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March 19, 2004
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 | NEM's Annual Membership Meeting and National Restructuring Conference | |
| NEM's Annual Membership Meeting and National Restructuring Conference will be held on March 31 and April 1, 2004, at the Capitol Hill Hyatt in Washington, DC. The Senate VIP reception will be held on March 31 at 6PM in the Senate Russell Caucus Room 325. If you would like to invite a guest to the reception please contact NEM Headquarters.
We need a final head count this week. If you wish to come please register immediately. You may view the agenda and register for the event by using this hotlink. Registration Information is also available on the NEM Website.
House Energy and Commerce Committee Chairman Barton, Deputy Energy Secretary Kyle McSlarrow, FERC Chairman Wood, CFTC Chairman Newsome, FERC Commissioner Brownell, CFTC Commissioner Brown-Hruska, NARUC President Wise, New Jersey President Fox, New York Chairman Flynn, Illinois Chairman Hurley, Massachusetts Chair Paul Afonso, NARUC BPL Committee Chair and Michigan Commissioner Chappelle, Texas Commissioner Parsley, and Ohio Commissioner Mason have all confirmed that they will be presenting public policy addresses at the NEM event. | |
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| NEM's Summer and Fall Executive Committee Meetings Scheduled | |
| NEM's Summer Executive Committee Meeting will be held during the last week of June in Colorado. NEM is exploring the possibility of hosting a Utility-Marketer Summit to discuss the most important transitional rate design issues during the second week of October. Please mark your calendars. Many thanks to HomePort and ESG for hosting the upcoming meetings. | |
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| Article on NEM's Market Design Recommendations to New York | |
| Restructuring Today ran a lead article detailing NEM's market design recommendations to the New York PSC. (For further details on NEM's recommendations see item below). The full text of the Article is available on the NEM Website. | |
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| Office of Market Oversight and Investigations Releases "State of the Markets 2003" Report | |
| FERC's Office of Market Oversight and Investigations has released a "State of the Markets 2003" Report, "to assess the competitive performance and efficiency of U.S. wholesale natural gas and electricity markets from Jan. 1, 2002, through June 30, 2003."
With respect to electricity markets, the Report concludes that: 1) electricity markets generally performed consistent with supply and demand factors during the period, and regions with organized markets generally experienced declines in electric price volatility while those regions without organized markets generally experienced increased price volatility; 2) new risk management products were made available; 3) bilateral trading volumes declined, but participation in organized short-term markets was strong; 4) regions with organized markets had numerous buyers and sellers and generation ownership was spread among many entities; 5) "there are regions without organized markets where the basic conditions and market structure for achieving competitive performance did not appear to be in place" and these regions will be the subject of further analysis; 6) customers in regions with organized markets benefited from the fullest set of trading, scheduling and risk management products; 7) electricity and natural gas markets experienced increased interdependence with resultant effects on price, services, and infrastructure requirements for both markets; 8) diverse market designs hampered competitiveness and efficiency; 9) some markets did not permit adequate signals of the need for infrastructure to meet increased energy requirements; and 10) demand response was largely absent from electricity markets during the period.
With respect to natural gas markets, the Report concludes that: 1) the natural gas market exhibited characteristics of a well-functioning market; 2) the ability of market participants to manage price volatility declined mostly because of the increase in credit risk during the period; 3) existing and new industry players entered the marketing and trading segments and new credit risk management products were made available; and 4) the market dealt with imperfect transparency and diminshed credibility, and financial markets provided forward price transparency with a number of robust indicators. The full text of the State of the Markets 2003 Report is available on the NEM Website. | |
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| Chairman Wood Letter and Second Staff Survey on Price Reporting | |
| Chairman Wood wrote a letter to Senator Bingaman providing a status report on price reporting. Wood noted that a series of technical conferences and workshops led to the issuance of the Commission's Policy Statement on Natural Gas and Electric Price Indices in July 2003 including a good faith reporting safe harbor. Staff has monitored the industry's response to the Policy Statement and recently released a second survey to evaluate price reporting practices. FERC also adopted behavior rules for market participants in November 2003 that bar false statements and require, to the extent that an entity chooses to report transactional data, that such reporting be done in accordance with the Policy Statement. The full text of Chairman Wood's Letter is available on the NEM Website.
As noted above, Staff issued a second survey on the reporting of energy trade data to index developers and adoption of the standards for reporting as set forth in the Commission's Policy Statement. The Survey is meant to determine if the Policy Statement is having its intended effect. Staff notes that, "if the survey responses indicate that progress . . . is not being achieved, the Commission will consider alternatives to the Policy Statement." Survey responses are due March 30, 2004. The full text of the Survey is available on the NEM Website. | |
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| ALJ Decision on AEP Integration into PJM | |
| The ALJ has issued a decision on AEP's integration into PJM concluding that, "AEP should be exempted from the requirements of the Virginia and Kentucky laws, rules or regulations . . . to the extent required to consummate its timely integration into PJM." Pursuant to PURPA, the Commission has the authority to exempt electric utilities from state laws that prohibit or prevent a voluntary coordination of utilities. The full text of the ALJ's Decision is available on the NEM Website. | |
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| NEM Submits Comments on NYISO Creditworthiness Requirements | |
| NEM filed comments pertaining to NYISO's data responses on its creditworthiness requirements calculations. NEM argued that: 1) NYISO overestimated the amount and duration of its exposure with respect to prepaying customers; and 2) true-up liability should not be unfairly imposed only against prepaying customers. The full text of NEM's Comments is available on the NEM Website.
