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February 1, 2008
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 Marc Spitzer, 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 this event is needed and would be greatly appreciated.

Stakeholder Comments on FERC Capacity Release NOPR

Following up on its previous notice of inquiry, FERC issued a proposed rulemaking on its capacity release policies. NEM and a diverse group of stakeholders submitted comments on the rulemaking, including retail gas marketers, wholesale gas suppliers, generators, state PUCs, utilities, producers, pipelines, end users and others. NEM submitted comments recommending that: 1) a retail choice exemption to the shipper must have title rule be adopted; 2) the definition of exempt Asset Management Agreements should include transactions entered into by marketers serving retail choice customers; 3) Commission enforcement of shipper must have title rule violations should consider the nature of the underlying conduct; 4) FERC should reconsider its proposal to remove the rate ceiling on short-term capacity releases in light of potential negative consequences for retail market development; and 5) if (notwithstanding negative retail market implications) the rate ceiling on short-term capacity releases is lifted, it should be accompanied by a retail access bidding exemption. The full text of NEM's Comments is available on the NEM Website.

Of particular note, the New York Public Service Commission and Public Utilities Commission of Ohio submitted comments on the retail implications of the rulemaking. The NYPSC recommended that: 1) capacity releases made under state retail choice programs should have full exemption from bidding and tying prohibitions; 2)FERC’s proposal to address the eligibility of state-regulated retail access programs for the AMA exemptions by requiring LDCs to seek a waiver from the bidding requirements and tying prohibitions on a case-by-case basis is not reasonable; and 3) the AMA exemption from the tying prohibition be extended to releases of storage capacity undertaken pursuant to state retail access programs. PUCO recommended that: 1) “in Ohio, capacity releases made by the local distribution companies (LDCs) to marketers participating in state-mandated unbundling (Choice) programs should be exempted from market-based pricing so long as the retail markets have not fully matured and adequate protections exist to ensure that neither the LDC nor a participating Choice marketer is advantaged or disadvantaged from such an arrangement”; 2) FERC should examine the concept of a statewide waiver where state retail choice programs are developing; 3) many of the exemptions for AMAs should be duplicated for retail choice programs.

A Summary of Stakeholder Comments submitted to FERC is available on the NEM Website.

Petitions Filed on FERC Wholesale Gas Reporting Requirement

FERC recently issued Order 704 and corresponding Form 552 requiring annual reporting of wholesale natural gas transactions. Form 552 is due on an annual basis commencing May 1, 2009, for the 2008 reporting year. NEM filed a petition for clarification related to difficulties in assessing the appropriate reporting categories for certain transactions under Form 552. For instance, how a “NYMEX Plus” priced contract should be categorized, how pricing is to be reported when an initial contract is priced at “NYMEX Plus” with the option for a buyer to trigger a fixed price at a future date, and whether volumes priced as “NYMEX Plus” are intended to be excluded from reporting as “any type of financially-settled transaction." NEM requested that the Commission consider instituting a technical compliance forum to provide stakeholders with a more flexible means of raising questions about the new reporting requirements inasmuch as reporting questions will continue to be encountered throughout the reporting year. The proposed technical compliance forum could take the form of a combination of measures such as a FERC hotline, a designated page on the FERC website for Order 704 and Form 552 including frequently asked questions (that could be posted anonymously with a FERC response), a designated FERC contact person, periodic technical conferences, and a document of technical clarifications. Similar to NEM's request for a technical compliance forum, AGA requested that FERC Staff convene web conferences or informal workshops to field questions and generate a FAQ page for industry guidance on Form 552.

The full texts of NEM's Petition for Clarification, FERC Order 704 and Reporting Form 552 are available on the NEM Website as well as a Summary of Stakeholder Petitions filed on the reporting requirement.

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Commission Adopts Billing Rule and Electric Service Technical Standards

The Commission previously issued proposed rule modifications with respect to billing practices applicable to C&I electric and gas service as well as technical standards for electric service. In its review, the Commission discussed NEM's comments noting our "concern that the revised rules could be read as applying to any company that transports, distributes, or markets energy in Michigan, and request that the Commission revise the rules to make clear that they do not apply to alternative electric or gas suppliers (AESs and AGSs).

The Commission’s revision of these billing rules did not result in the extension of any new rules to AES/AGSs. These entities are already required by statute, Commission orders, and tariffs to comply with specified billing practices. See, MCL 460.10t, the August 31, 2006 order in Case No. U-14838 (Attachment B to Exhibit A), and the June 19, 2000 order in Case No. U-11915. Those requirements remain in place. The statement of the rules’ general applicability in Rule 1 and the definition of "utility" in Rule 2 continue to refer to utilities "subject to the jurisdiction of the Commission," which is the same language that these rules employed previously. The rule revisions made no change to the status of AES/AGSs." The full texts of the Billing Rule Order and Technical Standards Order are available on the NEM Website.

New York
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Comments Sought on CPB/DCA Petition on ESCO Marketing Practices

The Commission is requesting comment on the CPB/DCA petition on ESCO marketing practices filed at the end of last year. In their petition, CPB and DCA suggest that, "All ESCOs offering service to residential and small business customers in New York should be required to abide by a minimum set of marketing rules to ensure that consumers are protected from deceptive sales practices, and those rules must be enforced by the PSC with a range of sanctions including termination of a company's authorization to do business in New York. This can be accomplished by adding a new Section 10 to the UBP setting forth a Statement of Principles for ESCOs marketing to residential and small commercial customers, modeled after the voluntary Statement of Principles, with certain modifications." CPB and DCA recognize that "many ESCOs" conduct their business in an "appropriate manner." Nevertheless, they allege that, "the vast majority of consumers who are unhappy with their experience with an ESCO because of the marketing practices or conduct of a sales representative do not complain to us, the PSC or any other consumer agency."

Interestingly, CPB and DCA note, "under existing PSC rules, there does not appear to be any mechanism by which the Commission itself can sanction an ESCO on the basis of its marketing tactics other than to resort to the general prohibitions against deceptive acts and practices and false advertising incorporated in Sections 349 and 350 of the General Business Law." CPB/DCA argue, "the PSC should have clearly defined legal authority for acting directly to sanction ESCOs whose marketing practices it deems to be detrimental to consumers and to prevent further harm."

Comments are due March 10, 2008 (45 days after publication of notice in the NYS Register). A notice of a conference call to develop NEM's comments in response will be sent under separate cover.

The full text of the CPB/DCA Petition is available on the NEM Website.

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Duke Energy Ohio Requests Proposals to Supply PIPP Customers

Duke Energy Ohio is requesting proposals to supply gas for customers in its Percentage of Income Payment Program (PIPP). One supplier will have the right to supply the PIPP customers. DE Ohio is seeking, "a gas purchase contract with a supplier who will deliver a specified base load gas volume of 4,000 Dth per day to DE Ohio’s city gate off of KO Transmission (KOT) in Columbia Gas Transmission’s (TCO) Market Area 6 for the period from April 1, 2008 through March 31, 2009." Bids are due by 2PM EST on February 19, 2008. DE Ohio expects to notify the winning bidder by February 29, 2008. Questions should be directed to Jeff Kern at (513) 287-2837 or Judy Keith at (513) 287-3201. The full texts of the Supplier Bid Response Form and PIPP Operational Overview are available on the NEM Website.

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