August 31, 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. A block of rooms has been reserved at the rate of $179 per night. In order to receive the special rate, reservations must be received by September 14, 2001, at 312-726-5500. A draft agenda for the meeting is hotlinked here for your convenience. Many thanks to Exelon, Nicor, Peoples, InBusiness Teleservices 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 Marriott Metro Center in Washington, DC.

 NEM Member Opportunity

NEM members interested in submitting articles for publication in Hart's and PG&M should contact headquarters ASAP.

Federal Issues

 Smart Metering Protection Act of 2001

The Smart Metering Protection Act of 2001 (S.1212) was referred to the Senate Finance Committee. The bill provides a tax credit in an amount equal to the lesser of 50 percent of the cost of any qualified energy management device placed in service by the taxpayer during the taxable year or $30. The bill also provides a tax credit in an amount equal to the lesser of 50 percent of the adjusted basis of a qualified retrofitted meter originally placed in service during the taxable year or $30. Qualified energy management devices include software, equipment and related devices that allow consumers, suppliers, and service providers to manage the purchase, sale and use of electricity and natural gas in response to price and usage signals. The full text of S.1212 is available on the NEM Website.


 Alliance RTO Submits Proposed Business Plan

The Alliance RTO submitted a proposed business plan as ordered by the Commission. The business plan is intended to ensure independent decision-making with respect to market design and other matters that have not yet been approved by the Commission. The filing provides that the majority of the Alliance Companies have entered into a Letter of Intent with National Grid to allow National Grid to invest in and function as managing member of the Alliance Transco. Commonwealth Edison has offered to divest its transmission facilities to the Alliance Transco. The full text of the Alliance Business Plan is available on the NEM Website.

State Issues

New York

 POLR Proceeding Briefs

Staff submitted a brief in the POLR proceeding arguing that: 1) a three-year horizon is reasonable for achieving workably competitive wholesale power markets; 2) the Commission should consider testing the viability of the various POLR models in pilot programs with small commercial and residential customers upstate with the POLR function voluntarily contracted out by the utilities; 3) separate tracks of the POLR proceeding should be established to deal with the determination of when pre-conditions are met for utility exit of the commodity function and uniform consumer protections; and 4) utilities, on a prospective basis, should not generally enter into any supply contracts that extend beyond two to three years. The Consumer Protection Board argued that ESCOs should provide the consumer protections required of utilities under the Public Service Law subject to changes to prevent abuse of the ESCOs obligation to serve by consumers gaming the system. The full text of Staff's Brief and the Consumer Protection Board's Brief are available on the NEM Website.

 Order Supports Marketers on NYSEG Retail Access Credit

The Commission agreed with NEM's arguments and again rejected NYSEG's request for deferral treatment, a surcharge and a minimum bill requirement in connection with its market-based retail access credit. The Commission rejected NYSEG's argument that the difference between the market and fixed RACs is an uncontrollable cost finding it was a change to an existing regulatory program that could have been reasonably anticipated. The Commission rejected NYSEG's arguments that it should recover "incremental" costs associated with the 2 and 4 mill credits because if said credits are not subtracted from NYSEG's bundled rate NYSEG will be receiving a double recovery. The Commission denied NYSEG's request for a minimum bill provision finding it would be anti-competitive and deprive switching customers the full amount of the retail access credit. The full text of the Order is available on the NEM Website.

New Jersey

 CAS Master Service Agreement

Staff and other parties have developed a proposed CAS Master Service Agreement for the Board's September 12, 2001, agenda. Any comments on the proposed agreement are due September 5, 2001. The full text of the Proposed CAS Master Service Agreement is available on the NEM Website.


 NEM Comments on Mid-Sized LDC Choice Programs

NEM filed additional comments on mid-sized LDC gas choice programs arguing that: 1) matters associated with enforcing a supplier's agreements with its customers should be governed by pre-existing rules and laws pertaining to commercial transactions; 2) there should be no "minimum stay" requirements; 3) the SOLR function should be competitively bid in the marketplace, and the LDCs' role should be recast as an obligation to deliver. However, if the utility does serve as the SOLR, the program should be a market-based program that exposes the SOLR provider to the risks of the market and exposes consumers to proper pricing signals; 4) suppliers should not be forced to purchase firm capacity unless and until a market exists for such capacity at market-based prices; and 5) marketers should have the option to bill customers. The full text of NEM's Comments is available on the NEM Website.


 Competitive Bidding Rulemaking

The electric distribution utilities are required to offer customers in their territories an option to purchase competitive retail electric service after their market development periods end with the price set through a competitive bidding process. The Commission is required to adopt rules on the conduct of the competitive bidding process and has directed Staff to begin discussions with interested parties prior to proposing the rules for Commission consideration. The full text of the Order is available on the NEM Website.


 California Commission Proposes Retroactive Abrogation of Contracts and Suspension of Direct Access

A revised proposed decision was issued by the California PUC to suspend direct access. The decision is on the September 6, 2001, agenda. The revised decision provides as follows: 1) the statute gives the Commission some discretion as to when the right to contract for direct access should be suspended but not whether it should be suspended; 2) direct access should be suspended effective July 1, 2001, applicable to SCE, PG&E and SDG&E; 3) written contracts for direct access signed before July 1, 2001 are exempt from the suspension for the initial term of the contracts; 4) suspending the right to contract for direct access will assist the Administration and the State Treasurer in proceeding with the bond transaction they are currently undertaking so that the bonds can be issued at investment grade; 5) suspension of direct access will provide DWR with a stable customer base from which to recover the cost of the power it has to purchase; 6) this is a time when large customers might be tempted to switch from utility bundled service to energy service providers in order to avoid some of the impact of higher rates and take advantage of lower spot market prices, and this is the wrong time to encourage such behavior; and 7) all ratepayers should contribute to the effort to pay down the unprecedented debt incurred by the State to help weather the energy crisis. Comments are due on the Proposed Decision on September 4, 2001. NEM issued a public statement in opposition and is working with others to remedy this decision. The full text of the Proposed Decision and NEM's Statement are available on the NEM Website.