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December 7, 2007
Watts Marketing and Management Services, Inc. Nominated to the Executive Committee

NEM is pleased to announce that Watts Marketing and Management Services, Inc. (WMS) has been nominated to NEM’s Executive Committee. WMS will be represented within NEM by CEO Otis Watts, Charles Dalphon, and William Siveter. WMS is a Baltimore, Maryland-based corporation that has been in existence for over 9 years. WMS is a customer acquisition company that provides a direct channel to customers through a door-to-door sales force with an expertise in the energy and telecom industries. WMS currently has over 20 clients nationwide and is one of the largest direct sales companies in the United States, focusing on the execution and management of successful customer acquisition campaigns. WMS has acquired over 500,000 customers for clients in the past 5 years.

2008 NEM Winter Executive Committee Meeting and Annual Spring Membership Meeting

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. Please register at this hotlink. 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. An agenda for the meeting is forthcoming.

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.

HR6 - Energy Independence and Security Act of 2007

Congress is poised to take action on several points of energy legislation in the next several days. The House and Senate are looking to combine previous large bills and roll them together into H.R. 6 – The Energy Independence and Security Act of 2007 (caution: large file). Both chambers of Congress have passed various amended parts of the legislation, and the final energy bill is taking shape, including legislation topics of renewable fuels and energy, energy efficiency and conservation, grid modernization, and energy investment. Amongst the many issues included in the legislation, several issues merit special attention:

1. Renewable Electricity Standard: A modified version of the Renewable Portfolio Standard, the bill contains language that would implement a nationwide mandate that retail electric suppliers must use an increasing percentage of renewable electricity. Starting in 2010, the federal government would require 2.75% of retail electric supplier’s base amount be generated by renewable energy resources. The percentage increases yearly until 2020, where it is capped at 15% and will remain there until 2030. There is also a section that lays out a “program to verify and issue Federal Renewable Energy Credits to generators of renewable energy, track their sale, exchange and retirement and to enforce the requirements of the [Federal Renewable Electricity Standards Program.]"

The legislation defines a retail electric supplier as “a person that sells electric energy to electric consumers (other than consumers in Hawaii) that sold not less than 1,000,000 megawatt-hours of electric energy to electric consumers for purposes other than resale during the preceding calendar year. For purposes of this section, a person that sells electric energy to electric consumers that, in combination with the sales of any affiliate organized after the day of enactment of this section, sells not less that 1,000,000 megawatt hours of electric energy to consumers for purposes other than resale shall qualify as a retail electric supplier. For purposes of the paragraph, sales by any person to a parent company or to other affiliates of such person shall not be treated as sales to electric consumers.” The legislation is also clear that the Renewable Electricity Standard is meant to work in conjunction with the states and that each state may “adopt programs or requirements that exceed the required amount of renewable energy or energy efficiency in this program.”

2. Smart Grid: The Energy Independence and Security Act of 2007 sets forth a pronoucement that the Congress supports the development of a “smart grid,” complete with distributed generation, demand response, “smart” technologies and appliances, advanced metering and real-time pricing. Because of this, Congress is directing the Assistant Secretary of the Office of Electricity Delivery and Energy Reliability to develop and a Smart Grid Task Force. This Task Force would release a report within two years with a status update, “recommendations for State and Federal policies, and actions helpful to facilitate the transition to Smart Grid.” While preparing the report, the Task Force will solicit advice from FERC, the National Institute of Standards and Technology (NIST), the Department of Homeland Security, and a Smart Grid Advisory Committee (also created by the legislation). The Director of NIST will also be responsible for developing a “Smart Grid Interoperability Framework.”

3. Energy Security: The legislation would reorganize the State Department to include a Coordinator for International Energy Affairs to “ensure energy security is integrated into the core mission of the Department of State.” This section also requires the State Department to submit a report about placing energy experts in key US embassies and adds the Secretary of Energy to the National Security Council. The legislation would also require the President to submit to Congress at every State of the Union a “comprehensive report about the energy security of the United States.”

4. Increase in Taxes/Elimination of Some Tax Credits: On the natural gas side, the bill would eliminate several of the tax deductions and credits associated with the Energy Policy Act of 2005. One such provision is the elimination of the treatment of natural gas lines as 15-year depreciable property. The legislation also adds an estimated $15.3 billion of new taxes on the oil and natural gas production industry.

