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May 9, 2008
Shell Energy North America (U.S.) L.P. Elected to NEM's Executive Committee

Shell Energy North America (U.S.) L.P. (SENA) has been elected to NEM's Executive Committee. Shell will be represented within NEM by Matthew J. Picardi.

Headquartered in Houston, with regional offices throughout the United States and Canada, Shell Energy North America is a wholly owned subsidiary of Royal Dutch Shell plc. In conjunction with its subsidiaries, SENA trades and markets natural gas, wholesale power and risk management products with counterparties and customers throughout the continent. SENA currently conducts most of its US business activities in the name of its subsidiaries Coral Power, L.L.C. and Coral Energy Resources, L.P. More information about SENA is available at Shell Energy North America (U.S.), L.P. (Shell),

Matt Picardi, SENA Vice President - Regulatory Affairs, will be the company’s point of contact with NEM if the SENA’s membership is approved. Matt is located at 111 Washington Avenue, Suite #750, Albany, New York 12210. He can be contacted at (518) 433-0949 for any additional questions.

For those of you who don’t know Matt, he started his career with Niagara Mohawk Power Corporation as a regulatory and commercial transactions attorney. In that capacity, he tried many cases before the New York State Public Service Commission and Federal Energy Regulatory Commission ("FERC'), including rate cases and proceedings determining appropriate payments to be made to independent power producers under the Public Utility Regulatory Policies Act. In June of 1996, he was appointed General Counsel of Niagara Mohawk Energy, the natural gas and power marketing affiliate of Niagara Mohawk. Also, he was a co-founder and served as Chair of the National Energy Marketers Association.

Mr. Picardi became Dynegy's lead regulatory counsel for the Northeast United States in 2000. While in that position, he was extremely active in market design issues for electricity markets administered by the New York Independent System Operator ("NYISO") and was a member of NYISO's Management Committee and served as Chair of NYISO's Installed Capacity Working Group.

In December of 2002, Mr. Picardi joined Shell Energy North America to lead its natural gas and power regulatory activity for the North Region. For Shell Energy, this covers corporate affiliates that market and sell power in Canada and the regions covered by PJM Interconnection, Inc., NYISO, ISO-New England and Midwest ISO. He served as Chair of NYISO's Management Committee in 2007, and on the Stakeholder Advisory Committee for the Ontario Independent Electricity System Operator Board of Directors. Mr. Picardi is also a member of the Board of Directors of the Northeast Energy and Commerce Association.

Mr. Picardi holds a B.A from Hobart College and J.D. from Syracuse University College of Law. He lives in the Albany, New York area with his wife and three children.

NEM Annual Spring Membership Meeting

NEM's Global Energy Forum and Annual Membership Meeting held in Washington, DC last week was a great success. This year's theme was "Strategic Energy, Security & Advanced Technology Policies - Think Globally, Save Locally." NEM's Meeting Press Release and Speaker Presentations are now posted on the NEM Website.

Of particular note, U.S. Under Secretary of Energy Clarence "Bud" Albright announced at the event the issuance of the Solar Funding Opportunity Announcement for up to $60 million in funding over five years (Fiscal Years 2008-2012), including $10 million in FY 2008 appropriations and $10 million in the FY 2009 Budget request, to support the development of low-cost Concentrating Solar Power technology. The DOE's announcement was followed by SUNRGI's announcement of its invention of Xtreme Concentrated Photovoltaics™ (XCPV™). SUNRGI’s new solar energy system will soon make it possible to produce electricity at a wholesale cost of 5-cents per kWh (kilowatt hour), a price competitive with the wholesale cost of producing electricity using fossil fuels.

We had a great turnout for the event, featuring global, national and regional energy policy leaders including: Doug Hengel, U.S. Department of State, Foreign officials from Russia, Israel, Romania, and Slovenia, C.H. "Bud Albright, Jr., Undersecretary of Energy for DOE, U.S. Senator Jim DeMint (R-SC), Member, Energy and Natural Resources Committee, US House Majority Whip James Clyburn (D-SC), U.S. Congressman Joe Barton (R-TX), U.S. Congressman John Shadegg (R-AZ), FERC Commissioner Marc Spitzer, FERC Commissioner Jon Wellinghoff, CFTC Commissioner Michael Dunn, David Wales, Deputy Director, Bureau of Competition, Federal Trade Commission, New York PSC Chairman, Garry Brown, Texas PUC Chairman, Barry Smitherman, GAPSC Commissioner, Stan Wise, Asst. Executive Director, Maryland PSC, Calvin Timmerman and Pennsylvania PUC Energy Advisor, Eric Matheson.

Many thanks to our sponsors, speakers and attendees for making the meeting a success.

FERC Chairman and Commissioners Testify on Prevention of Cross-Subsidization

The FERC Chairman and Commissioners testified before the Senate Energy and Natural Resources Committee on the adequacy of state and federal regulatory structures for governing electric utility holding companies in light of EPAct's repeal of PUHCA in 2005 and in view of GAO's recent report on FERC's oversight activities. FERC reported on its related activities, in particular its recent rulemaking setting forth its policy "to accept state cross-subsidization protections absent evidence that additional measures are needed to protect wholesale customers or where states lack authority in this area." FERC also noted its new rules to address accounting for centralized service companies in holding companies and pricing for affiliate trades of non-power goods and services. FERC considered the GAO report recommendations and refuted the contention in the GAO report that FERC relies on self-reporting as the primary enforcement mechanism to prevent inappropriate cross-subsidization. The full text of FERC's Testimony is available on the NEM Website.

