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February 28, 2003
OM Joins NEM

NEM is pleased to announce that OM has recently become a NEM member. OM is a world leading provider of transaction technology to the energy and financial services industries. Both a systems solutions developer and an exchange owner and operator, OM develops and markets trading, risk and settlement systems geared to central marketplaces and participants. An industry innovator, OM developed the first day ahead electricity spot exchange and the first commodities future exchange. Today, more than 25 exchanges worldwide use OM technology to power their marketplaces. OM will be represented within NEM by Chris Crosby, Senior Vice President for Energy Markets, and Gerry Vurciaga, Vice President for Business Development.

NEM's Annual Membership Meeting and National Restructuring Conference for 2003

This yearís 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 Constellation NewEnergy for sponsoring the reception.

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

NARUC 2003 Winter Committee Meeting

NEM attended NARUC's four-day 2003 Winter Committee Meeting this week in Washington, D.C. The Committee on Electricity convened a discusssion on regional strategies regarding Multi-State Entities. At this session, FERC Chairman Pat Wood indicated that FERC would issue a white paper in April that would be a preview of the final SMD rule. Wood said that he supports paying for Regional State Advisory Committees through RTO-administered tariffs. A DOE representative at the session noted that an Office of Transmission and Distribution would be created at the agency to foster better understanding of regional markets in electric power.

The Committee on Electricity also examined New England's plan to implement SMD on March 1, 2003. New England's SMD incorporates essential features of FERC's SMD NOPR such as locational marginal pricing (LMP), market monitoring and mitigation, bilateral contracts, a Day-Ahead Market (DAM), Financial Transmission Rights (FTRs), and Auction Revenue Rights (ARRs). In New England, losses are included in LMPs, and FTRs are available to all in the wholesale markets.

Counsel to the House Energy and Commerce Committee appeared before the Committee on Gas to discuss upcoming energy legislation. It was discussed that the House Energy Committee would be releasing draft legislation, perhaps as early as this week, including provisions on the Alaska Natural Gas Pipeline and the Strategic Petroleum Reserve as well as an electricity title. The Senate was also said to have an aggressive schedule for getting an energy bill to the floor by May.

The Committee on Consumer Affairs discussed the introduction of prepaid utility metering in the U.S. Prepaid metering is a pay-as-you-go service, which involves a smart meter display box in a customer's house and a card (similar to a debit-card) which contains the customer's current credit information.

The Committee on Consumer Affairs also discussed the implementation of federal and state do-not-call (DNC) programs. A representative from the FTC said the implementation schedule for their DNC rule would be as follows: 1) July 1 - consumer registrations begin via internet and phone; 2) September 1 - telemarketers can access the DNC registry system; and 3) October 1 - telemarketer compliance with DNC rule required. FTC also indicated that many states have bill amendments in progress to permit names on state DNC lists to be added to the federal DNC list. A representative from FCC noted that it was unlikely that they would use a DNC list separate from the FTC and also discussed the FCC's extensive jurisdiction to apply DNC rules to every for-profit entity doing interstate and intrastate phone or fax marketing.

A Joint Committee meeting was held on restoring confidence in energy markets. Peter Rigby of Standard & Poors noted the market distortions imposed by current regulatory models that result in incomplete deregulation. He also raised concerns that the complexity of FERC's SMD NOPR as well as political pressures threaten its implementation.

NEM Conference Call on Retail Marketing and Related Technology Implementation Issues

NEM is convening biweekly conference calls to discuss retail marketing and related technology implementation issues. The next call will be held Thursday, March 13, 2003, at 1PM EST. The call will focus on the development of an NEM public relations campaign on the benefits of competition. The dial-in number is 703-788-0600, and the pass code is 209353. An agenda for the conference call will be circulated prior thereto.

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 March 19, 2003, at 2PM EST. An agenda including issues to be discussed will circulated prior to the call. The phone in number for the conference call is 1-703-788-0600, and the passcode is 209353

FERC Seeks Information About Natural Gas Price Volatility

FERC's Office of Market Oversight and Investigations has contacted energy brokers about a possible data request to provide transactional information pertaining to volatility in natural gas markets this week. At this time, the brokers are examining the confidentiality and liability aspects of complying with such a request.

