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December 6, 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

Energy Business Watch is hosting its final FERC 101/102 seminar of the year in Houston on December 10-12, 2002. The regular rate for the 2 1/2 day event is $1495. However, Energy Business Watch is offering NEM members a rate of $895. The full text of the FERC 101/102 Seminar Brochure is hotlinked here for your convenience.

NEM Member Opportunity

In “Energy Services Outsourcing: Opportunities and Challenges,” two seasoned energy industry professionals take an in-depth look at energy services outsourcing (ESO), a source of new profits for utility and energy companies. The book highlights the best markets to target for ESO, examines the expertise and resources most valued, and discusses the role for regulation. It also points out how to avoid the potential pitfalls of being an ESO provider. The book has just been released by Public Utilities Reports Inc. and is available for $119 (plus shipping and handling). To order, call 1-800-368-5001, e-mail, or visit

FERC holds Technical Conference on CRRs in the SMD NOPR

On December 3, 2002, FERC held a technical conference to discuss specific issues related to the transition to congestion revenue rights (CRRs) proposed in the SMD NOPR. The first conference panel discussed various transition processes that different ISOs and RTOs used or will use to adopt a congestion management system with financial rights. Subsequent panels discussed whether to require a CRR auction; how to allocate CRRs so that they are commensurate with customers' existing rights to the transmission system; how competing LSEs can acquire CRRs for new or existing load; if CRRs are auctioned, how to ensure that auction revenues are returned to load; and which matters, if any, should be allowed regional variation. A NEM Summary of the conference is hotlinked for your reference.

Massachusetts Electronic Business Transaction (MAEBT) Working Group Report on Internet Transmission Protocols

On November 27, 2002, the electric distribution companies submitted the Massachusetts Electronic Business Transaction (MAEBT) Working Group Report on Internet Transmission Protocols. For security purposes, the report recommended Secure Socket Layers (SSL) or Pretty Good Privacy (PGP, version 7.1 or later). The preferred recommendation for data transport was HTTP/S. On the issue of standardization and inter-operability, the report recommended the implementation of the Electronic Data Interchange-Internet Integration Applicability Statement 2 (EDIINT AS2). The report did not recommend the North American Energy Service Board/Electronic Delivery Mechanism (NAESB/EDM) solution because it is a much more limited solution. Additionally, there is only one vendor supporting NAESB/EDM, unlike the EDIINT AS2 solution, which is offered by several vendors.

Certain marketers voted against the final recommendation because marketers have already invested considerable resources to develop NAESB/GISB standards. They argued that having to support the new UCCnet standard of the EDIINT AS2 will increase their operating costs.

The full text of the Report is available on the NEM Website.

Consumers Gas Rate Proceeding

In conjunction with Consumers gas rate proceeding, the Commission has addressed NEM's recommendation of embedded cost-based unbundling of competitive services. The Commission declined to require further unbundling of services such as metering, billing, balancing, storage, backup, peaking, and turn-on and turn-off services at this time. The Commission argued that, "it makes little sense to establish a rate for a service before the details of the service are known. To do so is to inform potential alternative suppliers of contested services of the price to beat before they design the services to be offered to customers." The full text of the Order is available on the NEM Website.

Consumers Residential Electric Unbundling Petition

The Commission issued an Order approving Consumers application to unbundle its residential electric rates. By the terms of Consumers' proposal, it will include the percentages represented by the unbundled components on residential customer bills, rather than the detailed unbundled charges. The Commission found that Consumers' proposal was consistent with the terms of the state restructuring law. The full text of the Order is available on the NEM Website.

HB 6522 Introduced on Stranded Cost Computations

HB 6522 has been introduced and referred to the Committee on Energy and Technology. The bill would eliminate the provision in the electric restructuring law providing for true-ups of over- or under-collections of net stranded costs. The full text of HB 6522 is available on the NEM Website.

New Jersey
JCP&L Files RFP for Basic Generation Service Green Energy Program

JCP&L has filed a RFP for a Basic Generation Service (BGS) Green Energy Program. JCP&L is seeking bids to provide green power for ten 20MW tranches of residential BGS customers from August 1, 2003, to May 31, 2004. The price paid to the winning bidders will be determined in the statewide BGS auction. The full text of JCP&L's BGS Green Energy Program RFP is available on the NEM Website.

Board Adopts Process for Utility Default or Credit Impairment As It Affects the BGS Suppliers

The Board adopted a process for dealing with electric distribution utility (EDC) default or credit impairment as it affects the BGS suppliers. If an EDC is a prospect for a potential downgrading to a rating below investment grade, the EDC will have 3 days to file with the Board a plan to mitigate or remove the threat of such downgrade. The EDC filing must contain an assessment of the EDC's present and future sources of liquidity necessary to assure continued payments for the BGS supply for its customers. The affected suppliers may also file their position with the Board. The Board will issue an Order, which will include assurances to the suppliers of BGS to the effected EDC that their payments will continue in a timely manner. The adopted process will be included in the BGS Supplier Master Agreement. The Board approved final versions of the BGS-FP and BGS-HEP Supplier Master Agreements, with the new creditworthiness procedure. The documents are available at:

Additionally, the Board accepted the EDCs' proposed form of financial guarantee from the BGS bidders or any such guarantees approved through the revised policy on alternative forms of guarantee announced by the EDCs on November 7, 2002.

The full text of the Decision and Order is available on the NEM website.

New York
NEM Submits Initial Briefs in ConEd and NYSEG Unbundling Proceedings

NEM submitted Initial Briefs in the ConEd and NYSEG unbundling proceedings. NEM argued that the Commission should reject ConEd and NYSEG's studies and proposed unbundled rates since they did not comply with Commission Orders requiring the filing of an embedded cost study. Rather, they filed what amounted to an avoided cost study. The Commission has ordered that electric customer choice be provided for the following services: supply, meter ownership, meter service, meter data service and billing. NEM urged that ConEd and NYSEG must be required to fully unbundle the embedded costs associated with those functions, including an appropriate allocation of indirect costs and overhead in proportion to the revenue requirements not associated with delivery services.

NEM also argued that the energy companies' proposed stranded cost recovery mechanisms do not conform with Commission directives requiring a two-tier recovery mechanism, whereby competitive service costs are not applied to migrating customers. The utilities must be required to implement a transition surcharge in conformance with the Commission Orders that allows customers that migrate to avoid embedded costs of contestable services.

In its Panel Testimony, Staff proposed consideration of two methods for functionalizing retailing costs, a utility retailer model (URM) and a generalized allocation method (GAM). NEM recommended that the Commission reject Staff's URM as it produces artificially low costs associated with contestable services, as admitted by Staff. NEM urged that Staff's GAM also yields artificially low rates. Additionally, NEM urged rejection of ConEd's minimum delivery bill proposal.

The full text of NEM's Initial Briefs in the ConEd and NYSEG unbundling proceedings are available on the NEM Website.

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