Many thanks to Kyle Storie and Angela Carlson of Advantage Energy for their assistance with this proceeding. | |
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 New Jersey
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| Staff Meeting on Creditworthiness Requirements | |
| As directed by the Board, Staff has scheduled a meeting to discuss the creditworthiness provisions of the electric Third Party Supplier Agreements. The meeting will be held April 14, 2004, at 2PM at PSE&G in Newark. Additional details will be forthcoming.
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 New York
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| NEM Submits Vision Statement for New York Markets | |
| NEM submitted comments in the POLR proceeding on the Commission's proposed vision statement and related questions. NEM stated that the only public interest that a utility, and only a utility, can and must have an “obligation to serve” was, is and for the foreseeable future will be to promptly, efficiently and safely, connect, operate, maintain and reliability deliver natural gas and electricity. Accordingly, NEM urged the Commission to recognize that a utility’s “obligation to serve” will no longer obligate the utility to negotiate, buy, sell, trade, hedge, swap, finance or risk manage natural gas or electricity as a commodity or any related competitive functions. NEM offered the following market design recommendations: 1) establish a date certain by the end of which New York utilities will no longer be in the commodity supply business or provide supply related products, services, information or technologies; 2) in the transition, adopt and properly price elements of the O&R Switch & Save Program for all New York utilities including: a) offer a single bill option with the purchase of marketer receivables without recourse, b) establish the “energy component” of the “price to beat” to include a market-based price adjusted by current and future costs incurred or stranded when a utility provides the competitive products, services, information and technologies associated with serving retail load, c) use tax or regulatory incentives tied to the timing and degree of customer migration, d) provide marketers with reasonable, cost-based access to gas storage and capacity, and e) utilities should actively support and cooperate to ensure the success of the transition; and 3) utility pricing of commodity to large C&I customers who can be billed hourly should be based on an hourly, time of day rate, and as long as a utility is providing commodity-related services to small commercial and residential customers, the commodity component of the “price to beat” should start with a monthly adjusted, market-based rate to which should be added a utility’s fully allocated embedded and projected stranded costs associated with providing all of the other commodity related products, services information and technologies currently bundled in full service rates. NEM also stated that risk management is a highly specialized function that is most properly supplied by an efficient and competitive capital market, not government mandates backed by ratepayer guarantees. The full text of NEM's Recommendations is available on the NEM Website. | |
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| Staff Recommends Utility Purchase of Receivables in ConEd Gas Rate Proceeding | |
| Staff has filed testimony in ConEd's gas rate proceeding. With respect to ConEd's retail access program, Staff recommends that ConEd should more closely align its program with that of its affiliate, O&R, particularly with respect to purchase of receivables. Staff also recommends: 1) institution of a modified migration incentive whereby ConEd earns up to $400,000 (pre-tax) if 10,000 customers migrate to firm transportation service during the rate year, and for every customer that migrates in excess of 10,000 ConEd should earn $50 (pre-tax) dollars per customer; 2) marketers that acquire their own pipeline capacity or bundled commodity and capacity should be required to provide ConEd with access to the capacity so it remains available to New York consumers in the event of a marketer's default or departure; 3) revisions to cash-out and balancing provisions; 4) increased ConEd support for its retail access program; 5) appointment of a marketer ombudsman; 6) institution of Market Match and Market Expo programs; 7) institution of bill format modifications that separate delivery and supply sections; and 8) issuance of a marketer survey. The full text of Staff's Testimony is available from NEM headquarters. | |
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 Ohio
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| Second Meeting on DEO's Potential Exit from Merchant Function | |
| DEO will convene a second meeting to discuss issues raised by a potential exit from the merchant function on March 30, 2004, at 10AM. The meeting will be held at the Adams Mark hotel located at 50 N. Third Street in Columbus, Ohio. Conference calling capability will also be available. Topics for discussion will include: 1) operational issues associated with DEO's exit from the merchant function; 2) customer-related issues - customer communication, billing, credit and other issues that could affect customers if the LDC were to exit the merchant function; and 3) next steps and topics to be addressed at the following meeting. | |
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 Virginia
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| Staff Report on Default Service | |
| Staff has issued a Report on default service in the State concluding that, "there is not a sufficient degree of competition such that the elimination of default service for particular customers, particular classes of customers or particular geographic areas of the Commonwealth will not be contrary to the public interest." Accordingly, Staff recommends default service should not be eliminated or modified at this time. The full text of Staff's Report is available on the NEM Website. | |
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3333
K Street, N.W., Suite 425
Washington, D.C. 20007
Tel: (202) 333-3288 Fax: (202) 333-3266
©
Copyright 2001 National Energy Marketers Association
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