Senator Dunn predicted that the state Legislature will act on electricity issues before its September recess, despite the apparent death of SB 888. Dunn said SB 888 could be revived in the current session either by getting a waiver from the Assembly Rules Committee, which would require a two-thirds vote, or by amending another bill to add SB 888's language.

Maryland utilities, competitive suppliers and Staff filed agreed upon terms and procedures for implementation of the Phase I Settlement, which included a set of terms and procedures for the provision of Standard Offer Service (SOS) and default service to customers, through the competitive selection of wholesale supply. The Phase II Settlement includes a Model Request for Proposals (RFP), which encompasses the bid request process, the bid evaluation methodology, and the timeline for the RFP process.

According to the Phase II Settlement, if, after conducting the bid procedures a utility still has SOS load that has not been awarded to a supplier, then the utility will initially supply the unserved load and will pass all the costs of such purchases on to customers in the retail rates charged for the service for which the purchases are made. Within 5 business days of it being determined by the utility that the load is unserved, Staff will convene a meeting of all Parties to discuss alternative ways to fill the unserved load. The Settlement states that if any load is left unserved after a supplier defaults and the load has been offered to other suppliers, then the utility will initially supply the defaulted load and as soon as practicable the utility will auction the remaining term of the defaulted Full Requirements Service Agreement (FSA), for the same terms and conditions (including prices) as in the FSA. The full text of the Phase II Settlement and all the Appendixes are available at www.psc.state.md.us/psc/.

The Michigan Public Service Commission issued an updated report on expected natural gas prices and supplies in Michigan. The report indicates that natural gas wellhead prices will likely remain in the range of $5 to $6 per thousand cubic feet (Mcf) for the remainder of the year. This is more than 30 percent higher than the average price of $3.87 per Mcf that prevailed in 2000 and 2001. Higher wellhead prices faced by Michigan's utilities are beginning to make their way to residential customers. A comparison of the prices charged by Michigan's four largest natural gas utilities shows that price increases from July 2002 to July 2003 have ranged from 13.5 percent to 57.4 percent. When other charges are factored in – such as distribution and customer charges – estimates indicate that residential customers of these four utilities could pay a total of $53 to $172 more to heat their homes during the upcoming winter months than they did last winter.

Contributing to higher natural gas prices are low storage levels, rapid depletion of low cost supplies and increasing demand – particularly for electricity generation. Michigan is the sixth largest natural gas consuming state, accounting for 4.3 percent of U.S. consumption. Over 78 percent of homes in Michigan are heated with natural gas. The MPSC will hold a public hearing at 9 AM on July 22, 2003 to enhance public awareness of natural gas price increases and to discuss steps consumers can take to mitigate the increases. The full text of the MPSC Report is available on the NEM Website.

NEM submitted comments on the costs small businesses will incur to comply with HEFPA. NEM stated that it is concerned about the compliance costs of the HEFPA rules on small ESCOs. NEM submitted that the HEFPA rules could impose substantial initial and annual compliance costs on ESCOs that could easily render them unable to implement the business plans necessary to effectively compete in a deregulated energy market. NEM submitted that a low cost, efficient and equitable means of implementing HEFPA requirements quickly would be to require distribution utilities to purchase ESCO receivables on an interim basis pending the ESCOs ability to develop and invest in the infrastructure necessary to fully comply with these new rules independently. Thereafter, NEM stated that these functions can be outsourced and consumers can get shopping credits equal to the embedded costs of providing these services. NEM submitted that for those entities who have or can make the investments necessary to replicate the utility HEFPA functions immediately, customers migrating to these entities should be eligible for embedded cost shopping credits immediately.

NEM also submits that if ESCO HEFPA requirements are extended to multi-family dwellings, it will impose unreasonable costs on ESCOs and fundamentally change the relationship between ESCOs and commercial business owners of multi-family dwellings. NEM recommends that the Commission should clarify that ESCO HEFPA requirements should be limited to direct residential customers and not applied to multi-family buildings. The full text of NEM's Comments is available on the NEM Website.

The Commission is currently developing substantive rules that will be the basis for the wholesale market design in ERCOT. The PUC issued new proposed rules setting forth basic principles for the ancillary service markets operated by ERCOT, including both energy and ancillary capacity service markets. The rule includes requirements for ERCOT to: allow market participants to self-schedule and bilaterally contract for energy and ancillary capacity services, to the extent consistent with system reliability; require the submission of resource-specific bid curves for energy and ancillary capacity services that ERCOT competitively procures a day ahead of an operating day or in the operating day; directly assign all congestion rents to the resources causing the congestion; and use nodal energy prices for resources and zonal energy prices for loads. Under the proposed rules ERCOT will fully implement the requirements of an approved wholesale market design by March 1, 2006. The full text of the Proposed Rules is available on the NEM Website.

Dominion Virginia Power will conduct a web conference for Competitive Service Providers and Aggregators on July 21, 2003, from 1PM to 3PM EST. The purpose of the web conference will be to explain and discuss the filed proposed revisions to the retail pilot programs, as well as solicit comments. The agenda items for the call include: 1) Dominion Virginia Power's filing with the Commonwealth of Virginia to join PJM; 2) a summary of pilot program revisions submitted on June 25; 3)Commission Staff's Report recommendations submitted on July 15; 4) illustrative market prices/wires charges and pilot prices-to-compare for 2004; and 5) the pilot timeline.

Interested parties may participate as follows: 1) for the audio portion: Chairperson - Mary Edwards, conference number - 1-866-740-1260 and access code - 7716407; 2) for the web portion: website address - www.readytalk.com, click on "Join A Conference," access code - 7716407, enter name and email address and click "register."