In late December 2004, the Commission issued a draft decision approving the 2005 Demand Response Goals, Programs and Budgets. The order was issued in response to the requests by the utilities for approval of their demand response programs and budgets for 2005-2008.

A final decision is expected shortly.

The Commission issued an order outlining what market services could be included in Atlanta Gas Light’s (“AGL”) security deposit requirements for gas suppliers. Although the Commission held that AGL could not include Bundled Pipeline Peaking Sales Service and Firm and Interruptible Nominated Sales Service in its security deposit calculations, on reconsideration, the Commission stated that AGL could file a revised tariff to explicitly include such services in its security deposit calculation.

Currently, AGL may collect up to “at least two times the maximum monthly bill” of charges as estimated by AGL from gas suppliers. The Commission stated that the parties should address what charges should be included in future security deposit calculations in AGL’s 2004-2005 rate case, which is currently ongoing before the Commission.

In response to a customer complaint, the Commission revised the regulations governing late fees imposed by gas suppliers. Specifically, gas suppliers can not charge late fees unless there is a minimum past due of $30. The late fee can be $10.00 or 1.5% of the past due balance, whichever is greater.

Commonwealth Edison (“ComEd”) was granted expedited approval by the Commission to change the method it uses to determine the monthly off-peak Market Price, as set forth in ComEd’s Power Purchase Option, Rider PPO. Specifically, ComEd expanded the “snapshot window” used when there is insufficient market data for an off-peak forward contract. When determining the Off-Peak Market Price, ComEd polls the Intercontinental Exchange (“ICE”) twice a year during a pre-determined 20 day period to determine the market value energy charges. According to ComEd, there is insufficient off-peak data due to the low trading volume of forward off-peak products. For this reason, when there is insufficient market data, ComEd may expand the polling period back to find market data for forward contracts. The polling period can not be extended back by more than 365 days.

The Commission opened two proceedings related to standards of conduct and functional separation for certain public utilities that make unregulated retail sales of natural gas and electricity, as well as regulated sales of retail gas. Emergency functional separation rules were adopted by the Commission as of January 14, 2005 with a notice of proposed rules also issued.

A prehearing conference is scheduled for February 15, with the Commission expected to act on the proposed rules in June 2005. According to the Commission's utility-specific order, MidAmerican Energy Company is the only gas utility required to functionally separate its unregulated retail natural gas sales from its regulated retail sales of natural gas services. The utility–specific case also has a prehearing conference on February 15, with MidAmerican’s direct testimony due February 10, and Commission action expected in late April 2005.

The standard offer service rates for commercial and industrial customers in the Central Maine Power and Bangor Hydro-Electric service territories will increase during the period from March 1, 2005 to August 2005. The prices for customers in the Central Maine Power territory are as follows: 6.8 cents/kWh (for the medium class) and 6.56 cents/kWh (for the large class). For customers in the Bangor Hydro-Electric territory, the prices are: 6.88 cents/kWh (for the medium class) and 6.30 cents/kWh (for the large class). The new prices reflect increases ranging from .2% - 3.5%.

Stranded costs for BHE customers will decrease by approximately 3/4 cent, while stranded costs in the CMP territory will stay roughly the same. Residential customers will be charged the following standard offer service rates from March 1, 2005 to February 2006: 6.95 cents/kWh (CMP customers) and 7.1 cents/kWh (BHE customers). Please click here to read the full text of the Commission's release.

The Commission has developed a Competition Technical Implementation Working Group, with 4 sub-teams. The sub-teams will be co-chaired by a supplier representative and a utility representative. The sub-teams are: (1) EDI/Data Transfer Technology; (2) Billing and Metering; (3) Enrollment Issues; and (4) Business Policy.

The Board has proposed a program to allow retail electric customers interested in green energy to pay a small premium for such energy without having to change suppliers. The sign-up option would be on the customer's utility bill. Each of the four incumbent utilities will "host" the program, providing a delivery platform as well as consolidated billing, unless the marketer opts to bill separately. Utilities will then receive cost recovery for performing these functions.

All marketers who meet Green Marketer qualifications (such as creditworthiness and EDI capability) and minimum product quality requirements may participate in the program. Utility affiliates may also participate. A two-year commitment will be required. The program will be administered by the Board's Office of Clean Energy and will be statewide. The Board will hold a hearing on the program on February 10, 2005 and is seeking comments on the program, which will be due by February 18, 2005. Please click here for the full text of the draft proposal.

