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December 5, 2003
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 | 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 meeting will be held at the Pennzoil North Tower, 700 Milam, 20th Floor, Room 20014 (Pennzoil Conference Tower) Houston, TX 77002. The Executive Committee will prioritize the states, issues, utilities and advocacy positions for NEM in 2004. Please use this hotlink to sign up. | |
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| NEM's Annual Membership Meeting and National Restructuring Conference | |
| Please register early for NEM's Annual Membership Meeting and National Restructuring Conference. It will be held on March 31 and April 1, 2004, in Washington, DC at the Capitol Hyatt. Energy Subcommittee Chairman Barton, FERC Chairman Wood, FERC Commissioner Brownell, CFTC Chair Newsome, 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 sponsor this event, please use this hotlink and 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 VIP sponsors. You may view the agenda and register for the event by using this hotlink. Registration Information is also available on the NEM Website. | |
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| Ontario Electricity Prices Proposed to Increase | |
| Legislation has been introduced by Ontario's Liberal government to increase electricity prices effective April 1. The legislation provides that electricity will cost 4.7 cents/kilowatthour for the first 750 kilowatthours and 5.5 cents for usage above that amount. This is an increase from the 4.3 cent/kilowatthour cap set by the former Conservative premier Eves. It is hoped that the increases will help spur conservation measures. The government argues the increase is necessary because the current subsidized price is not sustainable, particularly in view of the $5.6 billion deficit facing Ontario. | |
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| Utilities in the Southeast Suspend RTO Efforts | |
| A group of utilities in the Southeast including Southern Co. Inc. and Entergy Corp. said that they suspended efforts to create a regional power grid. In a statement, the utilities said they had called off a plan to weave their transmission networks together to create the SeTrans grid, which would have extended over eight states from South Carolina to Louisiana.
Citing conflicts between state regulators and FERC over the agency's plan to create RTOs, participating utilities said they "decided unanimously to suspend the SeTrans effort." Southern lawmakers including Republican Senators Richard Shelby of Alabama and Trent Lott of Mississippi inserted language into comprehensive energy legislation before the Senate which would delay FERC's SMD until 2007. | |
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| Commission Strengthens Standards of Conduct For Natural Gas And Electric Industries | |
| In response to changes in the structure of the energy industry, FERC adopted a final rule that establishes standards of conduct that will apply uniformly to natural gas pipelines and transmitting public utilities. The standards of conduct govern the relationship between transmission providers and their energy affiliates. The final rule revises and conforms the current gas and electric standards by broadening the definition of an energy affiliate covered by the standards of conduct and applying them uniformly to natural gas pipelines and public utility transmission providers. Further, the goal of the final rule is to ensure that transmission providers cannot extend their market power over transmission to other energy markets by giving their energy affiliates unduly preferential treatment. The standards also aim to ensure transmission providers offer service to all customers on a non-discriminatory basis. FERC will not require ISOs or RTOs to be subject to the requirements of the standards of conduct.
The final rule holds that an Energy Affiliate is an affiliate of a transmission provider that: "(1) Engages in or is involved in transmission transactions in U.S. energy or transmission markets; or (2) Manages or controls transmission capacity of a Transmission Provider in U.S. energy or transmission markets; or (3) Buys, sells, trades or administers natural gas or electric energy in U.S. energy or transmission markets; or (4) Engages in financial transactions relating to the sale or transmission of natural gas or electric energy in U.S. energy or transmission markets. (5) An energy affiliate does not include: (i) A foreign affiliate that does not participate in U.S. energy markets; (ii) An affiliated Transmission Provider; or (iii) A holding, parent or service company that does not engage in energy or natural gas commodity transactions or is not involved in transmission transactions in U.S. energy markets; or (iv) An affiliate that purchases natural gas or energy solely for its own consumption and does not use an affiliated Transmission Provider for transmission of natural gas or energy; or (v) A state-regulated local distribution company that does not make any off-system sales."
In the final rule, the Commission retains the exemption of Order No. 889, which permits a public utility transmission provider to use the same employees for its interstate transmission business and its bundled retail sales business. The Commission clarifies that if a retail sales function employee engages in any wholesale sales, such as selling excess generation off system, the exemption will not apply. In the final rule, the Commission adopted the “no-conduit rule” which allows shared employees to receive certain information as long as the shared employee does not actively share the information with a marketing or energy affiliate.
Transmission providers continue to have economic incentives to give undue preferences to their energy affiliates, the Commission said. The final rule is intended to give transmission providers specific guidance on how to eliminate undue discrimination and undue preferences in providing interstate transmission services, consistent with the provisions of the Natural Gas Act and the Federal Power Act.
The revised rules require transmission providers’ employees who are engaged in transmission system operations to function independently from the transmission providers’ sales or marketing employees and from any employees of their energy affiliates. In addition, the transmission provider must treat all transmission customers, affiliated and non-affiliated, on a non-discriminatory basis and cannot operate its transmission system to benefit preferentially an energy affiliate or marketing affiliate.
The final rule is effective 60 days after publication in the Federal Register. On that date, each transmission provider is required to submit an informational filing describing the measures it will take to bring itself into compliance with the standards of conduct by June 1, 2004. The full text of the FERC Order is available on the NEM Website.
