Staff filed testimony this week in ConEd's electric rate case. Regarding retail access issues, Staff recommended that the Market Match program continue in its current form. It supported ConEd in the redirection of retail access efforts away from the Market Expo into other events with greater customer participation and higher exposure for marketers and their product offerings. Staff supported ConEd's categorization of retail access program expenses in its general outreach programming. Staff noted that it will be reporting to the Commission in the near future on ConEd's proposal to expand the referral program to new service customers. The full text of Staff's Testimony can be viewed at: http://www3.dps.state.ny.us/PSCWeb/PIOWeb.nsf/Pages/9E751440932D8F5B852574BE00642D68?OpenDocument

Iberdrola and Energy East have submitted letters indicating acceptance of the Commission's conditional approval of Iberdrola's acquisition of Energy East and its affiliates, NYSEG and RG&E. A contentious issue in the case was Iberdrola's ownership of wind generation and the attendant potential to exercise vertical power as an owner of transmission and distribution assets. The Commission imposed conditions to mitigate the risk that Iberdrola could exercise vertical market power and to provide NYSEG and RG&E customers with $275 million in benefits to be used to reduce rates or moderate rate increase requests. Iberdrola must commit to spending $200 million on wind energy development in the State. The Commission also accepted Iberdrola's offer to divest fossil fuel generating plants. However, it will continue to operate the hydroelectric plants. The full text of the Order Approving the Acquisition is available on the NEM Website.

The Commission's issued an Order on the SEARCH Gas Collaborative Report and adopted an action plan to increase retail natural gas market competition. The Order sets forth a two phase approach.

Phase One includes measures that can be implemented in short order:
a) establish an Office of Competitive Market Oversight at the Commission (by 1/5/09);
b) expand POR programs (by requesting the utilities to voluntarily file POR plans by 12/31/08 or alternatively be required to file a cost of service study in which unbundling of gas procurement costs from base rates can be examined); and
c) pursue legislative changes to capacity assignment/release.

Phase Two involves rulemakings on three groups of issues:
a) Utility issues - reformulation of the price to compare, POR programs, mandatory capacity release and non-discrimination, cost recovery for competition-related activities and regulatory assessments;
b) Marketer issues - creditworthiness requirements and reasonable security requirements; and
c) Business Practice issues - standardized utility operating rules, nomination and delivery requirements, tolerance bands and cash out/penalties, and standardization of EBBs.
The Order sets forth timelines for Commission consideration of the proposed rulemakings by the end of 2008/1st quarter of 2009.

A formal review of the state of competition was ordered to take place in five years, to be conducted by the Office of Competitive Market Oversight. The full text of the Order and Action Plan is available on the NEM Website.