The Commission adopted an Order setting forth a plan to facilitate the removal of the Department of Water Resources (DWR) from its role of supplying electric power to retail customers. This is attendant to the examination of whether direct access should be reinstituted. The Commission approved the formation of a Working Group as a means for the DWR, the utilities, and staff to work out strategies for conducting negotiations with the counterparties to the DWR contracts. The Commission determined that the Working Group be responsible for proceeding with contract negotiations with the goal of removing DWR from all of its remaining contract obligations by January 1, 2010. The full text of the Order is available on the NEM Website.

The Commission determined to issue a proposed rulemaking to consider changes to gas utility security requirements, which had been identified as a barrier to marketer participation in retail access. The Commission proposes changes to balance marketers ability to provide adequate security with the utility's risk of marketer default. The proposed rules pertain to: 1) use of marketer accounts receivable in POR programs as fulfillment of some part or all of security requirements; 2) adoption of standard language for financial instruments used for security; and 3) reasonable criteria for utilities to use to establish the amount of security needed for licensing purposes. Comments on the proposed rulemaking are due sixty days after publication of the Order in the PA Bulletin.

The Commission also approved the revision of its Customer Protection Guidelines to allow for the termination of customer service for the failure to pay gas supplier charges for supply service under Commission-approved POR programs. The Commission granted the gas utilities an extension of time to file POR programs until March 31, 2009, or alternatively, to file cost of service studies in subsequent proceedings on rates.

The Commission is considering proposed revisions to its Provider of Last Resort rules, intended to address the issues raised by REP defaults during the summer. The proposed changes are intended to allow REPs "greater flexibility in offering competitive market based rates to customers as they are acquired in a mass transition." As such, it would, "afford the POLR an opportunity of acquiring new customers, as opposed to simply providing temporary service to customers who may not pay the POLR for service." The Commission is considering special measures to apply to customers in the event of mass transitions, such as charging those customers a lower rate than the emergency service rate for a temporary period and waiving the deposit requirement for that period. The Commission is proposing modification of the methodology of setting the MCPE as well. Comments on the proposed rule are due December 22, 2008.

NEM will convene a conference call on December 12, 2008, at 1PM EST to discuss the rulemaking. Use dial-in 913-643-5111 and passcode 209353. The full text of the POLR Rulemaking is available on the NEM Website.

NEM filed comments on the Commission's proposed changes to its Retail Electric Provider (REP) certification requirements. The Commission proposed to significantly increase credit and technical and managerial requirements for REPs. NEM suggested that, rather than impose unnecessarily burdensome credit requirements on marketers, that the Commission and the stakeholders focus on reforming the Provider of Last Resort (POLR) rules to protect consumers in the event of a REP default. In the alternative, should the Commission determine that some change to the REP rules must be made, NEM suggested that: 1) liquid capital requirements be scaled to marketer size, not length of service; 2) that an expansion of Option 2 type REPs be instituted to accommodate the smaller marketers that may otherwise be unable to meet financial and technical requirements. The full text of NEM's Comments is available on the NEM Website.