FERC Follow-Up Technical Conference on Form 552 Wholesale Gas Reporting

FERC Staff will convene a second technical conference to address questions associated with the new wholesale gas reporting requirement on Form 552 under Order 704. The follow-up conference will be held May 19, 2008, from 9:30AM to 3:30PM at the Commission's Washington, DC headquarters. Those that wish to participate by phone must register by May 14, 2008, at

Staff compiled over 100 questions from stakeholders on Form 552 reporting and was not able to address all of the questions in the course of the previous technical conference. On May 12, Staff will post its draft responses to the questions and a workshop agenda. The full text of the Notice of Follow-Up Workshop is available on the NEM Website.

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Nicor Gas Files Rate Case

Nicor has filed a rate case requesting a $140.3 million increase in delivery rates. Nicor also proposed to implement a revenue decoupling mechanism as part of its filing.

Nicor proposed to modify its transportation tariffs (Rates 74, 75, 76, and 77) to reflect the cost of service study filed with the case. The proposed transportation charge modifications pertain to Nicor's Storage Banking Service, individual and group Administration Charges, Recording Device Charges, Group Change Fees, Transportation Service Credit, Storage Withdrawal Factor and Gas Supply Cost/Demand Gas Cost.

Nicor also proposed five new riders, Rider 26-Uncollectible Expense Adjustment, Rider 27-Company Use Adjustment, Rider 28-Volume Balancing Adjustment, Rider 29- Energy Efficiency Plan and Rider 30-Qualifying Infrastructure Plant. Nicor proposed different implementation adjustments for the Riders for sales and transportation customers.

The full text of Nicor's Rate Case Filing is available at this hotlink.

New Jersey
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Board Adopts Revisions to Energy Competition Rules

The Board has adopted revisions to its energy competition rules. The revisions pertain to the price reporting requirements, requiring marketers to provide customers access to detailed information concerning average pricing via phone or web (utilizing a formula method where appropriate) and permitting marketers to use alternative information disclosure methods, upon petition to the Board. The revised rules retain the 14-day right of rescission and independent third party verification requirement. The Board modified recordkeeping requirements for web-based enrollments so that rather than requiring marketers to retain an "exact copy" of each customer's acceptance screen image, marketers must record the date and time of customer acceptance as well as the service accepted and its terms and conditions. The full text of the Revised Energy Competition Rules are available on the NEM Website.

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Governor Signs Substitute SB221

Last week, Governor Strickland signed into law Substitute SB221. The law sets forth the terms under which the electric utilities will provide a standard service offer beginning January 1, 2009 through a market rate offer or electric security plan. The market rate offer is to be determined by a competitive bidding process. Electric utilities with electric generating facilities that "had been used and useful" in the state must offer it as part of the competitive bid for the first five years of the market rate offer as follows: 10% in year one, and not less than 20% in year two, 30% in year three, 40% in year four and 50% in year five. Under an electric security plan, utilities would be provided allowance for construction work in progress for electric generating facility costs, with such allowance established as a nonbypassable surcharge for the life of the facility. The Commission could require a phase-in of electric utility rates established under these rate schemes, with deferred costs collected through a nonbypassable charge.

Just prior to Substitute SB221 becoming law, Duke Energy Ohio filed an application with FERC requesting approval of a transaction under which its generation facilities and appurtenant interconnection facilities would be owned by unformed entities that would be indirect subsidiaries of Duke Energy Ohio's parent, Cinergy. Ohio PUC Chairman Schriber issued a statement about Duke Energy Ohio's filing noting that, "The motive behind the timing of Duke's announcement is, at best, suspect. Therefore, we believe that it is important to intervene at the FERC on behalf of the electric ratepayers of Ohio and to ensure that Duke's filing is not an attempt to skirt our recently passed legislation, Substitute Senate Bill 221. The Commission's Order on Remand affirming Duke's Rate Stabilization Plan prohibits the company from divesting its generating assets through Dec. 31, 2008. The General Assembly, in passing Substitute Senate Bill 221, has extended this prohibition into 2009 and beyond. The bill specifically states that no electric distribution utility can sell or transfer generating assets without obtaining prior PUCO approval."

The full texts of Sub. SB221 and Duke Energy Ohio's Filing are available on the NEM Website.

VEDO Settlement on Transitional Exit of Merchant Function Approved

The Commission approved the settlement filed on VEDO's transitional exit from the gas merchant function. A multi-phase process is to be used. The beginning phase will entail elimination of the traditional GCR mechanism and replacement by a standard service offer (SSO) rate, that will be established through an auction process. The next phase will entail the establishment of a standard choice offer (SCO), which will also be established through auction. A primary distinguishing feature of this phase will be that the supplier responsible for providing commodity service will be identified on the customer's bill. The last phase contemplated by the filing where VEDO exits the merchant function, entailing a direct relationship between the customer and supplier, was not requested for Commission approval at this time. The Commission approved the VEDO settlement in its entirety, finding that, it "benefits ratepayers and the public interest." The full text of the Order is available on the NEM Website.

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