In the unbundling proceeding, the Commission issued an order on rehearing on the Commission’s unbundling order in response to ConEd’s request for rehearing. The request for rehearing challenged the order on unbundled rates, retailing costs related to a supplier’s account receivables, and lost revenues. NEM filed in opposition to ConEd’s request and specifically argued that customer care and credit and collection costs should not be hidden in an utility’s delivery rates. The Commission rejected ConEd’s arguments and stated that nothing new was offered by ConEd. The Commission further noted that it is “concerned with the potential for adding to the complexity of the retail consumer’s decision to enter the energy market, as well as the potential for adding complexity to the utility’s unbundled bill.”

In a related proceeding, in which NEM filed comments in support of the Commission’s policies regarding Further Steps Toward Competition in Retail Energy Markets, the Commission issued an order rejecting the requests for rehearing. The Commission re-affirmed and clarified its position regarding hedging. Specifically, the Commission stated that individual utility hedging obligations should be addressed in a full rate proceeding, in a tariff filing or in a utility-specific petition. Additionally, the Commission noted that hedging contracts for mandatory time-of-use customers should expire and not renewed, with rates then reflecting spot market prices and the net costs of public policy contracts. For other customer classes, a future proceeding should determine the availability of hedged services. At this time, the Commission will not pre-approve specific designs of spot market prices, with such issues to be considered in multi-year rate plans or as significant long-term hedging contracts expire. The Commission affirmed that it will continue to monitor procurement contracts to ensure that the contracts are not anti-competitive.

In anticipation of ConEd’s current rates ending on March 31, 2005, ConEd proposed new rates, which have been suspended through March 31, 2005.

While the rates are suspended, ConEd and a number of active parties including NEM have agreed to a settlement in ConEd’s rate case. The settlement includes a 3 year rate plan and addresses among other things (1) electric rates and rate design; (2) changes and improvements to ConEd’s retail access program; and (3) an expanded demand management program. As part of the retail access improvements, additional discounts would be allowed for customers of suppliers, commercial gas-only programs would be extended to commercial electricity customers, a collaborative on bill formats would be formed, a collaborative on a retail auction pilot program would be formed, and a budget for retail choice education would be set.

Public comments and hearings have occurred on the settlement, with post-hearing briefs opposing and supporting the settlement also filed. Although a number of the active parties in the case are parties to the settlement, a few consumer and environmental groups oppose parts of the settlement.

As part of the Commission’s unbundling proceeding addressing ConEd's unbundled rates, back-out credits and lost revenue recovery mechanisms, ConEd has proposed new and higher bill credits and tariff sheets for competitive supply, competitive supply collections, competitive billing and competitive metering, along with a transition adjustment for competitive services, with an effective date of May 1, 2005. In summary, ConEd has proposed the following bill reduction credits related to competitive supply and collections costs: 3.7 mills/kWh for residential customers, 2.7 mills/kWh for general small customers, and 1.0 mill/kWh for all other customers. The back-out credit for billing and payment processing for consolidated, single bill customers would increase to $0.94/monthly billing cycle. There also would be a corresponding charge for suppliers whose customers receive a consolidated bill from ConEd. There are certain limitations and restrictions for consolidated billing and other credits. Finally, ConEd proposes to implement certain parts of the settlement filed in ConEd’s rate case.

In the meantime, ConEd and other parties currently are discussing on a settlement of the unbundling proceeding.

The Commission and the NYSERDA issued a schedule for implementing New York’s renewable energy portfolio requirements. New York requires at least 25% of electricity to be from renewable energy sources by 2013. The Commission decided to speed up its renewable energy program in order to allow generators to take advantage of the federal tax credits, which could expire at the end of 2005. The initial round of bids to supply renewable energy closed in mid-January; however, a series of RFPs is expected over the next several years with the next RFP expected to occur by the end of 2005.

The renewable energy projects are subject to a 10 year or shorter term, a standard contract, and a fixed price.

The Commission requested comments regarding the system benefits charge (“SBC”) and funding after June 30, 2006, when the current SBC funding expires. The SBC finances public policy initiatives, such as electric demand reduction programs and market transformation programs. One question asked by the Commission is whether the SBC funds should be used to fund programs that research and develop competitiveness in the retail and/or wholesale electric markets and/or transmission/distribution issues. The Commission also is considering whether SBC funds should be used for natural gas programs. Comments are due by March 4, 2005.