FERC Approves General Direction of MISO Proposed Market Rules

FERC issued a declaratory order affirming the general direction of three of MISO's proposed energy market rules. The rules would provide for: (1) a security-constrained, centralized bid-based scheduling and dispatch system; (2) Financial Transmission Rights (FTRs); and (3) market settlement rules. FERC also provided guidance on certain issues including: congestion management, seams, resource adequacy, and the initial allocation of FTRs. As proposed, MISO will take an incremental approach to market implementation, starting first with energy and FTR markets. MISO will follow up with the Commission on the allocation of FTRs and the continued use of separate control areas. FERC clarified that, unless indicated otherwise, it does not intend to revisit prior approvals because of possible inconsistencies with the details of the final SMD rule. However, the Commissioners stated that MISO would be given a reasonable time in which to change its market design if there are substantial changes in the final SMD. The full text of the FERC Declaratory Order is available on the NEM Website.

Two California State Assembly Bills Introduced to Reinstate Retail Electric Choice

Two bills were recently introduced in the California Assembly to reinstate retail electric choice. Assembly Bill 428 would compel large business and industrial customers to choose their own power providers starting in 2006, and give residential and smaller businesses customers the option to do so. Assembly Bill 816 calls for the reinstatement of retail choice under three conditions: (1) that utilities are buying their own power instead of being supplied by that state; (2) that the state has issued bonds to pay for long-term contracts; and (3) that exit fees are established for customers who left a utility service. All three circumstances have been met, though an exit fee is still being considered by state regulators, with a final decision expected by July. The full texts of AB 428 and AB 816 are available on the NEM Website.

New York
NYPSC Requests Comments on HEFPA Rule Implementation

The NYPSC has requested comments on a series of questions related to implementation of HEFPA provisions applicable to marketers. The Commission indicated it would be issuing proposed rules for comment at a later date.

The Commission is particularly interested in comments on pro rata allocation of residential and commercial customer payments on a consolidated bill. Specifically the Commission asked: 1) whether a billing party should be required to pro-rate customer payment on consolidated bills; 2) what procedures are needed to provide notice to the customer and the non-billing party that payments are pro-rated, and what customer response to the notice, if any, should be required; 3) how should payments be pro-rated - based upon the proportion of each partyís charges to the total bill; and 4) how long would it take to implement billing system modifications to provide pro-ration.

Additional questions for consideration include: 1) the effect of the statute extending HEFPA requirements to marketers; 2) whether any statutory provisions require an ESCO to provide commodity service to residential customers; 3) what should constitute effective marketer notice of customer termination and documentation, what time limits and other procedures should be required for transmitting the notice and disconnecting service, and should marketers submit sample termination notices for Department review; 4) whether marketer termination and distribution utility suspension notices should be issued jointly; 5) how can a utility verify that a marketer's customer contract allows the marketer to refuse resumption of commodity service; 6) can the distribution utility refuse to disconnect its service if it is not satisfied with marketer HEFPA compliance procedures; 7) whether the suspension of delivery service by a combination gas and electric utility that is requested by a terminating marketer limited solely to the commodity that the marketer is terminating; 8) can a marketer seek suspension of delivery service before one year elapses from the termination of commodity service, but after the customer begins service with a different marketer or returns to full utility service; 9) what constitutes a reasonable amount of time for utility disconnection of delivery service; 10) how should the value of "full utility service" be determined for purposes of customer payment to permit reconnection; 11) can marketer contracts include provisions that prohibit use of deferred payment agreements (DPAs) as a condition of service reconnection; 12) can marketers receive direct payments from social service agencies to permit service reconnection; 13) what constitutes a prohibited security deposit under the new law; 14) if the distribution utility and marketer are owed arrears that led to the suspension of service, are both entities required to offer DPAs, and, if so, must they offer a combined DPA; 15) should the same criteria be utilized for a customerís eligibility for a DPA from a marketer and the distribution utility; 16) does the new law require allocation of customer payments if the distribution utility and the marketer each have a separate DPA with the customer or if the marketer is the only entity that has a DPA with the customer; 17) should marketers be required to offer budget billing or levelized payment plans to existing customers; 18) if the distribution utility adjusts the delivery charges on the bill as a result of customer complaint, must the marketer make a corresponding adjustment in commodity charges; 19) should the entity responsible for issuing a consolidated bill be responsible for issuing all annual notifications, or, if the marketer and utility issues separate bills, should the distribution utility be responsible for issuing annual notifications; 20) and how should marketers and utilities share responsibility for investigations related to shared meter conditions.

