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June 6, 2003
NEM Summer Executive Committee and Policy

NEM Summer Executive Committee Meeting to be held in Chicago at Constellation NewEnergy's Headquarters (Click here for map), on June 30, 2003 and July 1, 2003. The meeting will start at 9AM on June 30 and all attempts will be made to finish business in one day. This meeting will be for NEM Executive Committee Members only. A block of rooms has been reserved at the rate of $159 per night at the W Chicago City Center. Place your reservations at (312) 917-5640 or (866)833-9330. Reservations must be received by June 18, 2003, in order to guarantee the discounted rate.

Also, Please Register on the NEM website so we may have your meeting materials sent and ready for you in Chicago.

There are significant wholesale, retail, legislative, trading and technology issues currently facing NEM, and the industry. All Executive Committee Members are requested to attend. The agenda is being revised and will be sent out next week.

Members are requested to forward additional agenda items to headquarters at your earliest convenience.

TheEnergySite Joins NEM

NEM is pleased to announce that TheEnergySite has joined NEM. The business of TheEnergySite is consulting, value added services and buying & selling generation asset inventory. TheEnergySite E-Marketplace allows them the flexibility to accept consignment assets in order for others to benefit from their expertise. TheEnergySite Site will be represented within NEM by Mick Barron, Chief Executive Officer, George Sullivan, Corporate Operations Officer, and William T. Miller, Vice President/Senior Advisor.

Conference call to Discuss Michigan Stranded Costs and Other Retail Issues

NEM will convene a conference call on Tuesday, June 10, 2003, at 10AM EST to discuss strategy in the Michigan stranded cost collaborative proceeding. The call will also focus on recent retail issues in other states. The dial-in number is 1-703-788-0600 and the pass code is 209353.

FERC Will Hold Second Conference on Price Indices

The Federal Energy Regulatory Commission (FERC) will hold a technical conference on June 24, 2003, at 9 A.M on "Energy Price Discovery and Indices". At an April 24, 2003, conference on Natural Gas Price Formation, FERC staff explored issues relating to the sufficiency of currently collected and published natural gas price information. Authenticity and reliability of the data and adequacy of coverage were discussed. At the upcoming conference FERC will weigh options and facilitate solutions that would ensure accurate, transparent and reliable gas and electric price indices. The discussion will focus on comparing the merits of various options, including industry solutions and solutions involving regulatory or self-regulatory oversight. The conference will also focus on what would be required to implement each option. FERC Staff plans to issue an options paper in this docket that will be available on the Commission's web site by June 13. The full text of the Notice of the technical conference is available on the NEM website.

Conference on MISO Market Mitigation Measures

FERC will convene a technical conference on MISO's proposed market mitigation measures on June 26, 2003, at 9AM. Topics for discussion will include BCA Mitigation, NCA Mitigation and reference levels; physical withholding penalties and day-ahead resource adequacy assessment; and the status of resource adequacy requirements, safety-net bid caps, and scarcity pricing and demand response. The full texts of the Notice of Technical Conference and Agenda are available on the NEM Website.

Bill to End Direct Access is Amended and Sent to Assembly, Two Bills to Reinstate Direct Access Sent to The Senate

Senator Dunn's bill (SB 888) to end direct access passed out of Senate Appropriations on a vote of 7-5 and also passed out of the Senate by a vote of 21-16. SB 888 was read for the first time in the Assembly on June 5, 2003. The full text of SB 888 as amended and the recent Amendments is available on the NEM Website.

Additionally, on June 3, Reyes' Assembly Bill 816 to reinstate the right of retail end use customers to acquire electric service from suppliers other than an investor owned utility (IOU), once certain conditions are met, passed the Assembly Floor by a vote of 60-1. Also on June 3, Richman's Assembly Bill 428 which defines bundled core customers and non-core electricity customers and establishes a process for non-core customers to obtain the electricity through direct access purchases with suppliers other than the investor-owned utilities passed the floor by a vote of 67-0. Both bills will now move to the Senate. The full text of AB 816 (as recently amended) and AB 428 (as recently amended)is available on NEM's website.

