March 28, 2001

Announcements

 White House to Brief NEM Members at April 3 Annual Membership Meeting and Restructuring Conference

A final head count is needed ASAP for NEM's Annual Membership Meeting and National Restructuring Conference on April 3-4, 2001, in Washington, D.C. Leaders from Congress, NARUC, academia and the industry are confirmed. Congressman Barton is confirmed to speak at 11 AM on the second day of the conference. In order to expedite the registration process so as not to delay the White House briefing, pre-registration with headquarters is requested. A hotlink to the event is provided here for your convenience. NEM, Keyspan, Lodestar, PowerTrust, and AES New Energy are hosting a VIP Reception in the U.S. Capitol Building the evening of April 3rd. Please use this hot link to register for the reception. NEM members that wish to distribute logo items at the conference should contact headquarters. The rooms reserved at Marriott Metro Center have been sold-out. Please call headquarters if you need assistance with a room.

 FERC Appointments Announced

The Washington Post reports that Texas PUC Chairman Pat Wood and Pennsylvania PUC Commissioner Nora Brownell, both of whom are confirmed to speak at NEM's Membership Meeting and Restructuring Conference, have been appointed to fill the vacant seats at FERC. The full text of the Washington Post Article is available on the NEM Website.

Federal Issues

 NEM Comments to FTC on Retail Electricity Competition Plans

NEM has finalized its Comments to the FTC on retail electricity competition plans. Pursuant to testimony filed by NEM, Congressman Tauzin and Congressman Barton requested that FTC examine the different states' retail electric competition programs and identify which features yielded consumer benefits and which did not. The Congressmen also asked FTC to examine possible jurisdictional limitations on the states' authority to design successful retail competition plans. Comments are sought on retail supply issues, retail pricing issues, market structure issues, and other miscellaneous issues. Comments are due to FTC by April 3, 2001. FTC will update its report of last year on Competition and Consumer Protection Perspectives on Electric Power Regulatory Reform as a result of this process. The full text of NEM's Comments is available on the NEM Website. The full text of the Notice Requesting Comments on Retail Electricity Competition Plans and the Report on Competition and Consumer Protection Perspectives on Electric Power Regulatory Reform are available on the NEM Website.

FERC

 NYISO Seeks Permission to Implement Hybrid Fixed Block Generation Pricing Rule

NYISO proposes to implement a revised hybrid pricing rule for fixed block generation units that bid into the NYISO-administered energy markets starting on May 1, 2001. NYISO proposes to implement the hybrid rule by modifying the current two-step price calculation methodology of the Security Constrained Dispatch software to include four discrete price calculation steps. The proposed hybrid rule is designed to ensure that fixed block units that force more economic units to be backed down: (1) will never set day-ahead LBMPs; (2) will not set real-time LBMPs when they are scheduled solely due to their minimum run-times or other inflexibilities; but (3) can set real-time LBMPs when their operation is economic and necessary. The full text of the NYISO Filing is available on the NEM Website.

 Order Authorizing FirstEnergy-GPU Merger

The Commission has authorized the proposed merger of FirstEnergy-GPU finding that: 1) the merger will not harm competition; 2) the applicants' commitment to hold harmless all of their wholesale customers from all merger-related costs in excess of merger-related savings is sufficient protection against adverse effects on rates; and 3) and the proposed merger will not adversely effect state or federal regulation of the merged entity. The full text of the Order is available on the NEM Website.

 NOI on Electronic Tariff Formats

The Commission is seeking comments on the filing of electronic tariffs. The issues for comment include the use of section-based tariffs as opposed to tariff sheets, the need for a standardized tariff structure, and the electronic format to be used for filings to facilitate database management, for example the use of generic, nonproprietary markup languages such as XML. NEM is pleased the Commission has noticed this issue as NEM has long urged the use of uniform Internet-based information and data exchange to facilitate restructuring. See NEM's National Energy Technology Policy. The Commission will hold an informational meeting on April 24, 2001. Comments on the NOI are due June 25, 2001. The full text of the NOI is available on the NEM Website.

State Issues

New York

 ConEd Phase 4 Proposed Settlement

Parties in the ConEd Phase 4 electric proceeding have filed statements on the proposed settlement. Following NEM's lead, many parties requested the Commission to institute fully consolidated proceedings to consider ConEd's long run avoided costs. Significantly, many parties including the Attorney General, accepted the concept of an adder based on ConEd's avoided costs. The full text of the Attorney General's Brief and ConEd's Brief are available on the NEM Website.