Timeline/Bill Track: The combined legislation is being offered as a substitute amendment for HR 6, but will include all of the elements of the original bills. The latest version (which is still subject to change) of what is likely to be passed in the House of Representatives later today can be found here (new H.R. 6 – The Energy Independence and Security Act of 2007). The Senate is reported to be picking up energy legislation next week. President Bush is expected to veto the legislation due to certain elements such as tax increases, CAFÉ Standards, and wage requirements.

Commission Requires Technical Conference to Consider Columbia Proposed Revisions to Storage in Transit Service

Columbia Gas Transmission Corporation filed proposed revisions to its SIT Rate Schedule (“Storage in Transit”). Columbia maintained these changes were necessary, “to prevent customers from gaming the Rate Schedule to obtain longer term interruptible storage service in contravention of the intended use of that Rate Schedule as a short term balancing service.” The specific changes proposed by Columbia include: 1) an adjustment of Rate Schedule SIT eligibility requirements to exclude those shippers that obtain automatic balancing service through their firm no-notice storage service under Rate Schedules FSS/SST; 2) establishment of Imbalance Quantity cap for SIT shippers in an amount equal to 100,000 Dth; 3) imposition of a new Account Balance Charge against SIT shippers that exceed the Imbalance Quantity safe harbor; and 4) increasing the requirement that SIT shippers cross zero from twice every thirty days to once every ten days. NEM and Integrys Energy Services submitted comments urging the Commission to reject Columbia’s proposed revisions to its SIT Rate Schedule arguing that the changes are unnecessarily restrictive, have not been adequately justified and will significantly limit shipper flexibility on Columbia’s system.

The Commission has determined to suspend Columbia's filing to be effective May 7, 2008, pending the outcome of a technical conference to be convened by Staff. Columbia was instructed to be prepared to address the concerns raised in opposing parties' comments. The full text of the Order is available on the NEM Website. The full texts of Columbia's Filing and NEM/Integrys Energy Services' Comments are available on the NEM Website.

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Commission Report on Options for Re-Regulation and New Generation

As required by state law, the Commission submitted a report on options for re-regulation of Maryland's electricity markets and for securing new generation and transmission resources in the State. The Commission concluded, "it is not in the public interest to rely exclusively on market forces to deliver timely and cost-effective solutions to the serious, structural limitations in Maryland's electricity markets at this time," based on a projected shortfall of generation and transmission.

The Commission determined utility long-term contracting to be the best alternative to meet the State's electricity needs. The Commission will monitor upcoming capacity auctions, and unless existing and new generators substantially increase their committed electricity supply, order the electric utilities to enter into long-term contracts to "induce" electricity supply. This will be coupled with utility demand management and energy conservation programs.

The Commission rejected the notion of full re-regulation, utility ownership of all generation resources in the state. Even in the absence of legal barriers, full re-regulation would be prohibitively expensive with the fair market value of the Maryland generation fleet estimated at $18 to $24 billion.

The Commission also noted that it will soon decide on whether modifications to the Standard Offer Service procurement process should be modified to better serve customers. The full text of the MDPSC Report is available on the NEM Website.

Click here to view all past updates.
Electric Re-Regulation Legislation Introduced

As had been rumored for many months, legislation was finally introduced in the Michigan legislature to re-regulate the electric market. A package of 9 bills was introduced in the House that are tie barred together. Of particular importance, HB 5524 would institute a 90-day window to choose, followed by elimination of choice.