PSC Adopts Rules on Determining Whether Prices Are Constrained by Market Forces

The Georgia PSC adopted rules for determining whether natural gas prices are constrained by market forces. The rules went into effect on May 6, 2003. The rules state that if the PSC determines that prices are significantly higher than they would be if they were constrained by market forces, the PSC may, on an emergency basis, temporarily impose such directives on gas companies including but not limited to price regulations and the imposition upon distribution companies of the obligation to serve retail customers. Prices paid by firm retail customers for natural gas will be considered not constrained if an emergency market failure results in excessive market power. Prices will be considered excessively higher if: (1) Over the prior 12 months, such prices are more than 20% higher than such prices would be if they were constrained by market forces; (2) Over the prior 3 months, such prices are more than 30% higher than such prices would be if they were constrained by market forces; or (3) The current prices are more than 50% higher than such prices would be if they were constrained by market forces. The full text of the Georgia PSC Order is available on the NEM Website.

NEM Submits Comments on DG Interconnection Tariff

NEM submitted comments on the Interconnection Tariffs proposed by the DG Collaborative. NEM stated that distribution system planning practices should acknowledge that distributed generation may function as a demand-side management resource to reduce customer impact on the distribution system or to enhance the reliability of the system. NEM urged Massachusetts to set a maximum application fee at a lower amount to put it more in line with other states. Additionally, NEM urged the Department to implement the same application fee exemption for net metered customers that California uses to encourage net metering. NEM also submitted that the Department should establish a time line for completing applications that appropriately encourages investment in distributed generation. NEM also suggested that utility costs for studies or upgrades that may benefit DG customers and other utility customers should be allocated on a non-discriminatory basis and assessed on all customers. The full text of NEM's Comments are available on the NEM Website.

The DG Collaborative recommended that the DTE authorize the Collaborative to undertake a two-year review process for studying distributed generation interconnection experiences under the Collaborative recommended procedures. A goal of the extended review process is to reduce the need for studying issues beyond those covered by the screens. NEM strongly supported this goal and agreed that the Collaborative should continue to strive toward creating industry best practices that minimize the fees and time involved in impact and facility studies.

MPSC Issues Order in Consumers' Securitization Case

The Michigan Public Service Commission (MPSC) authorized Consumers Energy Company to proceed with the sale of securitization bonds, granting the company authority to securitize up to $554,323,000 of its qualified costs. The Commission was persuaded that although all of Consumers’ bundled customers, special contracts customers, and ROA customers should share the costs of securitizing the 1998- 2000 ROA implementation costs and the associated issuance expenses, only its bundled customers and special contracts customers should be made responsible for the pre-2003 Clean Air Act compliance costs. The Commission held that Consumers may securitize $64,108,000 of its 1998-2000 retail open access (ROA) implementation costs (which have already been reviewed and approved by prior Commission final orders). Consumers’ 1998-2000 ROA implementation costs may be recovered through a securitization charge assessed against all of Consumers’ customers. The MPSC also held that $544,429,000 of Consumers’ pre-2003 Clean Air Act compliance costs may be recovered through a securitization charge assessed against all of Consumers’ bundled sales customers and against customers on existing Commission approved special contracts. Consumers is also authorized to treat $35,853,000 of "up front" costs incurred by it in connection with the approved securitization transaction as a qualified cost that may be securitized and paid by all of its customers.

Consumers Energy Company is authorized to bill its customers an initial securitization charge of not more than $0.001190 per kilowatt-hour and an initial tax charge of not more than $0.000015 per kilowatt-hour. The charge will be offset so as not to amount to an increase in customers' bills until January 1, 2006. The charges shall remain in effect until changed pursuant to the approved true-up mechanism. The securitization and tax charges shall be billed to each customer for recovery over a period of not greater than 15 years after the beginning of the first complete billing cycle during which the securitization and tax charges were initially placed on any customer’s bill. True-ups of the securitization charges and the tax charges shall be conducted periodically. The full text of the MPSC Order is available on the NEM Website.

