December 6, 2001

NEM filed Reply Briefs in the Peoples/North Shore Gas small volume gas transportation proceedings arguing that the proposed $2000 application charge, monthly aggregation fee of $200 per pool and $1.25 per customer, and $10 customer pool activation charge are excessive and unnecessary. NEM argued that to the extent Peoples incurs costs associated with the transition to a competitive marketplace they should be recovered, if at all, by a competitively-neutral transition charge on the remaining monopoly function(s). NEM also urged institution of delivery tolerances and imbalance trading to provide suppliers a source of flexibility and a means to minimize the costs to deliver energy to Illinois consumers.
Staff supported the following recommendations in its Briefs: 1) suppliers should be able to offer single billing through account agency, and the utilities should implement a single billing tariff as soon as practicable; 2) the proposed minimum stay requirement should only be imposed when enrollment limits are reached; 3) the daily delivery tolerance should be increased from plus-or-minus 3% of required daily delivery quantity (RDDQ) to plus-or-minus 10% of RDDQ, and on critical days should be eliminated; 4) the monthly delivery tolerance should be increased from plus-or-minus 1% of required monthly delivery quantity (RMDQ) to plus-or-minus 2% of RMDQ; 5) the proposed SVT supplier charges should be approved; and 6) suppliers should be permitted to sign up customers on their websites and over the telephone, subject to Letter of Agency requirements, when applicable.
The Citizens Utility Board and Attorney General (GCI) argued in their Brief that prohibiting single billing would benefit the utility to the detriment of consumers and competition. GCI, recognizing NEM's argument that enrollment limits hamper marketers ability to achieve economies of scale, urged the Commission to find a way to open the market to all customers while protecting non-switching customers from stranded costs.
Peoples/North Shore Gas argue in their reply briefs that supplier single billing should not be permitted, the proposed enrollment limits are reasonable, the proposed imbalance and cash-out charges create appropriate incentives for supply management, and the proposed supplier charges are cost-based and reasonable.
The full texts of the NEM Reply Brief-Peoples, NEM Reply Brief-North Shore Gas, Staff Brief-Peoples, Staff Brief-North Shore Gas, GCI Reply Brief, Peoples' Reply Brief, and North Shore Gas' Reply Brief are available on the NEM Website.

NEM filed a Motion for Clarification of the Commission's Order requiring filing of embedded cost studies and rate filings. NEM requested clarification of the intended use of forward looking cost studies in relation to the embedded cost studies and rate filings and urged suspension of further studies until the embedded cost-based rates have been in effect for at least a year. NEM urged that consumers must be given a chance to see and react to embedded cost-based price signals and that competitive service providers must be given an opportunity to compete against embedded cost-based unbundled rates. NEM argued that the long run incremental cost approach adopted for the telecommunications industry was not applicable because it was intended to price network elements not available in the competitive marketplace. In comparison, this case involves setting price signals for consumers to purchase competitive products and services. NEM also argued that unbundled rates based on embedded costs will allow utilities to quantify and, if properly mitigated, recover stranded costs within a reasonable time frame. The full text of NEM's Motion for Clarification is available on the NEM Website.

The Commission approved the proposed settlement of the NIMO-National Grid merger. The settlement provides for delivery rate reductions, institutes a 2 mill credit for demand metered and residential customers and a 4 mill credit for non-demand metered customers, and extends the gas delivery service rate freeze through December 31, 2004. The settlement also: 1) institutes a distributed generation pilot program; 2) replaces Rule 12 with the rules recently established in the standby rate proceeding; 3) retains Rule 44, allowing NIMO to recover non-commodity lost revenues if a customer changes voltage levels; and 4) modifies Rule 52, that imposes exit fees on individual customers leaving the NIMO system, to allow an exemption for customers receiving service from a third-party generator if the generating capacity is installed after the effective date of the settlement, is located on the customer's property or is immediately adjacent, and is used to serve that single customer. The full text of the Order is available on the NEM Website.

The Commission ordered the institution of an investigation into the PJM installed capacity market. This investigation was prompted by a Report issued by PJM finding that an unnamed entity engaged in economic withholding during the period of January 1 through April 30, 2001. The PJM Report also concludes that subsequent changes in PJM rules have corrected the market design flaws that allowed this exercise of market power. The Commission noted that to the extent there was an exercise of undue market power in the PJM ICAP market, there was probably a corresponding effect for the PJM retail market. The Commission is seeking comments on the PJM Report, suggested remedies for the reported conduct, and whether changes to the competitive safeguard regulations are warranted. Comments are due January 15, 2002. The full texts of the Order Initiating Investigation and the PJM Report are available on the NEM Website.

NFG has filed a revised gas transportation operating procedures manual to incorporate: 1) the implementation of NFG’s new internet-based transportation scheduling system to be used for placing nominations and for NFG to inform suppliers of changes to delivered supplies and/or customer demand; 2) rate ready and dual billing options; 3) the requirement that market pool operators serving monthly metered transportation customers utilize intermediate firm capacity year round except where customers are served with third party deliveries directly attached to NFG's system; and 4) a "Customer Consent to a Change of NGS Notification" form letter. The full text of the NFG Revised Gas Transportation Operating Procedures Manual and NFG Revised Gas Transportation Operating Procedures Manual(Redlined) are available on the NEM Website.