ALJ Barnett issued a draft decision retroactively abrogating direct access contracts signed from July 1, 2001, through September 20, 2001. The decision also prohibits the extension and assignment of direct access contracts entered into prior to July 1st. NEM has prepared draft comments arguing that the retroactive abrogation violates the Contract Clause and Due Process Clause of the U.S. Constitution, that the PUC was not granted the statutory authority to engage in retroactive ratemaking, that suppliers and consumers lawfully entered into direct access agreements in reliance on then-existing law, and that assignment should be permitted. The due date for comments has been extended to February 14, 2002. The full texts of the Draft Decision and NEM's Draft Comments are available on the NEM Website. NEM members should forward their comments and suggestions on the Comments to headquarters ASAP.

NEM sent a submission to the IUB recommending principles for development and implementation of small volume gas transportation programs. These principles include: 1) not imposing enrollment restrictions; 2) not imposing minimum stay requirements; 3) permitting supplier consolidated billing; 4) prohibiting administrative charges, access fees, switching fees, aggregation and pooling charges that act as barriers to competition; 5) requiring reasonable delivery rules, conditions and tolerances; and 6)implementing consumer education programs. The full text of NEM's Submission is available on the NEM Website.

The DTE will convene a technical session on February 15, 2002, at 10AM to discuss ways to improve load response capabilities of consumers. Actions for consideration include initiatives aimed at increasing participation in the ISONE Load Response Program and increased use of advanced metering technology by customers and competitive suppliers. Parties interested in attending should reply to jeanne.voveris@state.ma.us by February 11, 2002.

Contrary to the comments filed by NEM, the BPU issued an Order on BGSS declining to make competitive BGSS available on a competitive basis at this time. The BPU directed Staff to form a Gas Policy Group to examine issues such as pricing and reliability that will effect the long-term structure of BGSS. The BPU also decided that interested competitive suppliers and utilities could pursue implementation of BGSS pilot programs subject to certain guidelines. These guidelines include use of a two year minimum term, inclusion of at least 25% of residential and small commercial customers in the pilot, supplier access to interstate capacity and storage, and uniform pricing for all customers within the same rate class categories and no subsidization. The full text of the Order and Guidelines is available on the NEM Website.

NEM filed comments on Issues 2, 3 and 4 in the Unbundling proceeding arguing that: 1) streamlined and then fully allocated embedded cost-based unbundled rates should be implemented as soon as possible; 2) consumers deserve just and reasonable unbundled rates based on the same embedded costs they currently pay in bundled rates for competitive services; 3) resources that would be used to develop long run incremental cost studies are better spent on developing embedded cost-based unbundled rates; 4)utility recovery of stranded costs should be premised on a showing that the costs are material, were productively managed and reasonably mitigated, the utility was not earning in excess of its earning cap, and identification of losses specifically attributable to the utility's obligation to provide POLR and bundled services. Lost revenues not associated with utility provision of POLR or bundled service should be added to distribution rates in a competitively neutral fashion and be computed on an after-the-fact basis. The full text of NEM's Comments is available on the NEM Website.

Staff filed comments arguing that competitive rates based on embedded cost studies should be implemented before LRIC studies are attempted (although still supporting its proposed total service long run incremental cost methodology). Staff argued that per unit net lost revenues should be computed by calculating the difference between short run avoided costs and the unbundled or backout rate. Staff said the calculation of net lost revenues should be made on an after the fact basis and be collected as a competitive surcharge applicable to all customers. Staff argued that initial recovery in a competitive service charge would provide ESCOs a larger margin for competition but eventually, as migration increases, a different method may be required. The full text of Staff's Comments is available on the NEM Website.

The Attorney General argued that utilities should not be allowed recovery of net revenue losses attributable to retail migration, but if it is permitted it should be on an after-the-fact basis.

Echoing NEM's arguments, Multiple Intervenors (MI) argued that only embedded cost studies should be used to establish unbundled rates and for calculating stranded costs. MI also argued that utilities are not guaranteed total recovery of stranded costs and that any recovery should be subject to utility promotion of competition and consistent with cost causation principles. The full text of MI's Comments is available on the NEM Website.

The first meeting in the ConEd Phase 5 proceeding will be held on February 13, 2002, at 10AM at the Commission's Penn Plaza offices. ConEd is expected to file a proposed plan by February 1, 2002, for discussion and questions at the meeting.

NEM submitted its continued concern that: 1)the long term fixed price option will not be reflective of market conditions and should be subject to Commission reopening and review; 2) NYSEG has reserved the right to discount the fixed commodity price for the second enrollment period; 3)NYSEG will be able to pass the commodity risk of serving variable rate option customers through the floating wires charge; and 4) NYSEG will be able to recover portions of the adders and incremental costs and net revenue shortfalls resulting from the unbundling proceeding as uncontrollable costs contrary to Commission precedent. The full text of NEM's Submission is available on the NEM Website.

NEM filed in support of NEM member, Advantage Energy, who requested Commission reconsideration of its prior Order on NYSEG's market-based backout credit. NEM and Advantage Energy requested that the Commission retroactively implement market-based backout charges from April 2001 to February 2001. This is meant to redress the fact that NYSEG did not properly load weight day ahead market prices and did not properly calculate the off-peak credit. The full text of NEM's submission is available on the NEM Website.

Many thanks to Kyle Storie of Advantage Energy for bringing this matter to the attention of NEM.