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February 22, 2002
NEM Annual Membership Meeting and National Restructuring

A number of very prominent speakers and PUC Commissioners have agreed to speak at NEM's Annual Membership Meeting and National Restructuring Conference to be held June 20 and 21, 2002 at the Marriott Metro Center in Washington, DC. A quick registration form is hotlinked here for your convenience. An electronic brochure is also hotlinked here.

Please contact NEM headquarters if you are interested in sponsorship or table-top space at the conference, as space will be limited.

Conference Call on NEM's Meeting with Commissioner Brownell

In order to have an organized and effective meeting with Commission Brownell, those who plan to attend the meeting in person are requested to participate in a pre-meeting conference call on February 27, 2002, at 1PM. The dial-in number is 1-303-248-1820, and the passcode is 428358. To avoid confusion and extraneous issues being presented, all members who wish to participate in the meeting with Commissioner Brownell are requested to participate in this conference call pre-meeting agenda and presentation planning session. For those who can fly in early on the date of the meeting, we will plan a lunch to review issues before the meeting as well.

Wholesale Electric Standards Board Conference

At yesterday's wholesale electric standards board meeting, NERC reported the recent actions of its Board. The NERC Board passed resolutions providing that NERC should be the entity to devise reliability standards and that it would not pursue responsibility for the development of market practice standards. NERC proposed that it would be possible to coordinate the activities of a business practices organization with NERC activities but that there should not be a "one-stop shop." Accordingly, NERC proposed that there be two separate forums, a reliability forum and a business practices forum, and the forum would be selected by which area was predominantly related to the standard. NERC also proposed that, as necessary, it would be the spokes-entity for reliability in the NAESB process. The full text of NERC's Resolutions are available on the NEM Website.

Daschle-Bingaman "Energy Policy Act of 2002"

Senators Daschle and Bingaman introduced S.Amend.2917, the "Energy Policy Act of 2002." Provisions include: 1) standards for FERC to consider in determining whether market-based rates are just and reasonable such as whether: a seller and its affiliates adequately mitigated market power, if the sale occurred in a competitive market, if market mechanisms like power exchanges and bid auctions are functioning adequately, demand response mechanism effects, and the effect of reserve margin requirements. It is allows FERC, upon a finding that a market-based rate is unjust and unreasonable, to determine the just and reasonable rate and set it; 2) requiring FERC to establish generation interconnection standards and procedures; 3) requiring FERC to establish mandatory electric reliability standards systems; 4) requiring FERC to establish rules for an electronic information system that provides information on the availability and pricing of wholesale electric energy and transmission services. As part of this system, RTOs must provide information about available capacity and capacity constraints and market-making entities must provide information about the amount and sale price of sales of electric energy at wholesale; 5) repealing PUHCA; 6) an inter-agency task force, the “Electric Energy Market Competition Task Force," is to perform a study pertaining to competition in the wholesale and retail electric markets. The Comptroller General must also perform a study of federal and state government efforts to prevent anti-competitive behavior of public utility holding companies and to promote competition; 7) electric utilities must provide real-time pricing service to requesting customers; 8) distributed generation, combined heat and power, and district heating and cooling systems must be provided competitive access to the local distribution grid and competitive pricing of service. Electric utilities must use standard contracts for generation interconnection for facilities with a power production capacity of 250 kilowatts or less; 9) net metering for renewable energy and fuel cells must be made available to requesting consumers; 10) FTC rules shall require electric utilities to provide consumers with information on the nature of service offered, the energy price, a description of the other charges of service such as access charges, exit charges, back-up service charges, stranded cost recovery charges, and customer service charges; 11) FTC rules shall prohibit disclosure of electric consumer information by an electric utility unless it is for the purpose of changing the consumer's electric utility; and 12) FTC shall prohibit slamming and cramming of electric consumers. The full text of the Daschle-Bingaman Legislation is available on the NEM Website.

Feinstein Introduces Energy Trading Oversight Bill

Senator Feinstein introduced S.1951, on energy trading oversight. The bill gives FERC jurisdiction over derivatives transactions, persons making the transactions, and entities operating electronic forums to make the transactions. Derivative transactions are defined as, "transaction based on, or reflecting prices of or for, electric energy or natural gas," and include futures, options, forwards and swaps. Under the bill, derivative transactions do not include retail sales of electric energy and natural gas under exclusive state jurisdiction and do not include transactions under exclusive CFTC jurisdiction. The bill makes it "unlawful to make, demand, or receive rates and charges for or in connection with derivative transactions that are unjust, unreasonable, discriminatory, or preferential. The full text of S.1951 is available on the NEM Website. An Article with NEM's Position on the Feinstein Bill is hotlinked here.

