Document Search
Site Search
Advanced Search
Updates & Alerts
News & Media
Upcoming Meetings
Deregulation Library
Member Services
ACN Energy
AES Contellation New Energy
AGL Resources
Agway Energy
Allegheny Energy Supply Company
Alliance Data Systems
APS Energy Service Corporation
CASA - Customer Acquisition Specialists of America, Inc.
ConEdison Solutions
Customer Link
Deloitte & Touche
Electric America
Elster Electricity
Energy America
Energy Clear America
Energy Services Group
Energy Source (Regional Member)
Excelon Corporation
Financial Engineering Assocation, Inc.
First Energy (Regional Member)
InterContinental Exchange, Inc.
Interstate Gas Supply
IMServ (Invensys)
InBusiness TeleServices (Regional Memembers)
KeySpan Energy
New York Mercantile Exchange
Nicor Energy, Inc.
OM Energy
Ontario Power Generation
Peoples Energy
Pinnacle West
Prebon Energy
ProLiance Energy
Sempra Energy Soulutions
Shell Energy Corporation
SPi Group
South Star Energy
Teco Power Services
Total Gas and Electric, Inc.
Tractebel Energy Services, Inc.
Vectren Source
February 7, 2003
NEM's Annual Membership Meeting and National Restructuring Conference for 2003

This year’s Annual Membership Meeting and National Restructuring Conference will be held April 3 and 4, 2003, at the Hyatt Regency on Capitol Hill. Congressman Joe Barton, Chairman of the House Energy & Air Quality Subcommittee, Chairman Patrick Wood of the FERC, Chairman James Newsome of the CFTC, SEC Commissioner Campos, NARUC President David Svanda, Chair Klein of the TX PUC, Chairman Vasington of the MA DTE, Chair Spitzer of the ACC, and Commissioner Jones of the PUCO are all confirmed to be speakers at the event.

Our VIP reception will be held in the Senate Russell Caucus Room on the evening of April 3, 2003. This is one of the nicest rooms in the Capitol. Many thanks to LODESTAR, Itron, IMSERV and KWI for sponsoring the reception.

The Agenda is hotlinked here for your convenience. A registration form is also hotlinked here for your convenience.

NEM Conference Call on Retail Marketing and Related Technology Implementation Issues Scheduled

NEM will convene a conference call to address Retail Marketing and Related Techology Implementation Issues on February 14, 2003, at 2PM EST. The purpose of the call is to prioritize issues for NEM action and determine dates of future calls. The phone in number for the conference call is 1-703-788-0600, and the passcode is 209353.

NEM Conference Call on Wholesale Marketing, Clearing, Risk Management and Related Technology Issues Scheduled

NEM will convene a conference call on Wholesale Marketing, Clearing, Risk Management and Related Technology Issues on February 21, 2003, at 2PM EST. The purpose of the call is to prioritize issues for NEM action. The frequency of future conference calls will also be determined. The phone in number for the conference call is 1-703-788-0600, and the passcode is 209353.

Do-Not-Call Implementation Act Introduced in House

HR 395, the "Do-Not-Call Implementation Act," was introduced in the House and referred to the House Energy and Commerce Committee. HR 395 authorizes FTC to collect fees for the implementation and enforcement of its "do-not-call" registry rule. HR 395 requires FCC to issue a final rule in its do-not-call registry proceeding within 180 days after this legislation is passed. FCC and FTC are also required to coordinate their do-not-call registry rules. The full text of HR 395 is available on the NEM Website.

NEM Participates in FERC/CFTC Joint Conference on Clearing and Other Solutions

FERC and CFTC held a joint technical conference on February 5, 2003, entitled, "Credit issues in Energy Markets - Clearing and Other Solutions." The conference, led by Chairman Pat Wood and Chairman James Newsome, covered clearing fundamentals, clearing regulation, clearing alternatives, other credit solutions and implementation issues. Chairman Newsome said the CFTC, which pursuant to the Commodity Futures Modernization Act of 2000 (CFMA) has the authority to regulate clearing organizations, is interested in the benefits and challenges of clearing. Bill Hederman, director of FERC's Office of Market Oversight and Investigations, stressed the importance of counterparty risk management as long-term and short-term debt is coming due in 2003 and companies' credit ratings continue to go in a negative direction. The conference included three panels: (1) Clearing Fundamentals and Oversight; (2) Clearing Models in the Energy Markets; and (3) Other Credit Solutions and Implementation.

