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January 5, 2007
NEM Winter Executive Committee Meeting

Please mark your calendars for NEM's Winter 2007 Executive Committee Meeting. It will be held January 18-19, 2007, in Charleston, South Carolina. Please register for the event using this hotlink. The agenda is also available online.

For those staying through until Friday, please indicate to headquarters your interest in participating in a golf outing that day OR taking a 30-45 minute tour of SCRA's facility that includes a snapshot of all the innovative things they are involved in doing (DoD initiatives, metals technology, homeland security, etc.).

A room block has been set aside at the Hilton Garden Inn (843-308-9330) for the January meeting at the rate of $92 per night. Reference the "NEM" block when calling. Alternately, you may also book online at and when it asks for group/convention code, enter "NEM" and the rate will be $92.

Many thanks to the South Carolina Research Authority for offering to host the meeting again this year.

FERC Conditionally Approves PJM Reliability Pricing Model

Based on concerns of deteriorating reliability and extreme price volatility, FERC had determined that PJM's existing market for supply was unjust and unreasonable, and it established further proceedings to determine a just and reasonable replacement for the existing market structure. A stakeholder collaborative developed the Reliability Pricing Model (RPM) Settlement as a result. By the terms of the approved settlement, PJM will implement a Variable Resource Requirement Curve (a downward sloping demand curve) to clear the RPM capacity auctions. In order to incent construction of new generation and retention of current generation, companies providing service to customers must contract with suppliers for three years in advance. Locational pricing will be achieved through the creation of Locational Delivery Areas. Utilities can supply their energy needs through generation, transmission and demand response. The Commission required PJM to submit proposed tariff revisions pertaining to the rules and criteria for participation of demand response within RPM within sixty days, and PJM must file a report on demand response within nine months. The full text of the PJM Order is available on the NEM Website.

Commission Requests Comments on Capacity Release Policies

FERC is requesting comments on potential changes to its capacity release policies that could improve the efficiency of the natural gas market. This is in response to a petition requesting the Commission to remove the maximum rate cap on capacity release transactions as well as a petition highlighting problems faced by marketers in the ability to provide efficient portfolio management services under the current capacity rules. Issues for comment include: 1) lifting the maximum rate cap on a permanent basis for short-term or all capacity releases; 2) means of providing added price flexibility for capacity releases short of removing the maximum rate cap; 3) removing the requirement that prearranged capacity releases of more than thirty days, at less than the maximum rate, be posted for bidding; 4) should prohibitions against tying arrangements be modified; 5) should the "shipper must take title rule" be eliminated; and 6) would changes to the current capacity release rules provide sufficient efficiency gains in the natural gas market to permit a relaxation of rules pertaining to posting and bidding. Comments are due sixty days after publication in the federal register. The full text of the Request for Comments is available on the NEM Website.

Click here to view all past updates.
DOER Petition for Investigation in Efficiency Performance Standard for Basic Service Customers

DOER petitioned for the initiation of an investigation into the creation of an Efficiency Performance Standard (EPS) for customers that receive Basic Service electricity supply in Massachusetts. DOER proposes that utilities be required to procure a minimum percentage of their projected needs for electricity supply for Basic Service customers in the form of energy efficiency resources. DOER explains that, "The goal would be to achieve a reduction of 1.5% in sales of Basic Service by the sixth year of operation. Distribution companies would meet this target through annual procurements of efficiency resources provided by efficiency vendors through investments in the homes and businesses of Basic Service customers. Recovery of the EPS cost would be accomplished through the charge for Basic Service, collected in monthly increments over periods of five years for each efficiency resource procured." As a first step, DOER suggests that a stakeholder collaborative process be established to assess the potential for additional efficiency, review design options for an EPS and address various implementation issues. Comments on DOER's petition are due January 31, 2007. The full texts of DOER's Petition and DTE's Request for Comments are available on the NEM Website.

Click here to view all past updates.
MichCon GCR Filing

MichCon filed its GCR Plan, 5-Year Forecast and monthly GCR factor for a 12-month period from April 1, 2007 through March 31, 2008. MichCon proposes to implement a maximum base GCR factor of $8.49 per thousand cubic feet, subject to increase based on a contingency factor matrix based on increases in NYMEX gas commodity prices resulting in a new maximum GCR factor. MichCon also requests that the Commission review the reasonableness and prudency of its 5-Year (2007-2012) Forecast of Gas Requirements, Supplies and Costs. MichCon proposes to modify its fixed price program with a Price Limit Method (PLM) component. The PLM is intended to be a "formal mechanism that would limit GCR customers’ exposure to increasing prices in the next complete GCR period and beyond." The GCR case is being consolidated with MichCon's gas storage case (Docket U-14800). The full text of MichCon's Application is available on the NEM Website.

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