May 25, 2001


 ChooseEnergy Elected to NEM Executive Committee

NEM is pleased to announce that ChooseEnergy has been elected to NEM's Executive Committee. ChooseEnergy is a leading application service provider for the competitive energy industry. Utilities, energy service providers, energy service companies, and other trading partners can quickly implement ChooseEnergy's private-labeled CE Suite of Java-based web applications to automate workflow for online energy procurement and customer enrollment. James Menton, Chief Innovation Officer and Co-founder, and Scott DeBroff, Vice President of Government and Regulatory Affairs, will represent ChooseEnergy within NEM.

 NEM's Federal Policy Development Committee and interested members will be meeting with FERC Staff on June 1. Members who wish to participate will meet at the Georgetown Club (1530 Wisconsin Avenue) for a pre meeting luncheon at 11AM on June 1.

The subjects will cover RTO seams, access, load-shifting, interval vs. daily capacity commitments and penalties, targeted, time-sensitive, performance-based rate incentives for congestion relief and capacity additions and the political implications of conditional short-term price caps. Please contact headquarters ASAP to confirm if you will be attending, as we have reserved a private dinning room and need a firm head count.

 NEM Summer Policy Development Meeting

NEM Executive Committee members are reminded that the summer policy development meeting will be held June 28-29, 2001, at the Hotel Boulderado in Boulder, Colorado. Please call 1-800-433-4344 for our special rate. Rooms at the Historic Boulderado are very limited. Agenda items will include NEM's strategy for summer shortages and its position on the politics of Price Caps, the development of National Guidelines to Encourage Investments in Distributed Generation Technologies and to Expedite Expeditious Interconnection and Low-Cost Back-up Power Rates and Services, strategies for Utility offerings of long term fixed prices, competitive services by tariff, and the next steps on National Energy Technology Policy development and implementation. A hotlink to register for the meeting is provided here and on the NEM Website for your convenience.

NEM issued a Press Release and Op-Ed on the Republican and Democratic Energy Proposals, and proposals to impose Price Caps and Windfall Profit Taxes responding with lower cost, higher yielding competitive solutions to the current crisis. The NEM Press Release, Op-Ed, Bush Plan and Democrat Proposals are hotlinked here for your convenience.

Federal Issues

 Executive Orders on Energy Supplies

Executive Orders have been issued targeted to ensuring energy supplies. Executive Order 13211 requires agencies to submit a Statement of Energy Effects for matters identified as significant energy actions. The Statement must disclose adverse effects on energy supply, distribution, or use caused by the agency action as well as alternatives. Executive Order 13212 directs agencies to expedite the review of permits for energy-related projects and also directs the formation of an interagency task force to coordinate federal, state and local permitting activities. The full text of Executive Order 13211 and Executive Order 13212 are available on the NEM Website.


 FERC Considers Reporting Requirements and Rate Ceilings on California Natural Gas Markets

FERC issued an Order proposing to collect information from sellers of natural gas to the California market as well as from interstate pipelines and local distribution companies (LDCs) serving the California market. The information proposed to be collected includes volumes and prices of sales to the California market, including transportation rates; the daily operational capacity of pipelines to and in the California market; the actual volumes flowing to and in California; and gas sales and transportation requirements of LDCs. FERC proposes to collect the information on a quarterly basis using a standardized electronic form. FERC maintains the reporting requirement is necessary to determine what part of the problem underlying high California natural gas prices it has jurisdiction to act on. FERC also argues the data collected will allow it determine to what extent the cost of interstate transportation affects the cost for gas commodity at the California border. Comments on the proposed reporting requirements are due June 18, 2001. The full text of the Order is available on the NEM Website.

 FERC also issued an Order requesting comments on whether it should reimpose the maximum rate ceiling on short-term capacity release transactions into California and how such action will effect the California natural gas market.

The Commission requested comments on the following specific questions: 1) would reimposition of the maximum rate ceiling on short-term capacity release transactions into California have any significant effect on the price of gas at the California border; 2) should the reimposition of the maximum rate ceiling on short-term capacity release transactions be limited to California or extended to pipelines delivering into the Western Systems Coordinating Council region; 3) what effect do capacity release transactions have on wholesale electric prices; 4) what would be the effect of reimposing the maximum rate ceiling on short-term capacity release transactions into California given firm shippers' ability to make bundled sales at the California border; and 5) how will reimposing the maximum rate ceiling for short-term capacity release transactions into California impact shippers' ability to obtain short-term firm capacity. Comments are due June 11, 2001. The full text of the Order and Appendix are available on the NEM Website.

