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September 29, 2006
Upcoming NEM Meetings

Please note the following upcoming NEM meetings:

Fall 2006 Industry Leadership Roundtable - October 24-25, 2006, Doubletree Hotel, Wilmington, Delaware - Washington Gas Energy Services has generously offered to host the meeting. Vice Chairman Cawley of the Pennsylvania Public Utility Commission is confirmed as a keynote speaker for October 25th. Please note that room availability at the Doubletree is limited. (Doubletree reservations - 1-800-222-8733).

Winter 2007 Executive Committee Meeting - January 18-19, 2007- 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.

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Commissions Finds Zero Net Stranded Costs for Consumers Energy and Detroit Edison

The Commission determined that both Consumers Energy and Detroit Edison had zero net stranded costs for 2004. The Commission felt it was appropriate to offset stranded costs with proceeds from wholesale power sales to third parties. The Commission noted that Consumers' production fixed costs are no longer stranded. Likewise, "Detroit Edison has now recovered all stranded costs arising from the utility restructuring imposed by Act 141, and it is the Commission's expectation that the stranded cost process has now run its course." The full texts of the Consumers Energy and Detroit Edison Stranded Cost Orders are available on the NEM Website.

New York
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Request for Comments on Customer Enrollment Contest Period

The Commission is requesting comments on a marketer proposal to establish a contest period to be utilized in the instance when an ESCO tries to enroll a customer that is already receiving service from another ESCO. By the terms of the proposal, the incumbent ESCO would be able to cancel a pending enrollment with another ESCO using an EDI transaction. The incumbent ESCO would obtain customer consent to cancel the enrollment. The proposal also recommends that the pending ESCO receive notice at the time of enrollment that the customer is receiving supply from another ESCO. As a result, using the proposed contest period approach, "once a customer learns of the pending change in service providers, he or she may authorize either the utility, the pending ESCO, or, unique to the Contest Period, the incumbent ESCO to cancel a pending switch so as to prevent an interruption in service.” This process would enable the ESCO contacted by the customer to cancel a pending enrollment by using a drop request before the third day prior to the effective date. Currently, only a pending ESCO can perform this process. Comments on the contest period proposal are due November 13, 2006. The full text of the Contest Period Proposal is available on the NEM Website.

Commission Denies Challenge to ESCO Referral Program

The Commission reviewed and denied PULP’s challenges to the ESCO Referral Program Order. The Commission reiterated that courts would be, “unlikely to find that either price fixing or customer allocation violations of the anti-trust laws arise out of referral programs.” Additionally, the Commission found that the Supreme Court’s test for state action immunity was satisfied by its ESCO Referral Order and its approval of the ESCO referral programs for each utility. The Commission rejected PULP’s suggestion that the ESCO Referral Programs require the utilities to act as agents for ESCOs when the utilities are merely performing the ministerial activity of enrolling customers. Finally, the Commission also rejected PULP’s argument that ESCO Referral Programs are unwarranted, because purportedly, the benefits of competition have not materialized. The full text of the Commission’s Order is available on the NEM Website.

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AEP Files Proposed Competitive Bid Process Plan

As a result of the Ohio Supreme Court decision and subsequent Commission Order, AEP was directed to file a plan to provide customers the ability to purchase electric service at a price determined through a competitive bid process (CBP). AEP filed a CBP plan providing for a "standard power service" option and a green power option. AEP would send customers a mailing in which they would indicate their willingness to opt-in to the standard power service option or green power option from a range of pricing levels, including below, at or above AEP's Rate Stabilization Plan rates. Subsequent to the competitive bid, customers would be offered another 21 day window in which they could opt-in to one of the final offerings. The RFP would seek wholesale bids for all the two supply options and the differing price levels. For each option, the total load for a price level will include the load for all higher price levels. Customers participating in the plan will be billed all of AEP's same standard service rates and riders applicable to non-participants. Participating customers base generation billings will be adjusted up or down in conformance with the option and price level under which they receive service. Administrative costs of the program will be collected from all customers through a non-bypassable charge. Metering requirements applicable to switching customers (customers with maximum monthly billing demands of 200 kw or greater for the most recent twelve months must have interval meters) will also apply to customers participating in the CBP program. The full text of AEP's Competitive Bid Process Plan is available on the NEM Website.

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Investigation into Energy Efficiency and Conservation

The Commission initiated an investigation into measures that can be taken to enable consumers to conserve energy or use it more efficiently. In addition to the obvious benefits customers could achieve in individual bill reductions, it was noted that reducing usage at peak times can result in overall wholesale price decreases.

The Commission decided to reconvene the Demand Side Response Working Group to expedite the process and directed that the group provide the Commission with specific recommendations on implementation, not just a generic report. Recommendations are sought on "what more can be done in a cost effective manner for all customers." In Vice Chairman Cawley's motion he stated that, "In the current environment, utility efforts to assist their customers to reduce usage (thereby helping them to reduce their bills) is as essential a part of the utility's public service obligation as is securing adequate sources of supply or maintaining a safe and reliable distribution network." The working group was also asked to address: 1) the costs and benefits of an advanced metering infrastructure; 2) the effect of "adopting flat rates instead of time-of-use rates for default service"; and 3) rate disincentives against energy conservation (for example revenue decoupling). The full text of Cawley's Motion is available on the NEM Website.

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