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August 13, 2010
NEM Upcoming Events

Please mark your calendar for NEM's Fall Leadership Roundtable on October 18-20, 2010, in Harrisburg, PA. The conference will take place at the Hilton Harrisburg on One North Second Street. You may register for the Fall Meeting in Harrisburg at this hotlink.

Our Annual Winter Executive Committee Meeting is scheduled for January 17-19, 2011, in Miami at the famous Doral Hotel and Resort. Many Thanks to Doug Marcille, Vice Chair of NEM’s Executive Committee and CEO of US Gas and Electric for hosting this upcoming Executive Committee Meeting.

D.C. Circuit Court of Appeals Upholds FERC Decision in Order 712

Pipeline petitioners sought review of FERC's Order 712 which lifted the price ceilings for short term capacity releases but retained the ceilings for capacity sales by pipelines. Applying its approach in the INGAA case, in which the Court noted its special deference to FERC and the understanding that the Natural Gas Act was to address the natural monopoly that exists in natural gas pipeline transportation, the Court denied the pipelines petition for review. The Court cited FERC's authority under the NGA to treat pipelines and shippers differently based on "reasonable distinctions." Moreover, the difference in treatment recognized the concern that pipelines could wield market power. The full text of the Decision is available on the NEM Website.

Click here to view all past updates.
Staff Report on Electric Restructuring Issues

As directed by the Commission, Staff has issued a report on electric restructuring issues, in particular, whether or not to implement retail electric competition in Arizona, and if so, how to proceed with implementation. The Report followed stakeholder comments and a workshop. "At this point in time, Staff believes that although some form of retail electric competition may be in the public interest, in order to be sure, more analysis, discussion and study of all the aspects of the issue is required in order to perform a proper evaluation. The Commission should, however, approach this task with caution. The Commission should recognize that retail electric competition could bring benefits to some and could also present risks to others, especially in the transition period and especially to smaller customers and low income customers. If the Commission chooses to move forward with retail electric competition, it should do so only after a careful evaluation of the potential benefits and potential risks, as well as ways to mitigate those risks." Staff further recommends that, "if the Commission wishes to revisit retail electric competition in Arizona, the best path forward is to initiate a notice of inquiry on this topic and to hold workshops to explore the many details involved in properly analyzing the issue of retail electric competition and whether it is in the public interest." The full text of the Staff Report is available on the NEM Website.

Click here to view all past updates.
NEM Comments on Proposed Marketing Standards

NEM submitted comments on the Commission’s Tentative Order setting forth proposed interim guidelines applicable to the marketing and sales practices of electric generation suppliers (EGSs) and natural gas suppliers (NGSs). The Proposed Guidelines in large part represent the consensus workproduct of stakeholders involved in the Staff-led CHARGE and SEARCH workgroups. NEM largely supported the Proposed Guidelines subject to certain limited modifications.

NEM recommended the following:
1) The Commission should recognize a safe harbor for marketers that choose to have door-to-door agents physically exit a customer's residence before the verification process establishing the customer's consent to the sale rather than require marketers to adopt this practice.
2) Door-to-door marketing and sales activities should be permitted from 9:00a.m. to 9:00 p.m.
3) A supplier in its business discretion may choose to contact the distribution company prior to initiating marketing or sales activities but should not be required to do so.
4) Marketer background checks of door-to-door sales and marketing agents should include reference to the Megan's Law registry.
5) Verification of customer consent should be maintained by a marketer for at least 6 billing cycles.
6) Utilities should refrain from offering information about marketer product offerings.
7) NEM requests clarification of the presentation and use of the complaints statistics.
8) Door-to-door sales to residential and small commercial customers serves a valuable purpose in the marketplace and is consistent with ensuring informed consent.

The full text of NEM's Comments is available on the NEM Website.

ANOPR on Price to Compare, POR and Capacity Release

The Commission issued an ANOPR on specific issues intended to promote effective competition for natural gas supply service. The rules pertain to the reformulation of the price to compare, adoption of permanent rules for voluntary POR programs, and capacity release rules. The ANOPR continues a proposed rulemaking begun last year, incorporating changes suggested by the stakeholders at that time.

With respect to the price to compare, the ANOPR proposes that, "the PTC or commodity rate will be adjusted on a quarterly basis and will consist of the following elements on a per Mcf or Dth basis: the gas cost rate determined in the NGDC's Section 1307(f) proceeding; the reconciliation for over and under collections; the NGDC's natural gas procurement costs (determined via a Section 1308(a) tariff filing); and the Merchant Function Charge (determined via a Section 1308(a) tariff filing). All of these elements shall be embedded in a single PTC rate on the customer's bill."

The Commission is also proposing revised voluntary POR program guidelines, determining that such programs are "essential to facilitate effective competition." Under the rules, marketers would be required to use utility consolidated billing under the POR program, except in the case where the marketer is providing a service that does not meet the definition of basic natural gas supply or the utility's billing system cannot accommodate the marketer's bill for basic supply service. Marketers must also include all of their commodity-related receivables in the POR program. The discount rate should compensate for the utility's projected risk of nonpayment and costs of administering the POR program but may not include a generic risk factor above that associated with uncollectibles. The discount rate may vary by customer class.

With respect to capacity release, the Commission described the proposed rules as ensuring competitively neutral administration of the utilities' capacity release and storage programs. "The assets of gas pipeline and storage capacity should follow the customers of each utility, regardless of where they purchase their natural gas supply. Additionally, we want to ensure that useable capacity is released to marketers at fair and equitable rates, not the most expensive and least usable capacity."

Comments on the ANOPR are due September 9, 2010. The full text of the ANOPR is available on the NEM Website.

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