Please mark your calendars for April 24-25, 2007, for NEM's Tenth Annual Global Energy Forum and Membership Meeting. The meeting will be held in Washington, DC at the Marriott Metro Center. Those confirmed to participate include: U.S. Senator Richard Burr, U.S. Congressman Edward Markey, U.S. Congressman Steve Buyer, U.S. Congressman Tim Murphy, FERC Commissioners Marc Spitzer and Jon Wellinghoff, Delaware Senate Majority Leader Harris McDowell, Ohio PUC Commissioner Don Mason, Pennsylvania PUC Energy Advisor Eric Matheson, New York PSC Administrative Law Judge Jeffrey Stockholm, Maryland PSC Assistant Executive Director Calvin Timmerman, MCI Founder Jack Goeken, NYMEX President, James Newsome, and Ansis Teteris, Ministry of Economics, Republic of Latvia.

Please use the hotlink below to view the agenda and to register: http://www.energymarketers.com/agenda/2007/April07Agenda.htm

Please note that the early bird registration discount is in effect through April 13, 2007. The NEM preferred rate at the Marriott Metro Center for hotel accommodations expires on April 13, 2007.

As required by EPAct, the Electric Energy Market Competition Task Force, comprised of representatives from FERC, FTC, DOE, DOJ and USDA, submitted a report to Congress on wholesale and retail electric market competition. The report includes a comprehensive discussion of the evolution of competitive wholesale and retail markets.

The Task Force identified a number of issues for states to consider in relation to retail competition and POLR policies. These include: 1) POLR service price should closely approximate the competitive price; 2) frequent adjustments to POLR prices should be permitted; 3) POLR service that is limited to an obligation to serve customers of a supplier that has left the market is the least intrusive form of POLR service. More expansive forms of POLR service limit development of alternative suppliers; 4) effective retail competition programs require different POLR service designs for different customer classes; 5) consumer awareness and access to comparative pricing information is important; 6) opt-out customer aggregatons are worth considering as a means to reduce marketer transaction costs without limiting customer choice; 7) rules and procedures for customer swithcing should allow customers to switch easily but deter slamming; and 8) auctions may allow retail customers to receive the benefits of competition in wholesale markets as suppliers compete to supply the necessary load.

With regard to the wholesale electric market, the Task Force discussed the bilateral sales approach utilized in the Northwest and Southeast in contrast with the organized market approach in the Northeast, MidAtlantic, Midwest, Texas and California. Shortcomings of the bilateral sales markets include lack of transparency, lack of shared information and difficulty of wholesale customers in obtaining transmission access. By contrast, organized markets provide price transparency, increase efficiency of trading, and provide price signals for generation building. However, concerns exist related to the inability to obtain long-term transmission access at predictable rates and commodity price volatility. Generation investment in wholesale power markets are impacted by the availability of long-term contracts, capital markets, and availability of transmission infrastructure. To elicit adequate supply in wholesale power markets the report recognized several options - allow wholesale price spikes when supplies are short; capacity payments; expand transmission capacity; or traditional regulatory authority over electricity generators/suppliers.

The full text of the Task Force Report is available on the NEM Website.

NEM submitted comments in FERC's inquiry into possible modifications to its capacity release program. NEM urged that capacity release program rules be updated to simultaneously facilitate the continued growth of both wholesale and retail natural gas markets. NEM urges the Commission to endorse the “assets follow the customer” capacity construct. NEM also argued that the Shipper Must Have Title (SMHT) policy is inconsistent with the current and future development of the retail natural gas markets. The SMHT rule impinges on forward-thinking utilities’ ability to design marketer-friendly capacity release programs and on a broader level limits the marketability of capacity and potentially interferes with the ability to construct “merchant function exit” strategies such as that being developed in Ohio. NEM recommended that removal of the maximum rate cap must be predicated on a Commission finding that the market is sufficiently competitive to prevent the exercise of market power in capacity release markets and the setting of unjust and unreasonable rates. With respect to portfolio management agreements, NEM argued that the core issue as to whether these arrangements are permissible or improper tying is the degree of transparency and openness in the availability of the capacity. Capacity arrangements should be subject to an arms length, competitive bidding process to promote market transparency. In the absence of this, improper tying issues may remain. The full text of NEM's Comments is available on the NEM Website.

AGA suggested that, "when a releasing party combines a release with gas supply obligations or other terms that have a nexus with the releasing party’s own business use of its capacity or natural gas needs, and the replacement shipper is willing, the transaction will not be considered to be an inappropriate 'tying' that is suspect under the Commission’s capacity release policies." AGA proposed exempting two types transactions from the SMHT rule. AGA suggested that transactions to effectuate retail choice programs should not be subject to the SMHT requirement, subject to certain qualifications:
"First, this exception should only apply to: (1) LDCs offering service to entities serving retail customers in state-approved choice programs; and (2) the use of LDC capacity to balance daily and seasonal delivery requirements.
Second, if choice providers receive storage service capacity releases from the LDC as part of the LDC’s support for the choice program, the choice provider should not be entitled to any waiver of the rule with respect to its use of the released capacity – i.e., the lifting of the shipper-must-have-title requirement applies only to the LDC’s use of its own capacity to facilitate its state approved choice program.
Third, the Commission should establish reporting obligations to ensure that it maintains all appropriate oversight ability. LDCs engaging in choice program activities not subject to the title restriction would provide periodic reports on the transactions undertaken subject to this exemption, similar to the reports required of interstate pipelines with respect to use of third party capacity on other pipelines free of the title requirement. LDCs engaging in choice programs subject to the waiver should certify or warrant that their capacity used for their state choice program has been subject to the shipper-must-have-title waiver. LDCs that use their own capacity to facilitate choice programs without being subject to title restrictions would file a report with the Commission each year indicating the name of the choice providers and the quantities of capacity utilized pursuant to this limited waiver of shipper-must-have-title requirements."
AGA also supported lifting the SMHT requirement for storage transactions, accompanied with additional reporting requirements. AGA supported lifting the price cap on short-term capacity releases subject to conditions.

INGAA supported lifting the maximum rate cap for capacity releases, subject to monitoring and reporting requirements. It suggested that the cap on short-term firm and interruptible transportation and storage services provided by pipelines also be lifted. INGAA argued that the SMHT rule should be retained.

NGSA recommended instituting a two-year experimental program in which the price cap for capacity release transactions is reviewed. NGSA agreed that clarification was needed with respect to tying and portfolio management services. NGSA supported retention of the SMHT rule.

The full texts of the above Stakeholders' Comments are available on the NEM Website.