New Jersey
NEM Submits Comments on Expanding NJ CIEP Rate Class

NEM submitted comments on Staff's proposal to maintian the size of the CIEP Rate Class. NEM stated that it agreed with Staff that hourly pricing "promotes conservation and peak load management, reduces interclass subsidization, eliminates intraclass generalizations and, combined with the imposition of the retail margin, provides an incentive for customers to seek out alternative energy supply options provided by third party suppliers." However, NEM submitted that is concerned that Staff's proposal to maintain the CIEP class at its current size will delay a greater amount of customers from receiving the benefits of hourly pricing. NEM urged the NJBPU to extend hourly pricing to as many customers as practical as soon as reasonably possible. NEM recommended that the NJBPU consider extending the CIEP rate class to include customers with peak demands in excess of 500 kW. The full text of NEM's Comments are available on the NEM Website.

New York
Technology Attributes Measurement and Eligibility Proposal in Renewables Case

The Clean Technologies Coalition (CTC) recommended a Technology Attributes Measurement (TAM) and technology eligibility proposal in the renewable portfolio case. The proposal states that the TAM would be used to determine credit awards based on how well technology attributes meet the goals and objectives of the RPS. The CTC stated that the key elements of this proposal include the following: (1) no technologies are excluded (except combined cycle gas turbines); (2) quantifiable criteria are developed that reflect the RPS objectives; (3) criteria are weighted to reflect the highest priority goals of RPS; (4) each technology’s attributes are measured against the criteria (5) there is a minimum baseline for earning credits. The baseline measurement of the analysis is the combined attribute score of a central station gas combined-cycle facility.

The CTC proposal listed the following as examples of criteria that could be used that reflect the objectives of RPS: (1) Greenhouse gas (GHG) life cycle emissions; (2) Other environmental benefits; (3) Reduction in fossil fuel use; (4) Energy security and reliability; (5) Economic development in New York; (6) Energy costs; and (7) Efficiency. The measurement criteria in the proposal is weighted 60% toward environmental objectives and 40% toward the other RPS objectives. Each technology is assigned a score from 0 to 1 based on how well that technology’s attributes meet each criterion. The scores for each criterion are added to determine the total score for a technology.

The CTC proposal states that implementation of the TAM would require the following actions: (1) Define the specific criteria based on RPS goals and objectives; (2) Define how each criterion will be measured; (3) Determine the weighting of the specific criteria based on the goals and objectives; (4) Calculate the credit multiplier for each participant technology on the basis of 1-3 above; (5) Integrate and automate the use of the credit multiplier of participant resources into the accounting and tracking methodology adopted by the RPS. The full text of the TAM Proposal is available on the NEM Website.

NEM Submits Comments on Declaring Retail Ancillary, Metering, Billing & Collection As Competitive Services

NEM submitted that Ohio should promptly declare all services that are not natural monopoly functions as competitive services, including retail ancillary, metering, billing and collection services. NEM submitted that opening the market to the full panoply of competitive services will provide Ohio consumers with meaningful choice and allow competitive suppliers to offer a multitude of value-added products and services. NEM assertted that the competitive unbundling of ancillary, metering, billing and collection services would result in added value to consumers because unbundled services and the accompanying unbundled rates expose consumers to price signals that permit them to compare competitive options. Additonally, an advantage of permitting competitive retail ancillary, metering, billing and collection services is the economies of scale that competitive providers will be able to attain.

NEM submitted that under competitive metering the customer should own the meter information and be able to control who has access to it and choose which party reads his meter. NEM submits that meter reading by firms other than utilities is an established practice. In fact, a number of utilities use third parties to read their meters through AMR or advanced meter reading. The full text of NEM's Comments is available on the NEM Website.

NEM Submits Comments on DVP Pilots

NEM submitted comments on Dominion Virginia Power's (DVP) proposed pilot programs. As an initial matter NEM submitted that it supports DVP's proposals to reduce the wires charge and not require minimum stays for most participants in its pilot programs. NEM submitted that both the wires charge and minimum stay requirements are significant obstacles to the development of a robust competitive retail electric market. Regarding DVP's Pilot to apply market based pricing to C&I customers, NEM submitted that market-based pricing by utilities provides consumers with accurate price signals and enables them to modify their consumption levels in response to price. NEM stated that Virginia's current capped rates send distorted and artificially low cross-subsidized price signals to consumers. The full text of NEM's Comments are available on the NEM Website.

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