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December 22, 2006
NEM Winter Executive Committee Meeting

Please mark your calendars for NEM's Winter 2007 Executive Committee Meeting. It will be held January 18-19, 2007, in Charleston, South Carolina. Please register for the event using this hotlink. The agenda is also available online.

For those staying through until Friday, please indicate to headquarters your interest in participating in a golf outing that day OR taking a 30-45 minute tour of SCRA's facility that includes a snapshot of all the innovative things they are involved in doing (DoD initiatives, metals technology, homeland security, etc.).

A room block has been set aside at the Hilton Garden Inn (843-308-9330) for the January meeting at the rate of $92 per night. Reference the "NEM" block when calling. Alternately, you may also book online at www.charlestonairport.stayhgi.com and when it asks for group/convention code, enter "NEM" and the rate will be $92.

Many thanks to the South Carolina Research Authority for offering to host the meeting again this year.

FERC to Hold Conferences on Wholesale Power Market Competition

FERC has announced its intention to hold a series of public conferences on the state of competition in wholesale power markets in the coming year. The first conference is to take place in February. The conferences are intended to assist the Commission to address the debate concerning costs and benefits of wholesale power markets and whether these markets are just, reasonable and not unduly discriminatory. It is expected that the conferences will cover issues including federal-state cooperation, new infrastructure, demand response and renewable energy, availability of long-term contracts and market design issues. The scope of the conferences will include organized markets as well as bilateral contract markets.

Michigan
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Rulemaking on Consumer Standards and Billing Practices for Electric and Gas Residential Service

The Commission issued proposed rules pertaining to consumer standards and billing practices for electric and gas residential service. The proposed rules "apply to residential utility service that is provided by electric and natural gas utilities that are subject to the jurisdiction of the public service commission." The proposed rules define a "utility" as, "a person, firm, corporation, cooperative, association, or other legal entity that is subject to the jurisdiction of the commission and that provides electric or gas service for residential use."

The rules cover applications for service, deposits, meter reading practices, billing and payment standards, voluntary and involuntary termination of service, shutoff and restoration of service, and complaint procedures.

With respect to "non-tariff services" it is proposed that, "A utility may include charges for unregulated services, such as appliance repair or appliance protection programs, together with charges for gas and electric service on the same monthly bill if the charges for the unregulated services are designated clearly and separately from the charges for the gas or electric service and it is noted that it is an unregulated service. Failure to pay for unregulated service charges may result in the termination of that service but not the termination of the gas or electric service."

It is also proposed that utilities be required to provide, "to each customer, upon request, a clear and concise statement of the customer's actual energy usage, and/or weather adjusted consumption data for each billing period during the last 12 months. A utility shall notify its customers at least once each year by whatever method is used to transmit the customersí bills, that a customer may request energy usage and weather adjusted consumption data."

A public hearing will take place on January 31, 2007, and comments on the proposed rules are due Feburary 21, 2007. The full text of the Proposed Rules are available on the NEM Website.

New York
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Commission Clarifies NYSEG Electric Rate Order

A number of parties requested reconsideration of NYSEG's electric rate Order. The Commission reviewed the requests and: 1) upheld the determination that NYSEG offer a hedged portfolio default rate rather than a fixed price default service; 2) upheld the mechanism requiring NYSEG to forecast its nonbypassable charge for fixed price option customers in order to arrive at an "all in" fixed price although all other customers (including choice customers) will pay a variable nonbypassable charge; 3) granted NEM's request that NYSEG be required to provide notice of its intention to offer a fixed price option in 2008. NYSEG must provide notice to the Commission and active parties of its decision by September 1, 2007; 4) clarified that the fixed price option is to be available to demand metered commercial and industrial customers; 5) rejected the delayed transition from backout credits to merchant function charges; 6) clarified that a customer taking service under the EOSA option would not pay the Merchant Function Charge; and 7) clarified that its procedural approach to utility implementation of ESCO Referral Programs is not a concession of lack of authority to mandate such programs, and that given the failure of NYSEG's collaborative efforts to develop such a program, the utility was ordered to file such a plan. The full text of the NYSEG Order on Rehearing is available on the NEM Website.

