February 2, 2001


 NEM's National Energy Restructuring Conference and Annual Membership Meeting

NEM will host its National Energy Restructuring Conference and Annual Membership Meeting on April 3-4, 2001, in Washington, D.C. A number of prominent leaders from Congress, NARUC, academia and the industry have confirmed. A hotlink to the event is provided here for your convenience.

 NEM Restructuring Today Article

Restructuring Today published an article entitled, "Blocking New Generation While Demand Surges Can Create Havoc," discussing the NEM Executive Committee meeting in San Diego in which California style deregulation was reviewed and solutions were identified. The full text of the Restructuring Today Article is available on the NEM Website.

 NEM Executive Committee Meeting Reviews California Style Deregulation

NEM has issued a press release on the recent Executive Committee convened in San Diego. The NEM members present analyzed the California energy crisis and determined that the problem is primarily isolated to California. Solutions identified included ensuring adequate supplies to meet growth in demand and giving consumers price signals to conserve energy. The full text of the Press Release is available on the NEM Website.

 NEM Member Opportunity

The National Grain Sorghum Producers is seeking an energy industry representative to provide a thirty minute presentation before its annual convention on February 19th or 20th, 2001, in Nashville, Tennessee. The speaker is requested to discuss the current energy situation, its effect on agriculture, and possible solutions/projections ahead. Attendance at the convention has numbered roughly 450, most of whom are farmers, researchers and members of agribusiness. Media from approximately 10 television, radio and news publication outlets nationwide will also be present. Interested NEM members should contact headquarters by February 5, 2001.

Federal Issues

 Congressional Oversight Hearing on California Electricity Crisis

NEM prepared a special briefing for its members on the Senate Energy and Natural Resources Committee hearing on the California electricity crisis and implications for the West. The full text of the NEM Briefing is available on the NEM Website and other testimony including Governor Davis' letter is available from NEM headquarters.

 Democratic Energy Bill

Democratic staffers in the Senate have circulated a draft energy bill with provisions for incentives for construction of electric transmission facilities, expansion of the credit for electricity produced from renewable and water resources, establishment of an investment tax credit for new qualifying clean coal technology and retrofits of existing coal facilities, provision of an incentive for construction of natural gas storage, liquifaction, and propane-air injection facilities, establishment of a tax exemption for homes and businesses connecting to a utility to receive natural gas, adoption of rules by FERC on the interconnection of distributed generation to local distribution facilities, establishment of a seven year depreciation schedule for distributed generation facilities, establishment of regional boards to address energy infrastructure and supply planning, and development of an expedited procedure for federal approval of a natural gas pipeline from Alaska's North Slope to interconnect with the grid in Canada and the U.S. The full text of the Democratic Staffers Draft Energy Bill is available on the NEM Website.

 Draft Energy Security Bill

A draft Energy Security Bill is being circulated that includes provisions for the protection of energy supply and security, clean coal technology, electric reliability and PUHCA repeal. The full text of the Draft Energy Security Bill is available on the NEM Website. NEM is advised that this bill may be stripped of its retail section

 DOE Emergency Orders Extended

Secretary Abraham has extended the Emergency Gas Order authorizing PG&E to make emergency purchases of natural gas from listed suppliers pursuant to contractual arrangements in place within the past 30 days provided that there shall be no accelerated payment terms or termination by a supplier without agreement of the parties to February 7, 2001. The PG&E gas purchases are to be for high priority uses, such as generation of electric power, and not for resale into the wholesale market. The full text of the Emergency Gas Order, the Extension of the Emergency Gas Order is available on the NEM Website.

Secretary Abraham has extended the termination date of the emergency order requiring certain suppliers to sell electricity when the California ISO certifies there is an inadequate supply to February 7, 2001. The full text of the Amended Order is available on the NEM Website.


 Order on Alliance Compliance Filing

The Commission has issued an Order on the Alliance compliance filings finding that the filings appropriately establish the independence of Alliance as a for-profit transco, accepting the proposed scope and configuration, finding the filing has met the requirements for maintaining short-term reliability, finding that the proposed zonal rate is a reasonable approach to eliminate rate pancaking, and requiring the Alliance to resubmit a market monitoring plan. The full texts of the Order and the most recent Alliance Compliance Filing are available on the NEM Website.

State Issues

New York

 Marketers Successful in NYSEG Back-Out Rate Order

NYSEG has been ordered to implement a market-based retail access credit that is to include a fixed price adder, for electricity procurement costs and retail customer care costs, in the amount of 0.4 cents/kWh for residential and small commercial customers and 0.2 cents/kWh for large commercial and industrial customers. The ALJ reached this compromise adder by noting that the full list of services performed by marketers cited by NEM is not currently ripe for consideration in this proceeding. The Order implicitly endorsed NEM's arguments and opened the door to argue for increased "adders" to reflect more marketer incurred costs in the future. Additionally, the Order sets an important precedent that these costs can and should be quantified, included in a back-out credit and avoided by the utility as soon as possible. The full text of the Order is available on the NEM Website.

