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January 22, 2010
Upcoming NEM Events

January 2010 Executive Committee Meeting - NEM’s Annual Winter Executive Committee Policy and Planning Meeting was held this at the headquarters of South Carolina Research Authority in Charleston, South Carolina. The Executive Committee sets the course for NEM’s advocacy in the coming year at this meeting. At this meeting, NEM also elected its 2010-11 Leadership Team. Many thanks to Bill Mahoney and South Carolina Research Authority for hosting this meeting.

NARUC Winter Meeting - NEM is the Welcome Reception sponsor for NARUC's Winter Meeting in Washington, DC, on February 14-17, 2010. Please contact headquarters if you are interested in attending and/or participating in this event. For additional information on the event please see:

NEM's 13th Annual National Energy Restructuring Conference - NEM will convene its 13th Annual National Energy Restructuring Conference at the Embassy Suites Hotel Washington D.C. Convention Center on April 27th & 28th, 2010. This year’s theme is “Renaissance in Energy Markets.” Topics of discussion will include Competitive Energy Supply, Demand, Prices and Economic Opportunities. On the evening of April 26, 2010, we will host a reception at the Latvian Embassy.

New World Incentives Elected to NEM Executive Committee

NEM is pleased to announce that New World Incentives has been elected to NEM's Executive Committee. New World Incentives will be represented by Michael Pouls, President. New World Incentives is an incentive, loyalty, and Promotions Company based in Philadelphia, PA. They maintain a sales force of approximately 1500 agents throughout the US, Canada, & Puerto Rico. Their focus of the company and staff is to provide businesses with products and programs that help increase sales. They also utilize their network of sales agents to help businesses sell their products directly to consumers or B2B.

VoiceLog Elected to NEM Executive Committee

NEM is pleased to announce that VoiceLog, a third party verification company, has been elected to NEM's Executive Committee. VoiceLog, a division of BSG Clearing Solutions, will be represented by Dan Homa, Voice Log Sales Manager. Over the last decade, VoiceLog has offered third party verification in the deregulated energy market and understands what works when it comes to getting a customer's authorization to change electric or gas providers. Each energy company's target market, sales approach and product offering is different. Whether selling gas or electric, residential or commercial, with fixed or variable rates, VoiceLog understands the Energy business and has developed cost effective turnkey verification solutions. With our complete product offering of automated "open ended" call recording, automated "scripted" verifications and live operator scripted verifications, VoiceLog has a product in place to meet every energy company's marketing needs.

Major Non-Interstate Pipeline Reporting Requirements

FERC issued Order 720-A, in response to requests for rehearing and clarification of its decision to require major non-interstate pipelines to post daily scheduled volume information and other data for certain points. Issues decided on rehearing include:
1) Until a non-interstate pipeline has experienced three years of operational flow, it must use its maximum delivery capacity to determine whether it is a major non-interstate pipeline subject to the rule;
2) The definition of major non-interstate pipeline is clarified to mean a set of facilities that are both physically interconnected and operational integrated;
3) Major non-interstate pipelines must post scheduled flow data for points where design capacity is unknown or does not exist with scheduled maximum natural gas volumes equal to or greater than 15,000 MMBtu on any day within the previous three calendar years;
4) An exemption from posting requirements shall apply to receipt points with scheduled natural gas volumes of less than 5,000 MMBtu per day on each day within the prior three calendar years;
5) Major non-interstate pipelines are to begin internet postings for newly eligible receipt and delivery points within 45 days of the point's eligibility for posting;
6) Bi-directional scheduled volumes should not be netted prior to posting;
7) Postings shall be made by 10:00PM central clock time the day prior to scheduled flow; and
8) An exemption from the posting requirements shall apply to major non-interstate pipelines that deliver more than 95 percent of their annual flows to end-users as measured by average deliveries over the preceding three calendar years.

The full text of Order 720-A is available on the NEM Website.

