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August 13, 2004
Upcoming NEM Events

Please reserve the dates September 29-30, for NEM's Fall Industry Leadership Roundtable to be held in Boston. The meeting will be held at the Hyatt Harborside. Please reserve your room ASAP (617-568-1234 or 1-800-233-1234) to receive the NEM rate of $189 per night. Many thanks to Nate Owen and Bob Potter of Energy Services Group for hosting the meeting. Many thanks also to Mike Foley of First Data Corporation for offering to sponsor other parts of the meeting. A hotlink is provided here for registration.

NEM's Winter Executive Committee Meeting will be held in Newport Beach, California on January 19-20, 2005. Many thanks to Peter Weigand and Ian Carter of Commonwealth Energy for offering to host this event.

Lastly, NEM's spring industry event will be held in Washington, DC at the Marriott Metro Center on either April 21-22, 2005, or April 26-27, 2005.

Conference Call for NEM Policy Chairs and Executive Committee Members on New York and Massachusetts

NEM will convene a conference call of Policy Chairs and Executive Committee members on August 17, 2004, at 2-3PM EST to discuss the developments in New York and Massachusetts and how they relate to the NEM meeting scheduled for September 29-30, 2004, in Boston. The dial in number is 703-788-0600, and the passcode is 209353.

FERC Clarifies Standards of Conduct

FERC issued an Order clarifying the standards of conduct applicable to interstate natural gas pipelines and public utilities governing the relationship between these entities and their marketing and energy affiliates. FERC clarified that: 1) LDCs may release or acquire capacity in the capacity release market without becoming Energy Affiliates; 2) the Energy Affiliate exemption for LDCs extends to LDCs serving state-regulated load at cost-based rates that acquire interstate transmission capacity to purchase and resell gas only for on-system sales; 3) an LDC division of an electric public utility Transmission Provider will not be treated as an Energy Affiliate if it qualifies for the LDC exemption under the rules; 4) LDCs that otherwise qualify for the LDC exemption under the rules do not change their status by responding to emergencies; however, each emergency activity shall be posted; 5) natural gas processors do not become Energy Affiliates by virtue of purchasing and transporting gas on affiliated Transmission Providers for plant thermal reduction purposes; 6) processors, gatherers, intrastate pipelines and Hinshaw pipelines may purchase gas for operational purposes and make de minimus sales as required to remain in balance without becoming Energy Affiliates; 7) an affiliate that purchases natural gas solely for its own consumption is not an Energy Affiliate by virtue of those purchases; 8) Senior officers who are Transmission Function Employees are not prohibited from receiving transmission-related information; 9)Transmission Providers need not post the identity of shared physical field infrastructure, such as substations, that do not house any employees; 10) posted logs of discretionary waivers need not disclose customer names; 11) all officers of the Transmission Provider as well its employees with access to transmission information or information concerning gas or electric purchases, sales or marketing must be trained in the requirements of the Standards of Conduct; 12) Transmission Providers need not post notice of or transcribe scoping meetings for purposes of the Standards of Conduct; and 13) a Transmission Provider that has a division that operates as a functional unit is not required to maintain separate books and records for that unit. The full text of the Order is available on the NEM Website.

Commission to Examine Enhanced Reporting of Natural Gas Storage Inventory Information

The Commission will convene a technical conference on September 28, 2004, at 9:30AM to examine whether it should institute a generic rulemaking requiring enhanced reporting of gas storage inventory information by interstate natural gas pipeline companies and other owners and operators of natural gas storage facilities. Specifically, the Commission will examine whether to require posting on a standardized basis for the previous gas day of net aggregate actual injection or withdrawal data, actual total available working gas and actual total storage inventory volume. Comments on the proposal are due September 10, 2004. The full text of the Notice of Technical Conference is available on the NEM Website.

Proposed Changes to Nicor Gas Customer Select Program

Nicor Gas has submitted two proposed changes to its Customer Select program for Commission approval. Nicor proposes to: 1) base storage activity on a supplier's proportion of Nicor's storage plan for the month, as determined at the beginning of the storage withdrawal season, to determine a supplier's month-end cash out position for the withdrawal season (consistent with determining the month end cash out position for the injection season); and 2) eliminate the requirement that a supplier provide Nicor with copies of firm citygate supply contracts with Nicor as a primary delivery point and instead accept a supplier affidavit as proof of sufficient firm gas supply to be delivered during the period November 1 through March 31. If a supplier does not furnish the affidavit, the supplier will be charged Nicor's non-commodity gas cost in place of the aggregator balancing service charge for providing it with firm back-up service. The full texts of Nicor's Petition and Proposed Tariffs are available on the NEM Website.

Commission Schedules Electric Supplier Orientation Conference

The Commission has scheduled an Electric Supplier Orientation Conference for September 14, 2004, at 9:30AM at the University of Maryland, Baltimore County South Campus Main Seminar Room. The panelists for the five panel discussions led by industry representatives and Commission Staff personnel are being finalized. An announcement and other promotional materials will be forthcoming. Registration will be web-based, and will open next week.

