February 22, 2001


 White House to Brief NEM Members on Administration Energy Strategy at its April 3 Annual Membership Meeting and Restructuring Conference

The Director of the Vice President's Energy Policy Development Group will hold a "closed-door" meeting with NEM members at its Annual Membership Meeting and National Restructuring Conference on April 3-4, 2001, in Washington, D.C. Leaders from Congress, NARUC, academia and the industry have also confirmed. A hotlink to the event is provided here for your convenience. NEM, Keyspan, Lodestar PowerTrust, and AES New Energy are hosting a VIP Reception in the U.S. Capitol Building the evening of April 3rd. Members and guests who wish to attend must provide their name, social security number and birth date to headquarters ASAP for security reasons. Please use this hot link to register for the reception.

 Washington Post Coverage of Electricity Markets

The Washington Post featured an article entitled, "Power Line Shortage Looms," discussing the shortage of high-voltage transmission lines and the necessity of capacity in deregulated markets. The Post also ran an editorial entitled, "California on the Potomac," arguing that although retail prices in Virginia, Maryland and D.C. will be capped while wholesale prices are deregulated, as occurred in California, this region will not be subject to the same problems. This is because utilities can enter into long term contracts and spare generating capacity should be available. The full text of the Article and the Editorial is available on the NEM Website.

Federal Issues

 NEM Submits Testimony to House Subcommittee on Energy and Air Quality

NEM submitted testimony into the record for the House Subcommittee hearing on, "Electricity Markets: Lessons Learned from California." NEM's testimony urged that Congress should: 1) encourage development of national economies of scale through uniform rules, operating procedures, tariff structures, scheduling coordination and technology platforms; 2) limit utility services to pure monopoly functions and provide current monopoly cost-based prices to consumers as "shopping credits;" and 3) expand existing energy and environmental tax credits for qualified restructuring investments such as advanced metering, computer system upgrades, and distributed generation and provide tax and performance-based regulatory incentives for infrastructure upgrades, congestion management, maintenance and streamlined interconnection procedures. The full text of NEM's Testimony is available on the NEM Website.


 Order on CAISO and PX Proposed Tariff Amendments on Creditworthiness

CAISO and the PX filed proposed tariff amendments to address the credit ratings of PG&E and SoCal Edison through relaxed creditworthiness standards in the CAISO and PX tariffs. The Commission accepted the proposed amendments to the extent they allow PG&E and SoCal Edison to continue to schedule transactions from generation and over transmission they own to serve their own load. However, the Commission rejected the amendments to the extent they allow PG&E and SoCal Edison to continue to schedule transactions from third-party suppliers without adequate assurance of payment. The Commission clarified that PG&E and SoCal Edison may continue to schedule third-party transactions if they obtain financial backing from creditworthy counterparties. The full text of the Order is available on the NEM Website.

 NYISO Comments on Technical Conference Questions

In response to questions raised by the Commission at the previous technical conference, NYISO has filed comments on the use and expansion of its price correction authority, development of a "circuit breaker," market liquidity enhancement measures, transaction scheduling and its software and market rules. The full text of NYISO's Comments is available on the NEM Website.

State Issues

New York

 Briefs Filed on Utilities Exiting the Merchant Function

NEM filed a brief supporting the Commission's authority to set rates in a manner that direct and/or incent a monopoly to stop performing and/or to stop charging for non-monopoly products, services, information and technologies, and to do so by a date certain. The full text of NEM's Brief is available on the NEM Website.

Staff restated its long held position that the Commission cannot direct utilities to stop supplying commodity and cannot require customers to be switched from a utility's commodity service to that of an ESCO. However, Staff asserted that the Commission has the power to unbundle utility rates and therefore can separate out the monopoly distribution function and set an unbundled rate for delivery, provided that customers can still receive commodity from the utility if they wish. Furthermore, Staff argued that the Commission may allow the market to set retail commodity prices, if it were to deem that a workably competitive market would ensure market prices were just and reasonable. The full text of Staff's Brief is available on the NEM Website.

