NEM is pleased to announce that Virtual Markets Assurance Corporation (VMAC) was elected to the Executive Committee at the San Diego Meeting. VMAC's core product is their Counterparty Assurance System, which provides both buyer and seller performance insurance to electronic exchanges or OTC operations and that can be applied to other points of risk aggregation as well. VMAC will be represented within NEM by J. Scott Perry, President and COO, and Wally Turbeville, CEO.

Industry experts that formed NEM's policy team on Clearing, Netting and Settlement Issues have finalized a document entitled, "Solutions to Improve the Liquidity and Creditworthiness of the U.S. Energy Industry." The document reviews all of the major clearing solutions currently available to the industry. A copy of this document is hotlinked here for your convenience.

This year’s Annual Membership Meeting and National Restructuring Conference will be held April 3 and 4, 2003, at the Hyatt Regency on Capitol Hill. Congressman Joe Barton, Chairman of the House Energy & Air Quality Subcommittee, Chairman Patrick Wood of the FERC, Chairman James Newsome of the CFTC, SEC Commissioner Campos, NARUC President David Svanda, Chair Klein of the TX PUC, Chairman Vasington of the MA DTE, Chair Spitzer of the ACC, and Commissioner Jones of the PUCO are all confirmed to be speakers at the event. The Agenda is hotlinked here for your convenience. A registration form is also hotlinked here for your convenience.

As a result of discussions at the Winter Executive Committee meeting, NEM will convene periodic member calls on retail, wholesale and technology issues. The first call will address Retail and Related Techology Implementation Issues and will be convened February 14, 2003, at 2PM EST. A separate call on Wholesale, Clearing, Risk Management and Technology Related Issues will be convened February 21, 2003, at 2PM EST. Members interested in technology and clearing issues are invited to join the wholesale call. The purpose of these calls is to prioritize issues for NEM action. The frequency of future conference calls will also be determined. The phone in number for the conference calls is 1-703-788-0600, and the passcode is 209353.

NEM members are eligible to receive a 20% discount on EPRM Magazine's 6th Annual European Congress and Exhibition to be held March 5-6, 2003, in London. The main topics of the conference include: advanced risk measurement and management strategies, analyzing pricing and hedging techniques, and latest developments in the European energy markets. The full text of the Meeting Brochure is available on the NEM Website.

As required by the Sarbanes Oxley Act, the SEC issued a report on the role and function of credit rating agencies. Pursuant to this review, SEC identified a number of issues of concern including: 1) the level of public disclosure by issuers; 2) the diligence and qualifications of credit rating agency analysts; 3) the nature and extent of information made available to the public and subscribers; 4) barriers to entry into the business of acting as a credit rating agency; and 5) conflicts of interest in the operation of credit rating agencies. SEC noted that it plans to publish a concept release within 60 days to address the concerns it has identified and that it expects to subsequently issue proposed rules reflecting comments received on the concept release. The full text of the Report is available on the NEM Website.

SEC issued a rule requiring disclosure of off-balance sheet arrangements. The off-balance sheet arrangements will have to be explained in a separately captioned part of the Management Discussion and Analysis section of a registrant's disclosure documents. The rule defines an off-balance sheet arrangement as, "any contractual arrangement to which an unconsolidated entity is a party, under which the registrant has: [a]ny obligation under certain guarantee contracts; [a] retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets; [a]ny obligation under certain derivative instruments; [a]ny obligation under a material variable interest held by the registrant in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the registrant, or engages in leasing, hedging or research and development services with the registrant." The rule requires disclosure of off-balance sheet arrangements that, "either have, or are reasonably likely to have, a current or future effect on the registrant's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors." The full text of the Rule is available on the NEM Website.

FERC and CFTC will convene a joint technical conference on February 5, 2003, on credit issues and potential solutions in energy markets. Panels will discuss clearing fundamentals and oversight, clearing models in the energy markets, and industry-proposed solutions to mitigate credit risk. NEM has been chosen to participate on a panel and will publish its, "Solutions to Improve the Liquidity and Creditworthiness of the U.S. Energy Industry," at the conference. The full text of the Technical Conference Agenda is available on the NEM Website.

Chairman Pat Wood, Commissioners Nora Brownell and William Massey presided over FERC's January 29, 2003, regular agenda meeting. The two main presentations were: (1) Seams Resolution Presentation - RTO West, West Connect and California ISO; and (2) 2003 Natural Gas Market Assessment Report.

The first presentation provided an overview of the organization of the Seams Steering Group - Western Interconnection (SSG-WI). The Commissioners urged the SSG-WI panelists to focus on creating a single Western market rather than trying to coordinate the market designs of the three Western RTOs.

FERC's Office of Market Oversight and Investigation (OMOI) presented its report, "2003 Natural Gas Market Assessment." The report identified the five major problems in the natural gas market for winter 2002-03 as: (1) deteriorating financial conditions of market participants; (2) managing credit exposure; (3) shaken confidence in price discovery methods; (4) continuing need for efficient investment in infrastructure; and (5) continuing potential for manipulation. FERC announced that it will hold a technical conference in April 2003 on price indices. The full text of the Assessment Report is available on the NEM Website.

A NEM Summary of the Agenda Meeting is available from NEM headquarters.