 NYISO and ISONE Load Response Programs

The Commission approved NYISO and ISONE's proposed load response programs. NYISO proposed to implement an Incentivized Day-Ahead Economic Load Curtailment Program from May 1, 2001, through October 31, 2003, by the terms of which qualified demand reduction providers are permitted to submit bids signaling their willingness to reduce demand, by curtailing load or activating local generators, at certain price levels.

The ISONE program implements two new interruptible services to compensate participants for load interruption. Class 1 service is available to any load capable of reducing its energy requirements within 30 minutes and sustaining that reduction for up to two hours. Class 1 loads are subject to interruption after the accounting of voltage reduction as ten minute reserve, the actual implementation of voltage reductions, or in the event of a contingency loss. Class 2 service permits participants to voluntarily interrupt their load based upon price signals received and accepted through NEPOOL's Internet-based communications system. The full text of the NYISO Order and the ISONE Order is available on the NEM Website.

State Issues

New York

 NYPSC Order on Uniform Retail Access Billing and Payment Processing Practices

The NYPSC issued an Order establishing back-out credits and business practices for billing and payment processing. The Commission established consolidated billing back-out credits for each utility as follows: Niagara Mohawk - $0.53/bill; Keyspan (NY) - $0.78/bill; Keyspan (LI) - $0.78/bill; NFG - $0.80/bill; NYSEG - $0.70/bill; ConEd - $0.65/bill; O&R - $0.62/bill; and Central Hudson - $0.68/bill. The Commission directed the utilities to set billing charges equal to back-out credits in their tariff filings. The back-out credits and billing charges are to be effective by June 1, 2001. The Commission recognized that calculation of billing back-out credits will likely be revisited because of the unbundling proceeding and directed that the back-out credits are to serve as placeholders pending a more thorough review. The Commission also indicated that the Marketer Coalition study filed in the ConEd electric proceeding will be reviewed by Staff resulting in possible modification to the ConEd back-out credit.

The Order also adopts many of the business practices recommended in the UBP Report for billing and payment processing with certain modifications. The practices are to become effective when EDI protocols for billing and payment processing are established by the end of the year. The full text of the Order is available on the NEM Website.

 Standby Rate Proceeding Straw Proposal

A revised straw proposal has been circulated in the standby rate proceeding. The full text of the Revised Straw Proposal is available on the NEM Website.

 ConEd and O&R Upstream Pipeline Capacity Proposals

ConEd and O&R filed proposed tariff changes to implement upstream pipeline capacity proposals as follows: 1) the utility will acquire capacity and/or bundled citygate deliveries to meet capacity requirements of sellers for 1, 2 or 3 years for the period beginning November 1, 2001, and ending October 31, 2004; 2) sellers shall either make binding commitments to obtain capacity from the utility to serve all or part of load to serve firm customers during the 12, 24, or 36 month period beginning November 1, 2001, or acquire and use their own capacity to serve their customers; 3) sellers using their own capacity must provide documentation to the utility demonstrating transportation contracts are in place for each winter season through 2003-04 providing non-recallable firm transportation with primary delivery point capacity from the source of gas supply to the citygate; 4) the capacity released by the utility will be allocated to sellers on a pro rata basis and priced at the utility's weighted average cost of capacity; 5) if a seller has a net increase in firm load, the utility will not provide additional capacity where the additional load represents a reduction in load supplied by another seller that was utilizing its own capacity to serve the load; 6) the utility can recall capacity if a seller's firm load declines; 7) the customer is subject to a capacity release servicee adjustment; and 8) during winter months, sellers taking capacity release service must use the capacity released by the utility to deliver gas to firm customers behind the utility's citygate. ConEd and O&R propose that initial comments on the filings be due June 13, 2001, and sellers interested in the program make binding commitments on the later of July 5, 2001, or 14 days after issuance of a Commission order. The full text of ConEd and O&R's filings are available from NEM headquarters.

