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July 16, 2004
Upcoming NEM Events

NEM's Fall Industry Leadership Roundtable will be held in Boston between the last week of September and the second week of October. Many thanks to Nate Owen of Energy Services Group and Mike Foley of First Data Corporation for offering to host this event.

NEM's Winter Executive Committee Meeting will be held in Newport Beach, California during the third week of January. Many thanks to Peter Weigand of Commonwealth Energy for offering to host this event.

Please mark your calendars.

The SPi Group to Release Ontario Retail Market Statistics

NEM Executive Committee member, The SPi Group, will be releasing a report on Ontario Retail Market Statistics. The Report reveals that 700,000 customers switched to a competitive retailer before the Ontario market opened in May 2002, and switching rates continued to increase until late 2002. In late 2002 the Ontario government capped retail rates for small users which led to a significant drop in customer enrollments (from peak in October 2002 of 20,000 enrollment to a drop to 1,300 enrollments in June 2004). The reforms of the new Ontario government appear to be having a positive effect on the market as evidenced by a slight increase in customer enrollments and historic usage requests from retailers. The full text of The SPi Group Report - Ontario Retail Market Statistics is available on the NEM Website.

Many thanks to Gary Michor of The SPi Group for providing this report to the NEM membership prior to its general release.

NEM Conference Call on Michigan, Ohio and Massachusetts Legislative Activities

NEM will convene a conference call on Tuesday, July 20, 2004, at 2PM EST to discuss legislative activities in Michigan, Ohio and Massachusetts and how to respond to these activities. A Summary of Recently Introduced Legislation on Electric Choice Programs in Michigan and Senator Morrissey's Proposal for a Massachusetts Retail Auction are available on the NEM Website. Potential action in the Ohio legislature will also be discussed. The conference call number is 703-788-0600, and the passcode is 209353.

NEM Member Opportunity

The New York City Economic Development Corporation is seeking two senior level candidates to fill the following positions: 1) Vice President for Energy Planning & Development; and 2) Vice President for Energy Policy Implementation. The Vice President of Energy Planning & Development will be responsible for: 1) developing and calibrating the Energy Department’s annual business plan; 2) crafting a strategic energy marketing plan to support internal clients; 3) creating energy policy, regulatory and legislative programs; and 4) managing energy resource plans and support work related to the siting of energy facilities in New York City. The Vice President of Energy Policy Implementation will be responsible for: 1) managing the implementation of the twenty-eight recommendations contained in the New York City Energy Policy Task Force Report (“Task Force”); 2) collaborating and working with the co-chairs and members of the four working groups of the Task Force; and 3) recruiting additional support and leveraging public and private resources to successfully achieve and complete the required deliverables of the Task Force. For additional information, contact NEM headquarters.

FERC Technical Conference on Electric Creditworthiness Standards

Staff convened a technical conference on July 13, 2004, to consider whether FERC should institute a rulemaking to consider credit-related issues for service provided by electric transmission providers, ISOs and RTOs as well as ways to reduce credit exposure and minimize mutualized default risk in ISO/RTO markets. An NEM Summary of the technical conference is available from NEM headquarters.

Order on Market Power Screens

FERC affirmed the generation market power screens it adopted earlier this year. The pivotal supplier screen evaluates an applicant in relation to market supply and demand. The market share screen evaluates an applicant's size in relation to others in the market. Both screens consider native load obligations, operating reserve requirements and other commitments of the applicants. Passage of both screens establishes a rebuttable presumption that the applicant does not possess generation market power, and failure of either screen creates a rebuttable presumption that it does. AEP, Entergy and Southern Companies must now file generation market power analyses pursuant to the two screens. The full text of the Generation Market Power Screen Order is available on the NEM Website.

New York
NEM Comments on NFG Choice Program

NEM submitted comments on NFG's choice program supporting the Commission's recommendation to continue the current competition backout credits, at a minimum at current levels, pending the completion of a major rate case or unbundling proceeding. NEM also supported continuation of the outreach and education program. NEM also urged the Commission to consider requiring NFG to offer to purchase marketer receivables inasmuch as it lowers the cost to serve consumers, is a cost-effective means of ensuring HEFPA compliance, and has supported significant migration in the O&R service territory. The full text of NEM's Comments is available on the NEM Website.

Meeting on Columbia Gas Choice Program

Columbia Gas will hold a meeting on July 29, 2004, at 10AM at its offices at 200 Civic Center Drive in Columbus. The purpose of the meeting is to engage in discussions with marketers and other interested parties about unresolved issues associated with Columbia's gas choice program. RSVPs and proposed agenda issues are due by July 23 to A meeting agenda will be forthcoming.

Workgroup on Implementation of Reverse Migration Rider

The Commission ordered the adoption of a Reverse Migration Rider and required Staff to form a workgroup for its implementation. Staff will convene a workgroup on July 28, 2004, at 1PM in Hearing Room B/C with the purpose of developing customer information about the Rider and how it should be disseminated to consumers.

The Rider imposes a moratorium on GCR adjustments for customers returning to sales service that were choice customers for at least twelve months. The Rider is intended to eliminate the incentive for customers to return to the GCR when the GCR adjustments are credits and result in an artificially low GCR rate.

Washington Gas Proposed Credit Policy

Washington Gas filed a proposed credit policy for competitive service providers (CSPs) participating in its retail access program. Washington Gas requested that the policy become effective on an interim basis effective September 1, 2004, if not approved on a final basis by that time.

Washington Gas proposes to revise delivery requirements applicable to CSPs such that a CSP's failure to provide its customers' Daily Required Volume for five calendar days or five consecutive days in any period is considered breach of contract and grounds for termination by Washington Gas. Washington Gas' current policy is to consider failure by a CSP to deliver at least 50% of its customer Daily Required Volume for fifteen consecutive days a breach of contract.

Washington Gas also proposes creditworthiness criteria, a formula for calculating security requirements, and collateral terms and conditions. If a CSP does not have an unsecured long-term debt rating of BBB- or higher from S&P and Fitch and Baa3 or higher from Moody's, the CSP must provide credit collateral. Credit collateral is to be calculated separately for the winter and summer seasons using a formula incorporating risk components for volume, price and time. "The volume component shall be computed as the CSP's portion of peaking resources, as calculated on or about September 1 for the winter season, and the CSP's DDR [design day requirement] less the CSP's portion of peaking and storage resources, as calculated on or about February 1 for the summer season. The price component shall be the highest 15-day rolling average delivered cost of gas to the Company from the previous five years during November through March for the winter season, and during April through October for the summer season. Finally, the time component shall be 15 days, which is the sum of five calendar days of possible nonperformance and ten days of process administration."

The full text of Washington Gas' Proposal will be posted on the NEM Website when made available electronically.

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