We had a highly productive Executive Committee meeting last week at the South Carolina Research Authority. Many thanks to Bill Mahoney and Russ Keller of SCRA for hosting the meeting and to all of the members who attended and contributed to the discussions.

Please mark your calendars for April 24-25, 2007, for NEM's Annual Membership Meeting and National Restructuring Conference. The meeting will be held in Washington, DC at the Marriott Metro Center. More details will be forthcoming.

In light of the D.C. Circuit Court of Appeals recent decision in NFG v. FERC, the Commission has issued a rulemaking proposing changes to its standards of conduct. Earlier this month, the Commission issued interim rules on standards of conduct applicable to natural gas transmission providers such that the relationship between natural gas transmission providers and their energy affiliates would not be governed by the standards. The Commission is requesting comments on whether the interim rules should be made permanent. Additionally, the Commission is requesting comments on changes to standards of conduct applicable to electric utility transmission providers, i.e., whether the standards should apply to the relationship between an electric transmission provider and its marketing affiliates but not to its energy affiliates and whether this would be adequate to protect customers from undue discrimination.

The proposed rulemaking also requests comments on: 1) whether it is desirable to have consistency between the natural gas and electricity standards of conduct; 2) changes to the definition of "marketing affiliate"; 3) permissibly shared risk management employees and lawyers; 4) appropriate form of disclosure to customers of transmission providers' discretionary activities; 5) permitting "planning employees" that are engaged "in all aspects of 'integrated resource planning' for bundled retail load, to receive non-public transmission information, and to interact with transmission function employees, provided that the integrated resource planning is conducted pursuant to state mandate"; and 6) permitting "competitive solicitation employees" to "conduct competitive solicitations intended to serve bundled retail load, and to receive non-public transmission information and to interact with transmission function employees in order to evaluate proposals submitted in a competitive solicitation."

Comments are due 45 days after the proposed rulemaking is published in the Federal Register. The full text of the Proposed Rulemaking is available on the NEM Website.

FERC assessed its first civil penalties under its expanded penalty authority granted by the Energy Policy Act of 2005. FERC has the authority to assess civil penalties of up to $1 million per day per violation for violations of rules, regulations and orders issued under the Natural Gas Act, Natural Gas Policy Act and Federal Power Act. The penalties totaled $22.5 million. SCANA agreed to pay a $9 million civil penalty and to disgorge over $1 million in profits stemming from an investigation into violations of its OATT, specifically with respect to improper use of its network transmission to facilitate off-system power sales. Pacificorp agreed to pay a $10 million civil penalty for violations of its OATT and Standards of Conduct. Entergy Corp. will pay a $2 million civil penalty and contribute $1 million to a charity to settle violations associated with its Alternative Flowgate Capability system and failure to post information on its OASIS. Northwestern Energy will pay $1 million to settle violations of its OATT. Finally, NRG Energy will pay a $500,000 civil penalty to settle violations of Market Behavior Rules stemming from misrepresentation of a reliability must run generation facility in ISONE. The full texts of the Civil Penalty Orders are available on the NEM Website.