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May 7, 2004
SAP Elected to NEM Executive Committee

NEM is pleased to announce that SAP has been elected to the Executive Committee. Founded in 1972, SAP is the recognized leader in providing collaborative business solutions for all types of industries and for every major market. SAP is the world's largest inter-enterprise software company, and the world's third largest independent software supplier overall. SAP will be represented within NEM by James Menton, Utilities Principle for SAP America.

NEM's Summer Executive Committee Meeting

NEM has reserved June 29th and 30th, 2004, at Constellation NewEnergy's offices for its Summer Executive Committee Meeting. The Summer Meeting is critical as it is the venue where the new Executive Committee leadership and regional and state policy chairs are elected and the Associations's advocacy goals and activities for the remainder of 2004 are prioritized and decided upon.

NEM is interviewing candidates and actively seeking nominations for national, state and regional leadership positions for 2004-2005. NEM members are encouraged to submit nominations to headquarters before May 20, 2004. A full list of nominations will be circulated to the Executive Committee prior to the meeting,

A draft agenda for the Summer Executive Committee and the sign up page for Chicago will be posted within the next week. NEM members are requested to forward the issues of highest priority to headquarters for inclusion on the agenda.

To date, the issues that have been submitted for Executive Committee discussion, debate and consensus include: 1) NEM's National Model for a "Transitional Retail Market Design"; (2) NEM's National Recommendations for (a) designing "POLR" (e.g. eligiblity, duration and scope of default service), (b) designing or constructing "Default Service Pricing", (c) the timing and means of privatizing POLR services; (3) What products and services should be bid out with the POLR franschise; (4) should POLR services be segregated by class of customer; (5) Are there any circumstances in which the utility must act as a backstop for commodity services, after its full exist from the merchant function. If so, is it necessary for a utility to retain any related costs in rate base or should these costs merely be market-based. Positions NEM has taken on these issues are hotlinked here for your review.

Members have also recommended consideration of (1)an NEM standardized retail contract, (2)an NEM position on California's resource adequacy requirements, (3)NEM outreach to Wall Street on the impact of a utilities failure to exit the merchant function on both its cost of capital and its debt rating; (4) in response to renewable portfolio standards, members have inquired about establishing a market in tradeable renewable credits.

Please submit your issues to headquarters this week for publication in the agenda.

Restructuring Today Articles Highlight NEM Activities

Restructuring Today has recently featured a number of articles on NEM activities and positions, including: 1) how the efforts of NEM and its members to open markets and change business rules are beginning to work; 2) NEM's position on competitive transitional retail market designs as submitted to the New York Public Service Commission; 3) NEM's comments to the Maryland Public Service Commission on telephonic enrollment and elimination of wet signature requirements; 4) NEM's comments and presentation to the Pennsylvania Public Utility Commission on Provider of Last Resort service; and 5) NEM's comments to FCC on jurisdictional issues associated with Broadband over Power Lines. The full texts of the Articles are available on the NEM Website.

NEM Comments on Jurisdictional Issues Associated with Broadband over Power Lines

Pursuant to the FCC's rulemaking on the application of emissions standards to Access Broadband over Power Lines (BPL), NEM submitted comments urging the FCC to enter into a Memorandum of Understanding with FERC to apportion jurisdiction over BPL prior to issuing a final rule. NEM argued that relevant statutes and caselaw indicate that FCC's jurisdiction over BPL, as opposed to DSL or coaxial cable, appears limited to regulating emissions. NEM also argued that the Federal Power Act and Supreme Court precedent confer FERC with primary and/or exclusive jurisdiction over both access to as well as the just and reasonable pricing of power lines used to transmit "electricity" into or through interstate commerce, regardless of "whether or not it does other things as well." The full text of NEM's Comments is available on the NEM Website.

FERC Staff Report and Recommendations on Price Indices

Staff released a "Report on Natural Gas and Electricity Price Indices." Staff reported its findings that: 1) the amount of transaction data and the quality of reporting has improved; 2) more volumetric and transaction information is needed to indicate the liquidity of specific trading locations; 3) due to the variety of survey results, it is difficult to make strong general conclusions about index performance; 4) there is a high level of dependence on natural gas indices as price references in contracts, with less dependence on electricity indices; and 5) confidence in price indices rates 7 out of 10 as revealed by the industry survey responses.

Staff discussed four options for future Commission action: 1) permit the industry to address the issue without further Commission guidance; 2) actively encourage implementation and monitor compliance with the Policy Statement; 3) use some form of mandatory price reporting of energy trade data; and 4) encourage greater reliance on platforms for trading, confirmation/settlement and clearing.

Staff also offered the following recommendations: 1) the Commission should convene a public conference to consider the industry's response to Staff's Report and also address the issue of market liquidity; and 2) price index developers should provide more transaction information related to the price provided in indices; and 3) price index developers should agree to provide the Commission with access to relevant data in the case of an investigation into possible false price reporting or price manipulation. Staff also provided guidance on the use of indices in jurisdictional tariffs. The full texts of the Report and Appendix are available on the NEM Website.

Workshop on Electric Reliability Standards

FERC will convene a technical workshop on May 14, 2004, to focus on recommendations of the U.S.-Canada Power System Outage Task Force. Representatives from FERC, DOE, NERC, Natural Resources Canada, the Ontario Ministry of Energy and other industry groups will participate to address near term and long term measures to ensure a reliable electric system. The full text of the Workshop Notice is available on the NEM Website.

NEM Comments and Presentation on Provider of Last Resort Service

NEM submitted comments and appeared before the Commission to present its position on Provider of Last Resort (POLR) service. NEM recommended that: 1) the Commission establish a date certain by which utilities will exit the merchant function consistent with the Commission's statutory authority to so require; 2) POLR should be structured and priced as true no-notice, last resort service; 3) POLR prices should reflect current market conditions and the embedded costs of serving no-notice retail load; 4) billing, metering and customer care are competitive functions; and 5) there are a number of transitional market design changes that can facilitate competitive markets such as pricing the energy component of the price to beat as a market-based rate, requiring utilities to offer a single bill option and purchase marketer receivables, provide utilities with tax and regulatory incentives for customer migration, and require the utilities to support choice programs. The full texts of NEM's Comments and Presentation are available on the NEM Website.

Staff Report on Competitive Metering

Staff issued a Report on competitive metering in which it concluded that, "it is premature to implement additional elements of competitive metering." Staff recommended that it, "continue to direct its focus on monitoring regulated and competitive market developments in metering as a precursor to the implementation of any additional elements of competitive metering. As circumstances merit, the Staff, with the assistance of the competitive metering working group, will evaluate additional elements of competitive metering services for large commercial and large industrial customers, as well as the desirability of competitive metering for residential and small business customers." The full text of the Report is available on the NEM Website.

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