Proposed Rulemaking on Credit Reforms in Organized Electric Markets

FERC issued a proposed rulemaking on a number of credit reforms to be applied to the organized wholesale electric markets. The proposals under consideration by the Commission include:
1) Shortening the settlement cycle to no more than seven calendar days with no more than an additional seven calendar days for final payment;
2) Limiting unsecured credit to no more than $50 million per market participant in energy markets while eliminating unsecured credit in Financial Transmission Rights markets;
3) Clarification of the ability of market participants to offset amounts owed to and amounts owed by them and to manage defaults;
4) Establishing minimum participation criteria for market participants;
5) Specifying circumstances by which a market administrator may invoke "material adverse change" to require a market participant to post additional collateral; and
6) Limiting the time period allowed for posting additional collateral when additional collateral has been requested.

Comments on the NOPR are due 60 days after publication in the Federal Register. The full text of the NOPR is available on the NEM Website.

New York
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National Grid Smart Grid Proposal

National Grid filed a revised smart grid program proposal seeking Commission approval and cost recovery. The revised filing is subsequent to the DOE's rejection of National Grid's smart grid proposal for stimulus funding. National Grid is now seeking cost recovery of a smart grid pilot project in the Syracuse area aimed at approximately 39,000 customers. The project will include installation of a Smart Grid Spine and supporting communications technology and advanced metering as well as Clean Energy Modules (charging stations for plug-in vehicles, an energy storage demonstration, a residential scale photovoltaic program, and an Advanced In-Home Energy Management program). National Grid estimates the cost of the project to run approximately $123 million. The full text of the National Grid Proposal is available on the NEM Website.

Click here to view all past updates.
Proposed Revisions to Default Service Regulations

The Commission issued proposed revisions to the electric default service regulations to incorporate the requirements of Act 129. Act 129 repealed the "prevailing market prices" standard, requiring instead that the utilities’ generation purchases satisfy a "least cost" standard. The proposed regulations generally adopt Act 129 procurement requirements verbatim. The Commission is seeking comment on how Act 129 should be interpreted in order to ensure adequate and reliable service at the least cost to customers over time.

The Commission also requested comment on the following specific questions:
"1. What is meant by “least cost to customers over time?”
2. What time frame should the Commission use when evaluating whether a DSP’s procurement plan produces least cost to customers over time?
3. In order to comply with the requirement that the Commission ensure that default service is adequate and reliable, should the Commission’s default service regulations incorporate provisions to ensure the construction of needed generation capacity in Pennsylvania?
4. If the Commission should adopt a provision to ensure the construction of needed generation capacity, how should the default service regulations be revised?
5. Which approach to supply procurement – a managed portfolio approach or a full requirements approach – is more likely to produce the least cost to customers over time?
6. What is a “prudent mix” of spot, long-term, and short-term contracts?
7. Does a “prudent mix” mean that the contracts are diversified and accumulated over time?
8. Should there be qualified parameters on the prudent mix? For instance, should the regulations preclude a DSP from entering into all of its long-term contracts in one year?
9. Should the DSP be restricted to entering into a certain percentage of contracts per year?
10. Should there be a requirement that on a total-DSP basis, the “prudent mix” means that some quantity of the total-DSP default service load must be served through spot market purchases, some quantity must be served through short-term contracts, and some quantity must be served through long-term contracts?
11. Should there be a requirement that some quantity of each rate class procurement group’s load be served by spot market purchases, some quantity through short-term contracts, and some quantity through long-term contracts? In contrast, should a DSP be permitted to rely on only one or two of those product categories with the choice depending on what would be the prudent mix and would yield the least cost to customers over time for that specific DSP?
12. Should the DSP be required to hedge its positions with futures including natural gas futures because of the link between prices of natural gas and the prices of electricity?
13. Is the “prudent mix” standard a different standard for each different customer class?
14. What will be the effects of bankruptcies of wholesale supplier to default service suppliers on the short and long term contracts?
15. Does Act 129 allow for an after-the-fact review of the “cost reasonableness standard” in those cases where the approved default service plan gives the EDC substantial discretion regarding when to make purchases and how much electricity to buy in each purchase?
16. How should the requirement that “this section shall apply” to the purchase of AECs be implemented. Section 2807(e)(3.5) states that “ . . . the provisions of this section shall apply to any type of energy purchased by a default service provider to provide electric generation supply service, including energy or alternative energy portfolio standards credits required to be purchased, etc.”"

Comments are due on the proposed rules 30 days after publication in the PA Bulletin. The full text of the Proposed Rules is available on the NEM Website.

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