Following up on the technical conference of earlier this week, the Department is accepting reply comments on default service issues. Comments are due July 22, 2005. The full text of the Procedural Notice is available on the NEM Website.

NEM submitted comments in opposition to NYSEG's request that the Commission open an investigation to establish market monitoring measures and affiliate rules to prevent potential market gaming by companies that own generation and sell electricity into New York retail markets. NEM argued that NYSEG's Motion failed to recite facts upon which a nascent Energy Services and Technology Industry can be found to either possess or abuse market power. NEM cautioned that absent prima facie evidence of both unregulated market power and its abuse, it is imprudent and unwise to impose costly regulatory intrusions onto a price competitive transitional market design. The Commission's reliance on and encouragement of market-based price and technology competition to achieve just and reasonable rates is a key public policy decision that has served and will continue to serve the public interest of the citizens of New York.

NEM noted that its members have experienced what might be considered "predatory pricing" when POLR services are offered at less than the fully allocated embedded cost of serving retail load. NEM said that equally anticompetitive is the use of captive ratepayer funds to hedge volatile commodity risks and offer fixed price products that could and should be offered by competitive suppliers with fully at-risk capital. The Commission should first prohibit "monopoly competition" in any New York service territory. As such, the "best practice" would be to encourage utilities to reallocate "state-protected capital and resources" out of competitive functions and into public interest reliability investments and infrastructure upgrades.

The full text of NEM's Comments is available on the NEM Website.

Staff similarly argued that, "the allegations in the [NYSEG] Petitionn are irrelevant, speculative, baseless and conclusory, and the Petition cites no facts tending to establish any need for such an investigation." Staff said that, "the best deterrent against abuses of market power is a healthy competitive market, [and] the Commission has actively promoted competition." Staff cited its Office of Retail Market Development, promotion of customer migration as well as initiatives on competitive metering, meter service provider/meter data service provider certification and dispute resolution, electronic data interchange, uniform business practices, ESCO eligibility determination and overisght, market monitoring, policy coordination, competitive markets proceedings, customer choice outreach, customer aggregation, the cost unbundling and bill format proceeding, and ongoing review of utility retail access plans. The full text of Staff's Response is available from NEM headquarters.

A.7429, passed by the NY State Assembly, would have required the NYPSC to analyze the impacts of retail competition and report the results to the legislature. We anticipate no further action on this legislation during this session. NEM will conduct a conference call on either Friday, June 24, 2005, at 2PM EST or no later than Monday, June 27, 2005, at 2PM EST once the legislative session has ended to discuss possible future implications. An email confirming the conference call time will be sent under separate cover. The full text of A.7429 is available on the NEM Website.

The Commission issued an Order on rehearing concerning HEFPA obligations. The Commission declined to exempt owners of residential submetered buildings from HEFPA and clarified that submeterers may disconnect service to tenants pursuant to the provisions of PSL §32(2). With respect to its pro-ration policy, the Commission clarified that customer payments, even those obtained by a collection agency, must be pro-rated if they are made after an ESCO's suspension of service. The Commission also found that, "Because we have determined that ESCOs have the right to suspend distribution utility services to non-residential customers serving multiple-dwellings and two-family dwellings, partial payments made for service to these dwellings shall be pro-rated in accordance with our pro-ration policy set out for residential customers: pro-ration after termination of service for the longer of one year from the termination of commodity service by the ESCO, until all arrears are paid in full, if the ESCO suspends service within one year of commodity termination, or the customer is paying the ESCO arrears under a DPA." The utilities must also reinstate ESCO arrears on customer bills for ESCO service provided on or after June 20, 2003 and apply pro-ration to those arrears. The full text of the Order is available on the NEM Website.

Columbia Gas filed rebuttal testimony in its application to implement Price Protection Service and Optional Sales Service Riders. In response to concerns that Columbia's proposal would threaten competition and not occur on a level playing field, Columbia maintains that, "it is not Columbia’s intent to undermine competition in Pennsylvania, but instead to provide customers a true fixed rate from the Natural Gas Distribution Company (“NGDC”). In fact, Columbia’s believes that the Riders, as designed, provide a new dimension to the developing competitive market in Pennsylvania." The full text of Columbia's Testimony is available on the NEM Website.