July 20, 2001

Announcements

 NEM's Fall and Spring Meetings

All NEM members and prospective members are invited to join the Executive Committee for an open meeting on October 3-5, 2001, at the Palmer House Hilton in Chicago. It will be structured to bring everyone up to speed on the most important restructuring issues in the most important markets, hopefully in one day with a short wrap-up on day two. Many thanks to Exelon, Nicor, Peoples and Encorp for sponsoring the meeting. Please also mark your calendar for April 1 and 2, 2002, the Annual Membership Meeting and National Restructuring Conference, that will be held at the Marriot Metro Center in Washington, DC.

 Member Opportunity

NEM members interested in including a business text description for posting in the "Marketplace" section of the new NEM Website should forward the information to headquarters ASAP. Members should indicate which of the following "Marketplace" sections they wish to be listed under: 1) Marketer Tools - Billing & Customer Care, Metering Technologies, Customer Acquisition, Wholesale Energy Suppliers, Electronic Data Solutions, ASPs/MSPs; 2) Consumer Tools - Request for Energy Proposals, Energy Efficiency/Conservation, Retail Energy Suppliers, Request for Non-Energy Proposals; 3) Energy Technologies - Distributed Generation, Renewable Energy Sources, Telecom/Bandwidth, Other Technologies; 4) Energy Trading - Exchanges, Auctions, Trading Platforms, Brokers; 5) Information Services - Internet Portals, Risk Management, Weather Derivatives, Tariff Analysis, Other Services; and 6) Employment Opportunities (Energy Central's "Job Center" ASP).

 Natural Gas Week Articles

Natural Gas Week features two articles highlighting NEM. The first discussed NEM's recent release of Distributed Generation guidelines urging the reduction of barriers to implementation. The second article quoted NEM on the subject of FERC's RTO orders and the positive impact they will have on reducing seams issues and removing political influences of single state ISOs. The full texts of the Natural Gas Week Articles are available on the NEM Website.

Federal Issues

 Comprehensive Energy Research and Technology Act of 2001 (H.R. 2460)

The House Science Committee referred H.R.2460 to its Subcommittee on Energy. The bill would require the Secretary of Energy to institute a program promoting research, development, demonstration and commercial application of distributed energy resources. The full text of H.R.2460 is available on the NEM Website.

FERC

 Consultants Selected for RTO Mediations

FERC has hired consultants to aid the ALJs in the RTO mediations. Herbert Tate will assist in the Southeast RTO discussions, and Joe Garcia will assist in the Northeast RTO discussions. NEM will participate in the RTO mediation sessions.

State Issues

New York

 ALJs Issue Recommended Decision in NY Competitive Opportunities Proceeding

The ALJs in the Competitive Opportunities proceeding issued a recommended decision. The ALJs recommend:

  1. Utilities should not be allowed to remain in any market which becomes workably competitive;

  2. The end-state vision should include removing utilities from the provision of commodity.

  3. Although there is a fair chance that Commission authority to remove utilities from the merchant function would be upheld by the courts absent specific legislation, the Commission should defer such a requirement until there has been time for judicial review. However, with respect to the provision of gas to large industrial customers, since utilities have effectively ceased performing the merchant function, an immediate effective date for exiting the merchant function should be established.

  4. Utilities should not be removed from any market until multiple suppliers offering a variety of products are available for the entire customer class throughout the utility's service territory.

  5. To foster market development, fully unbundled gas and electric rates should be instituted to give consumers proper economic signals and give ESCOs a price to compete against.

  6. The "obligation to serve" should apply to all suppliers. All ESCOs should be required to provide all of the consumer protections required of the utilities and to serve customers without undue discrimination in the customer classes and territories chosen by each ESCO.

  7. Until the wholesale electricity market becomes workably competitive and hedged products are widely available in the retail market, the utilities should continue to offer hedged products for all classes.

  8. With respect to natural gas, no utility hedging is required for industrial and larger commercial customers. As the gas market develops, hedging should be phased out for all commercial customers, and ultimately for residential customers.

  1. Utility hedging well into the future creates a significant exposure to utility stranded costs. Therefore, utilities should be required to file for approval of hedging plans by fuel and customer class, including a competitively neutral mechanism to recover costs.

  2. Utilities long-term rate plans for competitive services should be limited to the historic practice of multi-year rate plans covering no more than 3 or 4 years. Utility rates for competitive products and services should be based on the utility's costs rather than being fixed.

  3. Until workably competitive markets exist, the laissez-faire approach to customer migration should continue in combination with aggressive implementation of small-use customer aggregation programs. Once workably competitive markets exist, more aggressive migration measures should be used.

