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March 1, 2002
NEM Annual Membership Meeting and National Restructuring

A number of very prominent speakers and PUC Commissioners have agreed to speak at NEM's Annual Membership Meeting and National Restructuring Conference to be held June 20 and 21, 2002 at the Marriott Metro Center in Washington, DC. An agenda for the conference is hotlinked here. A quick registration form and an electronic brochure are also hotlinked here.

Please contact NEM headquarters if you are interested in sponsorship or table-top space at the conference, as space will be limited.

NEM Risk Valuation, Management and Financial Accountability Taskforce Meeting

NEM's Risk Valuation, Management and Financial Accountability Taskforce will hold a one day meeting at the Georgetown Club in Washington, DC on April 18, 2002, beginning at 11AM and lasting no later than 5:30PM. The purpose of the meeting is to identify issues and the principles upon which we will build an action plan.

The issues for consideration include: (1) FERC retroactive "just and reasonable" ratemaking authority over derivative and forward contracts, (2) CFTC jurisdiction over OTC forward and derivative trades, (3) the valuation of risk portfolios, assets, equity securities and forward price curves given the lack of depth in the wholesale marketplace, (4) the new SEC disclosure rules issued January 22, 2002, (4) the expansion of PUCHA to include power marketers, (5) the Feinstein and Defasio bills, and (6) the California CPUC retroactive rulemaking abrogating customer choice, the related FERC investigation and the outright request to void above-market contracts. This is in addition to wholesale market structure design, NAESB and implementation issues that will be ongoing for several years.

Your participation is encouraged. Those planning to attend the meeting should respond ASAP to or

NEM Meeting with Commission Brownell

NEM will be meeting with Commissioner Brownell on March 6, 2002. The group will convene for a working lunch at 10:30AM at the Center Cafe at Union Station prior to the meeting. Those members who wish to obtain another copy of the meeting agenda should contact headquarters. Additionally, those members planning to attend that have not already provided their social security numbers should contact headquarters ASAP.

NAESB Retail Electric and Gas Quadrants

Interested parties met to review procedures that have been drafted for the NAESB Retail Electric and Gas Quadrants (REQ and RGQ) in West Palm Beach, Florida last Wednesday. Some progress was made regarding procedure language and which NAESB document (i.e. NAESB Bylaws, Quadrant Procedures or Segment Procedures) should address specific issues. All remaining comments about the proposed REQ Procedures were resolved during two subsequent conference calls, and the revised document will be distributed to prospective REQ members and other interested parties by the end of this week. Recipients will be polled to determine their support for the document. The poll results along with any additional comments in response to the revised procedures will be submitted to NAESB for approval by March 6, 2002, so that they may be reviewed by the NAESB Board at the March 7, 2002, NAESB Board meeting.

Many thanks to Misty Khan of Telerx for this summary.

Rulemaking on Financial Instruments, Comprehensive Income, Derivatives and Hedging Activity Accounting and Reporting and Single Energy Industry Standards Organization

NEM members should forward their comments on FERC's NOPR on accounting and reporting of financial instruments, comprehensive income, derivatives and hedging activities as well as on the formation of a single energy industry standards organization to headquarters by next week so there is adequate opportunity to incorporate them into NEM's final comments.

RTO Cost-Benefit Study Released

The RTO cost-benefit study performed by ICF Consulting entitled, "Economic Assessment of RTO Policy," for FERC has been released. The study concludes that $1-10 billion per year in economic gains could result from FERC's RTO policy. The study cautions that the net benefits of RTO policy are dependent on, "effective and timely implementation of competitive electric power markets, and on minimizing delays and excessive start up costs." The study also concluded that larger RTOs would lead to somewhat greater benefits and that most regions will benefit from price decreases as a result of RTO policy. The full texts of the Study and ICF's FERC Presentation are available on the NEM Website.

Technical Conference on Market-Based Rate Authorizations

A staff conference will be convened on March 11, 2002, at 9:30AM to discuss issues pertaining to market-based rate authorizations. The full text of the Notice of Staff Conference is available on the NEM Website.

PJM West Supplier Workshop

Allegheny Power will convene a supplier workshop on March 11, 2002, at 10AM to discuss the procedural changes associated with Allegheny Power joining PJM to form PJM West. The meeting will be held at Allegheny Power's Greensburg Corporate Center located in Greensburg, PA. Those interested in attending should contact Becky Sarber at 724-838-6593 or

Briefs Filed in ComEd Delivery Services Proceeding

NEM filed a brief in the ComEd delivery services proceeding urging that the Commission expressly recognize the legal validity of the use of electronic signatures for customer enrollment. NEM recommended that the electronic signature workshop begin within 30 days after an Order is issued in the case and end within 90 days after an Order is issued and that the electronic signature option be available to competitive suppliers within 120 days after an Order is issued in the case. NEM also argued that the Commission should urge ComEd to eliminate or reduce the onerous 24 month minimum stay requirement. The full text of NEM's Brief is available on the NEM Website.

Staff echoed NEM's recommendation in its brief that the Commission recognize that internet enrollments are compatible with state and federal law. ComEd recommended that the Attorney General should issue an advisory opinion on the matter. ComEd also argued that it must be protected from the legal risk posed by electronic enrollments of processing invalid switch requests. ComEd also urged reconsideration of marginal cost-based rate design as opposed to embedded cost-based rate design endorsed in the ALJs Proposed Order. The full text of Staff's Brief and ComEd's Brief are available on the NEM Website.

New Jersey
Basic Generation Service Working Group Meeting

Staff has announced that a working group meeting will be convened to address Basic Generation Service (BGS) in the post-transition period. The meeting will be held March 22, 2002, at 10AM, in the BPU's hearing room. Any NEM member requiring representation at the meeting should contact headquarters.

New York
Commission Approves NYSEG Price Protection Plan and Merger

The Commission issued an Order approving the merger of NYSEG and RG&E as well as NYSEG's price protection plan. The plan provides for four rate options. Customers that do not choose a competitive supplier may choose a Bundled Rate Option with fixed energy and delivery rates or a Variable Rate Option with a variable energy charge, a floating nonbypassable wires charge and a fixed delivery rate. Customers electing competitive suppliers may choose the ESCO rate option comprised of a fixed delivery rate, floating nonbypassable wires charge, and the ESCO commodity charge or the Bundled Rate Option with a market-based backout credit and a 3 or 5 mill adder. The Commission directed the parties to resolve the issue of which service option should apply to ESCO customers that do not affimatively choose either the ERO rate or the BRO rate with market-based backout credit. The Commission also put NYSEG on notice that it would not tolerate anti-competitive conduct. The full text of the Order is available on the NEM Website.

Comments Sought on Uniform Business Practices

The Commission has modified its request for comments on proposed changes to its Uniform Business Practices. The Commission initially sought comments on changes pertaining to the glossary, customer information, customer agreement and switching, customer inquiries, disputes between distribution utilities, ESCOs, direct customers, default providers, registration agents, and ESCO eligibility provisions of the Uniform Business Practices. The Commission now also wants to consider the impact of bankruptcies on Uniform Business Practices and creditworthiness standards. Comments are now due April 8, 2002. The full text of the Proposed Uniform Business Practices Provisions is available on the NEM Website.

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