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October 17, 2003
NEM Winter Executive Committee Policy and Planning Meeting

The Winter Executive Committee Policy and Planning Meeting is scheduled for January 20th and 21st, 2004, in Houston, Texas. The conference will be held at the Pennzoil North Tower, 700 Milam, 20th Floor, Room 20014 (Pennzoil Conference Tower) Houston, TX 77002.

NEM's Annual Membership Meeting and National Restructuring Conference

Mark your calendars for March 31 and April 1, 2004, for NEM's Annual Membership Meeting and National Restructuring Conference. It will be held in Washington, DC at the Capitol Hyatt. Energy Subcommittee Chairman Barton, Chairman Wood, Commissioner Brownell, CFTC Commissioner Brown-Hruska, NARUC President Wise, NJBPU President Fox, Illinois Chairman Hurley, Michigan Commissioner Chappelle, Ohio Commissioner Mason, Massachusetts Commissioner Keating and a number of other important speakers have already confirmed. If you wish to be listed as a sponsor of this event, please contact headquarters. The exhibit space for this year is three times larger than last year's space, and Harts Magazine has offered to do a special section featuring our sponsors. Registration Information is available on the NEM Website.

NEM To Meet With NJBPU President Fox

President Fox of the New Jersey Board of Public Utilities has offered to meet with NEM leadership on November 24, 2003, at 11AM EST to discuss the issues of competitive markets in New Jersey. NEM members participated in a conference call on Wednesday, September 17, 2003, to discuss the agenda for the meeting with President Fox. NEM has scheduled another call on November 10, 2003, at 12 PM EST to go over the agenda before the meeting. All members wishing to participate in this meeting should dial into the conference call. The dial in number is 703-788-0600, and the pass code is 209353.

Energy Bill May Be Delayed Until Next Year

House-Senate members of the conference committee may not be able to wrap up negotiations on comprehensive energy legislation this year, according to a spokeswoman for the Conference Committee chairman, Senator Pete Domenici. The spokeswoman stated that the energy bill conferees "haven't made a lot of progress" over the past two weeks on four issues -- electricity, the Alaska natural gas pipeline, ethanol and the tax package and if negotiators aren't able to resolve the controversial items within the next two weeks, the energy bill may spill over into January and February, she noted. Negotiations on the bill were interrupted when the Senate recessed last week. Senators are due to return on October 14. But the House wants to recess at the end of the month, which would give House-Senate conferees only a narrow window of opportunity to complete the bill this year.

In response to Domenici's spokeswoman's remarks Senate Majority Leader Bill Frist and House Speaker Dennis Hastert announced plans to meet this week with key GOP energy conference leaders to determine how best to complete the energy bill before the end of this year. Frist and Hastert "are committed to finishing the energy bill this year," deputy press secretary for the Senate leader, said. "They will consult with the chairmen next week on the best way to complete the energy bill."

ISO-NE Will Apply to Be RTO

The board of directors of ISO New England decided to move ahead with the creation of a regional transmission organization (RTO) for New England and plans to file a joint proposal with New England transmission owners at FERC by the end of October. The reorganization would give ISO-NE more authority, including the power to mandate improvements to the region's electricity grid. "The creation of an RTO for New England will strengthen the independent oversight of the region's bulk power system and wholesale electricity marketplace, thus assuring power system reliability and a competitive wholesale market for the region's consumers and its economy," said Gordon van Welie, president and chief executive officer of ISO New England, in a statement.

FERC Conference on Natural Gas Markets

FERC held a conference on October 14, 2003, to discuss the natural gas markets. The conference focused on the findings and recommendations contained in the National Petroleum Council’s (NPC) report: "Balancing Natural Gas Policy – Fueling the Demands of a Growing Economy." The conference featured three panel presentations by the NPC study team. Panel 1 addressed gas supply; Panel 2 addressed gas demand; and Panel 3 addressed infrastructure issues. The full text of NPC's Presentation is available on the NEM Website.

The NPC study team introduced the Report, which is the result of a year long integrated effort of all industry sectors. Secretary Abraham requested the report last March to “examine the potential implications of new supply, new technologies, new perceptions of risk, and other evolving market conditions that may affect the potential for natural gas demand, supplies, and delivery through 2025.” The basic conclusion of the Report is that North America will not be self-reliant for its natural gas needs and that storage will play a critical role in the future. The full text of NEM's Analysis of the FERC Conference is available on the NEM Website.

