComEd's remaining contracts secured under the former auction process will expire on their natural termination dates. Additionally, Ameren and ComEd were required by law to enter into multi-year financial contracts to promote price stability. Ameren entered into such a transaction with Ameren Energy Marketing Company, and Exelon entered into such a transaction with Exelon Generation Company. The full texts of Ameren and ComEd's Procurement Plans are available from NEM headquarters.

Click here to view all past updates.
SB221 Passed By Senate

SB221 was passed by the Senate this week. The version of SB221 that was passed provides in relevant part for the continuation of a utility electric standard service offer. Rates in effect under the utilities' rate stabilization plans would function as a baseline to customer rates. Utilities could file an electric security plan or a market rate option, through which the standard service offer price would be determined by a competitive bidding process. However, the bill includes language permitting the Commission to "supervise and regulate competitive retail electric service provided to consumers by an electric utility" when needed to implement state policy.

The bill would require the Commission to establish energy efficiency standards applicable to electric utilities and also require utilities to provide 25% of "the total number of kilowatts of electricity supplied by the utility to any and all electric consumers whose electric load are located within the utility's certified territory" from advanced energy.

The bill would require electric utility disclosure in Commission proceedings of contract and agreement information between the utility, its affiliates and other relevant parties, subject to a Commission determination of its proprietary or confidential nature. It will also require the Commission to employ a federal energy advocate, whose responsibilities would include evaluating the state's electric utilities participation in an RTO.

The full text of SB221 Passed by the Senate is available on the NEM Website.

Click here to view all past updates.
Allegheny Power Default Service Program Proposal

Allegheny Power filed a proposed Default Service Procurement Plan with the Commission to establish the terms under which it will render provider of last resort (POLR) service beginning January 1, 2011, when its generation rate caps expire. Allegheny proposes to use a competitive procurement process to satisfy its POLR obligations. Allegheny will engage in separate procurements for each of four service classes, and it will procure load under the POLR RFP eight times between June 2008 and October 2010.

Service Type 10, comprised of residential customers, is proposed to be served through a combination of one-year agreements for 50% the POLR load, two-year agreements for 35% of the POLR load and three-year agreements for 15% of the POLR load. Service Type 20, comprised of small non-residential and street lighting customers, is proposed to be served through a combination of one-year agreements for 64% of the POLR load, two-year agreements for 27% of the POLR load and the PJM day-ahead and real-time spot market purchases for 9% of the POLR load. Service Type 30, comprised of medium non-residential customers and Penn State University, is proposed to be served through a combination of one-year agreements for 88% of the POLR load and the PJM day-ahead and real-time spot market purchases for 12% of the POLR load. Service Type 40, comprised of large non-residential and alternative generation customers, is proposed to be served through purchases in the PJM day-ahead spot and real-time spot market.

Service Types 10, 20 and 30 would have fixed quarterly generation rates and Service Type 40 would have hourly-priced generation rates. Allegheny also proposes to implement an Energy Cost Adjustment (ECA) rate to permit it to reconcile over- or under-collections of costs of POLR supply. The ECA will be adjusted quarterly for Service Types 10, 20 and 30 and monthly for Service Type 40.

Allegheny proposes to eliminate its Generation Rate Adjustment tariff page and permit customers to shop for competitive supply without switching restrictions.

To address potential rate shock at the expiration of its rate cap, Allegheny proposes to implement a voluntary rate mitigation plan in the event that the January 1, 2011, increase in generation rates results in a total bill increase that exceeds 25% for Service Type 10, 20 or 30 customers. The rate mitigation would take the form of a non-bypassable credit to limit the total bill increase to 25% on a customer class basis.

The full text of Allegheny Power's Filing is available on the NEM Website.

PPL to File Electric Rate Mitigation Plan

PPL announced its intention to file an electric rate mitigation plan next month. The PPL proposal will be for a five-year phase-in plan commencing next year. PPL customers would have the option to mitigate bill increases in 2010, "by making additional payments on their electric bill beginning in mid-2008 and continuing through the end of 2009. Funds from those additional payments, plus interest, would be applied to bills in 2010, 2011 and 2012."

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