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June 24, 2005
NEM Summer Executive Committee Meeting

NEM is currently planning its Summer Executive Committee Meeting. The meeting is scheduled for July 12-13, 2005, in Buffalo, New York. Please mark your calendars and plan to join us. Please use this hotlink to register. Our room block expires June 27, 2005. Make your reservations now because other conventions in town have reserved all other available rooms.

During the Summer Executive Committee Meeting, we elect our new leadership for the coming year, assess the priorities we identified at the January Executive Committee Meeting and identify any midcourse corrections we need to take for our advocacy agenda for the remainder of the year. Additionally, we will debate and vote on: 1) key retail energy restructuring issues including structure of retail auctions, and opt-in requirements when utility price increases; 2) key wholesale energy restructuring issues including structure of wholesale auctions; and 3) review existing NEM gas, electric and code of conduct policy recommendations, development of recommendations on demand response strategies and pricing, and formation of policy drafting committee. We will discuss integrated advocacy and p.r. strategies for achieving specific migration targets as well as how to focus member resources on quantitative analysis in support. Use this hotlink to view the Agenda.

Nominations for NEM's national policy leadership positions should be forwarded to headquarters ASAP.

Antitrust Modernization Commission Requests Comments

The Antitrust Modernization Commission requested comments on the following areas: enforcement, exclusionary conduct, immunities, international issues, mergers, new economy, regulated industries, remedies and the Robinson-Patman Act.

Specific questions raised by the Commission on the State Action Doctrine include: 1) whether courts should change or clarify application of the State Action Doctrine; 2) should changes to the application of the "clear articulation" and "active supervision" prongs of the State Action Doctrine be made; and 3) how should the State Action Doctrine be applied to various governmental entities.

With respect to regulated industries, the Commission asks what role antitrust enforcement should play in industries in transition to deregulation. The Commission also asks how authority should be allocated between antitrust enforcers and regulatory agencies to best promote consumer welfare in regulated industries. Additionally, the proper division of authority for merger review between the antitrust agencies and relevant regulatory agencies is questioned.

The full text of the Request for Comments is available on the NEM Website.

Seams Elimination Charge Assessment Order

FERC issued an Order on the MISO and PJM Seams Elimination Charge Assessment (SECA). The Commission found that, "Our preliminary analysis indicates that the compliance filings have not been shown to be just and reasonable, and may be unjust, unreasonable, unduly discriminatory or preferential or otherwise unlawful. Therefore . . . we will accept the compliance filings for filing, to take effect December 1, 2004, January 1, 2005, April 1, 2005, or May 1, 2005, as requested, following a nominal suspension and subject to refund and surcharge as appropriate, and set them for hearing. We will allow the requested effective dates for revised SECA rates to reflect integration of Duquesne into PJM on January 1, 2005, and updated test year data for Rate Period 2, effective April 1, 2005." FERC approved MISO and PJM’s proposal to phase billing of the SECA charges and the inclusion of interest for the period that SECA billings were delayed while the RTOs developed billing procedures. The full text of the Order is available on the NEM Website.

Click here to view all past updates.
Comments Sought on Default Service Issues

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.

New York
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NEM and Staff Comments on NYSEG Call for Retail Market Investigation

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.

Legislative Session Expected to End Without Further Action on Bill to Slow Choice Program Implementation

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.

Order Clarifying HEFPA Obligations

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.

Click here to view all past updates.
Columbia Gas Rebuttal Testimony on Rates PPS/OSS

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.

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