 NYSEG Retail Access Credit Calculation

NYSEG issued a draft report on changes to the calculation of the retail access credit (RAC). In the Report NYSEG proposes to: 1) implement an hourly load weighted average of day ahead Locational Based Marginal Prices (LBMPs) for calculating the market-based RAC; 2) increase the number of off-peak hours for service Classification 7 utilized in the computation of average off-peak LBMP; and 3) calculate the installed capacity component of the RAC separately for each if its 31 segment load profiles. NEM filed comments opposing NYSEG's proposal to defer implementation of the changes to the RAC computation methodology until July 1, 2001, and refusal to retroactively apply the RAC changes. NEM disputed NYSEG's proposal to submit segment load profiles to NYISO for balancing and settlement rather than conform its proposed RAC calculation to use interval meter data. NEM also argued that implementation of a new ICAP tagging methodology should not be delayed to November 1, 2001. The full text of the Draft Report and NEM's Comments are available on the NEM Website.

 NYSEG Price Protection Plan

NEM filed comments opposing NYSEG's request for trade secret protection for information on purchase power obligations and financial contracts. NEM argued that release of the data would facilitate price transparency in the market thereby driving down prices. The full text of NEM's Comments is available on the NEM Website.

 Energy Plan Proposed in State Assembly

The Assembly Majority has proposed the New York State Transitional Energy Plan (NYSTEP). The provisions of the Plan include: 1) elimination of the Gross Receipts Tax on electricity and natural gas; 2) extension of HEFPA protections to all residential energy consumers, including those served by ESCOs; 3) institution of a three year transition period for deregulation during which time utilities must act as purchasing agents charged with protecting consumers from price increases; 4) implementation of a planning strategy to insure investments in transmission, distribution and generation; 5) acceleration of generation siting process for repowering an existing facility or phasing out an old facility for a new, cleaner one; 6) rapid PSC review of utility costs to determine if pass through to customers is justified and whether generator prices are unfair; and 7) institution of a universal service rate that provides a 25% per month rate cut for the first 200 kwh used by residential customers. The full text of the Plan is available from NEM headquarters.

New Jersey

 Elizabethtown Gas Unbundling Proceeding

Elizabethtown Gas submitted a settlement proposal to resolve outstanding issues in the unbundling proceeding and proposed to meet to discuss these matters on June 5, 2001, at 1:30PM at the its offices in Union, New Jersey. Due to confidentiality concerns, NEM members interested in reviewing the proposal should contact headquarters.

 Elizabethtown Gas Tariff

Elizabethtown Gas submitted a tariff to the Board to be effective June 1, 2001. The tariff adds special conditions for third party suppliers providing service to residential delivery service customers and essential gas users, including: 1) suppliers must use the company's electronic enrollment procedures to enroll customers, whose consent is assumed if the supplier provides information including a customer's account number; 2) by enrolling a customer, the supplier warrants that there is a signed and dated contract (wet signature); 3) at the time of enrollment, suppliers must demonstrate sufficient capacity for the months of November to March, and may be required to purchase standby or seasonal delivery service to meet capacity requirements for commercial or industrial customers; and 4) a Load Balancing Charge of $0.0550 per therm for all metered quantities for residential delivery service shall be billed to the supplier and paid in full within 20 days of the billing date, and failure to timely pay this charge in full will result in the return of all of the supplier's residential customers to sales service. The full text of the Tariff will be posted on the NEM Website when made available electronically.

Meeting on Basic Generation Service

The next meeting to discuss Basic Generation Service (BGS) for Transition Year 4 will be May 30, 2001, from 9:30AM to 1:00PM in the Board's 8th floor hearing room. The Board will hear proposals from non-utility parties and discuss scheduling.

Order on Atlantic City Electric Company

The Board issued a final order in Atlantic City Electric Company's rate unbundling, stranded cost and restructuring proceeding. The Order requires the Company to reduce market transition charges (MTC) as necessary to achieve the mandated 10% aggregate rate reduction by August 1, 2002. The Company must also make a filing by August 1, 2002, on the proposed level of all unbundled rate components beginning August 1, 2003. The full text of the Final Order is on the NEM Website.