  4. The government's role in market development should be devoted to ratemaking, consumer protection, physical infrastructure, and when appropriate, encouragement of customer migration. After these foundations are laid, government should mainly play a flexible oversight role.

  5. The Commission should have direct oversight of ESCO provision of consumer protections, the resolution of consumer/ESCO complaints, and the provision of non-discriminatory service by ESCOs.

  6. The Commission should maintain on its website a listing of the utilities" price-to-compare information and ESCO price posting should be made on a voluntary basis. Consumers should also be provided with ESCO report cards, reflecting the nature and frequency of complaints against ESCOs.

  7. ESCOs should be required to disclose all changes made to utility delivery charges for which the ESCO bills or rebills.

  8. An advisory Competition Council should be formed for the market transition.

Briefs are due August 10, 2001, and replies are due August 28, 2001. The full text of the Recommended Decision is available on the NEM Website. Please send your comments to NEM headquarters ASAP.

New Jersey

 GPU Energy Net Metering Filing

GPU Energy submitted a compliance filing in the net metering proceeding including a tariff on net metering and interconnection requirements for wind and photovoltaic systems up to 100 kw, GPU Energy's "System Protection and Control Interconnection Requirements," and a proposed interconnection application for systems 10 kw or smaller. The full text of the Interconnection Requirements Document, and Proposed Interconnection Application are available on the NEM Website and the Tariff Filing is available from NEM headquarters.

Ohio

 NEM Comments on Proposed Gas Supplier Rules

NEM as part of a gas marketers group filed comments on the proposed gas supplier rules. The comments maintained as follows: 1) the right to terminate a contract for relocation should be a matter of negotiation between supplier and customer, 2) to reduce the likelihood of customer confusion, marketers should not be required to specify contract start and end dates but rather contract duration, 3) a workgroup should be formed to handle issues associated with consolidated billing, budget billing, allocation of partial payments, and purchase of receivables, and 4) the proposed rules must be clarified so as not to preclude marketers from introducing creative bundled products and services that are not offered in a fixed or variable price format. The full text of NEM's Comments is available on the NEM Website.

 Settlement Filed in Electric UBP Proceeding

Staff and other parties have filed a settlement with the Commission recommending guidelines for the resolution of issues concerning electric utility purchase of receivables from a certified retail electric service (CRES) provider and for bill ready billing of CRES provider charges by the electric utility. The full text of the Settlement is available on the NEM Website.

Michigan

 NEM Comments on SEMCO/MGU Choice Programs

NEM filed comments on the proposed SEMCO/MGU choice programs arguing that: 1) marketers should be assigned a slice of pipeline capacity pending institution of a capacity market in the state, 2) marketers should not be required to purchase a commodity that does not exist (e.g. demonstrate they have firm primary peak day capacity for the five winter months), 3) the supplier of last resort function should be let out for competitive bid, 4) customer enrollment should not be restricted to a two-month open season, 5) customer choice programs should be opened to all customers, 6) marketers should have the option to bill customers, and 7) consumers in the SEMCO/MGU service territories should be given back-out credits reflecting the full energy supply and commercial costs of serving retail load currently in the utilities' bundled rates. The full text of NEM's Comments is available on the NEM Website.

 H.B. 5003 and S.446

House Bill 5003 has been introduced and would require an alternative electric supplier to notify the Commission, prior to soliciting customers, of which cities, villages, and townships for which it intends to provide service. The full text of H.B.5003 is available on the NEM Website.

Senate Bill 446 has been passed by both the House and Senate and would clarify that alternative electric suppliers are not utilities. The full text of S.446 is available on the NEM Website.

Virginia

 Staff Report on Competitive Metering

Staff issued a Report recommending a phased-in approach to competitive metering services. Staff recommends that the first stage of a phased-in approach should provide meter functionality choices and data access choices, including access to meter data information on a near real-time, on command basis by January 1, 2003. Staff recommends submission of a draft of the proposed rules for this stage of the phased-in approach to competitive metering by February 14, 2002. Staff recommends that the competitive metering work group should continue its examination of the market and formulate recommendations for subsequent phases of the implementation of competitive metering. The full text of Staff's Report is available on the NEM Website.

Other Issues

 EEI Distributed Generation Task Force

The EEI Distributed Generation Task Force recently met to consider regulatory and legislative policy issues concerning the use of distributed generation. The following presentations made at the meeting are available on the NEM Website: Distributed Resources Interconnection Policies, DG Regulatory Policies: How Can We Make It Work; Efficient Pricing of Standby Distribution Services; The Next Wave of the Technology-Enabled Revolution; The Challenge Ahead, DG Legislative Developments; and Economic Market Potential for Electric Utility Use of DG.