April 19, 2001


 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 mark your calendars. Rooms at the Historic Boulderado are very limited. Agenda items will include NEM's strategy for summer shortages, the development of National Guidelines for Advanced Metering and Distributed/Self Generation, strategies for upcoming "bottoms-up zero rate base utility unbundlings," long-term fixed price programs and the next steps on National Energy Technology Policy development and implementation. Strawman proposals for both will be circulated shortly. Please also send headquarters your nominations for next year's Regional, State and National Policy Chairs and Co-Chairs.

 NEM Executive Committee Conference Call

A conference call for NEM Executive Committee members has been tentatively scheduled for April 26, 2001, at 2PM. The purpose of the call is to discuss organizational issues and future leadership of the Executive Committee as well as Regional Policy Chairs. Executive Committee members that cannot participate on that day are urged to contact headquarters ASAP. If necessary, the alternate date will be May 3, 2001, at 2PM. The conference call number is 303-248-1820 and the passcode is 428358.

 NEM Conference Call with Michigan PSC

NEM hosted a conference call with NEM members and Michigan PSC Commissioners Svanda, Chapelle, and Nelson, as well as all key Staff and Policy Directors, to discuss wholesale and retail issues for both electric and gas as well as issues related to billing, metering, customer care and distributed generation. The Commission called to thank us for our time and asked us to arrange additional conference calls on a regular and ongoing basis. The Commission suggested we segment the calls to address energy and related services, and NEM members requested that participants also participate in the pre-meeting strategy sessions. NEM members interested in participating in this effort should contact headquarters ASAP. The full text of the Issues List for the call is available on the NEM Website.

Federal Issues

 Comments on Use of Radio Spectrum by Energy Service Providers

The National Telecommunications and Information Administration (NTIA) is seeking NEM's comments on the use of radio spectrum by energy service providers in connection with a study it will submit Congress. Comments are due June 8, 2001. NEM members interested in submitting comments should contact headquarters ASAP. The full text of the Notice Soliciting Comments is available on the NEM Website.


 NEM Comments on PJM Load Response Program

NEM has filed Comments in support of PJM's proposed Load Response Program. NEM argued the Program will allow consumers to respond to market price signals and will demonstrate how voluntary, market-based conservation and load-shifting measures can lower energy prices without imposing mandatory price caps which could distort market signals over the long term. The full text of NEM's Comments is available on the NEM Website.

State Issues

New York

 Statewide Bottoms Up Unbundling Meeting in Albany

NEM plans to attend the kick-off meeting of what is perhaps the most important proceeding to be initiated in New York to date. NEM has pushed hard for a bottoms up approach to utility unbundling and is both very pleased with this important national precedent, and yet is very concerned that the process used and information provided by the utilities may not be sufficiently transparent (i.e. merely uses standard utility accounting codes and methods). If not done properly, this proceeding could drag out and become extremely costly to the marketing community. The full text of the Order is hotlinked here for your review, and we urge members interested in New York to contact headquarters and/or to attend and show support for NEM's appreciation and concerns.

 POLR Proceeding Briefs

NEM, Staff, the Consumer Protection Board, NYSEG, and Keyspan have filed briefs in the POLR proceeding. NEM argued that: 1) a date certain should be set for transition to a competitive market; 2) the POLR function can and should be a competitively bid function that reflects all of the political, social and reliability concerns of providing Last Resort service; 3) utilities should perform only natural monopoly functions, i.e., utilities should sell regulated distribution services on a "no frills" cost of service basis; and 4) POLR service should not be designated as a subsidized rate to address low income concerns, but rather programs could be developed to bid out aggregated low income groups as part of POLR service or a separate service.

Staff maintains that utilities should not offer competitive functions but cautions that before utilities exit the merchant function certain preconditions must be met including establishment of a viable wholesale market, availability of reliable service to all consumers, adequate customer education, and resolution of statutory impediments.

The Consumer Protection Board supports statewide adoption of the single retailer model (like Texas) but argues that the POLR function cannot practically be bid out and would be unreasonably complex, instead recommending that the Commission assign consumer protection and OTS responsibilities to all ESCOs.

NYSEG resists any further Commission efforts to define an end-state and opposes any plans to direct the utilities to exit the merchant function. In contrast, Keyspan encourages swift implementation via the end-state single retailer model and urges a date certain for utilities to exit the merchant function.

The full text of the Briefs of NEM, Staff, the Consumer Protection Board, NYSEG and Keyspan are available on the NEM Website.

 NFG Proposed Settlement

A proposed settlement has been filed in the NFG proceeding providing as follows: 1) marketers will not need to demonstrate firm capacity upstream of designated liquid points; 2) the tolerance band for daily deliveries of natural gas to the city gate will be a minimum of 80% and no more than 120% of the customer's daily average normalized consumption for the month; 3) marketers must demonstrate firm capacity to meet customer group requirements at 62 heating degree days; 4) marketers must demonstrate compliance with the Commission's 5 month firm upstream transportation requirements by July 1 of each year so long as the marketer's monthly compliance report is submitted by April 1. Comments are due on the Proposed Settlement by May 1, 2001. The full text of the Notice Requesting Comments and Proposed Settlement are available on the NEM Website.

 Gas Emergency Generator Incentive Program

Pursuant to the Standard Performance Contract Program, NYSERDA will provide incentives of $100/kW for new gas-fired emergency generators that are permanently installed and operational by August 1, 2001, in the ConEd service territory and are rated at 3 MW or less. Additional information is available at www.nyserda.org.

 ConEd Gas Settlement Meeting

A settlement meeting in the ConEd gas proceeding will be held May 2, 2001, at 10AM at the Commission's New York City offices. NEM, Hess, AES NewEnergy, and Agway are actively participating and urge your support.


 HB 2107 on Stranded Cost Recovery and Price to Beat

HB 2107 is being considered in the House and provides that if a utility has negative stranded costs it must reverse prior mitigation to the extent necessary to eliminate any estimated excess of market value over net book value of generation assets. The reversal of prior mitigation is to be reflected in transmission and distribution rates. Additionally, the price to beat charged by an affiliate will be reduced to pass through the reductions to transmission and distribution rates. The full text of HB 2107 is available on the NEM Website. Preliminary analysis suggests this may not pass, and if it does it should be competitively neutral.


 Order on Virginia Power and AEP Regional Transmission Entity (RTE) plans

AEP and Virginia Power filed plans to transfer functional and operational control of transmission facilities to an RTE. The Commission will examine whether the proposed transfers meet the requirements of state restructuring law and RTE rules and whether they are in the public interest.

The Commission will hold three hearings on the filings. One proceeding on July 30, 2001, at 10:00 a.m. will be a joint hearing pertaining to both AEP and Virginia Power. The second hearing on September 10, 2001, at 10:00 a.m. will specifically address aspects contained in Virginia Power's application, and the third hearing on September 13, 2001, at 10:00 a.m. will specifically address aspects contained in AEP's application.

Comments and/or lists of additional issues for consideration in the joint proceeding are due June 15, 2001. Comments for consideration in the Virginia Power and AEP specific proceedings are due August 6, 2001, and August 9, 2001, respectively. Interested NEM Members should submit written comments to headquarters by June 1, 2001, for the joint proceeding and July 25, 2001, for the other proceedings. The full text of the AEP Order and the Virginia Power Order are available on the NEM Website.

 Virginia Power Report on Pilot Program

Virginia Power filed a status report on its pilot program detailing customer switching, supplier participation and offerings, and identification of problems with billing transactions, EDI transactions, transmission settlement and load forecasting. The full text of the report is available from NEM headquarters.