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May 7, 2010
NEM's 13th Annual National Energy Restructuring Conference and Upcoming Events

Many thanks to the keynote speakers, NEM policy leadership, our sponsors, and the attendees for your support, outstanding presentations and substantive policy discussions during NEM’s Annual Restructuring Conference last week. Articles about the conference and your presentations are linked below:

New Rules Attract Energy and Technology Price Competition: States that implement new utility billing and collection rules attract new energy and technology price competition and local economic growth

PA and OH Lead in Restructuring State Energy Markets
Description: PA and Ohio implement new rules that attract energy and technology price competition and local economic growth

National Energy Consumer Bill of Rights Adopted: This Consumer Bill of Rights has been developed by members of the National Energy Marketers Association (“NEM”) to emphasize the commitment being made by competitive energy suppliers to act responsibly and treat every residential, commercial, and industrial customer with the highest level of respect as they consider the growing number of energy-related products and services available to them in today’s evolving marketplace.

Smart Grid Platform for Economic Growth: Smart Grid technologies including Smart Meters that read themselves offer Opportunities for Explosive Economic Growth and Lower Energy Costs

We are planning Industry Policy Leadership Roundtable Forums in Pennsylvania and Illinois over the coming months. Our Annual Winter Executive Committee Meeting is scheduled for January 17-19, 2011, in Miami at the famous Doral Hotel and Resort. Many Thanks to Doug Marcille, Vice Chair of NEM’s Executive Committee and CEO of US Gas and Electric for hosting this upcoming Executive Committee Meeting. Please also mark your calendar for October 18-20, 2010, for Harrisburg, PA. Draft agendas for the upcoming meetings are forthcoming. You may register for the Fall Meeting in Harrisburg at this hotlink.

Forest Capital LLC Elected to NEM Executive Committee

NEM is pleased to announce that Forest Capital LLC has been elected to NEM's Executive Committee. Forest Capital LLC will be represented by John Fox, President & CEO; Donald Kennedy, Senior Vice President and Martin Helfand, Chief Credit Officer.

Forest Capital LLC was formed by John Fox, Donald Kennedy, and Martin Helfand in December 2009. They all have extensive experience in the commercial finance marketplace. Forest Capital provides working capital to many kinds of businesses that, for many reasons, are unable to get conventional bank financing.

Forest Capital LLC provides working capital to Companies that are growing rapidly and have some form of financial stress. Forest Capital looks to current assets to support its funding. These assets maybe for sale of goods and or services. Once the goods or services are delivered, they purchase the asset and advance a significant amount against the face value. They have more than 50 years of experience in handling a wide variety of industries and products.

Technical Conference on Credit Reforms in Organized Electric Markets

FERC Staff will convene a technical conference on issues related to its proposed rulemaking on credit reforms in the organized wholesale electric markets. The conference will be held May 11, 2010, at 9AM at FERC's Washington, DC headquarters. The conference will address the specific issue of whether clarifying provisions are needed in RTO/ISO tariffs pertaining to their status as a party to each transaction to eliminate ambiguity as to their ability to set-off market obligations. The first panel will include the RTO/ISO perspective and also the perspective of regulatory oversight in related markets. The second panel will examine the issue from the market perspective and legal perspective. The full text of the Agenda for Technical Conference is available on the NEM Website.

New York
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Uniform Business Practices Phase II - Technical Conference and Request for Comments

Staff will convene a technical conference on May 20-21, 2010, to discuss the Uniform Business Practices Phase II, EDI practices and procedures, and the Commission's revised Power to Choose website. Specifically, with respect to the UBP Phase II process, the discussion will focus on: working group reports, applicability of marketing standards to C&I customers, requiring independent third party verification, contract renewal notifications, customer rescission of request to return to full utility service. The discussion will also include potential additional filing requirements for migration data.

The Commission also announced that it is requesting comments on the UBP Phase II reports (esco referral at service initiation, reverse slamming, customer complaint rate, provision of tax data, and customer lists). Comments are also requested on a potential independent third party verification requirement, contract renewal processes, and rescinding customer requests to return to full utility service. Comments are due July 6, 2010. The full texts of the Notice of Technical Conference, Notice Soliciting Comments and UBP Phase II Reports are available on the NEM Website.

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Proposed Default Service Regulations and Policy Statement

The Commission issued for comment proposed revisions to its default service regulations and policy statement to incorporate the requirements of Act 129. In particular, Act 129 requires that the electric utilities' procurements be conducted to ensure "adequate and reliable service at the least cost to consumers over time." Utility procurements may be in the form of auctions, RFPs, or bilateral agreements. The procurements are to include a prudent mix of spot market, short term and long term contracts (capped at 25% of the mix). Long-term contracts are defined as more than four but not more than twenty years in duration.

In addition to proposed revisions to regulatory language to incorporate these requirements, the Commission posed specific questions for comment as follows:

1. What is meant by ''least cost to customers over time?''
2. What time frame should the Commission use when evaluating whether a DSP's procurement plan produces least cost to customers over time?
3. To comply with the requirement that the Commission ensure that default service is adequate and reliable, should the Commission's default service regulations incorporate provisions to ensure the construction of needed generation capacity in Pennsylvania?
4. If the Commission should adopt a provision to ensure the construction of needed generation capacity, how should the default service regulations be revised?
5. Which approach to supply procurement—a managed portfolio approach or a full requirements approach—is more likely to produce the least cost to customers over time?
6. What is a ''prudent mix'' of spot, long-term, and short-term contracts?
7. Does a ''prudent mix'' mean that the contracts are diversified and accumulated over time?
8. Should there be qualified parameters on the prudent mix? For instance, should the regulations preclude a DSP from entering into all of its long-term contracts in one year?
9. Should the DSP be restricted to entering into a certain percentage of contracts per year?
10. Should there be a requirement that on a total-DSP basis, the ''prudent mix'' means that some quantity of the total-DSP default service load must be served through spot market purchases, some quantity must be served through short-term contracts, and some quantity must be served through long-term contracts?
11. Should there be a requirement that some quantity of each rate class procurement group's load be served by spot market purchases, some quantity through short-term contracts, and some quantity through long-term contracts? In contrast, should a DSP be permitted to rely on only one or two of those product categories with the choice depending on what would be the prudent mix and would yield the least cost to customers over time for that specific DSP?
12. Should the DSP be required to hedge its positions with futures including natural gas futures because of the link between prices of natural gas and the prices of electricity?
13. Is the ''prudent mix'' standard a different standard for each different customer class?
14. What will be the effects of bankruptcies of wholesale supplier to default service suppliers on the short- and long-term contracts?
15. Does Act 129 allow for an after-the-fact review of the ''cost reasonableness standard'' in those cases where the approved default service plan gives the EDC substantial discretion regarding when to make purchases and how much electricity to buy in each purchase?
16. How should the requirement that ''this section shall apply'' to the purchase of AECs be implemented. Section 2807(e)(3.5) states that '' . . . the provisions of this section shall apply to any type of energy purchased by a default service provider to provide electric generation supply service, including energy or alternative energy portfolio standards credits required to be purchased, etc.''

Comments are due May 31, 2010. The full text of the Proposed Default Service Regulations and Policy Statement are available on the NEM Website.

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