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December 5, 2008
Upcoming NEM Meeting Dates

NEM's Winter Executive Committee Meeting will be held at Infinite Energy/Intelligent Energy headquarters at 7001 SW 24th Avenue in Gainesville, Florida. The meeting will take place January 20-21, 2009. Please register at this hotlink. A block of rooms has been reserved at the Hilton University of Florida Conference Center at 1714 SW 34th Street, Gainesville, Florida at a rate of $139 per night. Contact 352-371-3600 for reservations.

NEM's 12th Annual Global Energy Forum & Membership Meeting will be held April 28 & 29, 2009. The meeting will be held at the Embassy Suites Washington D.C. - Convention Center located at 900 10th Street, NW, Washington, DC. Please register at this hotlink. A block of rooms has been reserved for NEM members at the rate of $279 per night. Contact 202-719-1421 for reservations.

FERC Order 712-A

FERC issued Order 712-A clarifying aspects of its capacity release rules. Of particular note, the Commission clarified the treatment of LDC capacity releases in the context of state approved retail access programs. The Commission previously determined that such releases would be granted exemptions from the prohibition against tying and the bidding requirements. In Order 712-A, FERC clarified that:
1- An LDC's consecutive short-term releases to a marketer participating in a retail access program will not be considered a long-term release subject to the maximum rate ceiling;
2- A marketer participating in a retail access program can re-release its capacity to an asset manager and qualify for the exemptions provided to an AMA, provided it meets the criteria of an AMA;
3- A marketer participating in a retail access program can use its released capacity to serve customers not part of the retail access program during periods when the capacity is not needed to serve retail access customers; and
4- Canadian provincial retail unbundling programs will be treated the same as state unbundling programs under Order 712.

The Commission declined to find that a wholesale supplier that obtained capacity as part of retail access program would receive the same exemptions from tying and bidding as a retail marketer. FERC said this issue could be taken up on a case-by-case basis. The Commission also declined to find that the tying and bidding exemptions for releases as part of retail access program applied equally to self-regulated municipals. The full text of Order 712-A is available on the NEM Website.

FERC Technical Conference on Credit and Capital Issues Affecting the Electric Power Industry

FERC will convene a technical conference on January 13, 2009, to discuss the impact on the electric industry of the current financial market situation. The conference will examine the specific issues of access to capital for normal business operations, credit practices in short-term markets, long-term capital financing of infrastructure replacement and new project development. The conference is intended to help the Commission and other stakeholders to better ascertain the financial health of the electric public utilities, the state of wholesale power markets and the development of infrastructure. A detailed agenda is forthcoming.

Click here to view all past updates.
Order on Removing DWR from Power Supply Role

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.

Click here to view all past updates.
Rulemaking on Gas Supplier Security Requirements and Decision on POR Programs

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.

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Provider of Last Resort Rulemaking

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 Comments on Proposed REP Rule Changes

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.

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