NEM will convene a meeting to draft a Master Margin and Netting Agreement. Chris Bernard from Entergy-Koch has offered to coordinate this effort and host the first meeting. The meeting will take place on March 29, 2002, at 8:30AM at 20 Greenway Plaza, Suite 100. Given the various agreements currently in use, the Enron collapse underscores the importance of standardizing margin and netting requirements to avoid future credit crunches in the energy wholesale marketplace. All industry participants interested in attending should call NEM headquarters at 202-333-3288 or Chris Bernard at (713) 544-5433 or email us at info@energymarketers.com.

Senators, FERC, PUC and FTC Commissioners have confirmed for 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'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 forge consensus on accounting and disclosure standards to promote the proper valuation of energy assets, equity securities and forward energy contracts, including derivatives.

Maximum industry participation is encouraged. Those planning to attend the meeting should respond ASAP to info@energymarketers.com.

NEM's meeting with Chairman Wood is still tentatively scheduled for May 1, 2002. Your suggestions for an agenda would be appreciated, and we will hold a conference call for attendees on April 16, 2002, at 1PM EST. The dial in number is 703-788-0600, and the passcode 209353.

NEM met with Commissioner Brownell on March 6, 2002, to discuss RTO-technology related issues, standard wholesale market design issues, and FERC's derivatives rulemaking. Commissioner Brownell noted that a White Paper would be issued by FERC next week to precede the upcoming standard market design "Giga-NOPR" and requested NEM to submit comments on the White Paper. Specific areas she requested NEM discuss include market clearing price and resolution of the FTR debate. Commissioner Brownell said FERC needs to fully understand operational details, whether it should look at experience from financial markets, and how it can avoid the telecommunications model. Commissioner Brownell noted that the "Giga-NOPR" White Paper won't be fully developed and requested that comments address what is included as well as important concepts that are not. She also requested a focus on the real value to the market, not just legal issues. The full text of the White Paper will be posted on the NEM Website when made available electronically. Members should submit their comments on the White Paper to headquarters ASAP. Notes from the Commissioner Brownell meeting are available upon request from NEM headquarters.

NEM submitted comments on FERC's derivatives accounting and reporting NOPR urging that the Commission should continue to grant entities with market-based rates waivers from Uniform System of Accounts reporting as well as Part 34 blanket approvals for future issuances of securities and assumptions of liability. NEM argued that the cost-based ratemaking purposes of the reporting requirements will not be advanced by their imposition on entities with market-based rates and that imposition of the requirements on these entities could have multiple negative impacts including increasing costs of doing business, discouraging entry into the competitive market, and negatively impacting market development. NEM also argued that imposition of the reporting requirements will not likely prevent future Enron-like situations. NEM urged that a full cost-benefit analysis of the NOPR should have been performed and that the NOPR should be rescinded. The full text of NEM's Comments is available on the NEM Website.

NEM needs member comments on a single industry standards setting organization (either NAESB and NERC or FERC) for the wholesale electric market. There is serious concern about the timing of any consensus process that is developed. While everyone wants a one stop shop it may not happen, and there is concern that the participants will likely predominate from the regulated sector as this will likely be a very time intensive process. Members are requested to forward their comments to headquarters ASAP.

The U.S. Supreme Court issued an opinion on the scope of FERC's jurisdiction over retail transmissions. New York and several other states as well as Enron had sought review of FERC's Order 888. Contrary to the arguments of the states, the Supreme Court found that FERC had not exceeded its jurisdiction by including unbundled retail transmissions within the scope of its open access requirements in Order 888. While recognizing that FERC’s jurisdiction over the sale of power is specifically limited to the wholesale market, FERC’s jurisdiction over electricity transmissions is subject to no such limitation. The Supreme Court also upheld FERC’s decision not to regulate bundled retail transmissions. However, the Supreme Court said that if FERC were to investigate alleged discrimination in the retail electricity market and make findings concerning undue discrimination, §206 of the Federal Power Act would require FERC to provide a remedy for that discrimination.

Three Justices dissented and stated plainly that FERC has jurisdiction over all interstate transmission. The dissenting opinion would have remanded the case to require FERC to make a determination of whether there was discrimination on the use of transmission between bundled and unbundled sales and fashion a remedy that was supported by a finding of fact. In NEM's opinion, this can be viewed as granting FERC both the authority and the discretion to regulated any transmission used for either wholesale or retail transactions. The full text of the Supreme Court Opinion is available on the NEM Website.

FERC issued a proposal to revise market-based rate tariffs to include a provision prohibiting anticompetitive behavior or the exercise of market power and requiring violators to pay refunds or subject to other remedies. The focus of the March 11, 2002, conference will be whether the proposed tariff condition can be modified to adequately protect customers on an interim basis until FERC adopts other measures to ensure competitive markets, including standard market design rules and RTO market monitoring units are established. Staff issued a white paper setting forth issues for consideration at the conference. These issues include modification of the proposed definitions of economic and physical withholding such as clarification of the term "full incremental cost" to include opportunity cost, clarification of the term "market price" as to time, product and geographic market, and consideration of environmental, operational and reliability factors in a determination of physical withholding. Issues to be discussed will also include exempting sales in fully competitive markets with effective market monitoring, exempting suppliers in an approved RTO market with FERC-approved bid caps, exempting power supply agreements of a specified duration or agreements where parties waive refund obligations, exempting all bilateral contracts, and the creation of safe harbors for certain transactions. Limiting the tariff condition to the specific market(s) in which a seller has market power, exempting generators that are unable or unlikely to exercise market power will also be discussed and limiting the refund potential window as well as clarification of the manner in which sellers can respond to allegations will also be addressed. Other suggestions for consideration include imposition of temporary price caps along with reserve capacity requirements until a competitive market structure emerges and tailoring mitigation measures to be applied to a particular exercise of market power, class of participant, and sector. The full text of the Market-Based Rate Conference Agenda is available on the NEM Website.