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November 15, 2002
NEM Winter Executive Committee Meeting to Be Held in San Diego on January 16 and 17, 2003

NEM's Winter Executive Committee Meeting will be held in San Diego at the Sheraton San Diego Hotel & Marina, West Tower, on January 16 and 17, 2003. The meeting will start at 9AM on January 16 and adjourn before noon on January 17. This meeting will be for NEM Executive Committee Members only. As in the past, the Executive Committee will establish the policy positions and priorities for NEM for the coming year. A registration form is hotlinked here for your convenience. A block of rooms has been reserved at the rate of $189 per night. Place your reservations at 619-291-2900 or 888-625-5144. Reservations must be received by December 16, 2002, in order to guarantee the discounted rate.

All Executive Committeee Members are requested to attend. A draft agenda is hotlinked here for your convenience.

NEM's Annual Membership Meeting and National Restructuring Conference for 2003 - Invitation for Speakers, Sponsors and Exhibitors

Next yearís Annual Membership Meeting and National Restructuring Conference will be held April 3 and 4, 2003, at the Hyatt Regency on Capitol Hill. We have arranged for additional space to accommodate more attendees with a special room for exhibits and added sponorship opportunities. Breakfast and all breaks will be in the exhibition room that is adjacent to and visible from the general session. The Agenda is hotlinked here for your convenience. A registration form is hotlinked is hotlinked here for your convenience.

Members who wish to be speakers, sponsors or exhibitors should contact headquarters immediately. Government officials and PUC commissioners have already started to RSVP.

Conference Call to Develop Policy Guidelines or Best Practices on Clearing and Settlement

NEM convened a conference call to discuss formation of NEM Policy Committees on Clearing and Settlement & Mark-to-Market and implementation of FASB-133. Outlines of best practices or issues involved in Clearing and Settlement and Mark-to-Market and implementation of FASB-133 will be circulated next week. NEM members interested in participating in the development of national policied regarding these issues should send their contact information to NEM headquarters.

Plan of Ontario Premier to Freeze Electricity Rates

The Eves government in Ontario has proposed a plan to: 1) freeze the price for power at 4.3 cents/kwh for residential and small business customers and providing large C&I customers with a choice between current arrangements and the 4.3 cents/kwh fixed rate; 2) institute the price freeze on a retroactive basis to May 1 with refunds payable for the difference in the amount actually paid and the 4.3 cent/kwh rate; 3) cap delivery rates at current levels; 4) review how other charges on electricity bills are calculated, including Independent Market Operator charges and fixed monthly customer charges; 5) remove the GST from electricity bills; 6) provide incentives for customers to conserve; 7) stimulate new supply with an emphasis on clean, alternative and renewable resources; 8) provide tax incentives and "tax holidays" for conservation, clean energy and alternative fuels; and 9) require net metering and connection agreements for self-generators and small-scale distributed generation. The plan would continue in effect until at least 2006. NEM has filed a letter with Premier Eves voicing its concerns about the proposal.

The full text of NEM's Letter to Premier Eves is available on the NEM Website. The full text of the Plan is hotlinked here for your convenience . News releases from the Office of Premier Eves and Ministry of Energy are hotlinked here for your convenience.

Senate Governmental Affairs Committee Investigation into FERC's Oversight of Enron

The Staff of the Senate Governmental Affairs Committee released a memo on FERC's oversight of Enron, and the Committee held a hearing this week on the subject. Staff concluded in its memo that: 1) the Commission's Office of Market Oversight and Investigation may not be enough to, "transform the agency into the proactive, aggressive regulator needed to protect consumers from the greed and subterfuge Enronís collapse revealed;" 2) more Commission resources must be devoted to market oversight and investigation; 3) the Commission must undertake a total reorientation of its regulatory approach; 4) FERC must improve its coordination with other regulatory agencies; and 5) internal staff activities and communications with the Commissioners must be better coordinated.

In his testimony before the Senate Committee, Chairman Wood noted the many generic initiatives the Commission has undertaken since he assumed his post including the standard market design rulemaking, the rule on reporting changes in fair value of certain investment securities, derivatives and hedging activities, revisions to reporting requirements on services and sales, the standards of conduct rulemaking, the cash management practices rulemaking, and the notice of inquiry on negotiated rates for natural gas pipelines. Chairman Wood also discussed institutional initiatives the Commission has undertaken including the creation of the Office of Market Oversight and Investigation, better coordination with the RTO market monitoring units, and better coordination with other agencies. Wood said Congress should increase FERC's penalty authority. He recommended broadening the sections of the Federal Power Act (FPA) for which violations will result in civil penalties. He also recommended increasing the penalty authority under the FPA and Natural Gas Act (NGA) from the current level of $5,000 to $1 million and increasing the potential prison term from two to five years. For criminal violations of FERC rules or orders under the FPA or NGA, Wood recommended increasing the penalty from $500 per day to $25,000 per day. The full texts of the Staff Memo and Chairman Wood's Testimony are available on the NEM Website.

