Search the Site:
Contact NEM

December 14, 2001

NEM Winter Meeting

All Executive Committee Members are encouraged to attend NEM's Winter Meeting to be held in Houston, Texas on January 17 and 18, 2001. Chris Bernard of Entergy-Koch and Tami Pallas of CMS MS&T have generously offered to sponsor the winter meeting that will be held at Entergy's headquarters at 20 Greenway Plaza Room 1. A firm headcount is needed ASAP.

The Executive Committee will be prioritizing NEM advocacy goals, issues, states, utilities and resource allocations for 2002. Wholesale policy issues to be discussed will include all of the FERC's recent rulemakings on RTO's, affiliate rules, market power, economic witholding, the latest proposals for federal legislation and the NISB/NERC/Duke Energy Proposals for wholesale standards. Retail Issues will include the proper rate structure for POLR services and the complete unbundling of utility rates based on fully allocated embedded costs for all competitive products, services information and technology. Technology Issues will include the latest standards for EDI/XML,standby rates for distributed generation services and the barriers currently being proposed by utilities that could hamper competition for energy services, information and technology.

The agenda is hotlinked here for your convenience. A quick registration form is hotlinked here for your convenience. A block of rooms has been reserved at the Renaissance Hotel located at 6 Greenway Plaza East in Houston. Be sure to request the special NEM rate of $119 per night. Contact Jennifer Webster at 281-230-1563 with any problems.

NEM Annual Membership Meeting and National Restructuring Conference Has Been Rescheduled for June 20 and 21, 2001

A number of very prominent Senators including the Speaker have called to express regrets with our dates as the Congress will recess for Easter both the week of and week after Easter which will include our meeting date of April 2 and 3, 2001. After much consultation, NEM has reserved June 20 and 21, 2002 at the Marriott Metro Center for our Spring event. Chairs of several important state PUC's and a number of Senators and Congressmen has penciled in the date.

Please make sure you reserve a room at the Marriott Metro Center in Washington, DC, for NEM's June 20 and 21, 2002 (please note the change in dates), Annual Membership Meeting and National Restructuring Conference. A quick registration form is hotlinked here for your convenience. Please contact NEM headquarters if you are interested in speaking, sponsorship or table-top space at the conference, as space will be limited.

H.R.3406 - Electricity Supply and Transmission Act

Congressman Barton has introduced H.R. 3406 - the Electricity Supply and Transmission Act. The bill provides that: 1) uniform interconnection standards for interconnection with distribution and transmission facilities should be established; 2) FERC shall issue a rule establishing procedures to govern the interconnection of new generating facilities to transmission systems owned/operated by transmitting utilities or RTOs, or the increase in capacity of an existing interconnected generating facility; 3) minimum federal standards for net metering programs should be established; 4) FERC shall develop and implement price-responsive demand programs designed to reduce the nation's peak annual electricity demand by 5 percent by 2004; 5) FERC is authorized to issue rules requiring open access transmission service by public utilities on a not unduly discriminatory or preferential basis, such as Order 888 and to provide for wholesale stranded cost recovery; 6) FERC is authorized to issue rules requiring access to transmission service by transmitting utilities that are not public utilities to provide transmission services at rates that are comparable to those each transmitting utility charges itself that are not unduly discriminatory or preferential, and on terms and conditions that are comparable to those required by public utilities; 7) FERC has authority to order transmission of electric energy to retail electric consumers served by local distribution facilities subject to open access, consistent with State law; 8) FERC is authorized and directed to order each transmitting utility to form or participate in an operational RTO within 12 months, and all transmitting utilities must have an RTO application on file at FERC within 3 months. If a transmitting utility fails to file, FERC, in consultation with the States, shall order the non-filer into an RTO of FERC's choosing within 9 months of the missed deadline; 9) FERC is authorized and directed to establish and enforce uniform market rules, including "seams" regulations; 10) FERC shall certify an electric reliability organization to develop enforceable reliability standards, and FERC shall approve reliability standards and enforce compliance; 11) FERC shall issue a rulemaking to establish incentive rate policies and standards for expansion of transmission networks; 12) FERC has the authority to issue permits to site or modify transmission facilities in instances where States have failed to act; 13) slamming and cramming are illegal; 14) FTC shall issue rules for obtaining the consent of a retail electric consumer and for assessing penalties for rule violations; 15) FTC shall issue rules on the disclosure of consumer information in connection with the sale or delivery of electric energy to retail electric consumers; 16) retail electric consumers are authorized to designate entities to aggregate purchases of electric energy on their behalf if the consumers are served by local distribution companies whose local distribution facilities are subject to open access; 17) FERC's investigative authority is expanded to include the power to investigate any person, electric utility, or transmitting utility for the purpose of obtaining information about the sale of electric energy at wholesale in interstate commerce and the transmission of electric energy in interstate commerce; and 18) FERC has authority to order refunds from sellers of electricity and transmission that are normally unregulated whenever they engage in sales of wholesale electricity or transmission to regulated utilities. The full texts of H.R. 3406 and a Section-by-Section Summary are available on the NEM Website.

