In a further assault to direct access in the state, it has been reported that a decision will be issued by Commissioner Wood retroactively abrogating direct access contracts signed this summer. NEM has formed a California taskforce to address this issue. Anyone wishing to assist in prevention of such an action by the CAPUC should contact NEM headquarters at (202)333-3288. The full text of the Decision will be posted on the NEM Website when made available electronically.

Governor Barnes Natural Gas Task Force has issued a draft proposal for a regulated supplier to be appointed to act as POLR for disconnected customers. Georgia Power, an electric utility, is considering whether to assume this role. Georgia Power has proposed to charge a montly customer service fee of $11.95 and a $150 deposit to combination gas and electric customers. Georgia Power also indicated legislation would be required to guarantee its recovery of losses. The taskforce stopped short of recommending full reregulation of the gas market however.

Additional recommendations of the taskforce include a return to volumetric rates as opposed to so-called "straight fixed-variable prices," setting performance measures for Atlanta Gas Light's services such as meter reading and response to reconnect and disconnect requests, requiring marketers to file notice of changes in terms and conditions of service, and adoption of a natural gas consumer rights statement. The taskforce declined to propose competitive metering and billing, establishment of a permanent POLR, or an increase for security deposit amounts. The full text of the Taskforce Recommendations will be posted on the NEM Website when made available electronically.

The Office of Peoples' Counsel (OPC) issued a report on electric competition suggesting that the legislature assess residential choice and determine if the electric utilities should remain as the retail suppliers for residential customers. OPC explained that the utility obligation to provide standard offer service (SOS) only applies through July 1, 2003. After that time, competitive bids for SOS supply are to be used, although the PSC has the discretion to extend the utilities' obligation to provide SOS. OPC noted that 2.6% of residential customers and 4.1% of non-residential customers have switched and discounted the argument that current SOS rates are too low to attract competitive entrants. OPC also urges consideration of opt-out municipal aggregation, an increase in the size and scope of the RTO serving Maryland customers, and review of residential utility consumer protection regulations. The full text of the OPC Electric Competition Report is available on the NEM Website.

A meeting was held on January 15, 2002, to discuss the implementation of a retail energy imbalance service for Consumers and Detroit Edison. ABATE proposes to have imbalances settled at the distribution level on an hourly basis. The proposed bandwidth for a retailer or marketer would be +/- 2000 kWh or 20% of its net delivery, and the penalty for falling outside that bandwidth would be $0.10/kWh or 110% of the utility's incremental cost for underdeliveries and payment of 90% of decremental cost for overdeliveries. ABATE also proposes to include a component for the group of load on retail access served by an alternative supplier. If a retailer is within the bandwidth and the total net retail access energy imbalance is within +/- 50,000 kWh, the retailer pays or gets paid 100% of incremental or decremental cost for under/over-deliveries. If the retailer is outside its bandwidth and the total net retail access energy imbalance is outside +/- 50,000 kWh, the retailer pays 110% incremental cost or is paid 90% of decremental cost if its imbalance is in the same direction as the net imbalance (imbalance of the whole "group"). There also was mention of creating an energy pool to assist with balancing and developing a load-leading process as used in PJM.

Consumers and Edison questioned whether there was a need for the service. They also argued that MISO's real-time balancing market should be functioning in a year and will represent a solution to the problem. ABATE and others are to provide more detailed proposals for utility reaction and a subsequent meeting will be held in mid-February.

Many thanks to Dan Oginsky of Dickinson Wright for this summary.

Consistent with NEM's recommendation, the Commission issued an Order in the Unbundling proceeding denying the utilities' request to delay the filing of embedded cost of service studies to coincide with the filing of long run incremental cost studies. The Commission said the utilities' assertion that only LRICs should form the basis of unbundled rates was wrong, and the issue of how LRIC studies should in fact be used would be resolved in the second phase of the case. The Commission also noted that it had previously found it was appropriate to use embedded cost studies as the basis for competitive rates. The Commission clarified that NEM's arguments against the use of LRIC studies for unbundled rates and NEM's request to delay the utilities' performance of the LRIC studies would be addressed in the second phase of the proceeding. NEM intends to file comments next week on these subjects combining the arguments set forth in its Motion for Clarification and Response to Utility Motion. The full text of the Order is available on the NEM Website.

A meeting will be held at O&R's Spring Valley offices to discuss a residential gas POLR program. The proposed program would consist of approximately 5,000 or approximately 6% of O&R residential gas full service customers. Participating customers are to be assigned to gas marketers on a rotating random basis so that approximately the same number of customers are assigned to each marketer acting as a POLR provider. The meeting will be held February 5, 2002, at 1PM. The full text of the Pilot Program Proposal is available on the NEM Website.