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June 29, 2012
NEM Summer Policy Conference

NEM's Summer Policy Conference will take place on August 21-23, 2012, in Chicago, Illinois. The Illinois Commerce Commission has confirmed that the entire Commission and its staff will participate and other top State Officials and Stakeholders will be invited. We are also pleased to inform you that the University Club has granted NEM permission to offer rooms at this exclusive Club on a first-come, first-served basis to our members subject to its code of conduct for guests at the Club. All reservations for members who wish to stay in the Club should be arranged with Catalina Aguilar at NEM headquarters. Please also note that we are arranging to have an NEM Member Baseball Game Night, the evening of August 22, 2012, at 7PM, White Sox v. New York Yankees. Please use this hotlink to register.

NEM Comments on CFTC Trade Option Exemption Proposal

NEM filed comments on the CFTC’s interim final rule that proposes to provide a trade option exemption from the general swaps rules, for certain physical delivery commodity options. There would be conditions for the exemption including position limits, large trader reporting, and recordkeeping and reporting requirements. NEM noted its concern that additional recordkeeping and reporting requirements will:

(1) Increase compliance costs,
(2) Reduce the availability and liquidity of physically settled options, and
(3) Increase premiums of physically settled options as fewer players would offer or demand these options.

The ultimate result of these three items would be to increase costs to electricity and natural gas to residential and commercial customers caused by the increase in risks and costs to the Retail Energy Marketers that serve them. The proposed reporting and recordkeeping requirements should not be imposed on Retail Energy Marketers as end users because the transactions these entities engage in, including the use of options to manage risk, ultimately result in actual physical energy delivery to consumers. In other words, trade options should be treated as any other contract intended for physical delivery with respect to recordkeeping and reporting requirements. The full text of NEM's Comments is available on the NEM Website.

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Pepco POR Filing

As ordered by the DCPSC, Pepco has filed a proposed electric POR program. Pepco proposes that the DC POR program largely mirror the POR program it already has in place Maryland. The discount rate will be computed as a function of uncollectible expense, program and development costs, and a risk component (initially set to zero). After the first year of the program a reconciliation component will also be added to set the discount rate. However, in a departure from the Maryland program, late payment fees will not be credited to uncollectible expense in setting the discount rate. Pepco requests that it be permitted to implement POR in coordination with its new billing system in 2014. It maintains that doing so will allow for the reduction of incremental costs and duplication of effort in implementing POR in both its current and future billing system. It estimates it will take nine months to implement POR in D.C. Comments are due July 25, 2012. The full text of the Pepco POR Filing is available on the NEM Website.

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Rulemaking Session on Electric Switching Regulations

The Commission has opened a proceeding to examine the switching period pertaining to retail electricity supply. Staff previously filed proposed regulatory revisions on the subject. The Staff proposal would reduce the transfer notice required to the utility of a customer's election to switch to a competitive supplier from 17 to 12 days prior to the customer's next scheduled meter date. The Commission will conduct a rulemaking session on August 9, 2012, at 10AM to consider whether to publish the proposed regulatory revisions as drafted or revised based on comments received during the rulemaking session. The full texts of the Notice and Staff's Proposed Revisions are available on the NEM Website.

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MichCon Proposed Changes to Gas Choice Program

MichCon filed with the Commission to implement changes to its voluntary gas customer choice program. MichCon proposes the following changes:

1) Change the term “Authorized Supplier” to “Alternative Supplier”;
2) Change the language in the residential acknowledgement statement from “agreement” to “contract”;
3) Require suppliers to satisfy credit deposits three business days prior to month end rather than by the last calendar day of the month; and
4) Modify the annual reconciliation process such that supplier deliveries that exceed the volume their customers have used will be returned in-kind.

Comments on MichCon's Proposal are due August 6, 2012. The full texts of MichCon's Proposal and the Notice for Comment are available on the NEM Website.

New Jersey
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2013 Basic Generation Service Proceeding

The Board has initiated a proceeding to determine the procurement process for Basic Generation Service (BGS) Fixed Price (FP) and Commercial and Industrial Energy Price (CIEP) requirements for the period commencing June 1, 2013. The Board directed the electric utilities and other interested parties to file BGS procurement proposals by July 2, 2012. The Board also directed the utilities to address the following issues in their July 2nd filings:

1) lowering the CIEP threshold to customers with a peak load share of 500kw beginning June 1, 2013;
2) the length of BGS procurement decision process;
3) requiring the installation of interval meters for all BGS eligible customers with a peak load share of 500 kw and above by June 1, 2013.

The Board also adopted a preliminary procedural schedule for the BGS 2013 proceeding as follows:
7/02/2012 - Filing of Proposals
7/20/2012 - Discovery requests due
8/03/2012 - Discovery responses due
8/31/2012 - Initial Comments
TBA - Legislative-type Hearing*
TBA - Public Hearings*
9/28/2012 - Final Comments**
November - Expected Board decision on proposals
Mid November- EDC Compliance Filing
Nov/Dec - Expected Board decision on Compliance Filing
Feb 2013 - Procurement Process for BGS Supply requirements

The full text of the 2013 BGS Order is available on the NEM Website.

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