Appeals Court Issues Opinion on Order 2000

The U.S. Court of Appeals for the D.C. Circuit issued its opinion on challenges to FERC's Order 2000. The Court ruled that the requirements of Order 2000 are voluntary and that the Utilities failed to demonstrate that they were harmed by Order 2000. The Court therefore dismissed the Utilities' petition. The Court also dismissed petitions challenging FERC's failure to address the costs and benefits of RTO formation and FERC's refusal to forbid passive ownership of an RTO by market participants. The full text of the Order 2000 Opinion is available on the NEM Website.

Commission to Reexamine Electric Restructuring

The Commission has discussed a reexamination of electric restructuring. NEM has filed in opposition arguing that such an inquiry will impose large risks on unregulated entities, have a chilling effect on competitive entry, and unfairly changes the rules subsequent to market participants investing time and resources into the Arizona market. The inquiry was announced subsequent to the filing of Arizona Public Service (APS) in which it requested a modification to the rule requiring it to acquire all of its customers' standard offer generation requirements from the competitive market, with at least 50% coming from a competitive bidding process. APS proposes instead that the Commission approve a long-term purchase power agreement with its affiliate to supply the power and that its affiliate act as the wholesale provider of last resort. The full texts of NEM's letter and APS' Filing is available on the NEM Website.

Many thanks to David Crabtree of TECO Power Services for his assistance with this matter.

Testimony Sought in Gas Unbundling Proceeding

The DPUC has requested written testimony on the issues of capacity disposition and the cost responsibility of that capacity. Specific issues to be addressed include mandatory capacity assignments, slice-of-system assignments, exit fees, transition surcharges, and shifted and stranded costs. Testimony is due January 15, 2002. The full text of the Request for Testimony is available on the NEM Website.

Briefs Filed in ComEd Delivery Services Proceeding

NEM, Staff and ComEd filed Briefs in the delivery services proceeding. NEM argued in its Brief that: 1) the proper price to beat for competitive services is the utilities' embedded costs, and institution of rates based on marginal costs will significantly understate the true prices that consumers actually pay for competitive services provided by utilities; 2) ComEd's proposed special demand ratchet for standby customers should be rejected; 3) consumers should be given shopping credits on their utility bills equal to ComEd's fully embedded costs of metering and information-related services, billing and customer care services and related technologies and should be permitted to use the credits to shop for a full panoply of energy services, products and technologies; and 4) customers should be able to enroll telephonically and through the Internet.

Staff argued in its Brief that: 1) ComEd's proposals to use marginal costs for design of delivery service rates and to set unbundled service credits are inappropriate and should be rejected in favor of embedded costs; 2) ComEd's proposal to set the Single Bill Option (SBO) credit on the basis of avoided costs unfairly benefits the company at the expense of competitors and consumers and the avoided cost approach for unbundled metering suffers from the same deficiencies; 4) a proper SBO credit should be based on ComEd's calculated $0.60 embedded cost based credit less a $0.27 offset for transactions between ComEd and suppliers over VANs or a $0.03 offset for transactions over the Internet; and 5) customers should be able to switch via Internet.

ComEd argued in its Brief that: 1) the Commission should use a marginal cost based approach to ratemaking; 2) the proposed special demand ratchet for standby customers should be adopted so that these customers cannot evade delivery services facilities charges; 3) the proposed single bill option credit of $0.03 is properly calculated based on the net costs ComEd will avoid when RESs elect the option and not based on an embedded cost approach; and 4) the proposed standard metering charges are properly calculated based on net costs ComEd will avoid when customers elect unbundled metering service.

The full texts of NEM's Brief, Staff's Brief and ComEd's Brief are available on the NEM Website.

