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August 15, 2014
NEM Mid-Atlantic Energy Policy Summit

Please plan to attend the inaugural NEM Mid-Atlantic Energy Summit to be held at The Center Club in Baltimore, MD on October 21-23, 2014. Registration is now available on the NEM website at this hotlink. Hotel Rooms are available at the NEM Rate of $160 at the Embassy Suites Inner Harbor Hotel in Baltimore, MD. Please contact headquarters if you are interested in sponsoring this event.

FERC Staff White Paper and Agenda Released on Upcoming Uplift Payment Workshop

FERC has issued a detailed Agenda and Staff White Paper in preparation for the upcoming workshop on uplift payments in energy and ancillary service markets operated by the RTOs/ISOs. The workshop will take place on September 8, 2014, beginning at 8:45AM at FERC's DC headquarters. Panelists at the workshop will consider the following topics: causes of uplift; impact on market participants; price transparency and evolving market designs; and broader price formation issues.

In preparation for the workshop, and to facilitate discussion, FERC Staff issued a White Paper on "Uplift in RTO and ISO Markets." Staff analyzed data on uplift costs for the period 2009-13 in preparing the paper. Staff made a number of preliminary findings as follows:

"* Uplift payments (i.e., credits) have been highly concentrated and recurring on a geographic or resource basis.
* Uplift payments are closely related to market fundamentals, including energy and fuel costs.
* Uplift payments are closely related to price divergences between day-ahead and real-time markets.
* The volatility of uplift costs varies across RTOs and ISOs and is trending upwards in three of the five markets studied.
* Uplift payments and the reasons they are incurred lack transparency."

FERC Staff specifically found that over the course of the study period, across the RTOs/ISOs, that uplift credits amounted to more than $5.5 billion dollars. However, "while large in absolute terms, uplift credits are relatively small when viewed in relation to load served." Uplift credits seem to be highly concentrated in RTOs/ISOS, with most plants receiving smaller credits (under $1 million) and a limited few receiving substantially larger credit totals ($5 to over $80 million). In other words, total uplift credits are not distributed evenly among resources. Moreover, "uplift credits made to the same resources year after year may indicate that market pricing is consistently failing to fully capture costs associated with committing and dispatching those resources or the existence of market work-arounds." For example, one plant in PJM received uplift credits of over $60 million in every year studied except one.

The full texts of the Workshop Notice and Staff White Paper are available on the NEM Website.

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Commission Allows Delayed Implementation of Seamless Moves and Instant Connects

While recognizing the merits of seamless moves and instant connects as enhancements to the retail market, the Commission decided to allow the electric utilities to delay the development of instant connects and seamless moves if it would hinder or delay the utility's development of 3-business day supplier switching. The Commission stated that implementation of 3 business day switching by December 2014, to reflect recent rule adoption, is a priority. The previously stated June 2015 deadline for instant connects and seamless moves is no longer in effect. OCMO was directed to submit a recommendation by December 31, 2014, with a proposed implementation timeframe for seamless moves and instant connects. The full text of the Secretarial Letter is available on the NEM Website.

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