The California PUC issued an Interim Opinion in the advanced metering, demand response, and dynamic pricing case. The decision adopts a statewide pricing pilot (SPP) designed to test time-of-use and critical peak pricing tariffs for a sample of residential and small commercial customers on an opt-out basis. The SPP will start this summer and run through the end of 2004. The adopted pilot is designed to test the impact of such dynamic pricing tariffs on the usage patterns of a small sample of such customers randomly selected statewide. The decision also adopts cost recovery mechanisms for authorized Phase 1 demand response programs. Demand response is defined as the ability of an individual electric customer to reduce or shift usage of demand in response to a financial incentive. The full text of the Interim Opinion is available on the NEM Website.

NEM will convene a conference call on the stranded cost recovery mechanism in Michigan. The purpose of the call is to discuss proposed modifications to the mechanism to make it competitively neutral and to provide market participants with greater long-term certainty as to the magnitude of charges assessed. This call is being held to fine tune NEM's position prior to the March, 26, 2003, Commission Staff collaborative on the subject. The conference call will be held Monday, March 24, 2003, at 12PM EST. The dial in number is 703-788-0600, and the passcode is 209353. The full text of the Notice of Stranded Cost Collaborative and Staff Strawman is available on the NEM Website.

Consumers Energy filed a 2003 gas rate application. Consumers makes a number of proposals in the application that apply to choice customers as follows: 1) institution of a demand charge for transportation customers on Rate LT and Rate XLT to be assessed based on the customer's Historical Daily Demand Level; 2) lowering the monthly customer charge for Rate ST customers from $450 to $200 and raising the transportation charge from $.5891/Mcf to $.7594/Mcf; 3) institution of a new gas-in-kind percentage for transportation customers of 0.89%; and 4) institution of a holdover fee of $0.25/MMBtu per month for removal of gas volumes remaining in storage, to be assessed against customers and suppliers. The full text of Consumers' Application is available on the NEM Website.

As urged by NEM, the Commission rejected ConEd's proposed backout credit reductions for Phase 6 of its retail access program. The Commission extended the backout credits for Phase 6 at Phase 5 levels pending the results of the unbundling proceeding. As a result, ConEd must provide bill credits of two mills per kWh for non-demand billed and one mill per kWh for demand billed retail access customers. The full text of the Order is available on the NEM Website.

The Commission has approved a gas distributed generation pilot program for NFG. The pilot will provide a maximum of $3 million in advances to customers over a term of no more than three years to fund approximately thirty DG projects. Although separate gas lines will not be required, metering must be installed to permit the measurement of incremental usage by the DG unit separately from other customer applications. The rates for the DG projects must be fixed for the term of the customer contract, and the customer must pay for necessary system upgrades. The full text of the Order is available on the NEM Website.

In the context of the applications of Columbia Gas, DEO, and CG&E to adjust their Gas Cost Recovery (GCR) for the month of April, NEM has filed comments supporting the request of members Shell Energy Services and Energy America for an investigation into the GCR process. NEM asserted that the multiple changes in the GCR, administered on an uncertain basis, unfairly hinder competitive suppliers' ability to compete in the natural gas market. NEM also suggested that as part of the investigation the Commission should examine the utilities' timely exit from the merchant function. The full text of NEM's Comments is available on the NEM Website.

PUCO initiated a proceeding on the desirability, feasibility and timing of declaring that retail ancillary, metering, billing and/or collection service supplied to customers is a competitive retail electric service. PUCO is seeking initial comments by June 6, 2003 and reply comments by July 7, 2003. Staff issued questions on issues that are of particular interest, including: (a) what is a comprehensive definition of "ancillary services"; (b) what are the benefits other states have experienced in conjunction with making retail ancillary services competitive; (c) if metering service were declared competitive, who should be permitted to own the meter; (d) if metering service were declared competitive, who should be permitted to read the meter and have access and/or rights to the information; (e) should competitive retail ancillary services be made available only to larger C&I customers or to all customers; and (f) should electric distribution utilities be required to put retail ancillary services out for competitive bid. The full text of the PUCO Order is available on the NEM Website.

NEM submitted comments pursuant to the inquiry on computation of "just and reasonable net stranded costs." NEM argued that any determination of costs that are stranded must necessarily address the issue of whether the "unavoidable" costs at issue are properly attributable to POLR-related services. NEM urged the Commission to implement embedded cost-based unbundled rates at the earliest possible time and to quantify the levels of migration and monitor utility mitigation efforts prior to developing just and reasonable methods to ensure utilities receive the appropriate revenue requirements based on the embedded costs associated with the actual services provided to migrating customers versus full sales customers versus POLR customers. NEM also urged that stranded costs be recovered on a competitively neutral basis. The full text of NEM's Comments is available on the NEM Website.