  Electric Customer Choice Pilot

The schedule for processing customer switching enrollments has been revised. Beginning June 1, 2001, ERCOT will accept a limited number of requests from retail providers to switch customers. Requests are expected to take two weeks to process. Beginning in mid-July, customers enrolled in the pilot will be switched at their next meter reading. The new retail provider will then bill customers after the next meter reading.


 FirstEnergy-GPU Merger

The Commission approved the merger of FirstEnergy and GPU on certain conditions including not charging customers for costs associated with the merger, maintaining GPU transmission facilities in PJM, and adoption of the GPU code of conduct by the new company. The issues of the proposed generation rate increase and merger savings are to be addressed by a collaborative to be held in the Commission's Executive Chambers, 3rd Floor, Commonwealth Keystone Building, starting on May 29, 2001, at 10:30AM, through May 31, 2001. The collaborative must conclude by June 20, 2001, and the Commission will issue a decision by July 13, 2001. Commissioner Brownell issued a statement opposing the collaborative process arguing that a record had been fully developed upon which to issue a ruling. The full text of the Motion to Conditionally Approve Merger and the Statement of Commissioner Brownell are available on the NEM Website.


 Proposed Order in Nicor Customer Select Proceeding

The Hearing Examiners in the Nicor Customer Select proceeding issued a proposed order providing as follows: 1) the program should be expanded to all customers in Nicor's service area; 2) supplier single billing through account agents should be implemented; 3) payments under single billing should be applied first to any overdue regulated charges, then to overdue supplier charges, next, to current regulated charges, and finally, to any current supplier charges; 4) uniform price disclosure for suppliers should not be implemented; 5) Nicor should send a notification letter to customers that have switched into the program; 6) the proposed monthly group charge, monthly account charge and group additions charge should be eliminated because of gas storage inventory savings Nicor realizes when customers switch; 7) the proposed $0.50 bill charge for billing for supplier charges to customers under the program should be eliminated because it was not justified by Nicor; 8) the $2000 supplier application charge is cost-justified and should be implemented; 9) Nicor Gas should modify its tariff to state that it will not impose a Customer Select OFO unless it imposes similar conditions on all other classes of non-Customer Select transportation customers, as well as on itself; 10) corporate name and logo issues should be addressed in the generic affiliate issues proceeding; 11) customers should be able to sign up for the program with suppliers via Internet; and 12) residential customers should have a three day right of rescission. Briefs on Exceptions and Replies are due June 5, 2001, and June 12, 2001, respectively. The full text of the Proposed Order is available on the NEM Website.


 Virginia Power RTO Filings

Virginia Power filed testimony and documentation supporting its application to transfer operational control of its transmission facilities to the Alliance RTO. The filings addressed issues including regional transmission entity planning and reliability, interconnection of generation facilities, transmission congestion relief procedures, market monitoring, access to regional markets, determination of the facilities designated to be transferred to the RTO, transmission capacity between the generation markets in the Alliance RTO. Additionally, Virginia Power filed documents pertaining to a revised customer advisory process, energy imbalance service and market monitoring, and proposed changes to the Planning Protocol. The full text of Virginia Power's Filing is available from NEM headquarters.


 Staff Report on Customer Education Program

Staff issued a report recommending implementation of a combined customer education program for natural gas and electric choice. The full text of Staff's Report is available on the NEM Website.


 Technical Session on Competitive Market Issues

The DTE will hold a technical session on May 31, 2001, at 10AM to discuss existing regulatory barriers that have slowed the growth of the competitive market and how these barriers can be removed.

 Advanced Metering Order

The DTE approved the utility tariff filings for provision of advanced metering services. The tariffs provide that: 1) authorized agents may request advanced metering services on behalf of customers; 2) metered-data may be stored on company-owned equipment for 35 days; 3) customers can access meter data electronically and through an optical port; and 4) customers have the option of paying a lump sum or on a monthly basis. The DTE also approved the additional services included in the utilities' filings including power outage reporting, peak consumption notification, meter read on appointment, meter read on request, and advanced meter read on demand. Finally, the utilities' historical load data tariffs were also approved. The DTE required the utilities to file proposed fees for the tariffed services by May 25, 2001, and comments on the fees are due June 1, 2001. The full text of the Order is available on the NEM Website.