John Davidson of Morgan Stanley spoke on the first panel about the fundamentals of clearing. Davidson explained that a key benefit of clearing is that when a member of the clearing organization exits the market there is no need to find the party with whom he originally contracted. Any willing clearing member can offset the leaving members' obligations and once the obligations are offset they are completely extinguished. Additionally, Davidson said that clearing mitigates the impact of price volatility. Parts of the market, according to Davidson, are ripe for introducing clearing.

On the second panel, Goone of Intercontinental Exchange said that the benefits of clearing were the legal costs, time and documentation it saves. Goone also mentioned how clearing reduces risk, increases liquidity and brings new players into the market. Robert Stewart from Merchants Exchange explained that the benefits of a regulated electronic exchange were its transparency, excellent audit trail, instant order fulfillment, and high reliability and security.

NEM participated in the third panel. NEM stated that the creation of a new and innovative energy-related trading, risk management, clearing, netting and settlement industry as well as reliable price indices are important developments in the energy market. Both Commissions was advised that NEM members are already offering the products, services, information and technologies that will help solve the credit and liquidity crises. NEM's "Solutions to Improve the Liquidity, and Creditworthiness of the U.S. Energy Industry," was released at the conference and introduced into the record. NEM also said that FERC's SMD can become one of the most important factors in facilitating the liquidity of the industry. Also on this panel was Edward Comer who discussed EEI's role in facilitating development of standard contracts, needed changes to the bankruptcy code and the necessity of tight agency coordination.

The following presentations are currently available from the NEM Website: NEM, Morgan Stanley, Tractebel, UBS Warburg, and EEI. Further presentations will be made available as FERC releases them in electronic format. A NEM Summary of the conference is available from NEM headquarters.

NEM Summary of January SMD Comments

On July 31, 2002, FERC issued a Notice of Proposed Rulemaking (NOPR) on Remedying Undue Discrimination through Open Access Transmission Service and Standard Electric Market Design. Parties submitted Initial Comments on November 15, 2002 and a second round of Comments on January 10, 2003. The January Comments discussed: (1) the Western Interconnection; (2) transmission planning and pricing, including participant funding; (3) Regional State Advisor Committees (RSACs) and state participation; (4) resource adequacy (RA); and (5) congestion revenue rights (CRRs) and transition issues.

The following stakeholders were among the parties that submitted Comments on the reserved issues: AES, Alliance of State Leaders Protecting Electricity Consumers, Coalition for Standard Market Design, Consolidated Edison Energy (ConEd Solutions), Constellation Energy Group, Edison Electric Institute, Electric Consumers Resource Council, Joint ISOs/RTOs, Mid-Atlantic Conference of Regulatory Utility Commissioners, Morgan Stanley Capital Group, NY Independent System Operators, NY Transmission Owners, Northwest Consumer-Owned Utilities, PPL, Public Services Electric and Gas Company (PSEG ER&T), PA Public Utility Commission, Public Utilities Commission of OH, Sempra Energy, Southern Company Services. The positions are organized by region and by the parties' position in the market. A NEM Summary of the January Comments is available from NEM headquarters.

Draft Order Issued in "Track B" Electric Restructuring Proceeding

A Recommended Opinion and Order has been issued in the "Track B" electric restructuring proceeding on competitive solicitation issues. The draft Order would require the utilities to use an RFP process rather than develop an auction process due to time constraints associated with implementation. Pursuant to the draft Order, APS and TEP would be required to solicit for power beyond that which cannot be produced from their existing assets or existing contracts, in order to, "determine whether reliable generation is available at a lower cost than that produced by their own existing assets, or at a comparable level of cost, but with reduced adverse environmental effects, compared to their own existing assets." The draft Order set the amount of "contestable load" to be put out for bid as follows (subject to the results of the reliability must run study): APS (capacity) - 2,460 MW in 2003, 2,734 MW in 2004, 2,854 MW for 2005, and 2,950 MW for 2006; APS (energy) 4,381 GWH for 2003, 4,963 GWH for 2004, 8,088 GWH for 2005, and 8,680 GWH for 2006; TEP (capacity)758 MW in 2003, 824 MW in 2004, 861 MW for 2005, and 898 MW for 2006; and TEP (energy) 443 GWH in 2003, 688 GWH in 2004, 596 GWH for 2005, and 561 GWH for 2006. However, the Order allows APS and TEP to reject all bids if the bids, "do not reasonably meet the needs of the utility and its customers, after sound economic and deliverability analysis of all bids received, including long- and short-term bids." The full text of the Recommended Opinion and Order is available on the NEM Website.