In the NFG rate case that NEM filed testimony regarding accelerated migration, transparency, and embedded cost unbundling, NFG’s proposed rates are suspended and deferred through July 28, 2005. Settlement negotiations are on-going, with hearings scheduled for March 2005.

The Commission approved NFG’s request to recover $1.6 million net lost revenues resulting from suppliers billing their customers directly and the suppliers receiving a billing credit from NFG. NFG will recover the lost revenues through NFG’s Gas Restructuring Reserve, which was created to allow NFG to recover costs related to natural gas restructuring.

The Commission has updated its monthly Power to Choose Comparison Chart listing the historical offers of suppliers and utilities. The Comparison Chart is available on the Commission's website.

The Commission recently has streamlined how it gathers information from suppliers. All suppliers may participate in the Comparison Chart.

The Commission has proposed regulations for Provider of Last Resort or default service for customers that do not receive generation service from a supplier. In the proposed regulations, the Commission treats default service as a basic generation/backstop service. The Commission wanted to develop a regulations that prefer market solutions and require supply to be acquired by the utility at prevailing market prices through a competitive procurement and bidding process. Nonetheless, utilities will provide default service at this time. The proposed regulations also address the transfer of customers to default service and the terms for determining the prevailing market price.

Comments are due within 60 days after the proposed order is published in the Pennsylvania Bulletin, with reply comments due 30 days later. Although the proposed order was issued by the Commission in mid-December, it does not appear that the order has been published yet in the Pennsylvania Bulletin.

The Commission has requested comments regarding interconnection procedures and standards for small generation, including fuel cells, microturbines, and other distributed generation. The Commission has requested comments on the best model for interconnection procedures, as well as technical requirements, interconnection procedures, appropriate generation sizes, with comments due by February 2, 2005. Stakeholder meetings are expected to follow.

The Commission recently held a technical conference to discuss the new renewable energy portfolio law and requested comments on various implementation issues. Reply comments are due by February 9, 2005. The Commission's order on the technical conferences and reply comments is available on NEM's website.

The new renewable energy law becomes effective on February 28, 2005. Suppliers and utilities must include a certain percentage, which will increase over time, of “alternative energy sources,” such as solar, wind, hydropower, geothermal, biomass, and demand side management resources, as part of the electricity sold to retail customers. A renewable energy credits program and a trading platform will be administered by an independent party. In addition to setting up the credits program, the Commission also is focusing on the development of alternative compliance payments, as well as technical standards for net metering and interconnection. Furthermore, the renewable energy sources must meet certain technical standards and be approved by the Pennsylvania Department of Environmental Protection.

The Center for the Advancement of Energy Markets Retail Energy Deregulation Index ranks Texas as the top of its list of competitive energy markets within the United States and number three in the world. Even though energy prices have increased, the Commission expressed confidence that competitive forces were working in Texas. Currently, 85 competitive suppliers are registered with the Commission and 55 are actively serving customers.

According to the Commission's Report, as of September 2004, over one million customers were taking service from a non-affiliated provider. By this date, ERCOT had also processed 1.5 million switch requests. Despite these statistics and the fact that new competitors continue to enter the market even with increasing natural gas prices, the Commission expressed concern over the development of competition in non-ERCOT areas. Competition will not begin in the El Paso Electric service territory until August 2005, and competition has been delayed by the legislature for both Entergy and Southwestern Electric Power's respective service territories as well.

The Commission has promulgated rulemaking for advanced metering that allows commercial and industrial customers to choose and own their own meters. The Commission also noted a decrease in energy-related complaints. The Commission will also continue its customer education efforts, in both English and Spanish, despite a significant decrease in funding. The Commission is reviewing its rules to close loopholes and address deficiencies in market design. The report also addresses emerging issues, such as the price to beat, opt-out aggregation, and default service options, and legislative recommendations. Click here to read the full text of the Commission's Report.

Dominion Virginia Power has issued a RFQ (request for qualifications) for suppliers to provide electric supply under Virginia Power's pilot to residential customers or small and intermediate general customers in Northern Virginia, Central/West Virginia or East Virginia, beginning April 18, 2005. The service will be supply to a sub-block (either residential or non-residential customers) in 1 of the 3 regions.

Responses to the RFQ are due by February 8, 2005, with responses to the RFP from invited entities due by February 15, 2005.