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February 23, 2007
NEM Tenth Annual Membership Meeting and Energy

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

Final Rule Issued on OATT Reform

FERC issued a final rule to strengthen the pro forma OATT, adopted in Orders 888 and 889, in order to better remedy opportunities for undue discrimination. The rule applies to all public utility transmission providers, including RTOs/ISOs. The rule retains the major elements of Order 888, including native load protections, functional unbundling and reciprocity. It also recognizes the states' jurisdiction over bundled retail load.

The rule also introduces important reforms. These include: 1) improved consistency and transparency in Available Transfer Capacity calculations; 2) a requirement that transmission providers participate in a coordinated, open and transparent planning process to better address transmission congestion problems; 3) reformation of energy and generator imbalance pricing to reduce the potential for undue discrimination in development of these charges; 4) adoption of a "conditional firm" component to long-term firm point-to-point service; 5) revision to rollover rights policy such that it applies to contracts with a minimum term of five years, rather than the current one year minimum term, and requiring customers to provide notice of the exercise of a right of first refusal no less than one year before the expiration date of the transmission service agreement rather than the current sixty day period; and 6) transmission providers must post all business rules, practices and standards related to transmission service under their OATTs on OASIS, and they must include their credit review procedures in their OATTs. The full text of Order 890 is available at this hotlink.

FERC Conference on Competition in Wholesale Power Markets

FERC will convene the first in a series of conferences to examine competition in wholesale power markets. The first conference will be held February 27, 2007, from 9AM to 4PM EST and will take place in the Commission Meeting Room at FERC's D.C. headquarters.

The conference will consist of three panel discussions: 1) origins of electric industry competition and restructuring (objectives of generation sector competition and whether objectives have been achieved); 2) challenges in strengthening organized markets and appropriate reforms (attracting new investment, price signals, demand response, long term contracts, congestion); and 3) challenges in strengthening bilateral markets and appropriate reforms (competitive procurement, risks to consumers of rate base investments, regional coordination, price transparency, access).

Those who wish to submit written comments in this proceeding must do so by March 13, 2007. The full text of the Notice of Conference and Agenda is available on the NEM Website.

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NEM Participates in Informational Forum on Electric Rate Relief

The Energy and Technology Committee of the Connecticut Senate convened an informational forum on electric rate relief this week. NEM and its members Dominion Retail and Direct Energy participated in the forum as well as smart metering, ice storage, solar and geothermal companies. Senator Fonfara, who co-chairs the Committee, convened the forum to, "educate legislators and the public on the opportunities available to all of us to take greater control of our energy usage." NEM highlighted the significant benefits realized by consumers as a result of energy choice. NEM also discussed the technological innovations, such as broadband over powerlines, hydrogen fuel cells, and advanced metering, that have and will develop attendant with energy choice. The full text of NEM's Presentation is available on the NEM Website.

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Governor Announces Public Service Commission Nominees

Governor O'Malley announced nominations to the Public Service Commission. Steven Larson, a former Maryland Insurance Commissioner, was nominated to serve as Chair. Larson is currently Executive Vice President of Amerigroup Corporation, a publicly traded health care company, and also serves as President/CEO of Amerigroup Maryland. The Governor also nominated Susanne Brogan, who served on the Commission from 1992 to 2001, to return to the PSC. Current Commissioner Harold Williams, who has served on the PSC since 2002, was reappointed by the Governor.

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Consumers Energy Distribution Rate Case

Consumers Energy filed a distribution rate case requesting $88 million in rate relief. Consumers proposed implementation of a revenue decoupling and conservation incentive mechanism (RDCIM) that it terms a "rate stabilization mechanism." Consumers is not proposing to include transportation customers in the RDCIM. Consumers also proposed to implement a natural gas efficiency and conservation plan for residential customers. The utility is seeking an annual adjustment mechanism to reconcile actual uncollectible write-offs with the amount included in rates. Ninety percent of the difference will be returned/charged to customers via an adjustment to the distribution charge. Consumers proposed to establish uncollectible write-offs in rates at approximately $18 million.

Consumers proposed to retain the Transportation Rate ST customer charge at $500/month and increase the distribution charge from $.7617/Mcf to $.7715/Mcf. The Transportation Rate LT customer charge would be increased from $2,710/month to $2,750/month and the distribution charge would be increased from $.4967/Mcf to $.5016/Mcf. The Transportation Rate XLT customer charge is proposed to increase from $6,900/month to $6,910/month and the distribution charge would increase from $.3945/Mcf to $.4/Mcf. Consumers proposed to change the Transportation Authorized Tolerance Levels also.

Consumers requested that the Commission adopt a nine month schedule for the case to permit the rate relief to become effective as of the 2007-08 heating season. The full text of Consumers Energy Rate Case Filing is available on the NEM Website.

New York
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NFG Rate Case

NFG filed a rate case application with rates proposed to implemented in 2008. The application proposes to retain the current purchase of receivables program, the ESCO ombudsman, and customer awareness surveys and customer education (although on a reduced basis). The POR discount is proposed to be changed to 3.66% for residential customers served under SC1 and 0.58% for the purchase of other marketer receivables. NFG proposes to discontinue the Marketer Referral Program, market match program, the market expo program, the residential energy fair, the pilot program to promote ESCO fixed price or hedged products, and the mass market migration program. NFG argues that these programs are scheduled to expire automatically and have served their intended purposes. NFG also argues that as customer awareness and understanding of choice has increased, that studies, "indicate that customers' likelihood to choose an alternate supplier have decreased as understanding and awareness have grown." NFG proposes to implement a Company Capacity Release Program to replace its current Voluntary Program. The SC1 merchant function charge is proposed to be $.22215/Mcf and the MFC for SC3 customers is proposed to be ($.09473/Mcf). NFG proposes to increase its billing charge from $2/bill to $2.26/bill. The full text of NFG's Application is available from NEM headquarters.

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