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September 1, 2006
Upcoming NEM Meetings

Please note the following upcoming NEM meetings:

Fall 2006 Industry Leadership Roundtable - tentatively scheduled for October 24-25, 2006, Doubletree Hotel, Wilmington, Delaware - Washington Gas Energy Services has generously offered to host the meeting
Winter 2007 Executive Committee Meeting - week of Jan. 24 - SCRA has graciously invited us back to Charleston, South Carolina
Spring 2007 Annual Conference - week of May 21 - Washington, DC
Summer 2007 Executive Committee Meeting - Chicago, Illinois - WPS Energy Services has generously offered to host the meeting.

Staff Workshop on Price Transparency

The Commission will hold a technical conference on October 13, 2006, on the price transparency provisions of EPAct. Staff will hold a workshop prior to the conference to review its understanding of the structure of key energy markets and the availability of information regarding those markets and to develop a common terminology to discuss market price transparency. The format of the meeting will be a staff presentation but audience participation will be encouraged. Topics to be discussed will include: 1) types of important energy markets; 2) levels of information available from those markets; and 3) sources used by FERC's Office of Enforcement/Oversight. The staff workshop will be held September 26, 2006, at 9AM in the Commission's Meeting Room.

Click here to view all past updates.
Order on Type II Standard Offer Service

The Commission issued an Order on Type II Standard Offer Service (SOS). The Commission directed: 1) Type IIA and Type IIB customers should be reunited into a single Type II customer class; 2) a quarterly bidding regime should be implemented for Type II SOS beginning June 1, 2007; and 3) the continued use of the SOS procurement procedures developed in Case 8908. The Commission reasoned that, "an SOS product that remains unchanged and disconnected from prevailing market prices for undue periods of time can deter market entry and thus deprive customers of the varied retail products that would be available when more retail suppliers enter the market. Entry will only occur when the opportunity to compete against the SOS product is sustained and continuous, not intermittent." The Commission further found that, "rate stability is an important public policy goal generally, and particularly with respect to SOS. Recent experience suggests that longer term fixed prices do not contribute to that goal; indeed they create a false sense of complacency that costs are in fact stable, followed by a painful transition when rates are finally adjusted to reflect current costs. . . . The upshot is that frequent, albeit small rate changes, are a better vehicle for insuring relative rate stability (and a more gradual reflection of changes in current market prices) rather than longer periods of frozen rates, followed by rate shock." The Commission did not specify an end date to the quarterly procurement approach and will not consider motions for changes effective prior to June 2009. The utilities were given ten days to accept the Type II service structure ordered or the Commission will institute "further proceedings to consider a retail SOS bidding regime and other options." The full text of the Order is available on the NEM Website.

Investigations of Electric Utility Restructuring and Impact of Rising Fuel Prices on Residential Consumers

The Commission has instituted two proceedings as required by SB1. One proceeding will examine the "general regulatory structure, agreements, orders and other prior actions of the Public Service Commission under the Electric Customer Choice and Competition Act of 1999, including the determination of and allowances for stranded costs." The full text of the Order Instituting Proceeding is available on the NEM Website.

The other proceeding will study the impact of increasing fuel prices on residential consumers and programs that may mitigate these for low income consumers. As part of this proceeding the utilities must file a Residential Customer Termination and Arrearage Report on a monthly basis beginning September 25, 2006. The full text of the Notice of Proceeding is available on the NEM Website.

New York
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Proceeding on Utility Portfolio Management and Price Transparency

The Commission instituted a proceeding to develop guidelines for electric utilities hedging policies and practices that are consistent with the goals of "reasonably protecting" residential and small C&I customers from price volatility while not impeding the development of competitive retail market. The proceeding will also involve certain aspects of gas utility portfolio management practices. The Commission identified a number of issues to be considered: 1) the appropriate level of utility flexibility in structuring supply portfolios; 2) the balance between protecting consumers from price volatility and sending reasonably accurate price signals; 3) whether an index of electric price volatility is needed; 4) whether electric hedging costs should be recovered in utility commodity rates or delivery rates; 5) "the cost elements that should comprise electric commodity charges to customers;" 6) length of time for electric/gas utilities longer-term portfolio management strategies; and 7) appropriate level of disclosure of utility portfolio information to promote price transparency and how it should be achieved. Initial comments are due October 30, 2006, and reply comments are due November 20, 2006. Requests to be added to the service list are due October 2, 2006. The full text of the Order Instituting Proceeding is available on the NEM Website.

Central Hudson Meeting of Retail Access Collaborative

Central Hudson will convene another meeting of its Retail Access Collaborative on September 12, 2006, from 9AM to noon at the Quality Inn, Kingston. The proposed agenda for the meeting includes: 1) update on the status of the EnergySwitch program; 2) discuss the Competition Education Campaign; and 3) discuss gas balancing and cash out changes to take effect April 1, 2007.

Click here to view all past updates.
DEO Auction Results Approved by Commission

The Commission approved the results of DEO's Standard Service Offer auction that was held this week. The auction resulted in a Retail Price Adjustment of $1.44 per Mcf to which will be added the monthly NYMEX settlement price to arrive at the monthly Standard Service Offer price. In its report on the auction, Staff concluded that a range of $2.196 to $2.504 per Mcf was a reasonable benchmark. As a result, the Commission authorized DEO to replace its current GCR mechanism with a Standard Service Offer. Twelve bidders participated in the auction, and their identities will be kept confidential for sixty days from the date of the Commission's approval or until agreements with pipelines are completed, whichever is less. The full text of the Entry Approving DEO Auction is available on the NEM Website.

Staff Report on Net Metering, Smart Metering, Demand Response, Cogeneration and Power Production

As a part of the Commission's EPAct review, the Staff issued a report with recommendations on net metering, smart metering, demand response, cogeneration and power production. With respect to metering and demand response, Staff recommends that the utilities be required to file tariffs with time sensitive rates reflecting wholesale price differentials to be available for all customers. Utilities should also be required to file a comprehensive list of advanced metering infrastructure (AMI) technologies and costs that are differentiated by capability and/or functionality. The utilities should also use the McKinsey model for evaluating the costs and benefits of different AMI deployment strategies. Staff recommends that interconnection rules should be revised to include all interconnection services in the utilities tariffs to improve accessibility for interconnection customers. Supplemental power and scheduled maintenance should be billed according to the tariff rate schedules. Staff recommends establishing the Commission as a liasion to self-generators for purposes of tariff interpretation and facilitation of interconnection. The full text of the Staff Report is available on the NEM Website.

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