May 18, 2001

Federal Issues

 National Energy Policy Report

The Bush Administration released the National Energy Policy Report outlining a long-term plan to increase supply and energy efficiency. The recommendations include: comprehensive electricity legislation to promote competition, including repeal of PUHCA and reform of PURPA; an investment tax credit and shortened time requirements for obtaining a permit for cogeneration projects; improving reliability of a national transmission grid through transmission expansion, incentive rate-making proposals and removal of bottlenecks; encouragement of new technology, including cogeneration, clean coal, enhanced oil and gas recovery and exploration; and expansion of nuclear energy. The National Energy Policy Report is available on the NEM Website.

 H.R. 1797-Energy Efficiency and Conservation Incentives Act of 2001

The House Ways and Means Committee is considering H.R. 1797 which would provide a $30 tax deduction for meters, metering devices and retrofitted meters that allow for reading of usage and price signals on at least a daily basis. The full text of H.R. 1797 is available on the NEM Website


 ENCORP, TECO Power Services and USPowerSolutions Elected to NEM Executive Committee.

 ENCORP is among the world's leading providers of products, services, and solutions that address the growing demand for clean, reliable, on-site power systems. ENCORP's power technology products include grid-interconnection switch gear and energy-automation software. ENCORP's products, in combination with its engineering services team, create dependable, on-site power solutions that can reduce the overall cost of energy for commercial and industrial customers operating in the digital economy. Scott Castelaz, Vice President of Corporation Development and External Affairs, will represent ENCORP within NEM.

 TECO Power Services builds, owns, and operates electric generation facilities that service customers in 18 states as well as a number of countries in Europe and Central America. TECO Power Services has interests in more than 7,000 net megawatts of announced projects, either operating, in construction or in advanced stages of development. David Crabtree, Director of Market Research and Analysis, and Jerry Brown, Vice President of Energy Management, will represent TECO Power Services within NEM.

 USPowerSolutions combines best-of-breed business applications with robust network architecture to create custom-designed, online enterprise-wide management systems that remove barriers to communication, reduce costs, and enhance customer relationships across the value chain. USPowerSolutions products include PowerSolution, a web-based customer care, billing, and trading partner/transaction management application service, PowerUp, a web-based EDI/XML-enabled CIS portal to regulated distribution companies, and PowerUp-G, a turnkey solution for EDI-over-the-Internet. H. Ward Camp, Vice President of Regulatory Strategy and Industry Alliances, and Sara O'Neill, Manager of Regulatory Affairs, will represent USPowerSolutions within NEM.

 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, the development of National Guidelines to Implelment Distributed Generation/Self Generation, Interconnection and Back-up Power Policies, 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-FERC Meeting Scheduled

NEM will be meeting with FERC's Office of Markets, Tariffs & Rates on June 1, 2001, from 2PM-3:30PM EST. A conference call will held on May 24, 2001, at 2PM EST to prioritize issues for discussion. The conference call number is 303-248-1820 and the passcode is 428358. A tentative list of issues that has been developed for discussion that day include RTO development (slow pace, independence, access, ATC, seams, configuration, California takeover of transmission) and price caps. NEM members will meet for lunch prior to the meeting. Those NEM members interested in participating should contact headquarters ASAP.


 Orders on Remedies for Western Wholesale Markets

The Commission ordered remedies to increase energy supplies and reduce demand in the Western energy markets to be effective until April 30, 2002. The Commission order provides for: 1) premiums on equity returns, and accelerated depreciation, for projects that increase electric energy transmission capacity in the short term; 2) revenue recovery for non-capital intensive expenditures made to increase transmission capacity on constrained interfaces; 3) rolling in of interconnection and upgrade costs associated with new supply, rather than direct assignment of such costs to the generator, for projects that are in service by November 1, 2002; 4) extending and broadening the temporary waivers of operating and efficiency standards and fuel use requirements for qualifying facilities; 5) waiving prior notice requirements and granting authorization of market-based rates for wholesale power sales from generation used primarily for back-up and self generation and located at businesses within the WSCC; 6) authorizing wholesale customers and retail customers who reduce consumption to resell their load reduction at wholesale at market-based rates; and 7) waiving prior notice requirements for wholesale contract modifications to facilitate demand-side management. The full text of the Order is available on the NEM Website.

To ensure that the maximum amount of Qualifying Facilities (QF) power will be available to the California market this summer, the Commission ordered that: 1) QFs may sell excess power to purchasers within the WSCC; 2) when California QFs sell excess power or when California QFs make sales to third-parties, California utilities must provide interconnection service and transmission service to effect sales to third-party purchasers. These measures will remain in effect until April 30, 2002. The full text of the Order is available on the NEM Website.

