November 16, 2001


 NEM Winter Meeting

Please mark your calendar for NEM's winter meeting to be held in Houston, Texas on January 17 and 18, 2001. Chris Bernard of Entergy-Koch and Tami Pallas of CMS MS&T have generously offered to sponsor the winter meeting that will be held at Entergy's headquarters. The Executive Committee will be prioritizing NEM advocacy goals, issues, states, utilities and resource allocations for 2002 and urges maximum participation by all Executive Committee members. Also, a new membership structure will be discussed including new membership categories for public officials, law firms, consulting firms, and tribal nations. Drafts of the proposals are available upon request. A quick registration form is hotlinked here for your convenience. A block of rooms has been reserved at the Renaissance Hotel located at 6 Greenway Plaza East in Houston. Be sure to request the special NEM rate of $119 per night. Contact Jennifer Webster at 281-230-1563 with any problems.

 NEM Spring Meeting

Please make sure you reserve a room at the Marriott Metro Center in Washington, DC, for NEM's April 2 and 3, 2002, Annual Membership Meeting and National Restructuring Conference. A quick registration form is hotlinked here for your convenience. Please contact NEM headquarters if you are interested in speaking, sponsorship or table-top space at the conference, as space will be limited.

 NEM Conference Call on EISB Wholesale Electric Quadrant

A conference call will be held to formulate NEM's position on the development of the wholesale electric quadrant under EISB. The conference call will be held on November 20, 2001, at 11AM. The call-in number is 303-248-1820 and the passcode is 428358. NEM will act as a facilitator of the December 7, 2001, DOE meeting on this subject (a copy of the Draft Agenda for the DOE Meeting is hotlinked here). NEM needs speakers for the December 7th conference and representatives for the November 27th GISB Advisory Meeting. The DOE meeting will include opening statements from facilitators, remarks from RTOs/ISOs, remarks from wholesale electric industry leaders, and a discussion of wholesale electric standards development issues (organization structure, organization governance, standardization efforts to be addressed in initial plan of development). The coordination of NEM's opening statement, remarks and contribution to the general discussion will be discussed in the conference call. All members are urged to participate.

 NEM Member Opportunity

NEM members who wish to use the new NEM Website as a portal to attract new business are urged to contact NEM headquarters immediately as the site is nearing pre-launch beta testing, and traffic on the NEM Website has increased significantly, both nationally and internationally.

 POLR Workshop Hosted by Institute for Regulatory Policy Studies

The Institute for Regulatory Policy Studies will conduct a workshop in Springfield, Illinois on December 6, 2001, that examines issues surrounding POLR responsibilities in the post-transition electricity and gas marketplaces. Further details are available at:


 FERC Seeks Extension and Expansion of CAISO Outage Reporting Requirements

FERC is proposing an extension of the CAISO plant outage reporting requirement. Currently, plant outages are to be reported within 24 hours of their occurrence and conclusion, whether forced, scheduled or otherwise. The requirement applies to non-municipal generators that sell into the CAISO market, are not investor-owned utilities and own, operate or control either one generation unit with a capacity of 30MW or more or generation units aggregating 50MW or more in capacity. FERC is proposing an extension of the reporting requirement from November 30, 2001, to the duration of FERC's California wholesale market mitigation plan, currently in effect until September 30, 2002. FERC is also proposing that generators also report outages that occur for economic reasons, i.e., when the CAISO allows a unit to be taken out of service because it will not be needed for dispatch. The full text of the Federal Register Notice of the Outage Reporting Requirement is available on the NEM Website.

State Issues

New York

 NEM Request for Clarification of Unbundling Proceeding Procedural Schedule

The Commission has ordered the utilities to file streamlined embedded cost studies on or before March 1, 2002. Thirty days following the submission of the studies, the utilities are to file proposed unbundled rates for competitive services, and the rates are to be effective on 90 days notice. NEM and Keyspan Energy Services submitted a letter requesting clarification of the schedule by which parties will have an opportunity to conduct discovery and offer alternative assumptions and methods to those set forth by the utilities in their submissions. The full text of NEM's Letter is available on the NEM Website.

Many thanks to Don Carroll of Keyspan Energy Services for his assistance with this matter.

