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March 21, 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. This year's theme is "Strategic Energy, Security & Advanced Technology Policies - Think Globally, Save Locally." Please register at this hotlink. A final agenda can be viewed 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.

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 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, Massachusetts DPU Chairman, Paul Hibbard, New York PSC Chairman, Garry Brown, Texas PUC Chairman, Barry Smitherman and Pennsylvania PUC Energy Advisor, Eric Matheson.

Commission Considers Changes to Standards of Conduct Rules

FERC issued a proposed rulemaking to modify its Standards of Conduct for transmission providers. The proposed rulemaking pertains to three rules. First, the "independent functioning rule" would require transmission function employees to function independently of marketing function employees, with the definition of marketing function employees restricted to those actually engaged in marketing functions and not all employees of a marketing affiliate. Second, the "no conduit rule" would be reformed to prohibit employees from passing restricted information to marketing function employees, prohibit transmission providers from using a conduit to pass rstricted information to prohibited employees and prohibit marketing function employees from receiving transmission function information. Finally, the "transparency rule" pertains to disclosure of information (i.e. on OASIS or website posting) to take it out of the no conduit rule. Comments on the proposed rulemaking are due forty five days after publication in the Federal Register. The full text of the NOPR will be posted on the NEM Website when made available electronically.

FERC Revises Reporting Requirements for Interstate Natural Gas Companies

FERC adopted revisions to Form 2 (Annual Report for Major Gas Companies), Form 2A (Annual Report for Non-Major Gas Companies), and Form 3-Q (Quarterly Financial Report of Electric Utilities, Licensees, and Natural Gas Companies) to require interstate natural gas companies to submit data that is better reflective of market and cost information. As a result, it is intended that shippers will be better able to assess the justness and reasonableness of pipeline rates. The companies will also be required to submit, "additional revenue information related to the disposition of shipper-supplied gas, affiliate transactions, rate treatment for new facilities, discounted and negotiated rate services, deferred income tax and state tax issues and regulatory assets and liabilities." The full text of the Final Rule will be posted on the NEM Website when made available electronically.

Ohio Commission Requests Review of FirstEnergy and AEP Market Based Rate Authority

The Ohio Commission filed a request with FERC that it conduct further analysis attendant with the grant of market based rate authority to FirstEnergy and AEP. The Ohio Commission contends that FirstEnergy and AEP fail the market share screen when certain circumstances are considered. In the case of FirstEnergy this includes: "1) the expiration of a power sales agreement committing its generation to native load; 2) the acquisition of the Fremont Energy Facility; 3) the unavailability and/or undeliverability of MISO generation to compete with FirstEnergy uncommitted generation; and 4) import limitations into the FirstEnergy zone." With respect to AEP, the Ohio Commission maintains that AEP's market share analysis is based, "on the false premise that all PJM uncommitted generation may compete with AEP's uncommitted generation." The Ohio Commission suggests that FERC require FirstEnergy and AEP to conduct a delivered price screen before making a decision on the continuation of market based rate authority for 2009 through 2011. The full texts of the Commission's FirstEnergy and AEP Filings are available on the NEM Website.

New Jersey
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Proposed Amendments to Affiliate Rules

The Board has issued proposed amendments to its affiliate relations rules. The proposal is precipitated by the recent repeal of PUHCA as well as examples of holding company practices encountered nationally and in the State. The rules pertain to utility corporate structure, utility relations with public utility holding companies, dividends, and Board access to public utility and public utility holding company books and records. The rules would establish ring fencing provisions to insulate ratepayers from public utility capital impairment. Additionally, the rules would potentially separate the corporate boards of directors of the public utility and public utility holding company by requiring independence of certain directors. Comments are due May 17, 2008. The full text of the Proposed Rulemaking is available on the NEM Website.

