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June 22, 2007
NEM Summer Executive Committee and Policy Development Meeting

NEM's Summer Executive Committee and Policy Development will take place on July 9-10, 2007. The meeting will be hosted by The Goeken Group Corp. and PolyBrite International. The meeting will take place at the Spring Hill Suites Chicago/Naperville and will be followed by a reception and tour at the Goeken Group Corp. headquarters. Many thanks to Jack Goeken, Carl Scianna and Sandra Goeken-Miles for offering to host our meeting. At this meeting, we evaluate our advocacy priorities for the remainder of the year and elect our Executive Committee leadership.

Please contact the Springhill Suites Chicago/Naperville for the preferred NEM accommodation rate at 630-393-3103. Please register at this hotlink. The final agenda is available here.

House Energy Legislation Markup

The House Subcommittee on Energy and Air Quality was scheduled to meet in open markup session this week to consider committee prints on energy legislation. The legislation is scheduled for markup before the full House Energy and Commerce Committee next week. It pertains to a smart electricity grid, energy efficiency standards, loan guarantees for innovative energy technologies, renewable fuels infrastructure incentives, and Energy Information Administration data collection. Of particular note, with respect to a smart grid, the committee prints would establish a federal policy in support of grid modernization and establish a Grid Modernization Commission. PURPA would be amended to require states to consider electric utility rate decoupling as well as requiring utilities to make time-sensitive supply, cost, price and other information available to consumers to facilitate smart grid technologies and demand response. With respect to energy efficiency, the committee prints would establish new efficiency standards for home appliances, lighting, residential, commercial and federal buildings. The House is also considering modifications to the Energy Information Administration's state data collection efforts to support efficient energy markets. The full texts of the Committee Prints are available on the NEM Website.

ANOPR on Wholesale Competition in Organized Electric Markets

FERC is issuing an ANOPR on potential reforms to improve the operation of wholesale power markets administered by RTOs/ISOs. The ANOPR is in response to information received in two prior technical conferences and pertains to demand response, long term power contracts, market monitoring units, and responsiveness of RTOs/ISOs. The Commission has outlined its proposals for consideration as follows:

"Demand Response and Pricing During Power Shortages - proposals
1) Require RTOs and ISOs to allow demand resources to provide certain ancillary services in their markets unless not permitted by state law, modify tariffs to let demand resources provide spinning and supplemental reserves without being required to sell into the energy market.
2) Modify RTO and ISO tariffs to eliminate certain charges for purchasing less energy in real time than in the day ahead market during a system emergency.
3) Amend market rules to permit an entity that aggregates the demand responses of individual retail consumers to bid the aggregate demand reduction directly into an RTO or ISO energy market, unless not permitted by state law.
4) Modify market power mitigation rules so that pricing during an emergency can elicit more demand response.

Long-term Power Contracting - proposals
1) Require RTOs and ISOs to post information that would facilitate long-term contracts.
2) Require or encourage efforts by RTOs and ISOs to develop standardized forward products.
3) Dedicate a portion of the ISO’s or RTO’s website for market participants to post long-term buy/sell offers.

Market Monitoring Policies and Information Sharing - proposals
1) Remove the market monitoring unit from RTO/ISO operations.
2) Require that the MMU advise the Commission and other stakeholders of any design flaws and report to the Commission any tariff violations it believes may
have been committed by the RTO or ISO.
3) Regular conference calls among the market monitor, interested state commission and FERC staff.
4) Release of offer and bid data, with a lag period. Release would mask market participants’ identities.
5) Subject to certain limitations, state regulatory commissions within an RTO or ISO may request and receive information from the RTO’s or ISO’s market monitoring unit.
6) Develop a pro forma tariff provision to address all sections relating to market monitoring.

Responsiveness of RTOs and ISOs - proposals
1) Provide RTO and ISO customers with direct access to the board of directors."

Comments on the ANOPR are due 45 days after publication in the Federal Register. The full text of the ANOPR Fact Sheet is available on the NEM Website.

Click here to view all past updates.
Advanced Metering and Demand Side Management Collaboratives

The Commission has established an advanced metering infrastructure (AMI) and demand side management (DSM) collaborative. The collaborative will examine four issues: 1) AMI technical standards and operational capabilities; 2) competitive neutrality issues; 3) cost recovery; and 4) cost effectiveness tests. The collaborative must report the outcome of its discussions to the Commission on July 6, 2007. Earlier this year the Commission approved BGE's request for a Demand Response Pilot Program and an AMI Pilot Program. Pepco and DPL filed for authority to establish DSM surcharges, AMI surcharges, DSM collaboratives and AMI advisory groups. The Commission decided to institute a Pepco/DPL-specific DSM collaborative as well. This collaborative must also report to the Commission by July 6, 2007, on any agreement on programs. The full texts of the Orders Establishing the Generic AMI-DSM Collaborative and the Pepco/DPL DSM Collaborative are available on the NEM Website.

New York
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NEM Comments on Retail Access Program Review

NEM submitted comments in the Commission's inquiry into retail access programs stating that the programs are a valuable construct in the continued movement toward attaining the Commission’s vision of the utilities exit from competitive commodity functions and reducing the risks and expenses that captive ratepayers bear when utilities perform the commodity merchant role. NEM argued that it would be premature to end these successful programs now, particularly in view of consumer interest and participation levels achieved to date and yet to be achieved, as well as the stakeholders’ meaningful resource commitment to continued market development. NEM noted that to the extent that the programs are portrayed as transitory in nature, rather than reliable market features, it will discourage the exact marketer investment of resources that is required to ensure the on-going availability of energy choice options.

NEM responded to the concern about possible “ratepayer subsidization” of competitive market participants. NEM pointed out that to the extent retail access programs leverage existing utility infrastructure that has been bought and paid for by captive ratepayers to effectuate State and Commission policy in favor of energy choice, these programs have efficiently avoided requiring the nascent marketplace to bear duplicative costs to provide these same services. Moreover, to the extent that consumers continue to bear hidden charges in utility delivery rates for competitive commodity related functions, it is the utilities, not the marketers, that are being subsidized by consumers. The full text of NEM's Comments is available on the NEM Website.

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