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February 10, 2006
NEM Annual Membership Meeting and National Restructuring Conference

Please mark your calendars for NEM's Annual Membership Meeting and National Restructuring Conference on April 25-26, 2006, in Washington, DC at the Marriott Metro Center focused on "Adding Value and Winning Customers with Innovation, Technology and Service." We have already confirmed the following to attend: U.S. Congressman Ralph Hall, Chair, House Energy and Air Quality Subcommittee, U.S. Congressman Tim Murphy, Member, House Energy Committee, Nora Brownell, Commissioner, FERC, Paul Hudson, Chair, Texas Public Utility Commission, James Cawley, Vice Chair, Pennsylvania Public Utility Commission, Ron Cerniglia, Director, NYPSC's Office of Retail Market Development and Calvin Timmerman, Senior Commission Advisor, Maryland Public Service Commission.

In addition, we will conduct new Mission Critical Workshops. These will include "How to Deal with the Media When they Knock on Your During Price Spikes - Crisis Communications Workshop for Energy Marketers" conducted by Rasky Baerlein Strategic Communications. An additional workshop will focus on "New Market Entry 101 - Significant Compliance, Reporting and Certification Requirements and Political, Legal and Regulatory Framework for Entering New Retail Markets (MI, MD, NY, OH)" to be led by John Dempsey of Dickinson Wright, Joelle Ogg of Brunenkant & Cross and Steven Sherman of Krieg DeVault. Another workshop will examine "Expanding Market Share and Winning New Customers with Innovation and Technology."

Those members interested in sponsoring the event should contact headquarters. Advertisements for the event, including sponsor information, receive international media distribution.

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Distributed Generation Collaborative

The Distributed Generation (DG) Collaborative will begin its work on the final interconnection tariff for the June 2006 report to the Department, at the DG Collaborative Plenary Meeting on February 15, 2006, from 9AM to 4:45PM, at National Grid's Westborough office (in the Energy Institute room). The Agenda can be viewed at:

New York
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Staff Testimony in NYSEG Electric Rate Case

Staff submitted testimony in NYSEG's electric rate case in which the utility proposed a six year extension of its Voice Your Choice Program. Staff proposed that NYSEG only offer a variable priced commodity service beginning on January 1, 2007, and that NYSEG's fixed price option be eliminated. Staff also recommended that NYSEG develop a hedging policy for residential customers, "that replaces existing hedges as they expire, where prudent, in order to ameliorate the volatility of its variable rate option." Staff recommended elimination of the fixed price offerings because, "they violate the Commission's Retail Policy Statement, they unreasonably enrich shareholders at the expense of ratepayers, they are not proper in or supportive of a competitive market, they create confusion for customers, and the prices produced, while more stable than variable priced offerings, are not more equitable than overall prices for NYSEG's variable offering."

Staff also recommended enhancements to NYSEG's choice program including: 1) making the Market Match program available to all C&I customers, regardless of consumption, and to interested residential customers; 2) conducting two Market Expos during the rate year; 3) implementing an ESCO Referral Program; 4) unbundling its bill to facilitate price comparisons; and 5) committing resources to EDI testing such that testing is available to marketers on a monthly basis.

The full text of Staff's Retail Access Panel Testimony and Commodity Options Panel Testimony is available on the NEM Website. Additional Staff Testimony is available from NEM headquarters.

Inquiry on Broadband over Power Line Technologies

The Commission opened an inquiry to investigate regulatory issues associated with the use of Broadband over Power Line (BPL) technology. In opening the inquiry the Commission stated, "we presume that competition is the most efficient way of ensuring the provision of quality utility services at reasonable prices. Second, structural separation of regulated and unregulated operations by electric and gas utilities or divestiture of unregulated assets are the most effective way of preventing self-dealing issues, the exercise of market power, and other potential abuses that may arise when competitive operations are affiliated with rate-regulated utility monopolies." Accordingly the Commission set forth two conclusions: 1) "Economically viable BPL services will benefit New Yorkers through the provision of broadband services from a new facilities-based platform;" and 2) "Electric utilities should not directly provide BPL services to the public. Rather, they should explore ways of granting unaffiliated BPL providers appropriate access to the electric system at market determined prices." The Commission identified four areas for comment including the current status and development of BPL technology, safety and reliability issues associated with BPL, workable business models/arrangements for BPL deployment and the provision of BPL-based services to the public and the appropriate regulatory framework to encourage BPL deployment. Comments are due March 13, 2006, and requests to participate are due February 24, 2006. The full text of the Order Initiating Proceeding on BPL is available on the NEM Website.

