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January 30, 2004
Allegro Elected to the Executive Committee

NEM is pleased to announce that Allegro Development has been elected to the Executive Committee of the National Energy Marketers Association. Allegro Development will be represented within NEM by its Solutions Director, Brian Cervantes.

Allegro develops software for the energy industry, with twenty years experience providing uniquely flexible and configurable solutions. Allegro Development application components manage the production, purchase, transport, sale, and consumption of natural gas, electric power, crude oil, natural gas liquids, refined products, and coal. Allegro Development customers include the world’s leading oil and gas producers, gas processors, pipelines, petrochemical producers, coal producers, first purchasers, crude oil traders, refiners, fuel distributors, energy merchants, municipals, natural gas utilities, power generators, power utilities, energy retailers, and energy consumers.

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. House Energy and Air Quality Subcommittee Chairman Barton, FERC Chairman Wood, CFTC Chairman Newsome, FERC Commissioner Brownell, CFTC Commissioner Brown-Hruska, NARUC President Wise, NJBPU President Fox, ICC Chair Hurley, NARUC BPL Committee Chair and MIPSC Commissioner Chappelle have all confirmed that they will be presenting keynote addresses at the NEM event.

If you wish to sponsor this event, please use this hotlink and contact headquarters. 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.

NEM Held Its Winter Executive Committee Policy and Planning Meeting

The Winter Executive Committee Policy and Planning Meeting was held January 20th and 21st, 2004, in Houston, Texas. CEOs from 40 member companies in the US and Canada attended the meeting to address the industry's priorities for 2004. Separate retail, wholesale, and technology issue identification break out sessions provided a number of significant insights into the current state of the industry and its likely direction for 2004. Reports from NEM members were very encouraging and the upcoming year looks promising. A summary NEM Year End Review is available on the NEM Website. NEM's Retail Issues, Wholesale Issues, and Technology and Services Issues for 2004 are also available on the NEM Website. A detailed report on NEM's issues and priorities for 2004 will soon be available.

NEM Comments on NYISO Creditworthiness Requirements

NEM submitted comments on NYISO's creditworthiness requirements for customers participating in NYISO-administered markets. NEM submitted that the operating requirement required of prepaying customers exceeds NYISO’s exposure. NEM's comments also stated that all customers, regardless of whether a prepayment agreement exists, pose the same risk of nonpayment of true-up obligations. Therefore, if the NYISO requires payment of true-up obligations as part of a prepaying customer’s Operating Requirement, the NYISO should demand payment for and/or securitization of true-up obligations as part of all sustomers’ Operating Requirements. The full text of NEM's Comments is available on the NEM Website.

Many thanks to Kyle Storie and Angela Carlson of Advantage Energy for their assistance with this proceeding.

Progress on Seams Issues

PJM, NYISO, and ISO New England, have posted on their
websites charts and information updating their progress on the resolution of ISO seams. Comments on this information should be filed with FERC by February 13, 2004. The full text of the Seams Reports is available on the NEM Website.

Department Investigation of Standby Rates

On January 16, 2004, Boston Edison Company, Cambridge Electric Light Company and Commonwealth Electric Company filed tariffs designed to establish standby rates for large and medium commercial and industrial (C&I) customers who have on-site self-generation facilities (OSG). The Department is investigating the following: (1) whether the standby rates ensure that customers with OSG facilities pay an appropriate share of the distribution system costs; (2) whether distribution companies should recover their costs through fixed or variable charges; (3) whether standby rates should reflect embedded and/or incremental costs; (4) and whether distribution companies should offer firm and non-firm standby service. The full text of the filings in this case are available on the Massachusetts DTE Website.

There will be a public hearing on the utilities' filings on February 10, 2004. Comments are due by February 10, 2004. Interested parties must intervene in this case by February 3, 2004.

New Jersey
Board Order on Renewables in Light of Upcoming BGS Auction

In October 2003, the Board proposed amendments to the Renewable Portfolio Standards (RPS) rules. Recognizing that the RPS proposal could affect the upcoming basic generation service (BGS) auction, which will take place on February 2, 2004, the Board held the following: (1) The prior BGS contracts shall be waived from compliance with the revised RPS percentages for 2004 and 2005. However, the RPS percentage, including the solar requirement, shall be proportionally increased for 2006 through 2008; (2) There will be no change in the overall total RPS percentages required by 2008, however, the annual increases in the percentage requirements will be redistributed over the 5 year period; and (3) The earliest date upon which generation may be eligible for issuance of a solar renewable energy certificates (SREC) shall be changed from June 1, 2004 to March 1, 2004. The full text of the NJBPU Order is available on the NEM Website.

New York
NYPSC Modifies Standby Service Tariffs

The Commission previously set standby rates and procedures for ConEd, NYSEG, O&R, RG&E and CH requiring them to offer existing on-site generation (OSG) customers the option of a phase-in to full standby service rates or taking service at those rates upon their effective date. The Commission ordered that existing customers must be able to select either an 8-year phase-in to the full standby rate or immediate billing at the full standby rate and customers with designated technology facilities must be able to select between a 5-year phase-in or full standby rates. Now the Commission has ordered that both existing customers and designated technology customers should be eligible for the eight-year phase in.

