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January 10, 2003
NEM Winter Executive Committee Meeting to Be Held in San Diego on January 16 and 17, 2003

NEM's Winter Executive Committee Meeting will be held in San Diego at the Sheraton San Diego Hotel & Marina, West Tower, on January 16 and 17, 2003. The meeting will start at 9AM on January 16 and adjourn before noon on January 17. This meeting will be for NEM Executive Committee Members only. As in the past, the Executive Committee will establish the policy positions and priorities for NEM for the coming year. A registration form is hotlinked here for your convenience. A block of rooms has been reserved at the rate of $189 per night. Place your reservations at 619-291-2900 or 888-625-5144.

All Executive Committeee Members are requested to attend. A draft agenda is hotlinked here for your convenience.

NEM's Annual Membership Meeting and National Restructuring Conference for 2003 - Invitation for Speakers, Sponsors and Exhibitors

Next yearís Annual Membership Meeting and National Restructuring Conference will be held April 3 and 4, 2003, at the Hyatt Regency on Capitol Hill. We have arranged for additional space to accommodate more attendees with a special room for exhibits and added sponorship opportunities. Breakfast and all breaks will be in the exhibition room that is adjacent to the general session. The Agenda is hotlinked here for your convenience. A registration form is hotlinked is hotlinked here for your convenience.

Members who wish to be speakers, sponsors or exhibitors should contact headquarters immediately. Government officials and PUC commissioners have already RSVP'd.

NEM Comments on Standard Market Design NOPR

NEM submitted comments on the Commission's Standard Market Design rulemaking urging the Commission to insist on adherence to the principles originally set forth in the NOPR and Order 2000 that would ensure large, highly standardized RTOs/ITPs. NEM also noted that if the Commission does decide to permit some degree of regional differences, it must seriously consider the seams that will be created, and it must recognize that the more regional differences that are tolerated, the greater the opportunities will be for arbitrage between RTOs/ITPs.

NEM recommended in its Comments that: 1) CRRs should be immediately auctioned; 2) CRR auction revenues should go to LSEs in proportion to the load they serve, and the revenues should follow load as it migrates amongst LSEs; 3) the network access charge should be a license plate rate; 4) rate pancaking must be eliminated; 5) bilateral transactions should satisfy the resource adequacy requirement; 6) the RAR mechanism should incorporate a residual capacity auction administered by the ITP to meet shortfalls; 7) physical resources and financial resources backed by physical resources should satisfy the RAR; 8) contracts should be permitted to be backed by a portfolio of resources rather than requiring the identification of specific resources; 9) a standard certification process to ensure a generator has a specified amount of MWs should be utilized; and 10) in regions without an existing capacity market, grandfathering of existing contracts that do not identify specific resources should be permitted to meet to the RAR. The full text of NEM's Comments is available on the NEM Website.

NEM Brief in Detroit Edison Stranded Cost Proceeding

NEM filed a Brief in the Detroit Edison stranded cost proceeding urging the Commission to implement a competitively neutral stranded cost recovery mechanism. NEM argued that a stranded cost charge applied only to retail access customers, and of the magnitude proposed by Detroit Edison, would eliminate opportunities for retailers to serve customers in Detroit Edisonís service territory. NEM also argued that the uncertainty about future levels of the stranded cost charge makes it difficult for retailers to invest in the Michigan retail market. NEM urged the Commission to order the use of a collaborative (as it did in the Consumers Energy case) to address the uncertainty of the yearly determination of stranded costs and to direct the parties involved to consider the implementation of a competitively neutral stranded cost charge as a valuable tool to reducing the retail market uncertainty. NEM noted the significant costs and risks as well as the numerous non-commodity business expenses, including labor, systems and office facilities, involved in making a competitive retail offering, and argued that retailers must have certainty with respect to the stranded cost charge in order to justify these expenditures. NEM also recommended that the costs for which Detroit Edison sought recovery should be treated as "qualified costs" under the restructuring law, and therefore subject to collection on a competitively neutral basis. The full text of NEM's Brief is available on the NEM Website.

Many thanks to Roy Brunner and Greg Towstego of Ontario Power Generation for their assistance with this proceeding.

PSC Sets Consumers Energy's 2003 Transition Charge at Zero

The Commission ordered Consumers Energy to set its retail open access transition charge for 2003 at zero. The Commission also held that Consumer's retail access customers should receive a credit for excess securitization savings which will be set at a rate equal to their securitization and tax surcharges in 2003. Additionally, the Commission, sharing some marketer concerns that stranded cost determinations are not predicatable from year to year, directed Staff to convene a collaborative to identify and make recommendations concerning future stranded cost determinations. The full text of the Order is available on the NEM Website.