New York
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Commission Considers Revisions to UBP

The Commission proposed revisions to the UBP, including a new Section 10 on Marketing Standards, to address perceived problems with ESCO marketing practices. The proposed changes to the UBP are intended to strengthen residential consumer protections and Commission oversight.

In addition to the UBP modifications, the Commission requests comment on the following specific questions:

"1. Should the ESCOs be subject to the utility assessments provided by PSL §18-a?

2. Should the customer of record be the only person qualified to enroll the residential account with an ESCO?

3. Should early termination fees for residential customers be limited to: (a) a flat amount (e.g.$200); (b) an amount based upon a set fee per month multiplied by the number of months remaining on the contract (e.g. $8 x 20 months = $160); or (c) some other variation?

4. Should there be a grace period for the application of early termination fees to residential customers, and if so, what is the appropriate length of time for the grace period?

5. Is the number of Customers served by an ESCO proprietary trade secret information, under the standards set forth in the State Freedom of Information Law?

6. Should the UBP provisions with respect to Marketing Standards be applicable to small commercial customers? If so, how should small commercial customers be defined?

7. Should ESCOs that include early termination fees in residential sales agreements be required to obtain a "wet" signature on the sales agreement?

8. How often do ESCOs enforce early termination fees for residential contracts? If available, the Commission seeks this information on an annual basis separated by contract types, e.g. fixed and variable price contracts.

9. How should the term "plain language" as used in Section 2.B.1.b of the UBP be defined?

10. Are there additional modifications to the UBP that should be considered?"

Important dates: Request to be added to service list due April 2, 2008; Initial Comments due April 18, 2008; Reply Comments due May 12, 2008.

The full text of the Request for Comments is available on the NEM Website. NEM will convene a conference call on the proposed changes on Thursday, March 27, 2008, at 3PM EST. Dial in 913-643-5111 and passcode 209353.

Commission Approves NYSEG "Price to Compare" Bill Message

As required as part of its last electric rate case, NYSEG convened a collaborative to examine use of a "Price to Compare" bill message. The Commission has approved the proposal developed in the collaborative. Accordingly, NYSEG must now include as a "must print" a "Price to Compare" message for every bill rendered after March 31, 2008, for all non-Mandatory Hourly Pricing customers receiving electric supply from the utility. The bill message will appear as follows:

"The NYSEG price for providing electricity supply during this billing period was x.xx/kWh, which includes a Merchant Function Charge of x.xx/kWh. If you decide to shop for electricity supply, you can compare this information with prices offered by energy services companies (ESCOs). You could achieve some tax savings if you switch to an ESCO. Additionally, if the ESCO includes its charges on your NYSEG bill, you would not have to pay NYSEG’s bill issuance charge of 89 cents per month. If you buy electricity from an ESCO, NYSEG will continue to deliver the electricity to you and you will continue to pay NYSEG for delivery, transition and basic service charges."

The full text of the Order is available on the NEM Website.

Click here to view all past updates.
State Supreme Court Reviews AEP Recovery of Electric Plant Costs

The Commission previously approved AEP's application to build an electric generating plant. The Commission specifically approved recovery of $24 million for R&D from its distribution customers and contemplated future recovery of construction and maintenance costs from distribution customers upon plant completion. The Commission decision was appealed on the basis that state restructuring law requires the separation of competitive electric generation service from regulated distribution service and that therefore the decision permitting AEP to build the plant should be reversed. The Supreme Court recognized that state restructuring law provisions, "prevent an electric-distribution utility from using revenues from noncompetitive distribution service to subsidize the cost of providing a competitive generation-service component; however, there may be merit to the commission's regulation of the design, construction, and operation of the proposed generation facility as a distribution-ancillary service related to AEP's POLR obligation, but this record is not fully developed in that regard." The Court remanded the case to the Commission for further findings, including for example, whether the requirement that any property included in utility rates by used and useful in rendering the public-utility service or be at least 75 percent complete was satisfied. The full text of the Order is available on the NEM Website.

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