The Commission also harmonized various effective dates and policies among all the utilities: (1) the phase-in option will be available to designated technology customers bringing their facilities on-line on or after July 29, 2003, for all five utilities; (2) for those designated techology customers that come on-line before the tariffs take effect, the utilties must allow a 30-day grace period after the tariffs take effect for designated techology customers to apply for the phase-in; and (3) for those designated techology customers entering service after the effective dates of the tariffs, all utilities must require that their customers submit a request for the phase-in no less than 30 days prior to commencing service.

Additionally, the NYPSC did not increase the 1 MW size limit for qualification for the phase-in. Finally, the Commission ordered NYSEG and RG&E to replace their 90-day notice requirement prior to termination of standby service to 60-days. The full text of the NYPSC Order is available on the NEM Website.

Comments Requested in Unbundling Proceeding

The NYPSC is seeking comments by March 22, 2004, on the appropriate role of regulated utilities during and after the transition to competitive retail electricity and natural gas commodity markets, and the ratemaking, service, and other policies it should implement to assist in the development of robust retail energy markets. The Commission is especially interested in exploring these issues regarding small commercial and residential customers. The NYPSC is seeking comment on a draft vision statement and also asked specific questions on the retail markets and utility commodity pricing and portfolio management. The Commission stated that to achieve its vision the dominant position of the utilities providing competitive retail services must be reduced or in some cases eliminated.

A NEM Alert is available from Headquarters and the full text of the NYPSC Notice Requesting Comments is available on the NEM Website.

NYPSC Proposes Amendments to HEFPA

The New York State Public Service Commission (NYPSC) is proposing to amend its HEFPA rules. The amendments include the following new sections for ESCOs to comply with: "Suspension of Distribution Service," "Restoration of Commodity Supply," and "Reconnection of Suspended Distribution Service." Comments on the proposed HEFPA rules are due March 29, 2004. A NEM Analysis of the HEFPA Amendments is available for members from Headquarters. The full text of the NYPSC's Proposed HEFPA Amendments is available on the NEM Website.

CG&E Proposes Two Choices For Generation Service After the Market Development Period

CG&E proposed two generation service options for customers in its service territory. The first is a Competitive Market Option that consists of a market-based standard service offer rate and a competitive bid process (CBP) for non-residential consumers. The second is a rate stabilization plan (RSP) that would provide a market-based standard service offer consisting of a frozen unbundled generation rate for non-switching customers and a POLR charge to all consumers.

CG&E's proposed CBP will provide non-residential customers with the option of a competitive offering by a competitive retail electric service provider. The bidding process will contain a RFP to solicit bids from alternative generation suppliers. Each winning bid will represent a rate offer that consumers may accept or reject. CG&E proposes that the winning bid offer remain open for the entire one-year bid period.

Under the proposed RSP, the market development period for all customer classes will end December 31, 2004, and all shopping credits will end December 31, 2004 (the credits of customers that have already switched will last until December 31, 2005). The RSP proposal states that the current generation rates will be reduced by the Regulatory Transition Charge and the resulting unbundled generation rate (little g) will last through December 31, 2008. CG&E will institute an annually capped POLR charge to all consumers. Under the RSP, little g plus the POLR charge equal the market-based standard service offer rate. CG&E will maintain the 5% unbundled generation rate decrease for residential customers until December 31, 2008. Switched customers that return to CG&E will pay the rate stabilization plan market-based standard service offer rate.

CG&E told the Commission that it intends to end the market development period December 31, 2004, for each non-residential customer class with 20% switching. The full text of CG&E's Proposal is available on the NEM Website.

Senate Commerce and Labor Committee Endorses Proposal to Extend Capped Rates

A state Senate committee has endorsed a proposal to extend the capped-rate period of Virginia's electric deregulation law for an additional 3 years, through 2010. There was also a competing measure, which called for suspending key parts of the state's deregulation law. The bill, as endorsed by the Senate Commerce and Labor Committee, also would: (1) require the State Corporation Commission to increase American Electric Power's rates to allow the company to recover new costs related to ensuring the reliability of its grid and to complying with state and federal environmental laws and regulations; (2) permit large industrial or commercial customers, that have switched energy providers, to return to their utility without a minimum-stay requirement and would conditionally eliminate special deregulation-transition charges for such customers; (3) allow localities to group together the electricity purchases of customers within local boundaries on either a consumer "opt-in" or "opt-out" basis, and allow localities to make a profit from that aggregation; (4) allow utilities providing service to customers who haven't found a competitive energy provider to petition the SCC to build a coal-fired power plant that would use Virginia coal and be located in the Virginia coal field region.

SCC Investigates Whether There is Sufficient Competition to Eliminate Default Service

By July 1, 2004, the States Corporation Commission must determine whether there is a sufficient degree of competition to eliminate default service for particular customer classes. The Commission will report its findings and recommendations concerning modification of termination of default service to the General Assembly and to the Commission on Electric Utility Restructuring by December 1, 2004. Interested persons who want to participate in this case must intervene before February 13, 2004. Comments are due by February 27, 2004. The full text of this Order will be on the NEM Website as soon as it is available in electronic form.

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