Comments Requested on Gas Supplier Licensing Procedure

The Commission issued an Order requesting comments on Staff's proposed gas supplier licensing procedure. The proposed procedure would require all gas suppliers, new and existing, that deliver to retail choice customers to be licensed. Applicants would be required to demonstrate financial, managerial and technical capabilities. Applicants that do not demonstrate financial capability will be required to post a $100,000 line of credit or bond. However, there would be a presumption that existing suppliers meet financial, managerial and technical capability requirements. Suppliers would be required to maintain a Michigan office and may be required to report statistical data relating to retail sales and wholesale transactions to the Commission. Comments on the proposed licensing procedures are due February 21, 2003. The full text of the Order is available on the NEM Website. Members should submit their comments to headquarters ASAP.

Commission Report on "Status of Electric Competition in Michigan"

The Commission submitted a Report on the "Status of Electric Competition in Michigan" to the state legislature. The Report finds that: 1) the number of customers choosing alternative electric suppliers (AESs) doubled from 2001 in 2002 to a total of over 5,700 customers and 1,600 MW; 2) the number of licensed AESs more than doubled between 2001 and 2002, from 12 to 25; 3) transmission capacity into Michigan was increased by 2,000 megawatts by mid-2002; 4) all of the state’s investor-owned electric utilities have joined FERC-approved RTOs; and 4) in 2002, a total of 2,286 MW of new, in-state, non-utility electric generating capacity started operating. The full text of the Report is available on the NEM Website.

Competitive Electric Suppliers Requested to File Supply Assessments

The Commission issued an Order requiring the utilities to file assessments of their abilities to meet customers’ expected electric requirements in 2003. The Commission also requested that the utilities’ affiliates and alternative electric suppliers voluntarily file similar assessments by March 31, 2003. The full text of the Order is available on the NEM Website.

Inquiry into DTE's Estimated Billing Practices

The Commission instituted a proceeding to examine DTE's estimated billing practices. The Commission found that problems persist in this area despite a previous proceeding on this issue and DTE's promises to improve. NEM had previously argued to the Commission that DTE's practice of failing to timely read meters and resultant failure to issue accurate bills for prolonged periods was damaging retail access programs. The Commission has now required DTE to submit a report detailing the number of estimated bills issued per month, for which customers and why actual meter reads could not be obtained. The full text of the Order is available on the NEM Website.

New Hampshire
Commission Sets PSNH's Transition Service Rate for Large C&I Customers

The Commission set PSNH's transition service rate for large C&I customers at 4.67 cents for February 1, 2003, through January 31, 2004. The Commission found it was contrary with state restructuring law to include PSNH's above-market IPP costs in the transition service rate and that they must instead be considered stranded costs. The Commission also found that the restructuring law required that PSNH recover its administrative costs through its delivery charge rather than its transition service rate. The full text of the Order is available on the NEM Website.

NEM Comments on Components of Default Service

NEM filed comments on the proper components of default service. NEM's comments argued that in a restructured environment the utilities' historical obligation to serve should be converted into an obligation to connect and deliver. NEM stated that the price set for default service should reflect the true costs of providing retail generation service and not be a capped or artificially subsidized price. NEM argued that the default provider could be different by customer group since the cost to provide default service varies by customer group. The comments also stated that the separate components of providing generation service to retail customers should be unbundled and treated as separate default services. Additionally, NEM argued that default service should be delivered directly to the retail customer. The NEM comments also called for metering, billing and collecting services to be deemed components of default service and separately priced for consumers to understand the costs of these services. The full text of NEM's Comments is available on the NEM Website.

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