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April 20, 2007
NEM Tenth Annual Global Energy Forum and Membership Meeting

Please join us 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 Steve Buyer, U.S. Congressman Tim Murphy, Ansis Teteris, Ministry of Economics, Republic of Latvia, FERC Commissioners Marc Spitzer and Jon Wellinghoff, Former Ambassador Keith Smith, NYMEX President, James Newsome, MCI Founder Jack Goeken, Delaware Senate Majority Leader Harris McDowell, Illinois Commerce Commissioner Erin O'Connell-Diaz, 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 and Georgia PSC Senior Utilities Advisor Jamie Barber.

Please use the hotlink below to view the agenda and to register:

Wholesale Power Market Conference Agenda

FERC previously announced that the second conference in its inquiry into competition in wholesale power markets would be held May 8, 2007, at its Washington, DC headquarters. FERC has now released a detailed agenda for the event. The first panel will discuss demand response in organized markets, including barriers and best practices for participation, compensation and possible FERC actions to enhance demand response participation. The second panel will address improving opportunities for long-term contracting in organized markets, including impediments to long-term contracting, the development level of forward markets that support bilateral contracting and possible FERC actions to remove barriers to long-term contracting. The final panel will examine enhancing the responsiveness of RTOs and ISOs, such as improvements to the decisionmaking process, board composition, providing adequate opportunities for stakeholder input and possible FERC actions to address these issues. The full text of the Conference Agenda is available on the NEM Website.

Proposed Rulemaking to Promote Natural Gas Market Price Transparency

FERC decided to institute a proposed rulemaking under its EPAct authority to promote price transparency in wholesale natural gas markets. The NOPR proposes: "a) a daily requirement for intrastate pipelines to post the capacities and volumes of natural gas flowing through their major receipt and delivery points and mainline segments, and b) an annual requirement for certain buyers and sellers of natural gas to report the numbers and volumes of relevant transactions for the previous calendar year." Additionally, holders of blanket marketing certificate authority or blanket unbundled sales services certificate authority would be required to notify FERC as to whether it reports transactions to price indices publishers. Comments on the NOPR 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.

Click here to view all past updates.
Detroit Edison Electric Distribution and Supply Rate Case

Detroit Edison (DTE) filed an application to modify its electric distribution and supply rates. DTE argues that it will have additional revenue requirements of $123 million associated with environmental compliance costs, inflation, infrastructure operations and maintenance, costs of customer uncollectibles, advanced metering infrastructure, DTE's Performance Excellence Process, and the impact of Electric Choice amongst other things. DTE notes that there is an interclass subsidy between full service C&I and residential customers. DTE proposes, "to eliminate 20% of the total inter-class rate subsidy contingent on the Commission adopting Detroit Edison's proposal to implement uniform distribution rates for commercial and industrial Detroit Edison full-service and Electric Choice customers. If the Commission does not adopt the Company's proposal to eliminate this disparity in C&I distribution rates, then Detroit Edison proposes to completely eliminate 100% of the inter-class rate subsidy."

DTE also proposes to implement the Choice Incentive Mechanism (CIM) on a permanent basis. "The purpose of the CIM is to reconcile changes in Electric Choice sales, both up or down, from the level of Electric Choice sales used to establish base rates, and then surcharge or credit Detroit Edison full service customer rates for any increase or decrease in non-fuel power supply revenue as a result of change in Electric Choice sales." Detroit Edison proposes to incorporate a symmetrical 90/10 sharing mechanism in the CIM such that customers would receive a refund of 90% of the the revenue gain when choice sales decline below the dead band level and would be surcharged 90% of the revenue loss when choice sales increase above the dead band level.

DTE also notes that it has reinstated a long-term integrated resource planning process. DTE argues that new baseload capacity will be needed in its service territory by 2017 and that a nuclear facility would be the most economic technology to meet the needs of its customers. DTE stated that it has begun the Combined Operating License Application process and is requesting working capital treatment for associated costs. DTE requested other accounting authority related to this activity.

The full texts of Detroit Edison's Application and Testimony are available on the NEM Website.

New York
Click here to view all past updates.
Electric Utility Hedging Guidelines

The Commission decided that, "to properly hedge commodity supply and reasonably protect mass market customers," that the development of utility-specific hedging guidelines is needed for electric utilities. Guidelines will include volatility measurement standards and limitation goals and also methods for reporting aggregate electric utility hedge prices at least quarterly. With respect to gas utilities, the Commission found that existing hedging practices are working well and require no changes at this time.

The Commission also determined that it will further examine long-term contracts as a means of facilitating new supply sources. Comments will be sought on barriers and incentives to long-term contracts, resource procurement practices and cost recovery mechanisms. The full text of the Order will be posted on the NEM Website when available electronically.

Commission to Review Programs to Promote Retail Access

The Commission has determined that it will review the programs and practices established to encourage retail access market development. Because of successes achieved in customer migration and ESCO market participation, Chairwoman Acampora stated, "Programs and practices initially established by the Commission to encourage market development at the inception and early stages of retail access may no longer be needed." For consideration, is whether certain programs have "outlived their usefulness and could be allowed to expire," as well as whether, "the costs of programs and practices could be shifted from ratepayers to market competitors." The Commission is requesting proposals for retail access program modifications with the purpose of better aligning programs with the current state of market development. Program modifications could be considered in a generic proceeding or future rate proceedings. Retail access program modification proposals are due June 7, 2007, and reply comments on the proposals are due June 27, 2007. The full text of the Order will be posted on the NEM Website when made available electronically.