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NEM Comments on Time-Based Rates and Meters

NEM submitted comments to the Commission supporting an expansion of demand response programs and a corresponding increase in investment in metering infrastructure. NEM argued that the implementation of an updated metering technology infrastructure is critical to supporting demand response programs and time-differentiated rate structures that permit consumers to engage in price responsive behavior. For the benefits of competition to be fully realized we must empower consumers, through time-differentiated, market-based pricing signals to make well-informed, cost-benefit lifestyle choices by conserving energy and shifting demand when it is to their advantage.

NEM recommended separately defining “enhanced” and “advanced” metering and information technology investments with corresponding cost recoveries. “Enhanced Metering Technology” (EMT) could be defined to include technology that is far superior than the decades old meters currently in place and yet currently available. Truly “Advanced Metering Technology” (AMT) on the other hand may require more rapid cost recovery provisions to offset the higher technology risks to make it a competitive use of capital in the shortest timeframe possible. Advanced metering and information technology could include bi-directional, remotely addresssable and configurable and easily upgradeable, independent and parallel-processing nodes that may already be technically achievable. The full text of NEM's Comments is available on the NEM Website.

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Meeting of Natural Gas Stakeholders Working Group

The first meeting of the Natural Gas Stakeholders Working Group has been changed to March 30, 2006, beginning at 9AM in Hearing Room 1 of the Commonwealth Keystone Building. Staff has identified three issue subgroups as follows: 1) Inter-Company Activity Subgroup; 2) Customer Interface Subgroup; and 3) Cost of Service Subgroup. The Inter-Company Activity Subgroup will address security, mandatory capacity assignments, nomination and delivery requirements, penalties for non-delivery, receivables for mass market customers, supplier tariff requirements, market information and switching restrictions. The Customer Interface Subgroup will address pricing information and consumer education, seamless move, acquisition costs for mass market, supplier consolidated billing, consumer protection rules, utility consolidated billing, utility negotiated supply contracts, and service to low income customers. The Cost of Service Subgroup will examine costs of retail supply service, receivables for mass market customers and acquisition costs for mass market. Additionally, utility promotion of competition, a Commission ombudsman and utility codes of conduct are issues that were not assigned to any particular subgroup and may be issued for public comment and review.

Those that want to participate, volunteer for a specific subgroup and offer comments on the subgroup issue assignment must do so by February 17, 2006.

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Commission Opens Time-Based Rate and Metering Inquiry

Pursuant to its obligation under the federal Energy Policy Act of 2005, the Commission opened an inquiry to consider establishment of a time-based metering and communications standard. The Commission identified the following issues for comment: 1) has a comparable time-based metering and communications standard already been adopted in Virginia; 2) does the Commission have authority to consider such a standard and can it be implemented consistent with state law; 3) should electric utilities be required to offer consumers time-based rates upon request; 4) should electric utilities be required to provide customers requesting time-based rates with time-based meters; and 5) should customers buying electricity from third parties be entitled to the same time-based metering and communications device. Comments are due May 12, 2006. The full text of the Order is available on the NEM Website.

Default Service Inquiry

As required by statute, the Commission instituted its annual inquiry into whether "there is a sufficient degree of competition such that the elimination of default service for particular customers, particular classes of customers, or particular geographic areas of the Commonwealth will not be contrary to the public interest." Those wishing to file comments must do so by March 24, 2006. Staff is directed to file a report with its recommendations by April 28, 2006.

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