NEM is pleased to announce that Financial Engineering Associates, Inc. (FEA) has been nominated to the Executive Committee. FEA is the leading source for pricing models and risk management analytics designed specifically for the energy market. Mark B. Garman, Ph.D., President, Laurent Birade, Vice President of Corporate Strategy, Carlos Blanco, Ph.D., Director of Global Support and Educational Services, Angelo Barbieri, Ph.D., Director of Financial Engineering, Cheryl Morgan, Energy Markets Specialist, and Sarah E. Althoff, Vice President of Strategic Alliances will represent FEA within NEM.

The Leadership of the NEM Executive Committee will circulate nominations for the National, Regional and State Policy Chairs and Co-Chairs for the coming year prior to the June 20 Membership Meeting and Conference. A special meeting of the Executive Committee is scheduled for the evening of June 19 from 6PM-8PM at the Marriott Metro Center to consider the structure of the Executive Committee and to vote on the nominations. Drinks and light hors 'douerves will be served at the meeting. We will not be attending "The 2002 President's Dinner."

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. We are experiencing difficulties on our website. If you have problems signing up, please call headquarters at 202-333-3288.

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 the revised draft Master Netting Agreement and Collateral Annex and to explain its provisions. Comments will then again be accepted for approximately 10 days subsequent. It has also been decided that a second version of the agreement should be created that allows only closeout netting and does not involve netting of exposures for determining collateral requirements. 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.

NAESB, DOE, EEI 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.

NEM will convene a conference call for the task force on May 28, 2002, at 4PM EST. The phone-in number is 703-788-0600 and the passcode is 209353.

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.

Caminus has issued a White Paper entitled, "A Caminus Response to Recent High Visibility Energy Market Problems." The Paper discusses recent market issues such as round trip trading, allegations of manipulation of transmission capacity reservation systems, lack of energy market transparency in the areas of physical asset and trading contract valuation, inadequacy of current internal and external industry reporting practices, and calculations of earnings and cash flow risk and credit exposure. The Report concludes that, "recent events will not fundamentally threaten the proper functioning of the energy markets over the long term." The full text of the Caminus White Paper is available on the NEM Website.

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.

CFTC has developed a online questionnaire for the purpose of allowing reporting of "suspicious activities or transactions involving Enron, its subsidiaries, affiliates, or related entities." The questionnaire is intended to collect information pertaining to transactions that may have effected western electricity or natural gas prices from January 2000 through December 2001. The full text of the Enron Questionnaire is available on the NEM Website.

FERC hosted a technical conference this week to discuss the standards of conduct rulemaking. Barry Green of Ontario Power Generation appeared as a panelist on behalf of NEM. The discussion centered on proposed modifications to the definition of "energy affiliate," with many of the utilities arguing that the scope of the definition was too broad and would cause them to incur costs in the tens or hundreds of millions of dollars to implement. The utilities described their integrated resource planning activities. Chairman Wood expressed surprise that significant retail operations (i.e. metering and call center functions) continued to reside in the transmission function, particularly with respect to the entities that were RTO members, as this did not appear to support the proposed RTO exemption set forth in the rule. The utilities also argued that the proposed separation of certain employees as well as the automatic imputation rule would impede the ability to perform enterprise-wide risk management. FERC staff discussed its increased sensitivity to utilization of conduits given recent events and questioned how it could audit to see if a conduit was used and what penalties would be assessed. Staff indicated the parties would have to justify retention of the no conduit rule. A short amount of discussion was directed to the issue of discount posting with one marketer arguing that contemporaneous posting of discounts would harm the market and make it impossible to hedge risk.

NEM will convene a conference call on June 3, 2002, at 2PM EST to discuss supplemental comments to file on the rulemaking. Topics will include independence of retail functions, no conduit versus automatic imputation rules, and posting of transmission discounts. The phone-in number for the call is 703-788-0600, and the passcode is 209353.

Many thanks to Barry Green of Ontario Power Generation for his assistance.

FERC issued requests for admissions to sellers of wholesale electricity and/or ancillary services in the WSCC during 2000 and 2001 as well as sellers of natural gas in the WSCC and/or Texas during 2000 and 2001. The data requests pertain to whether these companies engaged in "wash," "round trip" or "sell/buyback" trading. Responses with respect to electric wash trades are due May 31, 2002, and responses with respect to gas wash trades are due June 5, 2002. The full texts of the Request for Admissions on Electric Wash Trades and Request for Admissions on Gas Wash Trades are available on the NEM Website.