July 27, 2001


 NEM's Fall and Spring Meetings

All NEM members and prospective members are invited to join the Executive Committee for an open meeting on October 3-5, 2001, at the Palmer House Hilton in Chicago. It will be structured to bring everyone up to speed on the most important restructuring issues in the most important markets, hopefully in one day with a short wrap-up on day two. Many thanks to Exelon, Nicor, Peoples and Encorp for sponsoring the meeting. Please also mark your calendar for April 1 and 2, 2002, the Annual Membership Meeting and National Restructuring Conference, that will be held at the Marriot Metro Center in Washington, DC.

 NEM Conference Call with Michigan PSC

NEM and its members held a conference call with Michigan Commissioners and Staff this week. Topics of discussion included the Commission's order on unbundled cost of service studies for the gas utilities, reciprocity requirements, Commission feedback on FERC's recent RTO orders, billing agency relationships, proper structuring of the GCR rate, utility attempts to pad rate bases in advance of pending unbundling proceedings, and legislation requiring suppliers to notify the Commission of areas they intend to do business. NEM has also intervened in the Consumers gas rate case and the Detroit Edison electric rate unbundling case.

 Michigan Alternative Electric Supplier Workshop

The MEGA electric utilities will hold a workshop on September 25, 2001, at 1PM to educate alternative electric suppliers about the terms, conditions and procedures for supplying electric power through their distribution systems. Those interested in participating should contact Suzy Denison at 517-484-7730 by August 31, 2001.

 Washington Post Article Urges Retail Electric Deregulation

A recent Washington Post Editorial urges the implementation of market prices for retail electricity stating that the California crisis could have been avoided if prices had been allowed to go up earlier to curb demand. It also stated that retail deregulation would be good for the environment and for household finances. To view the entire article go to: http://www.washingtonpost.com/wp-dyn/articles/A29261-2001Jul20.html.

Federal Issues

 NEM Comments on Proposed EIA Gas Reporting

EIA proposes to request contingency standby OMB approval of Forms 911A-C on interruptions of natural gas supplies for use in the event of future natural gas supply or price emergencies. EIA wants advance approval so that it can immediately implement the forms when it determines that circumstances warrant. NEM argued that EIA lacked statutory authority to impose the reporting requirements on natural gas suppliers, the costs of compliance are understated, and LDCs are the best source of the information being sought.

The full text of NEM's Comments is available on the NEM Website.


 Order Requiring Hearings on California Wholesale Market Refunds

The Commission issued an order establishing hearing proceedings for calculating refunds pursuant to the methodology previously ordered for transactions in the spot markets operated by the CAISO and the CalPX during the period October 2, 2000 through June 20, 2001. The Commission clarified that transactions subject to refund include sales by public and non-public utilities into these markets.

The Commission also ordered the establishment of a separate proceeding for the Northwest to develop of a record on whether there may have been unjust and unreasonable charges for spot market bilateral sales in the Pacific Northwest for the period beginning December 25, 2000 through June 20, 2001. The record should establish the volume of the transactions, the identification of the net sellers and net buyers, the price and terms and conditions of the sales contracts, and the extent of potential refunds. The full text of the Order is available on the NEM Website.

 California Natural Gas Sale Reporting Requirements Imposed

The Commission ordered all interstate natural gas pipelines that deliver gas at points on the California border or within California, sellers of natural gas at points on the California border or within California, and LDCs within California to file reports on California natural gas sales for the period August 1, 2001, to January 31, 2002, 30 days after the end of each month in that period. The full text of the Order with Appendix is available on the NEM Website.

