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March 14, 2003
NEM's Annual Membership Meeting and National Restructuring Conference for 2003

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.

Our VIP reception will be held in the Senate Russell Caucus Room on the evening of April 3, 2003. This is one of the nicest rooms in the Capitol. Many thanks to LODESTAR, Itron, IMSERV and Constellation NewEnergy for sponsoring the reception.

The Agenda is hotlinked here for your convenience. A registration form is also hotlinked here for your convenience.

Speakers at NEM's April Conference - Presentation Materials Needed

Those NEM members that will be speaking at the April conference should forward to headquarters any presentations or other materials in electronic format that they intend to utilize ASAP. The materials will be posted on the NEM Website for access by the media, regulators, attendees, and other interested parties.

NEM Conference Call on Wholesale Marketing, Clearing, Risk Management and Related Technology Issues Scheduled

NEM will convene a conference call on Wholesale Marketing, Clearing, Risk Management and Related Technology Issues on March 19, 2003, at 2PM EST. An agenda including issues to be discussed will be circulated prior to the call. The phone in number for the conference call is 1-703-788-0600, and the passcode is 209353

Risk Desk Article on NEM Members

Risk Desk has generously made available an issue of its publication concerning the operations of NEM members, The New York Mercantile Exchange, EnergyClear Corporation, VMAC, and IntercontinentalExchange. The full text of the Risk Desk Article is hotlinked here for your convenience.

NEM Congratulates Member Winners of Rader Energy Awards

NEM congratulates the following individuals from NEM member companies that were recognized as "50 Key Women in Energy" by Rader Energy: Sharon Allen of Elster Electricity, Kim Clark of Entergy-Koch Trading, Elizabeth Moler of Exelon Corporation, Tracie Rowson of FEA, and Madeline Boyd of The New York Mercantile Exchange.

NEM also congratulates the following individuals from NEM member companies that were recognized as "50 Key IT Players in Energy" by Rader Energy: Bill Mahoney of Excelergy and Doug Staker of Itron.

Feinstein Introduces "Energy Market Oversight Act"

Senator Feinstein has introduced S.509, the "Energy Markets Oversight Act." The bill gives CFTC authority over online and bilateral energy and metals trading companies. The bill increases reporting requirements for these entities and prohibits wash trades. It also requires energy companies to, "maintain sufficient capital, commensurate with the risk associated with transactions conducted on [a] covered entity."

The bill also increases FERC authority. It authorizes FERC to assess fines for noncompliance with requests for information. It also increases penalties for violations of the Natural Gas Act and Federal Power Act from 2 to 5 years and from $5,000 to $1 million per violation. The full text of S.509 is available on the NEM Website.

Distributed Generation Collaborative Files Proposed Interconnection Standards

The Distributed Generation collaborative has filed "Proposed Uniform Standards for Interconnecting Distributed Generation in Massachusetts." The proposed standards include a review process utilizing a simplified, expedited or standard path depending on the type of facility, time frames and fee schedules for the review process, an overview of network interconnection opportunities and challenges for DG, and a dispute resolution process. The proposed standards also include a sample application form, interconnection requirements, and information tracking form. The collaborative will submit a proposed tariff incorporating the standards on April 15, 2003. The ALJ has indicated that comments will be permitted after the proposed tariff is filed. The full text of the Proposed Interconnection Standards is available on the NEM Website.

MIPSC Issues Order on AGS Licensing Procedures

The MIPSC issued an Order on licensing procedures for alternative gas suppliers (AGSs) which accepted many NEM proposals. The MIPSC agrees with NEM that: (1) 30 days, under normal circumstances, is the appropriate time frame for reviewing AGS licensing applications; (2) confidential and proprietary information should not be part of the initial application; (3) customer interests will be served by a requirement that allows for the disclosure of certain customer information (to third-party providers and credit agencies) accompanied by a notice that any further disclosure is prohibited. The Order, on NEM’s suggestion, provided more clarity to the term “business ethics” and employee “competence.” The Commission held that Staff intends to adhere to a similar approach to setting bond amounts for both Alternative Electric Suppliers and Alternative Gas Suppliers. The MIPSC rejected Staff’s proposal to relieve existing AGSs from presenting proof of their financial, managerial, and technical capabilities, however, Staff will be allowed to consider and give weight to an existing AGS’s past performance. MIPSC also stated that its ability to examine the books and records of an AGS will not involve routine inspections or reviews. The Commission also noted that a proceeding on slamming and cramming rules would soon be instituted. The full text of the Order is available on the NEM Website.

Stranded Cost Collaborative

Commission staff has scheduled a collaborative to discuss stranded costs and related issues as was ordered in the Consumers Energy case. The collaborative is scheduled for March 26, 2003, at 9AM. Staff has prepared a strawman to begin discussions. The strawman proposes transition charges be fixed for a two-year period beginning on January 1 of year 1 and ending December 31 of year 2. The charges would be set by September preceding the two-year period. The charges would be subject to reconciliation for over or underrecovery but adjustments would not be implemented until the next two-year period. The full text of the Notice and Staff Strawman is available on the NEM Website.

New York
NEM Comments on Implementation of HEFPA Legislation

NEM has submitted comments on implementation of the HEFPA law. NEM argued that the utilities in the unbundling proceeding must be required to fully unbundle their rates to reflect the embedded costs of providing the competitive function of consumer protection service. NEM urged the Commission to modify the payment allocation order such that payments are applied to first to the consumables portion of the bill and then to the non-consumables portion. NEM argued that if the Commission did not require such a payment allocation order that it should utilize pro-rata allocation of payments or consider utility purchase of supplier receivables. In its comments, NEM also: 1) opposed imposing an obligation to serve on competitive suppliers not acting as POLRs; 2) opposed utility oversight of ESCO terminations; 3) opposed requiring ESCOs to retroactively offer deferred payment agreements and budget billing to existing customers; 4) opposed requiring ESCOs to return deposits to existing customers; and 5) urged that ESCOs be eligible for receipt of payments from social service agencies. The full text of NEM's Comments is available on the NEM Website.

Marketers Request Investigation of Gas Cost Recovery Process

NEM members, Shell Energy Services and Energy America, have requested that the Commission institute an investigation into the Gas Cost Recovery (GCR) process. DEO, CG&E and Columbia recently filed applications to increase their GCRs, from $6.006/Mcf to $7.359/Mcf, from $5.688/Mcf to $7.440/Mcf, and from $7.5774/Mcf to $9.9558/Mcf, respectively, for the month of April. The marketers argue that the GCR as currently structured does not operate effectively, permits midstream changes to the GCR that harm competitive suppliers ability to compete, should be more reflective of the market and should send customers appropriate price signals. The full texts of the Utilities' GCR Applications and the Marketers' Motion for Investigation are available on the NEM Website.

Stranded Cost Proceeding

The Commission instituted a proceeding to examine the calculation of net stranded costs. The Commission issued a series of questions for comment as follows: 1) how to define "stranded costs;" 2) how to define "just and reasonable net stranded costs;" 3) what should be the methodology for computing "just and reasonable net stranded costs;" 4) how should stranded costs be recovered; 5) how should over- or under-recovery of stranded costs be dealt with; and 6) statutory constraints on the stranded cost calculation methodology. NEM draft comments on these issues will be circulated for member comment shortly. Comments are due March 21, 2003. The first working group meeting in this proceeding will be held April 1, 2003, in Richmond. NEM members planning to attend this meeting should contact headquarters ASAP. The full text of the Order Instituting Proceeding is available on the NEM Website.

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