 ALJ Decision on NY Member Systems Transmission Service Agreements

The ALJ issued a decision in the NY Member Systems proceeding on amendments to transmission service agreements (TSAs) finding that: 1) Niagara Mohawk does not have the unilateral right to file changes to its TSA with Sithe; 2) marginal loss provisions under the NYISO OATT as applied to Sithe are not just and reasonable; 3) the Member Systems can make amendments to their New York Power Authority (NYPA) TSAs, with NYPA's consent, to permit NYISO to be reimbursed for ancillary services; 4) out-of-state NYPA sales customers are not exempt from paying for operating reserve service; and 5) the NYPA Transmission Adjustment Charge may be applied to TSAs under which NYPA sales customers receive NYPA power. The full text of the decision is available from NEM headquarters.

 NYISO Technical Bulletin

NYISO released for comment Technical Bulletin 69 on Zonal Price Capped Load Bidding in the Day-Ahead Market. The full text of Technical Bulletin 69 is available on the NEM Website.

State Issues

New York

 Unbundling Proceeding

In view of the lengthy number of issues identified by the parties in the unbundling proceeding, Staff has proposed to focus on Issue 1, embedded cost studies, and Issue 5, contestable services, for consideration by the Commission in August. Staff will discuss the proposal on a conference call on May 21, 2001, at 1PM.

 Standby Rates Proceeding

NEM filed comments on the standby rates straw proposal arguing that the before the proposal is further considered, "bottom up" unbundled cost of service studies should be performed, and actual utility costs associated with serving back up power needs of distributed generation/self generation customers must be identified and quantified for each class of customer. The utilities generally endorsed the straw proposal and maintained there is no basis to conclude that the cost of providing standby delivery service is significantly different from the cost of providing delivery service to "full-requirements" customers. The full text of NEM's Comments and the Utilities Comments are available on the NEM Website.

 NYSEG Retail Access Credit Computation and Price Protection Plan

NYSEG will circulate a draft report on its retail access credit (RAC) calculation methodology on May 21, 2001, with comments due on May 23, 2001. NYSEG asserts that the modifications to the RAC should be applied only on a prospective basis. The full text of the RAC calculation proposal materials distributed at last week's meeting are available on the NEM Website as follows: NYSEG's Proposal, Methodology of Calculating Daily Weighted Prices by Service Class, and Examples of Hourly Load Weighting.

In support of its proposed Price Protection Plan, NYSEG has produced documentation pertaining to income, revenue, O&M and power expenses, amortizations, taxes, capital expenditures, plant in service and depreciation reserve, capital structure, cash flow and rate base. NEM members interested in reviewing the documents should contact headquarters.

 Keyspan Gas Proceeding

NEM filed a letter in opposition to Keyspan's proposal to delay implementation of a customer awareness and education program. NEM urged immediate implementation of the program to alleviate customer confusion caused by California and to inform customers of their right to choose a competitive supplier. The full text of NEM's Letter is available on the NEM Website.

The next meeting in the Keyspan gas proceeding will be held on May 23, 2001, at 11AM at the Commission's Penn Plaza offices.

 NFG Proceeding

Staff has prepared a back-out rate proposal in the NFG proceeding. Due to confidentiality concerns, NEM members interested in reviewing the proposal should contact headquarters.

 Proposal on Prepayment and Deposit Requirements

Staff has proposed security requirements and deposit amount limits for marketers who collect deposits or prepayments for service. The proposal would require marketers to ensure the ability to refund customer deposits through the use of a letter of credit, escrow account, bond, or other financial instrument or documentation of financial viability. The proposal would also limit residential customer security deposits to no greater than twice the average monthly bill. Comments on the proposal are due June 11, 2001. The full text of the Notice Soliciting Comments is available on the NEM Website.

 Central Hudson Proceeding

Staff has filed a brief opposing the ALJ's proposed customer rebate payments. Staff argues that retail access credits of $0.4 cents/kwh for small customers and $0.2 cents/kwh for large customers should be instituted instead (citing the credits adopted in the NYSEG proceeding) to stand as a proxy pending completion of cost studies in the unbundling proceeding. The full text of Staff's Brief is available from NEM headquarters.


 Minimum Stay, Consolidated Billing and Competitive Metering Proceedings

The Commission ordered Staff to convene workgroups for the development of rules on minimum stay periods, consolidated billing and competitive metering. The minimum stay period workgroup will meet on June 5-6, 2001, at 8:30AM. Staff must file proposed rules and a report on minimum stay periods by June 26, 2001. Comments on Staff's proposed minimum stay rules are due July 23, 2001. Staff's proposed rules on consolidated billing are due February 14, 2002, and a report is due February 28, 2002. Comments on Staff's proposed consolidated billing rules are due March 22, 2002. Staff is required to file a report with Commission with recommendations for future actions on competitive metering by July 16, 2001. The full text of the Order is available on the NEM Website.


 Notice of Inquiry on Supplier Single Billing

DTE issued a Notice of Inquiry (NOI) to investigate the implementation of a supplier single-bill option, including related changes to partial payment rules. The first technical session is scheduled for June 7, 2001. The full text of the Notice of Inquiry is available on the NEM Website.

Other Issues

 UBP/Retail Standards Board Governance Committee Meeting

A meeting of the UBP/Retail Standards Board Governance Committee will be held May 31, 2001, at 9AM. The Committee will be drafting organizational and policy recommendations for consideration and approval by the Retail Standards general membership.