 Staff Issued a Position Paper on Long Run Incremental Costs in Unbundling Proceeding

Staff issued a position paper for use in the unbundling proceeding entitled, "Concepts and Issues on Long Run Incremental Costs." In the paper Staff posits that pricing of unbundled services that are potentially competitive requires establishing prices for services traditionally provided by regulated utilities and that said prices should be set based on a measure of long-run incremental cost, including appropriate common costs. Staff asserts that Total Service Long Run Incremental Cost (TSLRIC) is such a measure. TSLRIC is to be computed based upon best available technology. Actual avoided costs are not to be considered. Staff reasons that setting prices that are lower than TSLRIC would require customers to pay the utility for services that the customer is receiving from and paying to another business.

NEM has marked up this document with its comments but has not circulated the comments. Please review these mark-ups and advise headquarters on your thoughts ASAP. NEM members are also urged to review Staff's document and forward comments to headquarters ASAP. NEM is concerned that use of Staff's document can set a dangerous precedent that can undermine competitive billing and metering services during the transition period in New York and elsewhere. The full texts of Staff's TSLRIC Position Paper and NEM's Comments on Staff's Paper are available on the NEM Website.

 Comments Sought on Customer Payment Allocation

The Commission has requested comments on the issue of the order of payment allocation in consolidated billing. Currently, all customer payments are first allocated to the utility for both past due and current charges, and the remainder is allocated to the ESCO. Staff proposes that changes to customer payment allocation be implemented in the following order: 1) utility arrears that would result in disconnection of utility service and for which a formal disconnection/termination notice has been issued; 2) past due utility charges not subject to a pending disconnection/termination notice; 3) past due charges owed to ESCOs or purchased by the utility; 4) current utility charges; 5) current commodity charges due to the ESCO or purchased by the utility; 6) other ESCOs services that may be included on the bill; and 7) any additional customer payment will be allocated or returned to the customer as the billing party desires if the customer's preference is unknown. NEM has taken the position that payment for energy services consumed should take precedence over assets that remain in place. Comments on the proposal are due January 2, 2002. The full text of the Order is available on the NEM Website.


 Staff and OPC Briefs on Commission Authority to Order Gas Utilities Out of the Merchant Function

Staff filed a Brief, agreeing with NEM's position, that the Commission has discretion under existing statutes to authorize a gas company to discontinue its provider-of-last-resort function pending a Commission determination that it is in the public interest, and no new grant of statutory authority is required for the Commission to take such action.

The Office of People's Counsel filed a Brief contending that the Commission lacks the authority under existing law to permit or order gas utilities to discontinue or abandon retail gas sales service in Maryland. OPC also argued that even if the Commission has the authority, it is not good public policy to permit such discontinuance without approval from the legislature.

The full texts of NEM's Brief, Staff's Brief and the Office of People's Counsel Brief are hotlinked here for your convenience.


 NEM Testimony in ComEd Delivery Services Proceeding

NEM's President presented expert testimony supporting embedded cost shopping credits for billing and metering services and electronic and telephonic enrollment in the ComEd delivery services proceeding. NEM's Direct Testimony and NEM's Rebuttal Testimony are hotlinked here for your convenience and use in other jurisdictions.

 Small Volume Gas Transportation Programs of Peoples and North Shore Gas

NEM has prepared draft briefs on a supplier single bill option and customer enrollment options to be submitted in the Peoples and North Shore Gas small volume gas transportation program proceedings. The full texts of NEM's Draft Peoples Brief and NEM's Draft North Shore Gas Brief are hotlinked here for member suggestions and comments. Please forward your markups to headquarters ASAP as these briefs are due November 20, 2001.

 Illinois Power Surrebuttal Testimony in Delivery Services Proceeding

Illinois Power filed surrebuttal testimony in its delivery services proceeding. Illinois Power urges that if the Commission decides to split electric and gas bills and to allow the use of electronic signatures that it should be subject to further exploration in a workshop process or generic proceeding. Illinois Power also suggested that, if adopted, compliance with such requirements be imposed on all utilities. The full text of Illinois Power's Surrebuttal Testimony is available on the NEM Website.

Other Issues

 Commissioners from important states have indicated interest in speaking at NEM's Annual Membership Meeting and National Restructuring Conference in Washington, DC, on April 2 and 3, 2002. NEM members interested in moderating and presenting competitive perspectives are urged to contact headquarters to ensure a slot on this agenda.

 NEM headquarters is offering career networking for its members. Members wishing to take advantage of this new service are urged to contact headquarters - all communications will be held in the strictest of confidences.

 NEM will be testing its new intra-internet functions, list serves and advanced Website functions over the next few months. We urge all members to contact headquarters to with suggestions to make it the best available site for members and the industry. Please let us know any glitches you experience during this testing phase so we can fix them before our formal launch. All ideas, suggestions and recommendations are welcomed and encouraged.