The Consumer Protection Board argued that the Commission has ample authority under existing legislation to alter Provider of Last Resort responsibilities provided that it ensures that safe and reliable energy services are provided at just and reasonable rates. The full text of the CPB Brief is available on the NEM Website.

NYSEG predictably argued that the Commission does not have the authority to direct utilities to stop providing commodity to consumers or to require consumers to be switched from a utility's commodity service to that of an ESCO/marketer. NYSEG also maintained that the Commission cannot require utilities to assign POLR responsibilities to ESCOs/marketers. The full text of NYSEG's Brief is available on the NEM Website.

 Briefs in Central Hudson Proceeding

Staff has submitted a brief in the Central Hudson proceeding arguing that measures must be taken to foster retail access in the service territory. Staff recommends that a $75 sign-up bonus be paid to residential and small commercial electric customers, as opposed to ESCOs. Staff also recommends that a $.20 per MCF merchant function credit be adopted on an interim basis to encourage the growth of the retail gas services market.

Central Hudson argues that Staff's proposal to implement a $.20/ MCF back-out credit should be rejected. Central Hudson also opposes Staff's rejection of its proposed gas rate unbundling that would accrue carrying charges on the deferred gas expense balances for recovery from or credit to customers through the Gas Cost Adjustment. The full text of the Briefs of Staff and Central Hudson are available from NEM headquarters.

 NEM Comments on Extension of Farm and Food Processor Pilot Program

NEM is urging the Commission to extend the Farm and Food Processor pilot program because a number of factors cited by the Commission for justification of a previous extension, including the lack of development of competitive markets, billing issues, metering issues, and EDI issues remained unsettled. The full text of NEM's Comments is available on the NEM Website.

 Central Hudson Proposed Demand Response Tariff

Central Hudson filed a proposed demand response tariff to implement a curtailable service option for certain customers with installed interval metering as well as an hourly pricing program for customers with interval metering. Central Hudson proposed to defer the costs of the programs and to recover the costs through the variable cost recovery factor of the purchased power recovery mechanism. The full text of Central Hudson's Proposed Demand Response Tariff is available on the NEM Website.

 NEM and other Marketers to Meet on Con-Ed Shopping Credits

NEM and several other marketers have funded a study of long run avoided costs associated with billing and customer care on the Con-Ed system. A meeting with Con-Ed to discuss a proper shopping credit is scheduled on March 7 and 8 in NY City. Members wishing to participate should contact headquarters.


 Distributed Generation Manual

The Commission has released a Distributed Generation Manual setting forth applicable regulations and procedures, including a process for prompt dispute resolution. The full text of the Distributed Generation Manual is available on the NEM Website.


 NEM Files Complaint Against FirstEnergy's Failure to Properly Offer Market Support Generation (MSG)

NEM filed a complaint with the Chairman of the Ohio Commission because NEM members are being deprived of MSG in contravention of the provisions of the FirstEnergy settlement and in circumvention of affiliate rules. NEM argued that if MSG is otherwise subscribed, then sales of MSG, directly or indirectly, by or through First Energy, will not be counted toward the 1,120MW limitation contained in the settlement. The full text of NEM's Complaint is available on the NEM Website.


 Order on Small Volume Gas Marketer Certification Rules

The Commission has issued an Order adopting rules for small volume gas marketer certification, including an application for certification. Despite NEM's arguments to the contrary, the Commission has adopted a 90 day application approval process, an application fee of $125 plus an hourly rate for review, and annual marketer report requirements. The Commission did direct, as argued by NEM, that penalties for supply failure should be a tariff associated with each utility's system. The Commission also limited customer deposit requirements to those marketers serving customers whose usage is less than 2500 therms/month or 10000 therms in any 12-month period. The full text of the Order is available on the NEM Website.


 NEM Letter on Resolution E-3726

NEM has submitted a letter to the Commission urging implementation of SDG&E's proposal for a rate stabilization plan for Direct Access customers. The full text of NEM's Letter is available on the NEM Website.