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December 13, 2002
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. Reservations must be received by December 16, 2002, in order to guarantee the discounted rate.

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 year’s 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 Member Opportunity

NEM members interested in submitting articles for publication in Harts Energy Markets magazine should contact headquarters ASAP. The deadline for submission is December 20, 2002.

NEM Member Opportunity

The Global Energy Management Institute (GEMI) will hold a conference on the "U.S. Energy Trading Crisis: Clearing, Credit and Confidence," on January 23, 2003. The conference will be held at the University of Houston. The full text of the GEMI Seminar Brochure is available on the NEM Website.

FASB Board Meeting

FASB will hold a meeting December 18, 2002, at 9AM to consider the following topics: 1) revenue recognition, 2) short-term convergence, 3) combinations of not-for-profit organizations, 4) consideration of potential agenda projects, 5) AcSEC document, and 6) amendment of Statement 133.

Washington and North Carolina Commissions File Comments Urging Withdrawal of SMD NOPR

Washington Utilities and Transportation Commission and North Carolina Utilities Commission, on behalf of over 200 officials and entities (including PUCs, AGs, local elected officials, consumer advocates, public utilities, municipalities unions and businesses), submitted Joint Comments urging withdrawal of the SMD NOPR.

The Joint Comments urge FERC to refrain from asserting jurisdiction over: (1) the transmission component of bundled retail sales; (2) power supply planning functions; and (3) demand-response functions.

Additionally, the Comments did not support the proposal to mandate the transfer of transmission operations to ITPs. The Comments also called for a return to voluntary regional transmission system discussions. Lastly, the Joint Commenters felt FERC's findings of undue discrimination were unjustifiable.

NEM filed Comments on the SMD NOPR that addressed the jurisdiction issues raised by the Joint Commenters. Specifically, NEM argued that the Commission made the requisite findings required by the Supreme Court for FERC to issue these proposed rules. The Commission set forth an extensive listing of examples of, "undue discrimination and impediments to competition that continue to exist in the electric industry" in the NOPR.

The full text of the Joint Comments is available on the NEM website. NEM has already been approached to form a coalition to respond to these comments with an equal number of signatures. Your participation will likely be requested.

NEM Summaries of Standard Market Design Comments

On July 31, 2002, FERC issued a Notice of Proposed Rulemaking (NOPR) on Remedying Undue Discrimination through Open Access Transmission Service and Standard Electric Market Design. The deadline for submission of Initial Comments was November 15, 2002. NEM has prepared a Summary of Initial Comments filed by various stakeholders for NEM member review. Copies can be obtained by contacting NEM headquarters at

ALJ Issues Proposed Findings on California Refund Liability

The ALJ in the California refund liability proceeding has issued proposed findings. The ALJ adopted the ISO's mitigated market clearing price methodology (MMCP). Pursuant to this methodology, for the refund period of October 2, 2000, through June 20, 2001, suppliers owe the ISO and PX a refund of $1.8 billion. However, the suppliers are owed approximately $3.1 billion. Accordingly, the net result is that suppliers are owed $1.2 billion after refunds. However, the ALJ noted that these figures are not final because they do not reflect final MMCPs, FERC interest, emission offsets, and other rulings. The full text of the ALJ's Proposed Findings is available on the NEM Website.

Standard Offer Service Phase II Meeting

Staff will convene the first meeting of the Phase II process to implement the Phase I wholesale bidding model settlement for standard offer service (SOS). A two-part meeting will be held December 17, 2002, at 11AM in the Commission's 16th floor hearing room. The first part of the meeting will be a general information session on procurement details. Discussions will include PJM's perspectives on serving SOS type services. The second part of the meeting will be a discussion of a general work plan for Phase II including what gets worked on first (e.g. auction vs. traditional bid models), what items could be worked on simultaneously by different technical groups, and whether some parties should be given long-term assignments to have proposed documents (such as contracts or template RFPs) for discussion by February.

Gas Roundtable Considers Issues of Payment Allocation, Utility Purchase of Receivables and Telephonic Enrollment

Another meeting of the Maryland gas roundtable was convened this week. Topics considered at the meeting included modifications to the current payment allocation order between utilities and suppliers, proposals for the utilities to purchase receivables when they render consolidated bills, and a recommendation to increase the cost-effectiveness of telephonic enrollment by permitting marketers the option of using third party verification instead of taping enrollment conversations. NEM will be preparing proposals on these topics for inclusion in the final report to be prepared by the gas roundtable. All proposals for inclusion in the report are due December 20, 2002. The next meeting of the gas roundtable will be held January 6, 2003, at 10AM at BGE's Spring Gardens facility.

New York
ConEd Submits Electric Phase 6 Proposal

ConEd has filed a proposed Phase 6 electric retail access program for the period from May 1, 2003, to April 30, 2004. The filing was required because the Commission has not yet approved unbundled rates for ConEd. ConEd proposes 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). ConEd also argues 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)." ConEd will convene a meeting to discuss the proposal in January 2003. The full text of ConEd's Phase 6 Proposal is available on the NEM Website.

Staff Proposal on Surcredit Rider for Customers of Competitive Natural Gas Providers

HB 9 subjected Competitive Retail Natural Gas Service (CRNGS) providers to assessments for the purpose of maintaining and administering PUCO and the Office of Consumers' Counsel. The assessment will be removed from base rates of natural gas companies by creating a surcredit rider applicable to those customers that do not purchase commodity sales service from their natural gas companies. Staff proposed a method for establishing the surcredit riders. The Commission believes Staff's proposal is desirable, however, it has requested comments on the Staff proposal by January 6, 2003. Additionally, natural gas companies with customer choice in their service areas must file by January 6, 2003, information needed to calculate the surcredit rider as proposed by Staff. The full text of the Order Requesting Comments is available from NEM headquarters. NEM members should forward their comments on the proposal to headquarters ASAP.

PUCO Denies FirstEnergy's Shopping Credit Application

PUCO denied an application filed by FirstEnergy to reduce the company's shopping credit incentives that NEM was instrumental in obtaining. PUCO, noting that significant customer switching has only recently been achieved for a number of customer classes, determined that the competitive market has not developed to a point where FirstEnergy should deviate from the shopping credit incentive levels established in the transition plans. PUCO agreed with FirstEnergy that shopping credits should be monitored and adjusted to maintain a balance between encouraging shopping and limiting the regulatory transition charges (RTC) recovery period. Therefore, PUCO will require that FirstEnergy annually file its projection of how long the RTC would need to remain in effect in order to complete the recovery period. The full text of the Order is available from NEM headquarters.

Order on Competitive Metering

Noting that customer meter ownership is the next logical step in the development of competitive metering services, SCC directed Staff and the competitive metering work group to propose rules regarding financial ownership of meters by large C&I customers. Staff must file proposed rules by March 4, 2003. SCC granted Old Dominion Power a delay in the implementation of competitive metering services for all customer classes until the later of January 1, 2003, or the implementation of retail choice in its Virginia service territory, on or before January 1, 2004. SCC held that it was too early to develop rules for additional elements of competitive metering, beyond ownership for large customers. SCC directed the metering work group to continue to study the possibility of the utilities establishing voluntary and/or expanded time-of-use (TOU) rate programs for residential and small commercial customers. SCC held that it was premature to make a recommendation regarding the implementation of competitive metering for small customers. Additionally, SCC believes that Staff and the work group should continue to address the issue of voluntary TOU and demand side management pilot programs. The full text of the Order is available on the NEM Website.

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