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November 22, 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 year’s 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.

Global Energy Management Institute Conference

The Global Energy Management Institute (GEMI) will host a seminar entitled, "U.S. Energy Trading Crisis: Clearing, Credit and Confidence," on January 23, 2003, at the University of Houston. Participants will include OTC clearing organizations, credit agencies, industry participants and academics. The full text of the GEMI Seminar Announcement is available on the NEM Website.

NEM Comments on FCC National Do-Not-Call Registry Proposal

NEM filed comments on the FCC's rulemaking on a national do-not-call (DNC) registry. NEM urged the Commission to reject the implementation of a national DNC registry. NEM argued that a national DNC should not be applied to the competitive energy market and that the matter of energy consumer enrollment should be a matter of state and local jurisdiction. NEM also argued that a national DNC registry will unnecessarily restrict commerce and will not yield an appreciable increase in consumer protection. The full text of NEM's Comments is available on the NEM Website.

FERC Technical Conference on the Resource Adequacy Requirement Proposal in Standard Market Design NOPR

On November 19, 2002, FERC held a technical conference to discuss aspects of the resource adequacy requirement (RAR) proposal in the SMD NOPR. Kevin Kelly of Commission Staff opened the conference by stating that the NOPR will complement existing resource provisions, rather than supplant them. The conference was divided into four panel sessions. The first three panels were divided by region and the last panel included state commissioners and associations. Panel members briefly described their positions on RAR and then answered FERC staff questions about enforcement and the need for centralization. Highlights of the conference included KeySpan's support of a market with a two-part demand curve, annual auctions, a capacity market and a long-term bilateral market and Green Mountains' view that costs of new resource payments should be collected from all customers and that there should be incentives for new generation. The full text of NEM's Summary is available on the NEM Website. The full text of NEM's RAR Proposal submitted at the conference is also available on the NEM Website.

Gas Unbundling Settlement Approved

The Commission approved a settlement in the gas unbundling proceeding. The settlement provides that: 1) the LDCs will continue to act as the SOLR for at least the next three years and continue to be responsible for long-term supply and capacity planning activities; 2) Shifted capacity-related costs are to be phased out over a four year period. A $0.30/mcf transition charge will be implemented for firm transportation customers on and after December 1, 2002, that will increase to $0.34/mcf beginning December 1, 2003. At least two-thirds of net shifted capacity costs are to be eliminated by December 1, 2004, and all capacity-related shifted costs are to be eliminated by December 1, 2005; 3) by June 1, 2003, parties are to submit a proposed approach to capacity assignment to marketers; 4) all LDCs will treat cashouts uniformly and will permit, "any trades of equal and opposite gas quantities for pools on the same pipeline with the same balancing requirements by any Marketer with the application of tariff provisions related to standby service, balancing and cashout applying only to the post-trading positions of such Marketer," and, "the calculation of daily cashout imbalances using a Gas Daily index appropriate for each pipeline and firm transportation pool." The full text of the Order is available on the NEM Website. The full text of the Settlement Agreement is available from NEM headquarters.

Commission Found ComEd's Rate 6L Service was Competitive

The Commission found that ComEd's Rate 6L, a tariffed service available to large commercial and industrial customers, is competitive with respect to customers whose loads are 3MW and greater. Due to a concern that future developments could lead to a decrease in competition for this customer segment, the declaration that ComEd's service is competitive was granted by operation of law. The Commission will monitor the ongoing development of the market for this particular customer group.

In its Order, the Commission found, consistent with NEM's argument, that a seven-prong test contains the proper criteria to consider when declaring service "competitive." The Commission found that an "identifiable customer segment" can be identified by examining ComEd's annual usage data in the same manner as ComEd examines it to determine eligibility for Rate 6L. The Commission agreed with NEM that the criterion of "reasonable equivalent substitute service" does not mean an "exact equivalent" and held that the substantial number of customers who have left bundled service for alternative service (as indicated in ComEd's switching data) was sufficient to demonstrate the existence of reasonable equivalent substitute service. The fact that sophisticated customers have chosen to buy their power from alternative suppliers was very compelling that such alternatives are priced comparably to or more favorably than Rate 6L. Therefore, the existence of substitute service available at a "comparable price" was met. The Commission held that the five alternative suppliers serving customers with loads of 3MW or more satisfied the "other providers" criterion. Given that ComEd has lost nearly 1/3 of its customers in the 3MW or greater group to alternative suppliers, the Commission sustained ComEd's proposition that it has met the "loss of business" prong. The Commission did not require proof of actual economic harm to prove this element. The Commission, after examining the amount of "transmission capacity" into ComEd's service area, concluded that ComEd has adequate transmission capacity to make electric power reasonably available. The Commission held that the criterion of "customer switching" can be (and was satisfied) by switching data, particularly if it is substantial. While, the Commission reserved the right to review this issue on a case-by-case basis, it held that ComEd's switching data was substantial. The full text of the Order has been hotlinked here for your convenience.

Settlement Agreement on Standard Offer Service

A settlement agreement has been submitted on standard offer service (SOS). The proposed settlement extends the utilities' obligation to provide SOS and provides that the utilities will obtain electric supply for SOS customers through a competitive wholesale procurement process. Prices for SOS customers are to be set as: a) the seasonally-differentiated and time-of-use differentiated (if applicable) load weighted average of all awarded electric supply prices for specific services in each year; b) retail charges to recover FERC-approved transmission charges and any other PJM charges and costs incurred by a utility directly related to its residential SOS load obligation; c) an administrative charge; and d) applicable taxes. The administrative charge is proposed as follows: residential customers - 4 mills/kwh, Type I non-residential customers - 5 mills/kwh, Type II non-residential customers - 6 mills/kwh, Type III large customers - 6.5 mills/kwh and hourly-priced non-residential service - between 2.25 and 3.0 mills/kwh. The full text of the Settlement Agreement is available on the NEM Website.

New Jersey
Utilities Submits Basic Generation Service Compliance Filings

Pursuant to the Board's Order approving the utilities wholesale procurement of energy to serve Basic Generation Service customers beginning on August 1, 2003, the utilities have submitted revised compliance filings. The filings detail the BGS-Fixed Price and BGS-Hourly Energy Price auction processes to be utilized. Utility-specific addendums were also filed. The full texts of the BGS-FP and BGS-HEP Auction Compliance Filing, PSEG Addendum, JCP&L Addendum, ACECO Addendum and RECO Addendum are available on the NEM Website.

NEM Comments on Competitive Metering Strawman

NEM submitted comments on Staff's competitive metering strawman. NEM supported the strawman proposals permitting customers to participate in competitive metering by purchasing a meter and permitting customers to choose a competitive provider for installation and routine maintenance of a non-utility-owned meter. However, NEM argued that the strawman did not comply with the terms of the restructuring law which required that all competitive metering services, such as meter data services, be available on a competitive basis to C&I customers beginning on Janaury 1, 2004. NEM also noted that the strawman failed to set forth timelines for implementation, a methodology for determining metering cost credits, data transmittal standards, certification standards, or a process for developing a metering manual. The full text of NEM's Comments is available on the NEM Website.

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