Additional bills pertain to: 1) File and Use (HB 5523) - would allow utilities to implement requested rate changes after 90 days of the request unless the PSC acts beforehand; 2) Deskewing (HB 5522) - would eliminate rate skewing for residential customers and require all customers to pay rates that reflect costs of service, with special provisions for schools and large industrials who can qualify for special contracts; 3) Certificate of Need (HB 5521) - would allow utilities to request up-front rate recovery approval for new investments in power plants, environmental upgrades to current plants, and power purchase agreements; 4) Plant Sale (HB 5520) - would require the utility to file for approval for sale of a power plant over 200 MW; 5) Municipal Procurement (HB 5384) - would eliminate the requirement that state municipal utilities enter into contracts for new power assets with other municipal utilities or regulated utilities; 6) Co-op Rate Regulation (HB 5383) - would eliminate PSC ratemaking jurisdiction over cooperative utilities and retain commission authority over customer service issues; 7) Energy Efficiency (HB 5525) - would set out incremental targets for demand reduction for both gas and electricity through programs run by either the utilities or an independent party, at the utility's discretion (up to 1% of total electricity sale by 2012 and .75% of total gas sales by 2012) with provision for a revenue decoupling mechanism; 8) Renewable Portfolio Standard (no number yet) - this piece is still being negotiated but a spot has already been reserved to tie bar it to the larger package. A requirement to provide 10% by 2015 is expected. The flagship repeal bill can be viewed at this hotlink.

The Customer Choice Coalition (CCC) has been working to combat the re-regulation movement in Michigan. It is looking to mount a PR effort in addition to outreach with policymakers. Those interested in participating in the CCC effort should contact Tanya Paslawski with Direct Energy at (517) 579-7105 or

New Jersey
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NJBPU Proposed Customer Account Number Look-Up Procedure

The NJBPU issued a request for comments on its proposal to require utilities to provide customer account numbers to third party suppliers (TPSs) and clean power marketers (CPMs), after having obtained the customer's written consent.

NEM will convene a conference call on Tuesday, December 11, 2007, at 2PM EST to formulate its comments in response. The conference call number is 913-643-5111, and the passcode is 209353.

The Board noted that the current procedure wherein customers must produce their utility account number to enroll with a choice supplier impedes customer choice. The Board proposes to implement a customer account number look-up procedure. The customer would sign an enrollment form (including name, address, phone number) authorizing release of their account number to the TPS/CPM. TPSs/CPMs would then submit an electronic list of names and addresses to the utility for it to look up the account numbers. The TPS/CPM could then use the account number to enter into the EDI system to enroll the customer.

Comments are due January 11, 2008.

The full text of the Request for Comments is available on the NEM Website.

Comments on BGSS Pricing

The Board is reviewing rules on utility service, including provisions related to basic gas supply service (BGSS). NEM and Intelligent Energy submitted comments recommending that the Board modify its proposed definitions of “Basic Gas Supply Service” and “Periodic BGSS pricing clause” to require that residential BGSS be offered at a monthly-adjusted market-based rate. The periodic BGSS rate paid by residential customers is set by each utility through an annual BGSS filing and remains unchanged for several months. Unlike their residential counterparts, large commercial customers purchase natural gas supply from the local utility at a market-based monthly BGSS rate. It was argued that periodic BGSS rates that are not reflective of current market conditions are not in the best interest of the consumer, utility or third party suppliers. This rate mechanism creates an unstable and unsustainable competitive environment, a barrier to entry for new suppliers, does not effectively mitigate volatility, forces captive utility ratepayers to bear significant risk, removes pricing signals, creates additional administrative costs, and singles out natural gas as one of the only products and services which is not offered subject to market-based pricing. The full of NEM/Intelligent Energy's Comments is available on the NEM Website.

New York
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NYSEG Price to Compare Filing

One of the terms of the Joint Proposal approved in NYSEG's last electric rate case was the requirement for NYSEG to include a price to compare for the bills of customers on utility supply service. A price to compare collaborative was subsequently convened. As a result of the collaborative, NYSEG filed with the Commission a proposed bill message to appear on the first bill issued after March 31, 2008. The bill message would read as follows:

"The NYSEG price for providing electricity supply during this billing period was x.xx/kwh, which includes a Merchant Function Charge of x.xx/kwh. If you decide to shop for electricity supply, you can compare this information with prices offered by energy service companies (ESCOs). You could achieve some tax savings if you switch to an ESCO. Additionally, if the ESCO includes its charges on your NYSEG bill, you would not have to pay NYSEG's bill issuance charge of 89 cents per month. If you buy electricity from an ESCO, NYSEG will continue to deliver the electricity to you and you will continue to pay NYSEG for delivery, transition and basic service charges."

The full text of NYSEG's Price to Compare Filing is available on the NEM Website.

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