Many thanks to Mary Beth Tighe of Amerada Hess, Michael Meath of Agway Energy Products, and Paul Gromer of Peregrine Energy for their assistance with this matter.

 Billing Proceeding Order

The Commission has ordered the suspension of the utilities proposed tariff filings on billing options for retail customers and has ordered the institution of a proceeding on the propriety of the rates, charges and regulations set forth in the filings. The full text of the Order is available on the NEM Website.

 Competitive Metering Proceeding Order

The Commission has issued an Order in the competitive metering proceeding requiring the utilities to cancel the unbundled metering tariffs because they do not properly reflect certain costs associated with metering. The utilities were ordered to file revised tariffs to be effective by March 1, 2001. The Commission also ordered that: customers eligible for competitive metering should be allowed to contract directly with meter service providers or meter data service providers; Direct Customers should be prohibited from acting as their own MSP or MDSP; and the option of meter ownership for large time-of-use customers should be continued. The Commission will issue another order on the rules of competitive metering and a revised electric metering manual. The full text of the Order is available on the NEM Website.

 Gas Reliability Collaborative Meeting

A gas reliability collaborative meeting will be held February 7, 2001, at 10:30AM at the Commission's Penn Plaza offices. The meeting will focus on capacity issues in the downstate market next winter and into the future. The full text of the Meeting Agenda is available on the NEM Website.

 Distributed Generation Proceeding

The non-utility parties in the distributed generation proceeding will meet February 9, 2001, at 10:30A.M. at the Commission's Albany offices to update their prior report to restate the remaining issues and propose a process to address those issues. The updated report is to be completed by March 7, 2001, and utility replies to the report are due March 21, 2001.

 EDI Technical Operating Profile

The EDI Collaborative has released a Technical Operating Profile that sets forth the Phase 1 EDI test plan. The full text of the EDI Technical Operating Profile is available on the NEM Website.


 Demand Side Response Working Group

Commissioner Fitzpatrick convened a demand side response working group meeting to develop an action plan for the group. The Commissioner's view of important considerations in designing programs include: 1) programs should be voluntary in nature as opposed to regulated, 2) flexibility, 3) use of test pilot programs, and 4) potential for measurement of program effectiveness. He is interested in short-term solutions for the summer and longer-term solutions, including implications of metering solutions.

The next steps of the group are to include CEEP design of a matrix of currently available programs and the working group participants submission of materials on current programs and what is needed to create successful programs. The next meeting of working group will be held February 23, 2001. A summary of the proceeding is available from NEM headquarters.

Many thanks to Paul Dwyer of Exelon Enterprises for this summary.

 State Utility Association Comments on EGS Notice Requirements

A state utility association has filed comments urging the Commission not to change the existing Electric Generation Suppliers (EGS) notice requirements or shorten the notice period to customers for changes in EGS agreements. The full text of the Comments is available on the NEM Website.


 NEM Comments on Proposed SEMCO-MGU Tariffs

NEM has filed comments on the proposed SEMCO-MGU gas customer choice tariffs arguing that the tariffs should be revised as follows: require the utility to exit the merchant function, institute billing options that allow marketers to offer creative products and services, structure default service pricing to reflect true no-notice retail service and to allow marketers to compete, and provide delivery tolerances and reasonable fees in conjunction with true-up procedures and imbalance trading for marketers. The full text of NEM's Comments is available on the NEM Website.


 Staff Proposed Competitive Transition Plan

Staff has submitted a proposed competitive transition plan recommending that retail access should be made available only on a voluntary basis to electric customers. Staff recommended retail access should initially be offered for large industrial customers beginning January 1, 2003, and at a later date for small customers, if the Commission concludes that small customer benefits are likely. The full text of the Staff's Plan is available on the NEM Website.

Other Issues

 Meeting on Future UBP Activities

EEI will sponsor a meeting of interested parties on Thursday, March 8, 2001, to discuss the organization and governance of future Uniform Business Practices (UBP) activities and the prioritization of future practices. The goal of the meeting is to move towards transferring the administration of the UBP effort from EEI to a suitable non-advocacy organization. The meeting will address the following issues: the status of EEI and GISB discussions, voting rules, majority, super-majority, and minimum segment requirements, who can join/vote, and membership dues. The goal of the meeting will also be to determine what issues are most important to the group so that work on those issues can proceed quickly once the above mentioned governance issues are resolved. The meeting will be held at EEI offices located at 701 Pennsylvania Avenue, NW, Washington, DC, 4th Floor-TAE A&B, from 8:30AM to 4:00PM. Those interested in attending should contact Deborah Matthews at dmatthews@eei.org.