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July 27, 2007
NOPR on Cross-Subsidization Restrictions on Affiliate Transactions

The Commission issued a proposed rulemaking pertaining to restrictions on affiliate transactions between franchised public utilities with captive customers and market-regulated sales affiliates or non-utility affiliates in order to prevent inappropriate cross-subsidization. The proposed rulemaking is meant to address a gap in current rules, i.e, restrictions imposed on Section 205 market-based rate applicants do not cover non-power goods and services transactions between a franchised public utility and non-utilities. Also, restrictions imposed on Section 203 applicants apply only to merger applicants. Accordingly, FERC has proposed uniform affiliate restrictions to be applicable to all franchised public utilities with captive customers and their market-regulated and non-utility affiliates as to power and non-power goods and services transactions between them. The proposed rules would: "(1) require the Commissionís approval of all power sales by a franchised utility with captive customers to a market-regulated power sales affiliate; (2) require a franchised public utility with captive customers to provide non-power goods and services to a market-regulated power sales affiliate or a non-utility affiliate at a price that is the higher of cost or market price; (3) prohibit a franchised public utility with captive customers from purchasing non-power goods or services from a market-regulated power sales affiliate or a non-utility affiliate at a price above market price (with the exception of (4)); and (4) prohibit a franchised public utility with captive customers from receiving non-power services from a centralized service company at a price above cost." Comments on the NOPR are due thirty days after publication in the Federal Register. The full text of the NOPR is available on the NEM Website.

Georgia
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Commission Denied AGL Request to Extend Asset Management Agreement

AGL requested that it extend its current asset management agreement with Sequent Energy Management. The agreement is scheduled to expire March 31, 2008. AGL requested that Sequent function as its asset manager through March 31, 2011. Staff recommended that AGL's request be denied and that AGL be required to issue an RFP for asset management by October 31, 2007. The Commission adopted Staff's recommendation and further required AGL to provide a copy of the RFP at least fifteen days prior to its issuance for Staff review and approval. The RFP is to be provided to Staff after the conclusion of AGL's Capacity Supply Plan proceeding in late September. If Staff and AGL cannot agree on the RFP, it will be brought to the Commission for a decision. The full text of the Order is available on the NEM Website.

Illinois
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Electric Rate Package

Ameren has announced that a $1 billion agreement has been reached to fund rate relief for electric customers. Credits could begin reducing customer bills within weeks. The four year rate relief package is the product of discussions amongst the legislature, the Attorney General, Ameren, ComEd, and generators. Ameren will contribute $150 million, Exelon-affiliated companies will contribute $800 million and other companies will contribute the remainder to fund the package. The agreement must still pass the legislature and be signed by the Governor. The rate package provides for the Attorney General to withdraw related litigation and proceedings. The General Assembly leadership agrees not to pass legislation to reduce or freeze electric rates, or to tax electricity generators, through August 1, 2011.

The utilities have also agreed to endorse legislation that would create an Illinois Power Agency to procure power for Ameren and ComEd. In the interim, the auction procurement format would be replaced in June 2008 with an RFP process.

Michigan
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NEM and Staff Testimony in Consumers Gas Rate Case

NEM submitted testimony in Consumers gas rate case including proposals for: 1) reconciling all pools collectively instead of individually, 2) reducing annual overdeliveries by scheduling deliveries to normal, instead of colder-than-normal, weather with the flexibility to adjust to actual conditions to ensuring system reliability, 3) replacing the current annual volumetric true-up matrix mechanism with a uniform, market-based cash-out mechanism that will provide for a more equitable result, and 4) providing an opportunity for participating suppliers to trade off-setting imbalances among themselves prior to the cash-out.

In its testimony, Staff recommended, "that the Commission begin a focused GCC program collaborative to address possible changes to the annual supplier volume/price reconciliation process required under the Choice tariffs." Staff concluded that a single reconciliation, "does not appear to be unreasonable, would not unfairly impact the GCR customers, and would be acceptable to the utilities."

The full text of NEM's Testimony is available on the NEM Website and Staff's Testimony is available from NEM headquarters.

New York
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Time-Based Metering and Net Metering Standards

As required by the federal Energy Policy Act of 2005, the Commission initiated an inquiry into the appropriateness of adopting PURPA standards for time-based metering and net metering for electric utilities. A State can comply with PURPA if it has adopted a "comparable" standard. The Commission has concluded that its, "prior actions, under which various electric consumers are offered time-based rate schedules and appropriate metering devices, provide a standard comparable to PURPA. We interpret the comparable standard to include time-based metering and communications devices that are made available to some, but not all, electric customer classes." Similarly, the Commission concluded that, "New York's net metering legislation, and our prior actions, under which various electric consumers are offered net metering service, provide a net metering standard comparable to PURPA. Although PURPA does not define what is meant by a 'comparable' standard, it is reasonable to interpret this term to include net metering service that is made available to some, but not all, electric consumers." The full text of the Order is available on the NEM Website.

Pennsylvania
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Commission Binding Poll Approves Pike County Default Service Plan

At its agenda meeting this week, the Commission conducted a binding poll on issues associated with Pike County's default service plan. The Commission poll was consistent with the ALJ's Recommended Decision, by the terms of which Pike County will implement a seventeen month default service implementation plan beginning January 1, 2008 through May 31, 2009. Pike County will procure all energy from the NYISO on the spot market during the term of the plan. Vice Chairman Cawley noted that customers in the service territory will have the choice of a marketer-provided fixed price, opt out service or the utility's spot market product. Cawley said, "customers will have the best of both worlds: a legitimate choice between a spot product or a fixed product." Staff will next prepare an Order reflecting the results of the Commissioner poll. The full text of Cawley's Statement is available on the NEM Website.

Revisions to Net Metering and Interconnection Standards

In response to recent legislation amending the State's Alternative Energy Portfolio Standards Act, the Commission initiated a rulemaking to revise its net metering and interconnection standards. Because the legislation takes effect immediately, the provisions will be given effect while the rulemaking takes place. Relevant changes to definitions and the frequency of compensation for customer-generators include:

1) "customer-generator" is defined to increase the capacity limit on non-residential systems from 1 to 3 megawatts generally, and from 2 to 5 megawatts for those systems that operate in parallel with the grid during emergencies or that maintain critical infrastructure.
2) "net metering" is defined to include a restriction on virtual meter aggregation.
3) customer-generators are to be compensated for excess generation on an annual basis at the full retail rate, rather than the current monthly standard.

The full text of the Commissioner Pizzingrilli's Motion to Initiate Rulemaking is available on the NEM Website.



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