Status Conference on Competition in BGE Service Territory

The Commission will hold a status conference on March 4, 2002, at 9:30AM to discuss the status of retail choice with respect to BGE's Schedule P customers for whom Standard Offer Service will no longer be available as of June 30, 2002. The Commission is interested in information about logistics of customer enrollment, if competitive offers are being made to these customers, and what will happen to customers that do not choose a new supplier before SOS expires. The full text of the Notice of Status Conference is available on the NEM Website.

Retail Energy Imbalance Proposal

At the second retail energy imbalance meeting, a supplier proposal was presented for a retail imbalance program. It was based on the program initially proposed by large industrial customers in the open access tariff cases. Under the plan, an individual supplier's imbalance would usually be settled at the utility's Top Incremental Cost ("TIC"). In some cases, imbalances would be settled as follows: 1) for undersupplies the supplier would pay 110% of the utility's TIC; and 2) for oversupplies the supplier would be paid 90% of the utility's TIC. These penalties, however, would only apply when the total AES (Alternate Energy Supplier) aggregated load is outside of a certain deviation band. Further, it only would apply to AESs who are in an imbalance in the same direction as the aggregate imbalance. Finally, individual AESs also would get a deviation band. The deviation bands would start out at 10% or 6MW in 2002 and shrink to 6% or 4 MW by 2006, to reflect increased scheduling sophistication of AESs.

The utilities response is due March 7, 2002. A third meeting will be held on March 11, 2002. Open questions to address include MISO's willingness to administer a retail energy imbalance program and what is a truly "cost based" penalty. The full text of the Retail Energy Imbalance Proposal is available on the NEM Website.

Detroit Edison Electric Choice Program Workshop

Detroit Edison will hold a workshop on March 21, 2002, at 7:30AM on its electric choice program. The agenda for the meeting includes a program overview, supplier qualification, customer metering, load profiling and load leading, customer enrollment, customer billing, current and future marketer billing and energy tagging. Registrations are due by March 14, 2002. In order to view the agenda and to register go to

New Jersey
NEM Comments on Basic Generation Service

NEM submitted comments on the competitive provision of Basic Generation Service (BGS). NEM recommended that competitive BGS should be priced to reflect the full energy supply and commercial costs of serving retail load and that the pricing mechanism must flexible to account for changing market conditions. NEM recommended that if the Board and political demands require assurance of extra reliability that such a requirement should be included in the RFP for the service. NEM cautioned that if the Board limited ratepayers exposure to market-based BGS rate increases that it would send false price signals and that consumers must be able to see and respond to price signals by modifying their consumption or choosing a lower-priced competitive provider. The full text of NEM's Comments are available on the NEM Website.

New York
NEM and Staff Comments in Unbundling Proceeding

NEM submitted reply comments in the unbundling proceeding reiterating that unbundled rates should be based on the utilities' embedded costs and not long run avoided costs. NEM argued that the utilities proposed transition cost recovery method should be rejected and that stranded costs should be recovered after-the-fact on a competitively neutral basis in distribution rates. NEM also urged that the Commission must require that unbundled rate information for competitive and potentially competitive products, services, information and technologies must be provided on a line item basis to provide consumers with an adequate basis for comparison when they shop. The full text of NEM's Comments are available on the NEM Website.

Staff submitted reply comments arguing that lost revenues should be collected on an after-the-fact basis and in a non-bypassable charge imposed on all customers. Staff repeated its recommendation that long run incremental cost studies should not be attempted until after embedded cost-based rates are in effect. Staff also recommended that research be conducted to gather consumer input on presentation of information on bills. The full text of Staff's Brief is available on the NEM Website.

Staff's Report on Proposed Competitive Electricity Metering Rules

Staff issued a Report setting forth proposed rules for competitive electricity metering. The rules address access to interval meter data by customers and competitive service providers and require that utilities offer read-only electronic access to the interval billing meter and/or receipt of a stream of data pulses proportionate to energy usage. Staff recommends that the rules become effective January 1, 2003. Staff also states that it will continue to examine pilot programs and other metering service elements and will submit a report with its findings on June 30, 2002. Comments on Staff's Proposed Rules are due March 25, 2002. The full texts of the Order Inviting Comments and Staff's Proposed Rules are available on the NEM Website.

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Copyright 2001 National Energy Marketers Association