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June 16, 2006
NEM Summer Executive Committee Meeting

Mark your calendars for NEM's Summer Executive Committee meeting to be held July 25-26, 2006, in Chicago, Illinois at the Congress Plaza Hotel and Convention Center. Please contact the hotel at 312-427-3800 and request the NEM reservation rate of $119/night.

It is at the Summer Executive Committee where we elect new leadership for the year and identify midcourse corrections for our regulatory advocacy strategy. Your participation in this meeting is critical.

Please register at this hotlink. (An agenda and slate of NEM Policy Chair nominations will be posted shortly).

Draft Report of Electric Energy Market Competition Task Force

As required by EPAct, a federal Electric Energy Market Competition Task Force (including a representative from FERC) has prepared a draft study of competition in the wholesale and retail electric markets. The Task Force makes a number of observations in the draft report that are open for comment.

With respect to the wholesale market, the Task Force notes the differing market structures in the Southeast and Northwest characterized by bilateral sales trading versus the centralized regional transmission facilities and trading markets in the Northeast, Midwest, Texas and California. The Task Force discusses different methods for ensuring adequate supply including permitting whole price spikes to occur when supply is short, using capacity payments, building transmission facilities, and traditional regulatory control over generators and suppliers.

With respect to retail markets, the Task Force notes the difficulty of assessing whether retail prices have been impacted by the introduction of competition because of the states implementation of retail rate caps and utility obligation to serve requirements. The Task Force found that, "One of the main impediments to retail competition has been the lack of entry by alternative suppliers and marketers to serve retail customers." The Task Force requests comments on how POLR pricing affects competition including the effect of long term rate freezes followed by rate shock and the regulatory response of further deferrals of rate increases. The importance of market based pricing signals is noted as well as the wholesale auction procurement method that is utilized in some jurisdictions. The Task Force also notes the success of the Orange and Rockland PowerSwitch program in facilitating migration of residential consumers. Comments on the draft report are due June 26, 2006. The full text of the Draft Report is available on the NEM Website.

Click here to view all past updates.
DTE Electric Rate Case

As required by the Commission, Detroit Edison filed testimony pertaining to the level of its electric retail rates. The Commission instituted the proceeding to determine if the utility's rates were excessive and should be decreased. However, Detroit Edison claims that as part of its review it has determined a need for $45 million in additional revenue effective January 1, 2007. Detroit Edison proposed to recover the shortfall through a significant increase in distribution rates applicable to choice customers. For example, D3 customers present rate would increase 27% from 3.65 cents to 4.65 cents, D4 customers present rate would increase 58% from 2.48 cents to 3.93 cents, and D6 customers present rate would increase 63% from 1.64 cents to 2.68 cents.

Detroit Edison proposes to implement a Choice Tracker Mechanism to trace changes in choice sales that deviate from that assumed in base rates and to institute a surcharge/credit for full service customers to cover resulting increases/decreases in non-fuel power supply revenues from a change in electric choice sales.

The full text of DTE's Testimony and Exhibits are available on the NEM Website.

New Jersey
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Utilities Basic Gas Supply Service Filings

The gas utilities have recently submitted revised Basic Gas Supply Service filings for 2006-07. PSEG proposes a reduction in its BGSS-RSG rate from the current rate of 106.3606 cents per them to 104.9049 cents per therm. PSEG has also requested an increase in its Balancing Charge from the current 8.6531 cents per balancing therm to 10.5828 cents per balancing therm and an increase in its Storage Inventory Carrying Charge to 1.9408 cents per therm for the balancing portion and 2.4905 cents per therm for the commodity portion.

NJNG is proposing a reduction of $0.1104 per therm for residential, commercial and industrial BGSS rates. South Jersey Gas proposes to reduce its BGSS charge from $1.2164 per therm to $1.1516 per therm. Elizabethtown Gas proposes a reduction in its BGSS rate from $1.1690 per therm to $1.1678 per therm.

The utility filings are available as follows:



South Jersey Gas:

Elizabethtown Gas:

New York
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ALJs Issue Recommended Decision in NYSEG Electric Rate Case

The ALJs in NYSEG's electric rate case issued a Recommended Decision finding that the default supply option for all customers should be a variable rate, based on a flow-through of the wholesale spot market price of power. However, the ALJs concluded that NYSEG must also offer a fixed price option that customers may elect on an opt-in basis. They found that, "the market is not sufficiently developed to rely on it to provide fixed price service at a reasonable price." The ALJs reasoned that certain elements of a fixed price utility offering could be instituted that would mitigate the damage to the competitive market including: 1) making the fixed price option an elective option, not the default service; 2) minimizing NYSEG's opportunity for profit and risk (limiting the markup to 122%); 3) limiting the customer term to one year; and 4) permitting customers to enroll in the option every six months. The ALJs also recommend that the fixed price offer be presented as a combined total of the commodity and fixed nonbypassable wires charge, rather than two separate charges. Additionally the ALJs recommend that NYSEG be required to file a marketer referral program proposal within sixty days of a Commission Order in the case, if parties fail to reach a successful collaboration on the issue.

Briefs on exceptions are due June 29, 2006, and briefs opposing exceptions are due July 14, 2006. The full text of the ALJs' Recommended Decision is available on the NEM Website.

NFG ESCO Referral Program Approved

The Commission approved NFG's proposed ESCO referral program in conformance with the ESCO Contract Option approach. By the terms of program, participating customers will be eligible to receive a two month, seven percent introductory discount from the utility's current month Gas Supply Charge. Customers may select a specific ESCO or be randomly assigned to an ESCO on a rotating basis. Customers can enroll through a written request, recorded telephone call or via electronic enrollment. Customers may only participate in the program one time, and those customers currently taking service from an ESCO are not eligible to enroll. ESCOs utilizing any of the three billing models used by NFG can participate in the program. The full text of the Order Approving NFG's ESCO Referral Program is available on the NEM Website.

Click here to view all past updates.
Procedural Schedule in Equitable-Dominion Acquisition

The ALJ has established a procedural schedule for the Equitable-Dominion acquisition case as follows:

Utilities Initial Testimony - June 15, 2006
Intervenors Initial Testimony - September 1, 2006
All Parties Rebuttal Testimony - September 29, 2006
All Parties Surrebuttal Testimony - October 23, 2006
Evidentiary Hearings - November 13-17, 2006
Close of Record - November 27, 2006
Main Briefs - December 15, 2006
Reply Briefs or Joint Settlement Petition - January 12, 2007
Recommended Decision - February 16, 2007

NEM will convene a conference call to discuss its strategy for this case. Please contact headquarters if you are interested in participating.

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