Commission Affirms Decision that Central Hudson Not Offer Fixed Price Option

CPB had requested that the Commission reconsider its decision not to require Central Hudson to offer customers a fixed price product. The Commission rejected CPB's request. The Commission reiterated its prior finding that there is a competitive market in Central Hudson's service territory and that competitive suppliers are making fixed price offers to Central Hudson customers. The Commission also distinguished the recent NYSEG Order permitting a utility fixed price product as follows: "1) the NYSEG Order was based on different facts and circumstances, namely that NYSEG had been offering fixed price service for the last four years, ending the program now would be too abrupt for residential customers, and the market for residential retail commodity service in NYSEGís territory was not fully competitive; 2) the NYSEG Order expressly states that approval of a NYSEG-provided fixed price service is transitional in nature and for a limited period of time; 3) the NYSEG Order expressly reiterates the Commissionís belief/policy that 'customers will ultimately best be served by a competitive market for retail electricity service, in which fixed price offerings are provided exclusively by ESCOsÖ;' 4) unlike NYSEG, Central Hudson never offered an electric fixed price option; 5) unlike the situation in NYSEGís service territory, the Commission has determined that the market (with respect to gas service) is in fact competitive in Central Hudsonís service territory; and 6) no one in the NYSEG proceeding proposed a gas fixed price offer, and none was required." The full text of the Central Hudson Rehearing Order is available on the NEM Website.

Utility Plans on Customer Real Time Access to Utility Account Numbers

The Commission recently issued an Order directing the utilities to submit plans detailing what could be done to facilitate customers' real time access to their utility account numbers to facilitate choice enrollments at venues when the customer would not have their utility bill (i.e., shopping malls). This was prompted by a petition of Accent Energy.

O&R's plan entails implementation of a dedicated toll free number using Interactive Voice Response, to be available 24 hours a day, seven days a week. Customers would obtain their utility account number by entering their social security or tax identification number. If a match is not found or multiple accounts are generated, the call will be transferred to a call center representative. After normal business hours, the caller will be instructed to call back the next day. ConEd submitted a similar plan except in order to obtain the utility account number, customers would supply their social security or tax identification number AND zip code. The full texts of O&R's Proposal and ConEd's Proposal are available on the NEM Website.

Central Hudson proposes to provide customers with access to account numbers via its existing Integrated Voice Response Unit. A new menu option would permit customers to obtain their account number by entering the first four characters or the last name of the account owner, the last six digits of their social security number, and the zip code that corresponds to the service address. If no account match is found, the customer will be requested to contact the call center during normal business hours. The full text of the Central Hudson Proposal is available on the NEM Website.

NFG submitted a plan for the use of an "Online Access Account" website. NFG proposes that, "provided that an ESCO's kiosk has access to computer equipped with wireless or cellular internet access, Distribution envisions that customers will be able to access their utility account number by logging into the Online Access Account web site. Once the customer Online Access Account has been set up, a customer would be able to access account information using non-public identifiers other than the utility account number." However, first-time users of Online Access must first set up an account using their utility account number and service address zip code. The website would be made secure by requiring the user to provide a login-id (the customer's email address) and a password. The full text of NFG's Proposal is available on the NEM Website.

O&R Rate Proceeding

Because of the expiration of O&R's electric rate plan and related concerns that O&R's electric rates may be higher than necessary and may be unjustly enriching the utility, the Commission has required an examination of O&R's electric rates on an expedited basis. O&R was ordered to submit cost of service, rate base and capitalization schedules, sales forecasts and workpapers to support its calculation of earnings for the period ending December 31, 2007. Comments are due fifteen days after O&R submits its filing. The full text of the O&R Order is available on the NEM Website.

