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April 11, 2003
Annual Membership Meeting and National Restructuring Conference

NEMís Annual Membership Meeting and National Restructuring Conference was held on 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 all spoke at the event. Congressman Barton addressed NEM members just hours after his energy bill was marked up and passed out of committee. A synopsis of the Conference is available on the NEM Website.

NEM Executive Committe Meeting to be held on June 30, 2003 in Chicago

The Executive Committee of NEM will hold its next meeting in Chicago on June 30, 2003. Dr. Phil O'Connor of Constellation NewEnergy has been kind enough to host the meeting. . The agenda will cover substantive issues affecting wholesale, retail and related technology rules, regulations, legislation and market openings. Importantly, we will also be electing national, regional, state and issue-specific policy development leaders for the coming year as well as discuss the implementation of a national PR campaign to open markets and other ways to leverage NEM's good will to enhance member business opportunities. Please contact headquarters to discuss your availability for leadership roles and participation on these issues at your earliest convenience.

SEC Proposes Amendment Regarding CEO, CFO Certification Under Sarbanes Oxley

The Sarbanes Oxley Act of 2002 required the SEC to adopt final rules under which the principal executive officers and the prinicpal financial officers of a company filing periodic reports must certify that the report: (1) does not contain any untrue statements and (2) that the financial statements in the report are fair representations of the issuer. Therefore, the SEC proposed rules to implement this section of the Act and proposed amendments to require companies to provide the corporate officer certifications as exhibits to the periodic reports to which they relate. The SEC also published guidance regarding the filing procedures for the certifications required by Sarbanes Oxley. Comments to the Proposed Rule are due May 15, 2003. The full text of the SEC Proposed Rule is available on the NEM Website.

ALJ Issues Interim Order on Demand Response for Large Customers

Administrative Law Judge Carew issued an Interim Opinion in Phase 1 Addressing Demand Response Goals and Adopting Tariffs and Programs for Large Customers. This Interim Opinion adopts an initial set of voluntary tariffs and programs for large customers whose electricity use exceeds 200 kW per month. The decision also sets annual Mw targets to be met through demand response and included in investor-owned utility (IOU) procurement plans. The approved offerings for large customers include a statewide Critical Peak Pricing (CPP) tariff, an Hourly Pricing Option (HPO) tariff for customers in San Diego Gas & Electricís (SDG&E) territory, an IOU demand bidding program (DBP), and the Demand Reserves Program (DRP) offered under the aegis of the California Consumer Power and Conservation Financing Authority (CPA).

The Interim Opinion contains a bill protection incentive for those customers participating in the CPP and HPO programs that provides 100% bill protection (i.e. the participant pays no more than he would have had he remained on his original rate schedule for the first 12 months he is on the CPP or HPO tariff). To receive the credit the customer must actually reduce peak demand by a minimum of 3% per CPP event, averaged over the course of the customer's twelve-month participation. For customers on the HPO tariff, the 3% reduction could be averaged over the entire time-period of the customer's participation. The Interim Opinion also includes a technology incentive for participation in the CPP and HPO tariffs, as well as the IOU's DBP. The full text of the Interim Opinion is available on the NEM Website.

Senator Dunn Amended Proposed Bill to Repeal Electricity Deregulation in California

Senator Dunn released an amended bill that would repeal electricity deregulation in California. The bill would eliminate direct access at the termination of existing contracts. The bill proposes: (1) to require legislative approval for the ISO to join an RTO; (2) to put the utility back in the generation business, subject to a regulated rate and a rate of return; and (3) to make metering once again a utility service. The full text of the Amended Bill is available on the NEM Website.

Georgia PSC Issues NOPR on Standards for Determining Whether Prices are Constrained by Market Forces

The Georgia PSC is considering proposed rules pertaining to the determination of whether the prices for natural gas paid by firm retail customers are not constrained by market forces and are significantly higher than such prices would be if they were constrained by market forces. In determining what the prices would be if they were constrained by market forces, the Commission will consider the wholesale price of natural gas, the cost of transportation, the costs of providing marketer services, and the impact of specific retail pricing structures. The NOPR establishes conditions under which it is appropriate for the Commission to intervene to protect consumers. The NOPR states that if the Commission determines that prices are not constrained, it may, on an emergency basis, temporarily impose price regulations. Comments on the proposed rules are due by April 25, 2003. The full text of the NOPR is available on the NEM Website. NEM members who wich to comment should forward comments to headquarters no later than April 15, 2003.

MIPSC Issues Stranded Cost Strawman #2

The MIPSC issued a second stranded cost strawman proposing that stranded costs be determined for a two-year period from January 2004 through December 2005. Starting in January 2006, stranded costs would be determined through normal Commission rate case procedures. During the two-year, period costs would be determined monthly based on the amount of load on customer choice as a percentage of total retail load. The straw states that customers may return to bundled service at regular tariff rates between September 15 and February 14 or within 45 days of a final Commission order in a rate case. Customers who return to bundled service outside of these periods will pay the utility's incremental generation cost until September 15, when the customer returns to the regular tariff rates. The MIPSC requests email response to the strawman by April 21, 2003 and the next stranded cost collaborative meeting will be on April 30, 2003. The full text of the Strawman is available on the NEM Website. NEM members who wish to comment should forward comments to headquarters no later than April 15, 2003.

PUCO Set Procedural Schedule for DP&L's Application to Continue its Rate Freeze and Market Development Period

PUCO issued a procedural schedule for DP&L's application to continue its rate freeze and Market Development Period (MDP). DP&L filed an application to continue its rate freeze and MDP until December 31, 2005. DP&L's MDP and rate freeze are to end on December 31, 2003. Staff recommended: (1) extending the MDP through December 31, 2005 and (2) certain changes regarding other provisions of DP&L Electric Transition Plan, including the rate components. PUCO believes that a hearing on the application is warranted to provide affected parties an opportunity to express their views on the applications and the Staff Recommendation. Parties wishing to intervene and file written objections must do so by April 16, 2003. A prehearing conference will be held on April 22, 2003. The full text of the PUCO Entry is available on the NEM Website. NEM will file for party status and urges members who wish to participate to contact headquarters immediately.

Meeting on Dominion Virginia Power Default Service Pilot Program

Staff scheduled a working group meeting for April 22, 2003 to provide interested parties an opportunity to comment on Dominion Virginia Power's proposed Default Service Pilot Program. The proposed pilot would start on January 1, 2004 and end on December 31, 2005. Customers that participate in the pilot will receive a reduction in applicable wires charges. The pilot is available to all Dominion's customers with less than 500 kWs of load. The pilot will consist of four blocks of eligible customers: (1) residential; (2) small general service; (3) intermediate general service; and (4) worship site service.

Dominion proposes a bid structure, administered by the Commission, to choose competitive suppliers to participate in the program. Under the proposal, all competitive service providers (CSPs) interested in bidding should prepare a qualification package and submit it to the commission by September 15, 2003. The bid should cover the two year term of the pilot and should be block specific. The full text of the Terms and Conditions of the pilot program are available on the NEM Website.

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