 Distributed Generation Proceeding

A Report on the costs and benefits of distributed generation has addressed several NEM concerns and recommended: 1) investigation of standardized interconnection requirements for: a) systems with a capacity of between 300 and 10000 kVa that are intended to be operated in parallel with radial distribution systems; and b) for all systems less than 10,000 kVa to be operated in parallel with network distribution systems; 2) investigation of costs incurred by the distribution utility in processing of interconnection applications; 3) consideration of necessary modifications to Standardized Interconnection Requirements (SIRs) for facilities sized to 300 KVA or under; 4) changing existing standby rates to reflect the limited costs that DG facilities actually place on the utilities' distribution systems; 5) study of appropriate distribution of cost recovery between avoidable and unavoidable charges to delivery rates; 6) consideration of tariff-based or other administratively determined mechanisms to replace or supplement the competitive solicitation process for DG projects; 7) requiring utilities to study and report to the Commission alternative forms of performance based regulation that remove the link between profits and sales; and 8) consideration of appropriate incentive mechanisms for rewarding utilities for the development of DG on their systems. Comments on the Report are due on May 2, 2001. Members interested in submitting comments should contact headquarters ASAP. The full text of the Report is available on the NEM Website.

The Utilities filed comments on the integration of distributed generation in the utility planning process arguing that net lost revenues have to be recognized in the RFP bid evaluation process and there should be no further consideration of environmental factors in the bid evaluation process as long as the DG proposal meets all existing environmental requirements. The utilities did agree on the need for some form of standardization in the contractual terms governing the relationship between utilities and DG developers. The full text of the Utilities Reply Comments on Integration of DG in the Utility Planning Process are available on the Website.

 NYSEG Merger and Price Protection Plan

Energy East, the parent company of NYSEG, and RGS, the parent company of Rochester Gas and Electric (RG&E), filed for approval of a merger whereby NYSEG and RG&E would be brought under a common management structure. The full text of the Merger Application is available from NEM headquarters.

A prehearing conference to establish a process and schedule for consideration of NYSEG's proposed price protection plan will be held at the Commission's Albany offices on March 30, 2001.

Illinois

 Nicor Pilot Program Proceeding

NEM filed a Brief in the pilot program proceeding urging that Nicor should be required to allow suppliers to act as customer account agents and that customers should be able to designate their suppliers as the recipient of Nicor's transportation bill. NEM also argued that customers should be afforded the ability to choose what information they wish to receive from the supplier, rather than requiring bills be issued to the customer in a rigid format containing line item charges from Nicor and a supplier. The full text of NEM's Brief is available on the NEM Website.

Staff filed a brief arguing that the Commission should allow natural gas suppliers to offer single billing services and should modify Nicor's proposed charges as follows: 1) reduce the Supplier Application Charge to $1,385; 2) add a separate Group Charge level of $100, applicable to smaller size groups; and make the current $200 Group Charge applicable to larger size groups; 3) reduce the Account Charge to $0.88; and 4) eliminate the Group Additions Charge and recover the costs associated with customer switching through the monthly Account Charge. Staff opposed a proposed uniform price disclosure requirement. Staff also argued that OFO procedures should be addressed in a separate proceeding. The full text of Staff's Brief is available on the NEM Website.

Nicor has filed a Brief arguing that single billing by suppliers should not be permitted, its proposed supplier fee structure is cost-based and should not be changed, and OFOs for the pilot program are necessary. The full text of Nicor's Brief is available on the NEM Website.

California

 Lynch to Propose Increasing Electricity Rates

The Washington Post reports that PUC President Lynch will propose increasing electricity rates and, "the increases will be structured so that large energy users, including residential consumers, will pay the most." The measure is meant to promote conservation. The full text of the Washington Post Article is available on the NEM Website.

 Commission to Consider Investigation into Utility Holding Companies

The Commission will consider instituting an investigation into the practices of utility holding companies at its meeting on March 27, 2001. The full text of the Proposed Decision Instituting Investigation is available on the NEM Website.

 Distributed Generation Proceeding

A proposed decision has been prepared on standby rate design policy. The Proposed Decision would require utilities to: 1) allow customers using onsite generation to pay no standby charges if they sign a contract providing the utility with physical assurance; 2) propose on-demand backup rates that recover fixed distribution costs through a $/kW reservation charge and variable distribution costs through a $/kWh usage charge; 3) propose scheduled maintenance rate options that recover only variable costs of distribution service from customers who offer physical assurance; 4) propose non-firm standby rate options that recover only variable costs of distribution service from customers who offer physical assurance; 5) establish standby rates using embedded costs consistent with the manner in which rates for other distribution services are calculated; 6) ensure that proposed standby rates do not include any costs associated with electricity procurement; and 7) propose standby rates that recover fixed transmission costs through reservation charges and variable transmission costs through usage based charges. Comments are due April 12, 2001. The full text of the Proposed Decision is available on the NEM Website.