New Jersey
Metering Work Group Meeting

The Board directed that a working group be created to consider which customers should be added to hourly pricing and in what timeframe. The initial working group meetings will be held January 16, 2003, at 1:30PM and January 30, 2003, at 10AM in the Board's hearing room. Meeting agendas will be forthcoming.

New York
Governor Pataki Signed The Energy Consumer Protection Act of 2002

On December 20, 2003, Governor George Pataki signed The Energy Consumer Protection Act of 2002 (the "Act") into law. The Act extends the provisions of the Home Energy Fair Practices Act (HEFPA) to energy marketers providing service in New York state. Significantly, the Act also extends the right to terminate customers to retail marketers. According to the Act, any payments for arrears made by a customer after termination of service will be allocated equitably on a pro rata basis between the utility and the marketer. Additionally, deferred payments will be allocated between the utility and energy marketer based on the current charges owing to each. The full text of the Act is available on the NEM Website.

ConEd Phase 6 Meeting

A meeting will be convened on January 15, 2003, at 10:30AM at the Commission's Penn Plaza headquarters to discuss ConEd's electric retail access program phase 6 proposal. ConEd proposed the use of supply back-out credits in the amount of $0.00025/kwh for residential customers and $0.00018/kwh for all other customers (as it proposed in the unbundling case) in phase 6. ConEd also proposed that the lost revenue recovery mechanism it proposed in the unbundling case, whereby a single transition charge would be assessed to all customers, should be adopted. ConEd maintains that if it is not permitted to implement its proposed recovery mechanism that it should be permitted, "to implement supply back-out credits equal to the Company's avoided costs associated with its electric supply function (i.e. 0.08 mill/kwh for residential customers and 0.01 mill/kwh for all other retail choice customers)." Parties were requested to submit comments prior to the meeting on the appropriateness of considering an extension of phase 5 credits for phase 6, the cost recovery mechanism that should be utilized for phase 6, and whether backout credits should be set at ConEd's avoided costs.

Commission Adopts Single Bill Metrics for NYSEG

The Commission adopted single bill metrics for NYSEG. NYSEG will be required to use those EDI protocols that have been developed to date to implement an interim single bill solution. The Order approved two metric-based service quality measures to ensure effective implementation of the interim solution. Under the Timely Bill Issuance metric, ESCOs will be compensated between $.50 and $2.00 per bill depending on the length of delay if NYSEG fails to timely issue a consolidated single bill. If a bill's issuance is delayed more than 7 days, the affected customer will receive a $10.00 bill credit. ESCOs are also compensated under the Timely Payment Remittance metric. If NYSEG unduly delays forwarding to an ESCO a payment the utility has received from an ESCO customer, a late charge is imposed that can be up to 1.5% in interest per month on the amount of the late remittance. These metrics will be in effect January 2003 through May 2003. The full text of the Order is available on the NEM Website.

NYSEG RFP for Distributed Generation

NYSEG will issue a RFP for 2 MW of distributed generation capacity in early January 2003. The RFP will only be distributed to pre-qualified developers. NYSEG is accepting pre-qualification applications through January 22, 2003, that can be obtained at: NYSEG issued its RFP in response to the PSC pilot program launched in October 2001 directing utilities to assess their distribution needs for 2004-2005 and consider DG solutions.

ANOPR on Electric Generation Supplier Licensing Requirements

The Commission issued an Advance Notice of Public Rulemaking to consider revision of the regulation relating to the licensing and bonding requirements of Electricity Generation Suppliers (EGSs). The Commission requested comments on the following: (1) should the existing bonding level of 10% be increased; (2) should the default level of $250,000 be changed; (3) what criteria should be used to forecast gross receipts for the first 12 months for a start up company; (4) should the term "other security approved by the Commission" be specified and should letters of credit and corporate guarantees be listed as approved types of security; and (5) whether the current bonding requirements cause utilities to assume an unreasonable financial risk when EGSs default on their obligations. Additionally, Staff is interested in whether, and how, the Commission's regulations should include an EGS's tax liabilities other than liability for the Gross Receipts Tax. Comments are due March 5, 2003. The full text of the NOPR is available at:

SCC Orders Establishment of Working Group on Components of Default Service

The Commission ordered Staff to create a work group with representatives of electric utilities, competitive service providers, retail customers and other interested parties to help develop recommendations for default service. The Commission seeks input predominantly on issues involving the components of default service. The first work group session will be held on March 4, 2003. By January 21, 2003, interested parties wishing to remain on or be added to the distribution list must file a statement of such interest. By February 7, 2003, interested parties may file comments on the components of default service. After the components of default service are established, the Commission will solicit information on the designation of providers of default service. The full text of the Order is available on the NEM Website.

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