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 Massachusetts
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| Mass Electric Proposes To Maintain Fuel Adjustment Surcharge | |
| Massachusetts Electric Company and Nantucket Electric Company (Mass. Electric), working with Constellation New Energy, Dominion Retail, MXEnergy Electric, Inc., Select Energy, Inc. and Strategic Energy proposed to implement a joint information campaign, called Now Is the Time to Choose. Mass Electric believes this program is important since now is the first time that the Standard Offer Service (SOS) price is above the market price for electricity. Under the Now Is the Time to Choose program, Participating Suppliers have agreed to join Mass. Electric’s New Choices program, and, if future market conditions allow, to provide offers consistent with their respective business practices to customers that are below the SOS rate for the remainder of the SOS period or at least through February 2005. Mass. Electric would in turn agree to provide informational support to Participating Suppliers, through letters and seminars to medium and large C&I customers, and through bill messages or inserts to residential and small C&I customers. Mass. Electric is seeking the Department’s approval to maintain the Standard Offer Service Fuel Adjustment (SOSFA) at the current level of 1.424¢ per kilowatt-hour for the period January 1, 2004 through February 28, 2005. Under this proposal there would be a firm price for Standard Offer Service equal to the 2004 base Standard Offer Service rate of 5.1¢ per kilowatt-hour plus the currently effective SOSFA surcharge of 1.424¢ per kilowatt-hour. As a result, the total Standard Offer Service rate during the period from January 2004 through February 2005 would not be less than 6.524¢ per kilowatt-hour. Any member wishing NEM to file comments regarding the proposed SOSFA must send their comments to Headquarters no later than December 9, 2003, as comments are due Monday, December 15, 2003. The full text of Mass Electric's Proposal is available on the NEM Website. | |
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 New York
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| Commission Adopts Revised Uniform Business Practices | |
| The Commission issued an Order adopting a revised set of Uniform Business Practices. The Order requires statewide EDI implementation for UBP transactions. ESCOs (other than designated Phase II test partners that are not required to accomplish Phase III) must complete Phase III testing and start using EDI in all of the approved EDI transaction set standards within 90 days after the date of this Order. ESCO compliance can be satisfied by contracting with a third party EDI supplier or clearinghouse to provide the service.
The Order also reduces marketer creditworthiness requirements as follows: 1) reduces security to protect against failure to pay charges related to natural gas imbalances from 30 days to 10 days; 2) allows ESCOs to satisfy creditworthiness requirements and avoid posting security by arranging for the utility to bill for the ESCO and retain the funds collected to offset balancing and billing service charges; 3) ESCOs that are unrated by the major rating agencies can satisfy creditworthiness and security requirements by maintaining a “1A2” rating from Dun & Bradstreet combined with 24 months good payment history with the utility and providing security, after deduction of an unsecured credit allowance; 4) utilities may choose to review ESCO audited financial statements as part of a voluntary program to reduce security requirements; and 5) a distribution utility can require full security from an ESCO with a minimum rating that is placed on a credit watch with negative implications.
The Commission declined to institute a regulatory review process for instances when a utility discontinues ESCO participation in a retail access program, for instance for failure to comply with ISO requirements or failure to deliver 80% of customer needs. The Commission also required that the utilities must provide available electronic interval data in summary form via EDI and, if requested, in detail via an acceptable alternative electronic format. The Commission declined to require utilities to provide customer lists and contact information to ESCOs. The full text of the Order and Revised UBP is available on the NEM Website. | |
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| ConEd Files Amendments to Gas Service Tariff | |
| ConEd filed to increase the delivery rates to certain firm sales and firm transportation gas customers. The companies proposed allocation of its revenue increase was based on its 2002 Embedded Cost of Service study. ConEd also proposed to continue its $0.24 per dekatherm competitive retail choice credit. ConEd also proposed a Transition Adjustment for Competitive Services to collect net retail choice credits equal to: (1) the proposed $0.24 per dekatherm credit less $0.012 cents per dekatherm (proxy for net avoided costs); plus (2) the currently effective $0.65 per bill credit provided to firm transportation customers if they have consolidated bills issued by their marketers; plus (3) marketer and Direct Customer non-payments for rates and charges that exceed the security deposits held by ConEd. Other tariff changes include new services fees associated with implementing HEFPA and the elimination of the virtual storage option service for marketers. ConEd is willing to pursue discussions with other parties in an effort to reach agreement on the above issues. ConEd requested that the proposed changes become effective October 1, 2004, the day following the expiration of the current rate plan. NEM has requested party status in this case. | |
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| ConEd Proposal for Phase 7 of Retail Access Program | |
| ConEd filed a proposal for Phase 7 of its retail access program, covering the period May 1, 2004, through April 30, 2005, since bill credits have not yet been determined in the “Unbundling Proceeding.” For Phase 7, ConEd proposed to continue its current program, modified to provide for contemporaneous lost revenue recovery. Specifically, ConEd proposed to continue to provide bill credits of 1 and 2 mills per kilowatt hour to demand-billed and non-demand-billed customers, respectively, during Phase 7 and to recover, on a contemporaneous basis, its unavoided costs.
ConEd submitted that it avoids 0.09 mills/kWh associated with working capital on electricity supply and uncollectibles for demand-billed customers and only 0.16 mills/kWh associated with those components for non-demand-billed customers. ConEd proposes to recover the difference between the retail access credits and their avoided costs through a Monthly Adjustment Clause charge. ConEd also proposed that it be allowed to discontinue its annual retail access “phase” filings. The full text of ConEd's Phase 7 Proposal is available on the NEM Website.
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3333
K Street, N.W., Suite 425
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©
Copyright 2001 National Energy Marketers Association
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