NEM Comments on Standard Market Design

NEM submitted comments on the Commission's standard market design rulemaking noting its overall strong support. NEM also noted FERC's statutory authority to require, implement and enforce the rulemaking. NEM recommended that: 1) FERC should mandate ITPs/RTOs with as large a geographical scope as possible; 2) states should be encouraged not to socialize LMP; 3) ex post settlement should be used for real time energy pricing, and ex ante pricing should be used strictly for informational purposes; 4) negawatts should be treated the same as megawatts; 5) the concepts of market power and competitive pricing need to be better defined consistent with NEM's suggestions; 6) the NYISO AMP mechanism is flawed; 7) a standardized software solution for SMD should be implemented utilizing XML technology; 8) the proposed stakeholder groupings of generators/marketers and end-users/retail energy providers should be separated, and the stakeholder committees should be structured so that no group is able to take the plurality; and 9) uniform creditworthiness requirements should be adopted. The full text of NEM's Comments is available on the NEM Website.

NEM Comments on Competitive Market in Illinois

NEM submitted comments for the Commission's Competition Report to the legislature. NEM argued that current barriers to the establishment of a competitive retail market in the state include: 1) the lack of accurate and timely price signals; 2) artificial rate freezes; and 3) the method of calculation of market values and the related calculation of transition charges. NEM submitted that a major impediment to new distributed generation investments is the lack of national interconnection standards and uniform business rules. NEM argued that competition for small-use electric customers is feasible if consumers are provided with unbundled rates based on embedded costs. NEM also supported telephonic enrollment and aggregation to promote the development of competitive markets. NEM recommended encouraging efficient investments to upgrade the energy infrastructure by expanding existing tax credits and expedited prudency reviews for "Qualified Energy Restructuring Investments." NEM also urged that the restructing statute should be modified to nullify the Illinois Appellate Court decision requiring that alternative retail electric suppliers must demonstrate that their utility affiliates' territories are open to competition. The full text of NEM's Comments is available on the NEM Website.

New Jersey
NJBPU Decides Basic Generation Service Auction Format

NJBPU approved the use of a simultaneous descending clock auction format for the procurement of Basic Generation Service (BGS). In February 2003, there will be two auctions, an auction to serve residential and small commercial and industrial customer load and an auction to serve large C&I load.

The auction period to serve residential and small C&I customers includes a 10 month period for two-thirds of the load and a 34 month period for the remaining third. The auction schedule will be synched with the PJM capacity period, which starts on June 1. These customers can switch between BGS Fixed Price (FP) service and third-party suppliers (TPS) without restriction (subject to a 20-day notification period to the utility and the terms of their TPS contract). The auction period for large C&I customers is ten months. These customers can switch between BGS Industrial Energy Pricing (IEP) service and TPSs in the same manner as the BGS-FP class.

Prior to the BGS auction, JCP&L will request sealed bids to provide for 200 MW of green energy. NJBPU also adopted a proposal which provides incentives of $0.005 per KWH to each retail green provider for power delivered starting June 1, 2004, to a maximum of 200,000 residential customers. The full text of the BGS Order will be posted on the NEM website when made available electronically.

Provider of Last Resort/Supplier of Last Resort Collaboratives to Recommence

The Provider of Last Resort/Supplier of Last Resort collaboratives that were initially started over two years ago will recommence. Staff is preparing a revised distribution list for those interested in participating in future meetings and activities. Those interested in being added to the list should contact: NEM will be participating, and members interested in this proceeding should contact headquarters.

Staff Competitive Metering Strawman

Staff has prepared draft competitive metering rules applicable to C&I customers as of January 1, 2004. The draft rules permit meter ownership for entities other than the electric utility. Customers may also choose a competitive provider for the installation and routine maintenance of a non-utility-owned meter. Regardless of whether a customer owns it own meter, the customer is deemed the owner of its metering data. The strawman states that, "as the retail electric market matures, additional elements of metering services may be appropriate for competition." Comments on the strawman are due November 22, 2002, and reply comments are due November 27, 2002. The full text of the Strawman is available on the NEM Website. NEM members should forward their comments on the draft rules to headquarters ASAP.

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