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February 8, 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: U.S. Senator Jim DeMint (R-SC), Member, Energy and Natural Resources Committee, US House Majority Whip James Clyburn (D-SC), U.S. Congressman Tim Murphy (R-PA), FERC Commissioner, Philip D. Moeller, FERC Commissioner Marc Spitzer, FERC Commissioner Jon Wellinghoff, CFTC Commissioner Michael Dunn, Natural Resources Canada Minister Gary Lunn, David Wales, Deputy Director, Bureau of Competition, Federal Trade Commission, 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.

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Order in Peoples Gas Rate Case

The Commission issued an Order in Peoples gas rate case. The Order institutes a number of changes to the small volume transportation program. The Commission rejected the request to provide competitive suppliers with greater storage rights as well as the proposal to reduce or eliminate the Aggregation Balancing Gas Charge (ABGC), through which the utility recovers the costs of off-system storage and daily balancing service. The ABGC will now be charged directly to customers, instead of charged to suppliers. The Commission also rejected a proposal to have the utility release storage capacity on a one-year recallable basis and pipeline capacity on a month-to-month recallable basis. In order to accommodate customer migration, the utility must perform the same storage reallocations during the withdrawal season that it performs during the injection season. The Commission approved an increase to the month-end delivery tolerance from 2% to 5%. The utility Aggregation Charge will include a credit for working capital. The Commission has also required improved access to customer data. The Commission endorsed a compromise proposal permitting customers a 120-day switch window before a one-year minimum stay requirement can be imposed on a customer returning to utility service. The Commission directed that a cost study be performed to ascertain the utility's billing costs, which should be used to arrive at an updated Single Billing Option credit (and will remain at 33 cents in the interim). Despite legislation providing a purchase of receivable option in the electric programs, the Commission declined to implement POR in this case. The full text of the Order is available on the NEM Website.

Workshop for Electric ABC Rules

A workshop will be convened on February 13, 2008, from 9AM to 4:30PM to develop rules applicable to the licensing of agents, brokers and consultants in the retail electric market. The workshop will be held in Room 413 of the Stratton Building in Springfield. Subjects of the workshop are to include the definition of agents, brokers, and consultants; Commission requirements for licensure such as technical competence, managerial competence and financial responsibility; code of conduct; disciplinary process and reporting requirements. RSVP to Cassie Washko at

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Commission Report on Electric Choice Program

The Commission issued its annual report on the status of the electric choice program in Michigan. Approximately 4,835 C&I customers participated in electric choice as of December 31, 2007, representing 4% or 311,310 MWHs of the total sales in energy usage of the Detroit Edison and Consumers Energy service territories. This is a reduction from 6% in 2006. Specifically, the Commission reported that, "the electric choice load served in the Consumers Energy service territory at year-end 2007 totaled 315 MW. This is 66 percent less than the 926 MW served at the high point in 2004. Similarly, the 672 customers served by AES providers in 2007 reflects approximately a 54 percent reduction from the 1,473 customers served in 2004." Additionally, "the electric choice load served in the Detroit Edison service territory at year-end totaled 708 MW. This is over 70 percent less than the 2,378 MW served at the high point in 2004. The 4,163 customers receiving service in 2007 represent a 76 percent reduction since 2004, when the number of customers was 17,241." In 2007, there was negligible residential customer participation in the Detroit Edison service territory and no residential customer participation in the Consumers Energy service territory. The full text of the Report is available on the NEM Website.

New Jersey
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Order on 2008 Basic Generation Service

The Board issued an Order memorializing its November 2007 decision approving Basic Generation Service (BGS) procurement for the period beginning June 1, 2008. The BGS process approved largely mirrors that which has been used in years past. Two descending clock auctions will be used. The BGS-CIEP auction will procure hourly priced service for larger C&I customers. CIEP customers will also be charged a $0.00015/kwh Standby Charge. The auction tranche size for the CIEP will be increased from 25 MW to 75 MW. The BGS-FP auction will procure one-third of the service requirements for the remainder of the utilities customers for a three-year period beginning June 1, 2008. BGS-FP customers using 500 kw or more that switch to a competitive supplier and then want to return to FP service must now commit to BGS-FP service for twelve months. The retail margin of 5 mils per kWh, applicable to CIEP customers and FP customers with a peak load share of 750 kw or higher, remains unchanged.

The Board considered proposals to increase the frequency of procurements and decided that it, "is not convinced that the current proposals for pricing based on Auctions for procurement of electricity for shorter periods than the current format would increase retail competition significantly. Gauging by the results of past BGS auctions, such Auctions could increase the short-term costs to customers." The full text of the 2008 BGS Order is available on the NEM Website.

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Settlement Filed on VEDO Phased Exit From Merchant Function

Stakeholders have filed a settlement in VEDO's application for a phased exit from the gas merchant function. The settlement provides that VEDO will conduct a commodity supply auction in May 2008 to establish a Standard Sales Offer (SSO) service that would be implemented on July 1, 2008. SSO service would take the place of GCR service, under a market-based and formula-derived rate. In February 2009, VEDO will conduct a commodity supply auction for Standard Choice Offer (SCO) service that would be implemented in April 1, 2009. VEDO will conduct at least two SCO service auctions, and if Commission approval of full choice has not been obtained by April 1, 2011, another SCO service auction will be held for a subsequent annual period and so on. The settlement provides for the establishment of an Exit Transition Cost Rider, to recover merchant function exit costs from all SSO, SCO and choice customers. VEDO agrees as part of the settlement to withdraw its proposal to hedge a portion of the SSO price during the winter months. The settlement also offers an alternative timeline for implementing SSO and SCO service in the case the milestones discussed are not reached. The full text of the VEDO Settlement (Part 1 and Part 2) is available on the NEM Website.

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HB 2200 and HB 2201 Introduced on Electric Service

HB 2200 and HB 2201 have been introduced on default service, rate phase-ins, and energy efficiency and demand response programs. HB 2201 sets forth the terms under which default service would be provided. It includes a requirement that default service be provided at "the lowest reasonable rates on a long-term basis and include[] a portfolio of long-term, short-term and spot-market purchases." Competitive procurement processes could include auctions, RFPs, spot market purchases and bilateral contracts. Long-term contracts, of a duration of greater than five years but not exceeding twenty years could be entered into for serving up to twenty percent of projected default service load. Default service rates for residential and small commercial customers could not change more frequently than annually. Utilities would also be required to file voluntary electric rate phase-in plans. The full text of HB 2201 is available on the NEM Website.

HB 2200 would institute a requirement for demand response and energy efficiency programs. A program administrator, via a competitive procurement process, would solicit demand response and energy efficiency programs for each electric utility service area for residential, commercial and industrial customers using third-party entities. The full text of HB 2200 is available on the NEM Website.

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