The Leadership of the NEM Executive Committee is accepting nominations for the National, Regional and State Policy Chairs and Co-Chairs for the comming year. Please forward forward your nominations to headquarters to headquarters by May 23, 2002. All the nominations will be circulated prior to the June 20 Membership Meeting and Conference, and a special meeting of the Executive Committee is scheduled for the evening of June 19 from 6PM-8PM to vote on the nominations at the Marriott Metro Center.

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 updated agenda, registration form and electronic brochure is hotlinked here for your convenience. All Congressional members and Staff of the conference committee on the energy bill have been invited to the NEM VIP reception to be held on the evening of June 20, 2002, in the Senate Hart Office Building Room SH-216. If you plan to attend the conference and the reception, we need your security information ASAP. Also there are only a limited number of rooms left at our discounted rate of $139/night. An alternative consideration for the evening of June 19 is to attend "The 2002 President's Dinner" to be held at the Washington Convention Center beginning at 5:30PM.

A meeting of the Master Netting Working Group will be held on May 30, 2002, from 10AM–4PM at the Omni Houston Hotel (Galleria area), Four Riverway, Houston, Texas. The purpose of the meeting is to present a final version of the NEM-EEI Master Netting Agreement and Collateral Annex. The final agreement will be posted on the NEM website by close of business May 28, 2002. Further details about the meeting will be released shortly.

A revised interim draft of the Master Netting Agreement and Collateral Annex has been prepared. Comments on the revised draft are due by noon CPT on May 23, 2002, and should be forwarded to elopez@reliant.com. The full texts of the Revised Interim Draft (Clean) and Revised Interim Draft (Redlined) are available on the NEM Website.

Many thanks to Dede Russo, Marty-Jo Rogers, Chris Bernard, Vince Duane and others for their leadership and hard work on this important project

EEI, NAESB, DOE and a group of industry CROs have contacted NEM to offer assistance with this project. Please send comments and suggestions to info@energymarketers.com or contact headquarters with your recommendations ASAP.

Many thanks to Lee Taylor, Harry Fry, Mike Walker, Bob Young, Kim Detiveaux, Dennis Sobieski, Mike Prokop, Ron Lukas, Trip Ray, Gordon Allott, Ray O'Connor, Paul Messerschmidt, Jennifer Feinstein and Greg Towstego for their assistance with this project.

NAESB will hold a wholesale electric quadrant (WEQ) meeting in Birmingham, Alabama on May 29 and 30, 2002. The purpose of the meeting is to continue discussions on segment definitions and the number of NAESB Board and Executive Committee seats for the WEQ. The meeting will include identification of preliminary definitions for the five WEQ segments as well as identification of sub-segments. Subsequent meetings to finish these discussions will be held on June 20 and 21, 2002, in Columbus, Ohio and on July 15 and 16, 2002, if necessary. The NAESB Board meeting will be held June 28, 2002, in Seattle. The full text of the Meeting Announcement is available on the NEM Website.

A draft annual plan for the NAESB retail electric quadrant (REQ) has been prepared. The draft annual plan is a high-level plan intended to provide direction to the REQ on work priorities once the REQ is formally created. Comments are due May 24, 2002. The full text of the Draft Annual Plan is available on the NEM Website.

NEM members interested in submitting articles for publication in Power and Gas Marketing and Harts magazine should contact headquarters ASAP.

New positions are being created in NEM for individuals with advocacy and marketing experience. Interested persons should email their resumes in confidence to NEM headquarters ASAP.

SEC issued a NOPR on management's disclosure and analysis (MD&A) about application of critical accounting policies. SEC proposes to amend the MD&A requirements to require disclosure in a new section to be included in annual reports, annual reports to shareholders, registration statements and proxy and information statements called "Application of Critical Accounting Policies." The new section would include disclosure about accounting estimates resulting from the application of critical accounting policies as well as the initial adoption of accounting policies that have a material impact on a company's financial presentation. The test of a critical accounting policy requiring disclosure is proposed as whether: 1) an accounting estimate that requires assumptions about matters that were highly uncertain at the time the estimate was made; and 2) different estimates that could reasonably have been used in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, would have a material impact on the presentation of the company's financial condition, changes in financial condition or results of operations. With respect to the initial adoption of accounting policies SEC proposes disclosure of the events or transactions that gave rise to the initial adoption, the accounting principle adopted and method of its application, and the impact, in qualitative terms, on the company's financial presentation. Comments are due July 19, 2002. Please send comments on these issues to info@energymarketers.com no later than June 1, 2002. The full text of the NOPR is available on the NEM Website.

S&P has issued a two-part report entitled, "Identifying Ratings Triggers and Other Contingent Calls on Liquidity." S&P concludes that of the 1,000 U.S. and European investment-grade industrial and utility companies that it reviewed, "there are only 23 companies for which the proximity to ratings triggers or other contingent calls on liquidity and the materiality of the consequences of the provisions could present a serious concern." The full texts of Part 1 and Part 2 of the S&P Report are available on the NEM Website.

Chairman Wood testified before the Senate Energy and Natural Resources Committee on allegations of potential manipulation in western energy markets. The hearing was prompted by the release of the Enron trading strategy memos. Hotlinked here is the latest memo. Prior memos were hotlinked in last week's update. Chairman Wood declined to discuss the findings of the on-going investigation into Enron and western trading practices, but discussed the numerous proceedings that FERC has initiated with respect to the California market. Wood also discussed the failure of the CAISO to timely remedy identified market structure flaws, such as its congestion management system. Wood suggested that Congress grant FERC the power to set a refund effective date as of the date a complaint as well as increase criminal and civil penalties for violations of the Federal Power Act. The full text of Chairman Wood's Testimony is available on the NEM Website.

A FERC Staff memo dated August 16, 2001, was released on an inquiry into EnronOnline (EOL). Staff was asked to examine the impact of EOL on natural gas and electric markets given its position in the market. Staff concluded that Enron's share of gas and power trading was not high enough to warrant concern at that time. Staff also discussed the competitive advantages that EOL conferred on Enron including better price discovery, lower costs, lower exposure to price fluctuations and better market information. Staff discussed that the one-to-many market model of EOL causes an increased risk to be shouldered by parties to the transaction as compared to a many-to-many market model. Staff recommended that if Enron were to request FERC approval of an index based on EOL transactions that a condition of approval should be posting all transactions in products covered by the index including product name, price, volume, and date and time of each transaction. The full text of the EnronOnline Memo is available on the NEM Website.

The Commission issued an Order on the formation of a wholesale electric standards organization. The Commission found that the NAESB Wholesale Electric Quadrant should be the single organization to develop business practice and electronic communication standards. The Commission also found that NAESB should develop formal procedures to coordinate wholesale electric standards with wholesale gas, retail gas and retail electric business practice standards. NAESB was ordered to file an update on progress in developing the WEQ, including a timetable for completion of the effort, by July 1, 2002, as well as a follow-up report on September 1, 2002. The Commission urged the industry to establish the procedures for ensuring coordination of business and reliability standards after the WEQ is formalized, and asked NAESB to file an update on the coordination process with NERC within 90 days after the WEQ is formed. The full text of the Order is available on the NEM Website.