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July 9, 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.

NEM Conference Call on Wholesale/Retail Issues

NEM will convene biweekly conference calls to discuss wholesale and retail issues of importance. The first call will be held July 13, 2004, at 4PM EST. The conference call number is 703-788-0600, and the passcode is 209353.

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.

NYISO Revisions to Creditworthiness Requirements

NYISO submitted a compliance filing on its creditworthiness requirements as required by the Commission. Consistent with NEM's recommendation, by the terms of the filing NYISO proposes to omit the requirement that a prepaying customer provide ten days of collateral. NYISO also proposes to amend the formula for calculating a prepaying customer's collateral requirement for energy and ancillary services to reduce the collateral required to account for true-up obligations by the amount of the customer's average prepayment (since the NYISO is proposing not to collect any collateral to address underestimated payments). The full text of NYISO's Compliance Filing is available on the NEM Website.

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

Technical Conference on Electric Creditworthiness Standards

FERC Staff will convene a technical conference on electric creditworthiness standards on July 13, 2004, at 9:30AM. CFTC may also participate in the conference. The purpose of the conference is to consider whether FERC should institute a rulemaking proceeding to consider credit-related issues for service provided by jurisdictional transmission providers and ISOs/RTOs. Conference panels will consider current company practices under the OATT, OATT-related credit issues, RTO/ISO-related credit issues, and other credit options. The full text of the Conference Agenda is available on the NEM Website.

New Jersey
Utilities Basic Generation Service Proposal

The utilities have filed proposed Basic Generation Service (BGS) auction guidelines and master service agreements for the post transition year 3 auction. The utilities propose to hold a single, statewide auction for Commercial and Industrial Energy Pricing (CIEP) loads to procure full requirements service for a one-year period from June 1, 2005, to May 31, 2006. Rate schedules for CIEP service will include a $0.0015 cent/kWh Default Supply Service Availability Charge, a per kW or per kWh rate for the transmission obligation, a per kWh rate for ancillary services, and provision to pass through hourly PJM real-time energy pricing.

The utilities propose to hold a single, statewide auction to procure full requirements service for one-third of Fixed Price (FP) load for the period from June 1, 2005, to May 31, 2008. The load will be divided into tranches of approximately 100MW of FP Peak Load Share. There will be a single clearing price for all tranches of FP load of each utility. Bidder payments will be shaped such that payments for July through September will be higher to reflect higher summer costs and payments for the rest of the bid period will be lower to reflect lower winter costs.

The full text of the Utilities' BGS Post Transition Year 3 Proposal is available on the NEM Website.

DEO Submits Gas Cost Recovery Filing

DEO has filed a proposed Gas Cost Recovery (GCR) report for the period of August 3, 2004, through October 31, 2004. DEO states that under the usual calculation method the GCR would be $6.346 for the period. However, DEO proposes to extend the period for recovery of the BA component of the GCR from three months to twelve months to reduce the impact of a large over-recovery in the BA component and permit the GCR rate to better reflect market prices. Using the proposed methodology, the GCR rate would be $8.351 for the period. The full text of DEO's GCR Filing is available on the NEM Website.

Monongahela Power Standard Service Offer and Competitive Bidding Process Proposal

Monongahela Power (Mon Power) has submitted a Standard Service Offer (SSO) and Competitive Bidding Process (CBP) proposal. Mon Power proposes to establish a fixed market-based rate and variable-rate SSO for all customer classes beginning on January 1, 2006. A competitive bid process will be used to procure the market-based SSO in a manner similar to that utilized in Maryland. The variable rate SSO will be procured from the PJM markets.

The RFP for the fixed rate SSO will be for full requirements service for a one-year term with subsequent bidding for one-year terms thereafter. The fixed rate SSO will consist of two groups - Group I (residential customers on Rate Schedules B, C and CSH and lighting customers on Rate Schedules SL-P, MV and SV) and Group II (commercial and industrial customers on Rate Schedules D, K, P and AGS). The variable rate SSO will be available to Group II customers and for Group II customers that return to SSO service from competitive service.

Retail prices for fixed rate SSO customers will consist of: 1) the seasonally-differentiated load weighted average of awarded bid prices consisting of energy, ancillary services, capacity and losses by Group; 2) retail charges to recover transmission charges, other PJM charges and costs of providing fixed rate SSO; 3) an administrative charge of 5.5 mills per kWh for Group I customers and 6.5 mills per kWh for Group II customers; 4) a reconciliation rider/surcharge; and 5) applicable taxes. Retail prices for variable rate SSO customers will consist of: 1) the PJM hourly integrated zonal real time LMP for energy; 2) charges associated with PJM capacity obligation; 3) FERC-approved transmission, ancillary services, administrative and energy losses; 4) an administrative charge of 3 mills per kWh; 5) a reconciliation rider/surcharge; 6) applicable taxes; and 7) any other price element directly related to Mon Power's variable rate SSO load obligation.

The full text of Mon Power's Proposal is available on the NEM Website.

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