State Issues

New York

 EDI Standards Order

The Commission issued an Order approving EDI standards and modifying the NY UBP for EDI implementation, adopting a number of NEM's recommendations. The Order provides that: 1) there should be statewide uniformity in NY's EDI data standards with flexibility limited to permitting a minimum of data segments, or data elements in a segment, that are not supported on a statewide basis by all parties; 2) NY data standards should be supportive of the goal of regional EDI standardization envisioned by the Mid-Atlantic states; 3) the five-calendar day period for utility issuance of a customer switch notification letter is reduced to three days; 4) customers have three business days to rescind an enrollment request prior to the effective date of the enrollment; 5) an enrollment request transaction must be sent a minimum of 15 days calendar days prior to the customers next regularly scheduled meter read date, a requested special meter read date or the first of the month for gas; 6) the EDI standard for history requests should accommodate requests for either actual usage history or gas profile data; and 7) transactions are to be validated based solely on a customer's utility account number. The full text of the Order is available on the NEM Website.

New Jersey

 Competitive Metering

A meeting to consider competitive metering issues will be held on August 9, 2001. An outline of metering issues previously prepared in the Customer Account Services proceeding will serve as the basis for discussions. The full text of the Metering Issues Outline is available on the NEM Website.

 Elizabethtown Daily Balancing Service Proposal

Elizabethtown filed a proposal to offer daily balancing service to third party suppliers (TPSs) serving residential transportation service customers in lieu of the current average daily delivery quantity balancing current offered. Elizabethtown proposes to develop a Determined Daily Delivery Quantity that the TPS would be required to deliver each day. If the TPS over or under-delivers the DDQ by more than five percent imbalance charges will be assessed as follows: over or under-delivers between 5-10% - $.11 per therm, under-deliveries greater than 10% - $.53 per therm, and over-deliveries greater than 10% - $.11 per therm. Elizabethtown also proposes to assess a $.0209 per therm balancing charge. The full text of the Elizabethtown Filing is available from NEM headquarters.


 Governor's Energy Task Force Issues Energy Policy Recommendations

The Governor's Energy Task Force has issued draft energy policy recommendations for the state including: 1) supporting national efforts to ensure a diverse supply of fuel; 2) encouraging interstate and local natural gas pipeline expansion; 3) supporting development of clean distribution generation; 4) encourage generation siting and the development of critical power transmission infrastructure; 5) continuing to monitor energy prices and market forces for signals of market power abuses; and 6) encouraging development and use of demand-responsive technologies. Comments are due August 17, 2001. The full text of the Recommendations is available at: http://www.paenergy.state.pa.us/policy.htm.

 PECO Energy Natural Gas Supplier Collaborative

PECO Energy will host a natural gas supplier collaborative on August 13, 2001, from 8AM to 5PM at its Philadelphia offices.


 Standby Rate Order

The Commission issued an Order on standby rates requiring the utilities to: 1) propose a Form Contract for Physical Assurance; 2) allow customers using onsite generation to pay no fixed standby charges if they sign a contract providing the utility with physical assurance; 3) propose on-demand backup rates that recover facilities-related distribution costs through a $/kW reservation charge and variable distribution costs, including peak demand-related costs, through a $/kWh usage charge; 4) propose scheduled maintenance rate options that recover only variable costs of distribution service, excluding peak demand-related costs, from customers who offer physical assurance; 5) ensure that proposed standby rates separately identify any charges associated with electricity procurement; 6) propose an electricity procurement rate option, which may be a real time price, that will be paid by standby customers when the utility procures electricity on their behalf; 7) report on the extent of distribution level diversity and propose a diversity factor, if appropriate; 8) price supplemental power at the otherwise applicable tariff rate; 9) allow customers to elect a reservation capacity; 10) establish standby rates using embedded costs consistent with the manner in which rates for other distribution services are calculated; 11) propose standby rates that allow customers to take service at transmission or distribution voltages; 12) propose standby rates that recover fixed transmission costs through reservation charges and variable transmission costs through usage based charges; 13) reflect in the proposed standby rates that solar generating units up to 1 MW that do not export power to the grid are not subject to standby rates; and 14) allocate costs to standby customers consistent with the policies adopted herein and propose ratemaking approaches to address any temporal inequities associated with the recommended cost allocation. The full text of the Order is available on the NEM Website.