Pennsylvania
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NEM Brief in Equitable-Dominion Proceeding

NEM submitted a brief in the Equitable-Dominion proceeding arguing that Equitable failed to prove that the three Settlements executed by the different settling groups are in the public interest and will support the development of a properly functioning and effective competitive retail gas market in the combined utility service territories. In fact, certain provisions of the Settlements could result in significantly higher costs for customers and cause substantial harm. In the event the Commission approves the Settlements, NEM urged that it be done subject to the following modifications and conditions: 1) Equitable should be required to file an embedded cost based rate study and accompanying unbundled rates that properly allocate competitive commodity-related costs to competitive commodity-related functions; 2) Equitable should be required to give competitive suppliers with adequate notice of changes to its delivery system; 3) Any changes to the gas in storage accounting methodology should be filed in a base rate proceeding, and any resultant savings should be passed through to all consumers in a competitively neutral manner; 4) The consolidation of the capacity and commodity acquisition functions of the utilities should be examined in a base rate proceeding where the underlying cost allocations of these competitive functions can be fully analyzed; 5) Dominionís operational rules should be implemented on the combined utility system; 6) The agency program should be eliminated in all forms by a date certain and as soon as possible; 7) Dominionís choice program rules should be implemented on the combined utility system; 8) A stakeholder review process should be established with firm timelines for action and a Commission resolution; 9) Equitableís ALTRA system should be required to have the same functionality as Dominionís E-Scripts system; and 10) Marketers should continue to have the benefit of Dominionís on-system storage subsequent to completion of the transaction. The full texts of NEM and Other Parties Briefs are available on the NEM Website.

ANOPR on Implementation of Responsible Utility Customer Protection Law

The Commission issued an advance rulemaking on its implementation of the responsible utility customer protection law. The law is meant to protect responsible customers that pay their bills from rate increases caused by uncollectible accounts of customers that have the ability to pay their bills but choose not to. By this rulemaking the Commission is seeking to align different code sections pertaining to bill payments, termination and dispute resolution. The Commission is requesting comments on specific issue areas but encourages, "commentators to raise any matters or issues that they feel [were] overlooked or missed." Of particular interest are provisions relating to permissible grounds for termination of service as well as procedures by which utilities may assign liability for balances accrued in another party's name when restoration of service is sought. Comments on the ANOPR are due February 14, 2007. The full text of the ANOPR can be viewed at this hotlink.

Virginia
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DVP Proposes to End Retail Electric Competition

Virginia's Commission on Electric Utility Restructuring met earlier this week. Participants reviewed the status of competition in the state as well as trends across the country. Dominion Virginia Power noted its intention to file a proposal in the new legislative session to end retail electric competition. The proposal would lift rate caps in 2008 (two years early). DVP would be provided with a 6% margin above bond rates for its return on equity with the possibility of a higher return based on its performance to incent it to build new power plants and operate them efficiently. Large commercial and industrial customers would retain the ability to shop under the proposal.

Virginia SCC Staff participating in the meeting raised concerns with post-rate cap market conditions. "After the end of capped rates in 2010, should Virginia's homes and businesses face electricity prices based on, set by or primarily influenced by wholesale electric prices in PJM, prices for electric service could rise precipitously in the Commonwealth. While post-2010 market conditions cannot be known with certainty, post rate cap prices could be significantly higher than today's capped rate levels. At the same time, such higher electricity prices will likely yield extraordinarily high returns to certain base load coal and nuclear fired generating resources that currently serve Apco and DVP customers. To the extent that base load generating units remain inside the incumbent utility, such generating units will remain subject to Virginia state jurisdiction. As such, it would be possible for Virginia policymakers to mitigate, in a non-confiscatory manner, potentially high retail rate levels." To view materials considered at the meeting, use this hotlink.



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