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January 25, 2008
2008 NEM Winter Executive Committee Meeting

NEM held its Winter Executive Committee and Policy Development Meeting last week at the South Carolina Research Authority in Charleston, South Carolina for a third time. The meeting was a great success. We had the benefit of insights from Raymond Vickery, senior advisor to Hillary Clinton, and James Woolsey, senior advisor to John McCain, on the candidates' presidential policy agendas. Many thanks to SCRA for hosting the meeting.

Annual Spring Membership Meeting

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. Please register at this hotlink. 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. A final agenda will be released shortly.

Thus far, we have confirmed the following featured speakers for the event: US House Majority Whip James Clyburn (D-SC), FERC Commissioner Jon Wellinghoff, CFTC Commissioner Michael Dunn, New York PSC Chairman Garry Brown and Massachusetts DPU Chairman Paul Hibbard.

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.

Industry Response to 41 Consumer Petition

NEM joined a group of 82 diverse entities in an Industry Response to certain customer groups, including ELCON and APPA, that had petitioned FERC to expand its ongoing inquiry into wholesale competition in organized electric markets. The customer petitioners had urged FERC to, "investigate the justness and reasonableness of wholesale power prices charged in RTO-run centralized markets." The Industry Response urged FERC to stay the course with the scope of its current proceeding, noting the deficiency of the customer group filing in providing any new evidence to justify a fundamental redesign of the markets. The Industry Response noted that, "The organized markets are regional in scope, independently administered, and rely on a single clearing price based on locational marginal pricing to meet demand for energy. Independent observers agree that this is an efficient means to operate organized competitive electricity markets, and the Commission has so found in its orders." The full text of the Industry Response is available on the NEM Website.

Maryland PSC Complaint Against PJM

The Maryland Public Service Commission filed a complaint against PJM with FERC. The Maryland PSC complaint questions, "whether blanket exemptions from energy offer caps are just and reasonable and whether PJM violated its tariff by failing to post the results of the MMU's quarterly evaluation of the need for offer cap exemptions, thus denying stakeholders and the Commission information on which to base a Section 206 complaint and depriving the Commission of an opportunity to consider the merits of the MMU's concerns. As a consequence, customers have paid and continue to pay unjust and unreasonable energy prices that reflect the exercise of market power. The MD PSC seeks both the elimination of these anticompetitive and unlawful exemptions going forward and refunds from at least September 2006, the date of PJM's tariff violations." PJM uses a three pivotal supplier test to determine market competitiveness, imposing offer caps on those generation resources that fail to meet the test. However, there are two exemptions from the offer capping process for generation resources' offers to relieve reactive limits on four transmission interfaces and for generation resources for which construction was commenced within certain time periods. The Maryland PSC has requested fast track processing of its complaint. The full text of the Complaint is available from NEM headquarters.

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Interim Report on Stranded Costs, CTC Payments and Nuclear Decommissioning

As it was required to do pursuant to SB400, the Commission issued a report to the legislature on stranded costs, CTC payments and nuclear decommissioning attendant with the electric deregulation process in Maryland. The report examines the terms under the regulated utilities divested or transferred their electric generating facilities to unregulated entities, focusing in particular on BGE. Upon its review of BGE's 1999 stranded cost settlement, the Commission concluded that, "in simplest terms, the settlement allowed BGE to give its power plants to an affiliate at book value, collect nearly a billion dollars in "stranded costs" payments from ratepayers, and avoid liability for funding the cost of decommissioning its nuclear plants - all in exchange for a rate decrease that, we believe, ratepayers themselves funded." The Commission reports that it intends to initiate proceedings to investigate the inter-affiliate agreements entered into by BGE, whether Constellation Power Source provided BGE with electricity at above market rates therefore contributing to BGE losses, and whether the affiliate agreements complied with the 1999 stranded cost settlement and Maryland law. The Commission recommends that the legislature clarify the Commission's authority to examine utility affiliate books and records and that the Commission can order ratepayer refunds if BGE is found to have violated the 1999 settlement or electric restructuring law. The Commission also requests authority to provide ratepayer refunds in the event it determines that stranded cost collections were diverted to subsidize rate freezes rather than fund stranded costs. The full text of the Interim Report is available on the NEM Website.

New York
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NFG Optimal ESCO Referral Program Collaborative

In its recent Order in NFG's gas rate case, the Commission directed NFG to convene a collaborative for the purpose of discussing an "optimal ESCO referral program for its service territory." NFG will convene the collaborative on February 27, 2008, in Buffalo at a location to be determined. The meeting is expected to run from 9:30AM to noon. An agenda is forthcoming. Those interested in attending should contact email

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Commission Approves Columbia Gas Settlement

The Commission approved a Columbia Gas settlement addressing certain outstanding GCR and choice program issues. The settlement proposes to institute a transition period running from November 1, 2008, to March 31, 2010, during which Columbia's choice program will be available. During the transition period, stakeholders will work to develop a wholesale gas supply auction to replace the current GCR mechanism, with the intent for Columbia to file a proposed auction process by February 1, 2009, for implementation by April 1, 2010. Stakeholder discussions during the transition will also focus on: 1) choice program services and costs, 2) the choice program enrollment process, 3) educational initiatives, 4) storage costs and access; 5) capacity assignment, and 6) the potential for Columbia's exit from the merchant function. The full texts of the Order and the Columbia Settlement are available on the NEM Website.

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