Initial comments are due March 17, 2003, and reply comments are due March 31, 2003. Those that wish to be on the active parties list must notify the Commission by March 3, 2003. The full text of the Notice Requesting Comments is available on the NEM Website.

NYPSC Order Approving EDI Standards

The NYPSC approved the TS568 Account Receivables Advisement and TS568 Payment Advisement transaction standards and related business processes. The Commission also approved modifications to the existing TS810 Invoice - Utility Rate Ready Billing transaction standard, updates to the existing EDI test plans associated with implementation of the utility bill ready consolidated billing model and approval of test plans and remittance procedures for the single retailer model. In addition, the Commission ordered that the proposed TS810 Invoice transaction standard for ESCO consolidated billing be remanded back to the New York EDI Collaborative for further development. The full text of the Order is available on the NEM Website.

Supplier of Last Resort/Provider of Last Resort Working Group Meetings

Staff will convene Supplier of Last Resort (SOLR) and Provider of Last Resort (POLR) working group meetings on March 25, 2003, in Hearing Room 1 of the Commission's Harrisburg offices. The SOLR meeting will begin at 10:30 AM, and the POLR meeting will begin at 1:30 PM.

The SOLR working group will examine issues related to standards for Commission approval of an alternative SOLR as well as how to ensure that an alternative SOLR's rates are just and reasonable. Staff has prepared a proposal pertaining to financial and technical requirements for alternative SOLRs, the application process for alternative SOLRs and cost recovery mechanisms. Considerations will also include the extent of an alternative SOLR's responsibilities to customers. The full text of the Supplier of Last Resort Working Group Meeting Notice and Proposal is available on the NEM Website.

The POLR working group will initially consider: "1) defining the ECDs' continuing obligations to connect, deliver and acquire electricity, 2) establishing a method for determining prevailing market prices, and 3) creating a mechanism for the full recovery of all reasonable costs by the EDCs." Staff has prepared a proposal for consideration on these issues. Subsequent issues for the group to consider will include standards, rules and procedures applicable to alternative POLRs. The full text of the Provider of Last Resort Working Group Notice and Proposal is available on the NEM Website.

NEM Submits Comments on Proposed Competitive Metering Rule

NEM submitted comments on Staff's proposal regarding competitive metering for C&I customers to be implemented by January 1, 2004. NEM urged the Commission to implement a timeline, which provides utilities with targeted, time-sensitive, performance-based incentives to implement the operational systems necessary to support competitive metering so the benefits of these upgrades can be realized at the earliest possible date. NEM recommended that the Commission provide shopping credits to consumers equal to the fully allocated embedded costs of all metering services and related information technologies including ownership, installation, servicing of equipment, maintenance, testing, reading, data management, validation, editing, estimations, pulse output transmission via Internet and billing. NEM urged the Commission to clarify what constitutes an eligible commercial and industrial customer and submitted that the definition be construed broadly to permit the largest number of customers to participate in the benefits of competitive metering. The full text of NEM's Comments is available on the NEM Website.

Staff Proposed Rules on Electric Meter Ownership

Staff has issued a report and proposed rules on electric meter ownership for industrial and large customers. By the terms of the proposed rules, customer ownership of the meter would consist of financial ownership and would result in a back-out credit on the customer's bill. However, the utility would continue to have full electronic and physical access to the meter whereas the customer will have read-only access to the meter. The utility will continue to be obligated to perform testing, replacement, customer accounting, reading and data management functions. The full text of Staff's Report and Proposed Rules is available on the NEM Website.

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