NEM is pleased to announce that IntercontinentalExchange has been nominated to NEM's Executive Committee. IntercontinentalExchange is an Internet-based marketplace for the trading of over-the-counter energy, metal, and other commodity products. It represents a partnership of world leading financial instituations with some of the world's largest diversified energy and natural resource firms. Jeffrey C. Sprecher, Chief Executive Officer, Richard V. Spencer, Chief Financial Officer, Charles A. Vice, Chief Operating Officer, Rafael Pirutinsky, Senior Vice President, David Goone, Senior Vice President, and James M. Falvey, Vice-President, General Counsel and Corporate Secretary, will represent IntercontinentalExchange within NEM.

NEM and NAESB sponsored an industry/government meeting this week in Washington, DC. Craig Goodman, NEM President, and Bob Young, of Deloitte and Touche and NEM's Executive Committee, presented the Energy Market Stability Framework issued by the NEM Taskforce. The meeting included an overview of what the CROs and EEI have done on the issues as well. The meeting also included open discussion among industry, DOE, CFTC, PSC Commissioners, and NARUC officials. Topics for discussion included: 1) the challenge to commissioners of maintaining the viability of the market and implementing regulations that keep step with changes in the industry; 2) the need to educate consumers, regulators, legislators, and the press about the merchant power business and its benefits; and 3) the need for inter-industry and inter-agency coordination in dealing with these issues. It was decided that an informal coordinating group follow-up on the various efforts discussed. The full text of Craig Goodman's Presentation, Bob Young's Presentation and the Agenda and Meeting Materials are available on the NEM Website. A Powerdaily article on the meeting entitled, "NEM-NAESB eye risk management," is also available on the NEM Website.

NEM will hold a conference call of its Risk Management and Financial Disclosure Taskforce on August 14, 2002, at 1PM EST. The purpose of the call is to review where we are and where we need to go on this group of issues including coordination with other groups and development of the "Energy Market Stability Framework" into a national policy paper. The dial in number is 703-788-0600, and the passcode is 209353.

NEM's Executive Committee will hold an important meeting to review, identify and prioritize issues and vote on NEM's position on the FERC Giga-NOPR, RTOs and Standard Market Design, Next Steps to Develop and Implement Industry Standards for Risk Valuation, Management and Financial Governance as well as review and prioritize NEM's positions on State Retail and Technology-related issues on September 26 & 27, 2002, in Chicago. The meeting will be opened for all NEM members and prospective members.

NEM has reserved Union Train Station in downtown Chicago for this meeting. Depending on the number of people coming, we may break out into Wholesale and Retail/technology sessions for issue identification and prioritization and then recombine at the end of the day for the Executive Committee to vote on the recommendations.

NEM Policy Chairs will lead the discussion on all issues. Your attendenace and input on these important issues is encouraged and will be appreciated.

NEM will host a conference call on August 20, 2002, at 2PM EST, on the forthcoming FERC standard market design giga-NOPR. The purpose of the call is to begin the formation of a comment group to address the NOPR. The dial in number is 703-788-0600, and the pass code is 209353.

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 and visible from the general session. A hotlink for signup is provided here.

Members who wish to be speakers, sponsors or exhibitors should contact headquarters immediately as we will be starting our worldwide advertising shortly. The exposure and attendance should be even better than this year.

NEM's Winter Executive Committee Meeting will be held in San Diego at Sempra's headquarters on January 16 and 17, 2003. This meeting will be for NEM Executive Committee Members only. As in the past, the Executive Committee will establish the policy position and priorities for NEM for the coming year.

All Executive Committeee Members are requested to attend. An agenda will be sent out prior to the meeting.

The Washington Post published an article today entitled, "Caution: Energy Trading - Today the Power Industry Fears the Risk." The article discussed the scaleback in power trading operations of many companies in response to Wall Street pressure. The full text of the article is available at http://www.washingtonpost.com/wp-dyn/articles/A2444-2002Jul25.html

The House and Senate have passed the Sarbanes-Oxley Act of 2002, and it is cleared for the White House. The bill provides for the establishment of a Public Company Accounting Oversight Board and prohibits public accounting firms from contemporaneously rendering audit and non-audit services. The corporate responsibility title of the bill requires that: 1) the audit committee of an issuer is responsible for the work of public accounting firms it employees; 2) principal executive and financial officers must certify that annual or quarterly reports do not contain untrue statements or omissions of material fact; 3) CEOs and CFOs are liable to reimburse bonuses and certain profits to an issuer if an accounting restatement is required because of material noncompliance; and 4) directors or executive officers are prohibited from engaging in insider trades during blackout periods.

With respect to enhanced financial disclosures the bill provides that the SEC must issue rules on: 1) disclosure of off-balance sheet transactions; 2) pro forma financial information filed in periodic reports; 3) issuer disclosure of whether or not it has a code of ethics for senior financial offiers; and 4) issuer disclosure of whether at least one member of its audit committee is a financial expert. SEC is also required to review issuers at least once every three years.

The bill provides that a fine and/or twenty years in prison shall be the penalty for destruction, alteration or falsification of documents in federal investigations and bankruptcy. The bill imposes a fine and/or thirty-five years in prison for defrauding shareholders of publicly-traded companies. Corporate officers that certify financial reports that do not comport with requirements are to be fined one million dollars, up to ten years in prison, or both. If corporate officers willfully make such certifications when the reports are not in compliance, they are to be fined five million dollars, up to twenty years in prison, or both. The full text of House Report 107-610 (including the full text of the bill) is available on the NEM Website.

GAO issued a report entitled, "Restructured Electricity Markets: California Market Design Enabled Exercise of Market Power." The report found that, "wholesale electricity suppliers exercised market power by raising prices above competitive levels during the summer of 2000 and at other times after restructuring." But GAO did not make findings as to whether the exercise of market power was in violation of federal or other laws. The report also stated that, "[t]he design of California’s electricity market enabled individual wholesale suppliers of electricity to exercise market power. In addition, once prices rose, in part as a result of market power, the design lacked effective mitigation strategies to return prices to competitive levels." This was chiefly attributed to the retail price freeze and the prohibition against utilities entering into long-term contracts. The full text of the GAO Report is available on the NEM Website.

FTC will host a workshop on "Possible Anticompetitive Efforts to Restrict Competition on the Internet." The focus of the workshop is on the anticompetitive effects of state regulation of e-commerce and business practices with antitrust implications. The workshop will be held October 8-10, 2002, and written comments will also be accepted until that time. The full text of the Notice of Workshop is available on the NEM Website.