FERC Postponed Deadline to End Through & Out Fees

FERC postponed the November 1, 2003, deadline for transmission grids in the Midwest and mid-Atlantic regions to end a fee charged to move power across their regions. The so-called "through and out" rates charged by PJM and MISO were struck down by FERC in July as unfair and a barrier to competition. At that time, the commission set a November 1 deadline for both grids to drop the fees. But in a recent Order, FERC said it would delay the deadline and set a new date "in the near future." FERC said it took the action because it is also investigating similar fees charged by American Electric Power Co., Ameren Corp. , Exelon Corp's Commonwealth Edison, FirstEnergy Corp. , DPL Inc's Dayton Power and Light , and Dynegy Inc.'s Illinois Power Co. The agency ordered the utilities in July to prove that their through and out fees are just and reasonable. PJM, which serves much of the mid-Atlantic and Northeast, and the Midwest ISO charge the fee to move electricity across large distances on their wires. The full text of the FERC Order is available on the NEM Website.

New York
NEM Supports NYPSC's Authority to Purchase ESCO Receivables

The National Energy Marketers Association submitted a Reply to HEFPA Comments of NYSEG and RG&E that submitted that the Commission does not possess the requisite authority to require utilities to purchase ESCO receivables. NEM strongly urged that the Commission does have the requisite statutory authority. NEM submitted that the Commission has the authority to mandate purchase of ESCOs' receivables pursuant to its "just and reasonable" rate authority. NEM also submitted that the Commission can mandate purchase of ESCO receivables pursuant to its authority to adopt rules and regulations necessary and proper to implement HEFPA. Lastly, NEM submitted that the NYPSC has previously exercised this authority in the billing proceeding to require a choice of consolidated billing entities. NEM submitted that the HEFPA case presents an even more compelling reason for the exercise of Commission authority. The full text of NEM's Reply is available on the NEM Website.

FirstEnergy Submits Application To Alter The Way Transmission and Ancillary Services Are Provided

WPS Energy Services, Inc., MidAmerican Energy Company, Constellation NewEnergy, Inc., and Strategic Energy, LLC (Ohio Marketers) are protesting FirstEnergy's application to alter the method in which transmission and ancillary services are to be provided to retail customers supplied by competitive retail electric service providers (CRES). FirstEnergy seeks to alter its tariffs so that transmission and ancillary services, now scheduled and provided by FirstEnergy, will be provided by the CRES. The Ohio Marketers submitted that FirstEnergy seeks to retain billing and collecting for transmission and ancillary services from retail customers, even though those services would be provided by the CRES. The Marketers also stated that FirstEnergy proposes to reimburse the CRES for some, but not all of the costs for providing transmission and ancillary services in FirstEnergy's name. FirstEnergy also seeks to retain all differences between what it collects from retail customers and what it reimburses the CRES as compensation. FirstEnergy stated that the above changes are necessary for it to join MISO. The Ohio Marketers submitted that joining MISO does not bar the utility from providing coordinated scheduling, transmission and ancillary services. The full text of the Ohio Marketers' Protest is available on the NEM Website.

Proposal to Extend Capped Rates

The offices of the governor and the attorney general are urging the General Assembly to consider extending the capped base rates of Virginia electric utilities by three years until mid-2010. The proposal was discussed earlier this week at a meeting of a General Assembly panel that monitors deregulation. Under terms of Virginia's 1999 electric-deregulation law, base electric rates of state utilities are capped, although overall rates can be adjusted up or down to account for changes in power-plant fuel costs. Base rates are to remain capped through July 1, 2007, when a transition to electric competition is scheduled to end and market prices come into play. Supporter of the cap extension said that the problem is that competition among electric suppliers has not developed as the legislature had hoped. To stimulate competition, Secretary of Commerce and Trade, Michael J. Schewel and Deputy Attorney General, Judith W. Jagdmann, the state's consumer counsel, suggested that lawmakers eliminate or phase out the current transition charge customers of utilities must pay if they switch electricity suppliers.

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