August 1, 2001


 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. NEM members interested in speaking at the meeting should contact headquarters. 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.

Federal Issues

 Securing America's Future Energy Act of 2001

H.R.4, the Securing America's Future Energy Act of 2001, is to be considered on the House floor. The bill provides for: 1) study and implementation of distributed power hybrid systems; 2) development of voluntary consensus standards for distributed energy systems; 3) implementation of a program to ensure the reliability of the electrical transmission system, including advanced energy technologies, advanced metering, and load management and control technologies; 4) tax deductions for qualified energy management devices that permit reading of energy price and usage signals on at least a daily basis; 5) tax credits for clean coal technologies; and 6) tax credits for production of natural gas from marginal wells. The full text of H.R.4 is available on the NEM Website.

 NEM Submits Testimony on Distributed Generation

NEM submitted testimony on removing barriers to distributed generation and other advanced technologies in electricity generation and transmission to the Senate Committee on Energy and Natural Resources. NEM urged adoption of fair and uniform business practices for interconnection, reasonable regulation of emissions, balanced planning and distributed generation valuation, fair tariffs for regulated services, and the ability to sell excess power.. NEM also recommended the expansion of existing energy and environmental tax credits to include qualified restructuring investments such as advanced metering, computer system upgrades, and distributed generation and the provision of performance based regulatory incentives for infrastructure upgrades, congestion management, maintenance and streamlined interconnection procedures. The full text of NEM's Testimony is available on the NEM Website.

State Issues

New York

 Unbundling Proceeding

NEM filed comments in the unbundling proceeding arguing that the unbundled embedded cost studies to be performed must be sufficiently detailed to transparently quantify each function, product, service, information or technology currently being provided by the utility such that the costs are capable of being traced and verified as contestable by the parties. NEM urged that an independent third party should do the cost study analysis. NEM also urged the Commission to examine the approach to the unbundled embedded cost studies for gas utilities adopted by the Michigan Commission. The full text of NEM's Comments is available on the NEM Website.

Staff filed comments arguing that: 1) the utilities should file embedded cost of service studies by December 31, 2001, and the parties should agree to schedule discovery meetings in December as the studies are filed; 2) the most important rule for the conduct of the utility cost of service studies is that the level of detail and explanation allows other parties to be able to argue from those studies that a service is competitive and should be priced at a certain level; and 3) an alternative cost study method to consider would functionalize the costs related to competitive services such as meter service, meter data service, supply, and billing, into individual functional buckets and the delivery costs, transmission and distribution, as a single functional bucket. The functionalized competitive service costs would then be classified and allocated to service classes or other reasonable groupings, and the delivery function costs would not be further classified or allocated. The full text of Staff's Comments is available on the NEM Website.

The utilities filed comments urging that the following "guiding principles" be adopted for performing the studies: 1) each utility will perform the cost of service study functionalizing costs from the utility's books and records kept in accordance with the uniform system of accounts; 2) the studies will be conducted assuming that the revenues for the test period are based on currently effective rates; 3) each utility will have discretion to perform the study using its own approach and will explain and support its assumptions and methods with appropriate documentation; 4) the studies shall be prepared using a recent historic period, or a forecast test period, or a combination of the two methods; and 5) no change to existing service classes will be made. The utilities also argued that the studies should not be performed until all of the policy issues identified by the Commission are decided and that increased time was needed to perform the studies. The full text of the Utilities' Guiding Principles, ConEd's Comments, NYSEG's Comments, Keyspan's Comments, NIMO's Comments, NFG's Comments and RG&E's Comments are available on the NEM Website.

 NYPSC Issued Order on Pipeline Capacity

The Commission ordered the continuation of the requirement that marketers serving firm loads have firm primary delivery point capacity for November 2001 through March 2002. The Commission approved Con Edison's plan to purchase bundled city-gate deliveries to meet overall system requirements and to release capacity to marketers to meet their peak month, average day requirements, at its weighted average cost of capacity (WACOC). Marketers that do not participate in ConEd's plan will continue to be required to demonstrate to the utility that they hold firm, primary point capacity. The Commission also approved KeySpan's plan to release to marketers an amount of capacity equal to approximately 80% of their November demands at its WACOC. Marketers will be allowed to use non-primary point capacity to meet the remaining 20%. KeySpan will offer marketers a bundled product to meet the remainder of their requirements in subsequent months with the capacity component priced at its WACOC. Marketers that do not participate will continue to be required to demonstrate to the utility that they hold firm, primary point capacity. The full text of the Order is available on the NEM Website.

New Jersey

 Interconnection Standards Meeting

Staff will convene a meeting on August 8, 2001, at 10AM at the Board's offices to begin discussions on uniform interconnection standards for units from 10-100Kw.


 Reply Comments on Gas Supplier Rules

NEM and other marketers have submitted reply comments on the proposed gas supplier rules arguing that: 1) the rules for telephonic enrollment of gas customers should not require taping of the entire conversation, in conformance with the rules for electric customers; 2) suppliers must be able to offer consolidated billing; and 3) the extensive increased reporting requirements sought by the Consumer Counsel should not be implemented. The full text of NEM's Comments is available on the NEM Website.


 Consumers' Motion on Gas Unbundling Study

Consumers filed a motion asking the Commission to clarify its Order on unbundled cost of service studies. Consumers questions whether the Order requires it to offer specific services on an unbundled basis or whether it simply must provide additional information for an examination of whether unbundling is appropriate. Consumers also requested that a separate proceeding be instituted for consideration of the unbundling study instead of its current rate case. The full text of Consumers' Motion is available on the NEM Website.


 Commonwealth Edison Delivery Rate Proceeding

NEM has intervened in the ComEd delivery rate proceeding and will be filing testimony. NEM members interested in participating should contact headquarters.

 Nicor Seeks Delay in Implementation of Customer Select Program

Nicor requested a delay in the implementation of the customer select program from August 1, 2001. Nicor proposed that all supplier charges and the billing fee be eliminated as of August 1, 2001 but that all other aspects of customer select be operational by March 2002. Nicor also proposed that single billing be implemented by September 2002. The full text of Nicor's Motion is available on the NEM Website.


 Competitive Market Initiatives Proceeding

DTE has requested comments on access to customer information as well as legal issues associated with use of electronic signatures. Initial comments are due August 10, 2001, and reply comments are due August 17, 2001.