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March 4, 2011
NEM Annual Meeting

NEM's 14th Annual Conference will be held April 25-27, 2011, at the Embassy Suites Hotel, Washington DC Convention Center. We have already begun the process of inviting officials to participate. An outstanding group of Public Officials have already confirmed for this event. The Agenda is available at this hotlink. Member and Sponsor input on additional potential invitees are strongly encouraged. You may register at this hotlink.

NEM Comments on CFTC Rulemakings to Implement Dodd Frank Act

NEM filed comments on CFTC proposed rulemakings to implement the Dodd Frank Act. NEM recommended that:

1) a safe harbor or transitional period for compliance be established since the key term "swap" and other significant regulations have not yet been finalized by the Commission;
2) retail energy marketers have a primary business in supplying physical commodity to serve retail consumers and are not swap dealers. An exclusion from the "swap dealer" definition should be set forth such that unless an entity is a financial entity whose primary business function is that of a swap dealer, such entity should not be deemed to be a swap dealer.
3) The de minimis exception should be modified such that the swap positions connected with those activities into which the person is a seller over the course of the immediately preceding 12 months have an aggregate gross notional amount of no more than $100 million, excluding sales to swap dealers. The other two proposed requirements for the de minimis exception, under 15 counterparties and under 20 swaps, should be eliminated.
4) The end user exception to mandatory clearing should be streamlined for cost-effective compliance to allow electing counterparties that are not financial entities who sell fewer than $100 million a year in swaps (excluding sales to swap dealers) to meet their transaction-by-transaction reporting requirements with an annual certification.

The full text of NEM's Comments is available on the NEM Website.

EIA Proposes New Gas Marketer Reporting Requirements

EIA is proposing a three year extension to its current Form 910, Monthly Natural Gas Marketer Survey. EIA does not propose changes to the reporting on this survey. However, EIA proposes a new annual survey, EIA-910A, to report the annual totals of the existing elements of the monthly survey. These elements are to be broken out for each utility service territory in which the gas marketer operates, instead of by state as is reported on the monthly survey. EIA-910 would be due March 1 of each year. EIA's rationale for the new survey is to, "enable EIA to resolve differences between marketer volumes and volumes transported on the account of marketers on Form EIA-176." Additionally, EIA proposes to change the data confidentiality status afforded to information collection from EIA-910, "from the Confidential Information Protection and Statistical Efficiency Act (CIPSEA) to protecting the reported information using exemptions under the Freedom of Information Act and provisions in the Trade Secrets Act. The company level data would still be protected and withheld from public release but could be shared for nonstatistical purposes in limited circusmtances. . . . EIA proposes to publish annual data collected on Form EIA-910A in company identifiable form approximately 9 months after the end of the calendar year." Comments on the extension of EIA-910 and new EIA-910A are due May 2, 2011. The full texts of the Federal Register Notice and Proposed Surveys are available at this hotlink.

Click here to view all past updates.
DEO Auction Results

The Commission approved the results of DEO's standard choice offer (SCO) and standard service offer (SSO) auctions. The auctions set a new retail price adjustment of $1 per thousand cubic feet, to which is added the NYMEX month end settlement price to establish SCO and SSO rates. The new retail price adjustment will be implemented on April 1, 2011.

On a related note, DEO also filed with the Commission notice of its intent to file an application in which it will, "request Commission approval . . . to combine its next Standard Service Offer and Standard Choice Offer auctions and implement other changes thereafter to facilitate the Company's ongoing transition to a more competitive natural gas commodity market." DEO noted its intent to make the filing within thirty days.

Click here to view all past updates.
Statewide Investigation into Retail Electric Markets

As part of its determination to approve the FirstEnergy and Allegheny merger, the Commission decided to open a broader inquiry into the retail electric markets. Specifically, a Motion by Commissioners Powelson and Coleman explained, "we are mindful of our obligation to ensure a properly functioning and workable competitive retail electricity market pursuant to Section 2811(e). However, rather than attempting to make changes piecemeal as a result of a litigated proceeding, we believe that any issues related to the structure of the retail electricity market in Pennsylvania should be addressed on a statewide level. To that end, we will open a statewide investigation into Pennsylvania’s retail electricity market, with the goal of making recommendations for improvements to ensure a properly functioning and workable competitive retail electricity market exists in the state. This investigation will be initiated within 60 days and will examine both the legislative and the regulatory framework behind Pennsylvania’s competitive retail electricity markets, including an analysis of the current default service model and whether, as currently structured, that model is hindering competition. Additionally, the investigation will include a process to identify interested alternative suppliers of electric generation services qualified to provide default service throughout the state and should result in recommendations for legislative changes, as well as changes the Commission can initiate on its own, to improve competition in Pennsylvania’s retail markets.

In addition to the statewide investigation, we believe there are certain actions that should be taken immediately with regard to the relationships between electric distribution companies (EDCs) and their affiliate electric generation suppliers (EGSs)in order to ensure a properly functioning competitive retail market in Pennsylvania. The following provisions should be added to the Code of Conduct Rulemaking currently underway at Docket No. L-2010 2160942: (1) protections so that EDC-affiliated EGSs do not inappropriately benefit from the use of resources shared with its affiliate EDC; (2 prohibitions on joint EDC/EGS marketing, sales, and promotional activities; (3) provisions to prevent direct or indirect cross-subsidies, such as the use of the affiliate EDC for credit support for affiliated EGS sales; and (4) an examination of whether the Commission should require EDC-affiliated EGSs to change their trade names so as to be dissimilar from both the EDC affiliate and corporate parent.

Regarding FirstEnergy specifically, in addition to the retail market enhancements and protections included in the Settlement Agreement, within 30 days after the close of the merger, the merged entity shall coordinate a meeting with all interested EGSs to address the operational issues set forth in the record of this proceeding including, but not limited to: (1) not implying a right of rescission in customer enrollment confirmation letters; (2) implementing an EDI Advance Notice of Drop; (3) providing PLC factors; (4) developing procedures for seamless moves; and (5) addressing account attribute changes for shopping customers by eliminating any operational or other rules that provide a disincentive for customers to either switch to a competitive electricity provider, or once switched, to remain a customer of an EGS, when a person initiates service or when a customer moves or his or her customer information changes (this should include prohibitions against any rule that requires an applicant to take default service for any period of time before being able to obtain service from an EGS). FirstEnergy shall hold these operational calls with suppliers on a monthly basis for 24 months after consummation of the merger and thereafter as may be necessary. The purpose of these meetings is to assist suppliers with technical and operational issues and to reach mutually satisfactory resolutions for the operational problems as they may arise. FirstEnergy shall commit to working cooperatively with the EGSs
on addressing these issues."

The full text of the Powelson and Coleman Motion is available on the NEM Website.

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