Commission Orders Utility Revenue Decoupling Mechanisms

The Commission directed electric and gas utilities to develop revenue decoupling mechanisms to be considered in on-going and future rate cases. Revenue decoupling is intended to address the utilities disincentives to promote more efficient energy usage caused by the recovery of utility delivery costs via volumetric rates and marginal consumption blocks. The revenue decoupling mechanisms are to true-up actual and forecast delivery service revenues, and the true-up is to be considered no less than once per year. The full text of the Order will be posted on the NEM Website when made available electronically.

Click here to view all past updates.
Commission Approves Equitable Dominion Merger - FTC Seeks to Enjoin the Acquisition

The Pennsylvania Public Utility Commission approved Equitable's acquisition of Dominion, finding the transaction to be in the public interest. This despite the concerns voiced by NEM and other stakeholders pertaining to Equitable's agency program, lack of firm commitment to retail choice development, possible GCR distortions resulting from accounting changes and proper rate unbundling. The Commission did require Equitable to submit semiannual reports regarding its operational practices and modifications and/or replacements to its ALTRA EDI system. The reports are to include information on the formation of collaboratives, subjects of discussion and resolutions achieved. The full text of the Commission's Order is available on the NEM Website.

Subsequent to the PAPUC's approval, the Federal Trade Commission filed a complaint in federal district court seeking a temporary restraining order and preliminary injunction to stop Equitable's acquisition of Dominion Resources. FTC's complaint alleges that the transaction would lead to higher prices for the local distribution of natural gas to nonresidential customers in some areas of western Pennsylvania.

FTC previously issued an administrative complaint against Equitable and Dominion regarding this transaction in March. Both Equitable and Dominion asserted the state action doctrine as an affirmative defense to the FTC's inquiry. Equitable argued that, "The actions of respondent Equitable challenged in the Administrative Complaint are immunized from application of the Sherman, Clayton and Federal Trade Commission Acts by reason of the state action antitrust doctrine insofar as all of the actions that are the subject of the allegations contained within the FTC's Administrative Complaint were undertaken pursuant to a clearly articulated and affirmatively expressed policy of the Commonwealth of Pennsylvania, acting through the Pennsylvania Public Utility Commission, and are subject to active supervision by the state." In response, FTC counsel sought to strike the state action doctrine defense, "because Pennsylvania has neither clearly articulated, nor affirmatively expressed, a policy authorizing anticompetitive mergers between natural gas distribution companies . . . [and] Pennsylvania does not adequately supervise anticompetitive mergers between natural gas distribution companies." The utilities also raised the state action doctrine defense at the hearing on the TRO in federal district.

To review FTC's Activities in this matter, use this hotlink.

Proposed Rulemaking on Electric Sales Reporting Requirement

The Commission issued a proposed rulemaking order to impose a reporting requirement on electric utilities and electric generation suppliers (EGSs) pertaining to sales activity in the state's electric generation market. EGSs would report on an annual and statewide basis. Only active EGSs (licensed and currently providing service to one or more customers) would be required to report. Individual EGS market share information would by treated as confidential. Electric utilities will file quarterly.

EGSs would be required to report data by customer class for residential, small C&I, medium C&I and large C&I customers pertaining to:
1) number of customer accounts;
2) number of flat rate customer accounts;
3) number of seasonal rate customer accounts;
4) number of time of use customer accounts;
5) number of hybrid rate customer accounts;
6) number of fixed term contract customer accounts by length of term;
7) number of green power customer accounts;
8) number of mandatory curtailable customer accounts;
9) number of voluntary curtailable customer accounts; and
10) number of customer accounts based on billing methods.

The electric utilities would be required to report:
1) number of accounts;
2) sales by EGS (MWh);
3) sales by the utility (MWh);
4) number of EGSs serving customer accounts;
5) number of time of use customer accounts served by EGSs;
6) number of time of use customer accounts served by the utility;
7) number of hourly/real time price customer accounts served by EGSs;
8) number of hourly/real time price customer accounts served by the utility;
9) sales by EGSs to hourly/real time priced customer accounts (MWh).

Additionally, each electric utility would report information about each EGS providing generation sales in its service territory as follows:
1) identity of EGS;
2) accounts served by EGS - by customer class for residential, small C&I, medium C&I and large C&I customers; and
3) sales in MW to customer accounts - by customer class for residential, small C&I, medium C&I and large C&I customers.

The Commission determined to define customer groupings for reporting purposes as follows: small C&I customers are those with Peak Load Contributions (PLCs) less that 25 kW; medium C&I customers are those with PLCs from 25kW up to and including 500kW, and large C&I customers are those with PLCs greater than 500kW. Comments on the proposed regulations and reporting forms are due sixty days after publication in the Pennsylvania Bulletin. The full text of the Proposed Rulemaking Order is available on the NEM Website.

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