Small Volume Gas Transportation Program

The Board announced that customer choice would soon be made available to small volume gas customers. NEM has submitted a filing with the Board in support and has urged it to implement the recommendations in NEM's "National Guidelines to Competitively Restructure the Market for Natural Gas and Related Products and Services," and "National Energy Technology Policy." The full text of NEM's Letter is available on the NEM Website.

Many thanks to George Phillips of MidAmerican Energy and Wendy Ito of Nicor Energy for their assistance with this matter.

Comments Sought in Competitive Markets Proceeding

The DTE has requested comments on the following issues raised in Phase II of the Competitive Markets proceeding: 1) whether electric distribution companies (EDCs) should act as electricity brokers for their default service customers; 2) inclusion of customer account numbers on Customer Information Lists; 3) requiring the first four characters of a customer's account name for enrollment of a customer; 4) expansion of Customer Information Lists to include information about customer service delivery points and/or about customers who receive generation service from competitive suppliers; and 5) the EDCs use of the Internet for the transmission of customer data between themselves and competitive suppliers. Initial comments are due January 4, 2002, and reply comments are due January 14, 2002. The issue of internet-based customer authorizations will be discussed on January 16, 2002, at 10AM at DTE offices. The full text of the Notice Requesting Comments is available on the NEM Website.

New Jersey
BPU Issues Order on Basic Generation Service

The Board approved the Utilities proposal for the provision of Basic Generation Service (BGS) in year 4 of the transition period to run from August 1, 2002, through July 31, 2003. The proposal entails use of a simultaneous, multi-round descending clock auction for the procurement of supply to meet the full electricity requirements (energy, capacity, ancillary services, transmission, etc.) of retail customers that have not chosen a Third Party Supplier. The BGS loads of all the electric distribution utilities, perhaps as large as 18,000 MW, are to be bid in the same auction. The full texts of the BGS Order, Attachment A (Tentative Approvals and Decision Process), Attachment B (Post Auction Assessment for the NJ BGS Auction), and Attachment C (Modifications to the Auction Rules) are available on the NEM Website.

Draft EDI Implementation Guides

A revised set of Draft EDI Implementation Guides for Pennsylvania, New Jersey, Delaware and Maryland has been circulated. Comments are due on the revised documents by December 19, 2001, in order to have finalized documents issued by the year's end. The full texts of the Draft EDI Implementation Guides are available on the NEM Website.

New York
Motions Filed on Commission's Unbundling Order

In addition to NEM's Motion for Clarification of the Commission's recent Order requiring the utilities to file streamlined embedded cost of service studies and embedded cost-based rates, the Utilities and Multiple Intervenors (MI) have also filed Motions challenging the Order. The Utilities have requested a stay of the requirement that they file tariff amendments containing unbundled rates based on streamlined embedded cost of service studies. In the alternative, the Utilities argue they should have been provided with a mechanism to recover transition costs simultaneous with the filing of embedded cost based rates. MI challenges the Order because it only required the electric utilities to file "streamlined" embedded cost of service studies that do not classify or allocate costs related to the provision of transmission and distribution service.

NEM filed a response to the filings urging the Commission to implement embedded cost-based rates as soon as possible, quantify the levels of migration and monitor utility mitigation efforts prior to developing just and reasonable methods to ensure utilities receive appropriate revenue requirements based on the embedded costs associated with the actual services provided to migrating customers versus full sales customers versus POLR customers. NEM also urged the Commission to Order fully allocated embedded cost-based rates be issued no later than June 2002.

The full texts of NEM's Response, the Utilities' Motion and MI's Petition are available on the NEM Website.

PSC Requests Comments on Changes to Uniform Business Rules

The PSC is considering changes to the New York UBP to reflect recommendations arising from the national UBP effort. The PSC is considering replacement of the provisions identified in the Definitions, Customer Information, New Delivery Customer Requirements, Switching Requirements, Slamming Prevention Process, Discontinuance of Service, and Dispute Resolution Process sections of the current New York UBP with provisions entitled Glossary, Customer Information, Customer Agreement and Switching, Customer Inquiries, Disputes Between Distribution Utilities, ESCO, Direct Customers, Default Providers, and Registration Agents, and ESCO Eligibility. Comments are due February 4, 2002. The full text of the Notice Requesting Comments with Proposed Provisions is available on the NEM Website.

Keyspan Settlement Agreement

Staff has circulated a settlement agreement in the Keyspan proceeding. Due to confidentiality concerns, NEM members interested in reviewing the document should contact headquarters.