BGE Gas Settlement and Supplier Meeting

A BGE gas settlement has been filed with the Commission providing that the cost of interstate pipeline capacity that the utility must hold to meet its Provider of Last Resort obligation will be charged to firm service customers participating in the Daily Requirements Service (DRS) for a period of one year beginning February, 2005. Beginning February 2006, this charge will shift to Gas Suppliers serving those customers. The one year transition period is intended to provide Gas Suppliers time to incorporate the cost into their pricing arrangements. In return, BGE will provide a credit to Gas Suppliers beginning in February 2005 for any interstate pipeline capacity held by Suppliers that is primary firm to BGE's citygate. Suppliers have until September 1, 2004, to notify BGE of any such capacity.

An informational gas roundtable meeting will be held by BGE at its Spring Gardens facility on August 25, 2004, at 1PM to review these changes. The tentative agenda for the meeting includes: overview of the changes, new gas choice and reliability charges, credit for primary, firm capacity to BGE's citygate, and how the charges will affect your bill. Contact Ann Cunningham at 410-291-4785 if you plan to attend. Teleconferencing capability will also be made available.

The full text of the BGE Settlement is available on the NEM Website.

New York
Order on Residential Gas Distributed Generation Rates

The Commission issued an Order setting the parameters for rates for residential gas distributed generation (DG) service. The Commission ordered as follows: 1) small residential DG customers can use one meter for combined gas usage; 2) ConEd's large residential DG customers must use a separate meter for DG usage; 3) the residential DG rates should not be subject to a sunset after the initial three year term of the pilot; 4) a 50% load factor for all of the gas used by a residential DG customer should be used for designing residential DG rates; 5) customer qualification for the DG rate should be subject to a simple utility verification process (application, load factor and volumetric qualification); 6) rates should be designed with a single block rate above the minimum charge (except for ConEd); 7) ConEd should implement two different residential DG rates - one applicable to buidlings with one to four units (no separate meter and use of one additional rate block over minimum charge) and one applicable to buildings with five or more units (separate meter for DG usage required and rate structure incorporating block structure of SC3 rate class); 8) seasonal differentials should not be implemented (with the exception of ConEd who should apply a seasonal differential to large multi-dwelling residential DG customers); and 9) utilities should collect gas usage and load factor data to be reported to the Commission every six months with an analysis to be filed January 1, 2008. The utilities must file residential DG service rates within 90 days of the issuance of the Order. The full text of the Order is available on the NEM Website.

Commission Modifies Terms of FirstEnergy Rate Plan

The Commission issued an Order clarifying the terms of FirstEnergy's (FE's) Rate Plan. The Commission decided to permit FE to file an application to adjust generation charges during 2006 through 2008 for increases in the cost of fuel as well as adjustments for taxes. Any increases approved would be subject to downward adjustment if fuel costs decrease during the Rate Stabilization Plan (RSP) period subject to a floor of the generation rate previously established in the case. The Commission decided that the provision for supply of Market Support Generation (MSG) should not be eliminated and approved FE's proposal for pricing and distribution of MSG. Additionally, FE's transmission and ancillary charges are to be avoidable for shopping customers after the end of the Market Development Period.

The Commission also modified the requirement that supplier contracts be submitted a year in advance to qualify for the enhanced shopping credit. Supplier contracts should be filed within 45 days of the date that the Commission makes a decision on the results of the Competitive Bidding Process. With respect to commercial and small industrial customers that are not part of an aggregation, the notice period should be modified to allow these customers to enter into competitive supply contracts beginning in 2006 with 90 days notice. With respect to 2007 and 2008, these customers must provide one year's notice. Finally, the Commission adjusted the shopping credit cap so that the avoided cost for the RSP is capped by the average shopping credit by rate schedule.

The full text of the Order is available on the NEM Website.

Meeting on FirstEnergy Competitive Bidding Proposal

A meeting will be held August 19, 2004, at 10AM EDT in Room 11-C of the Commission's offices for FirstEnergy to present its competitive bid proposal and permit interested parties to discuss the proposal prior to its filing. Conference call capabilities are also available (dial-in 614-644-1099).

Dominion Virginia Power Issues RFQ for Competitive Bid Supply Service Pilot

Dominion Virginia Power has issued a RFQ for interested entities to serve sub-blocks of retail customers in the utility's Competitive Bid Supply Service Pilot. The RFQ includes details on the pilot and geograhpic blocks of customers to be served as well as program terms, the competitive supplier tariff, and the certification form. Responses to the RFQ are due by August 23, 2004. After a review of respondent qualifications, Dominion Virginia Power will issue a request for bids. The full text of the Competitive Bid Supply Service Pilot RFQ is available on the NEM Website.

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