November 9, 2001


 NEM Winter and Spring Meetings

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. An agenda and additional details will be forthcoming. 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 (please allow a few days for the rate to be entered in the hotel computer system). Contact Jennifer Webster at 281-230-1563 with any problems.

Please also mark your calendar for April 2 and 3, 2002, NEM's Annual Membership Meeting and National Restructuring Conference, that will be held at the Marriott Metro Center in Washington, DC. 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.

 Restructuring Today Article on NEM POLR Policy

Restructuring Today featured an article on NEM's policy on proper POLR pricing structure as well as letting out POLR service for competitive bid. The full text of the Article is available on the NEM Website.

 Member Opportunity

NEM members who come to the Washington, D.C.-area often and who might be interested in becoming a member of the Historic George Town Club should contact headquarters. One invitation for a membership at a $1,000 reduced membership fee is available.


 FERC Issues Order on RTO Filings

FERC issued an Order to provide guidance on how it will proceed with RTO filings and related efforts. FERC will proceed with two parallel tracks. The first track will involve addressing issues of geographic scope and governance of RTOs in the pending RTO dockets. The second track will be a rulemaking to reform open access tariffs to standardize market design rules. The rulemaking will address business and process issues necessary to accomplish Order 2000 functions. The resulting tariff will be required to be filed by RTOs and other public utilities that own, operate or control interstate transmission facilities.

FERC will create state-federal RTO panels to establish a dialogue with state Commissions. The first issue for the panels to address will be the make up of regional markets. FERC will also perform additional cost-benefit analyses to demonstrate whether, and if so, how RTOs will yield customer savings and to provide a quantitative basis for the appropriate number of RTOs.

FERC also discussed the two-phase NOPR process that will be used for standardized generation interconnection agreements and procedures. The first phase will entail a January 2002 NOPR on terms and conditions of interconnection services. The second phase will entail an April 2002 NOPR on pricing issues associated with interconnections. FERC believes that an early resolution of the pricing issue will aid in resolving RTO issues.

All NEM members interested in helping to formulate NEM's position on these issues are encouraged to contact headquarters ASAP. A subsequent order will be issued to clarify the RTO progress timeline. The full text of the Order is available on the NEM Website.

State Issues

New York

 Order Issued in Unbundling Proceeding

The Commission just issued an Order in the unbundling proceeding requiring the utilities to file streamlined embedded cost of service studies on or before March 15, 2002. The utilities are further required to file fully allocated embedded cost of service studies with their next major rate filings. A full analysis will be set forth under separate cover. The full text of the Order is available on the NEM Website.

 Order on EDI Test Plans and Data Standards

The Commission issued an Order approving EDI test plans and data standards as follows: the Technical Operating Profile, EDI Glossary of Terms, Account Change Business Process, 814 Change Data Dictionary, and 814 Change Implementation Guide. The full texts of the Order and Supplements are available on the NEM Website.

 Central Hudson Tariff Filing

Central Hudson submitted a tariff filing to implement the Commission's recent Order. Pending the results of the unbundling proceeding, the tariff provides electric back-out rates of $.0005/kwh for SC 13 customers, $.002/kwh for SC 3 customers, $.003/kwh for SC 2 demand customers, and $.004/kwh for SC 1, SC 2 non-demand and SC 6 customers. The tariff also provides that retail suppliers and direct customers will be reimbursed for NYISO-defined ancillary service charges incurred on or after February 1, 2002. A gas back-out rate of $.15/mcf is also provided. The full text of the Central Hudson tariff filing is available from NEM headquarters.

 Briefs on Temporary Electric Rates for NYSEG

Staff, the Consumer Protection Board and the Attorney General filed briefs arguing that a temporary rate reduction should be implemented for NYSEG citing NYSEG's return on equity of 35% as a principal reason. The full text of the Briefs of Staff, the Consumer Protection Board, and the Attorney General are available on the NEM Website.


 Texas Commission Expected to Issue Favorable "Price to Beat" Order for TXU Service Territory

A proposed decision was issued in the TXU "price to beat" fuel factor proceeding. The decision grants TXU a $25.017/MWH fuel factor, higher than TXU's request of $24.948/MWH. The decision is an indicator of the PUC's commitment to establishing the price to beat high enough to encourage customer switching to competitive suppliers. Hearings were held on the proposed decision this week and a final order is expected shortly.


 NEM Comments on Gas Utilities Exit of Non-Monopoly Functions

NEM submitted Comments arguing that the Commission currently has the statutory authority to order the utilities to exit non-monopoly functions. NEM recommended that the Commission issue an order setting forth a date certain by which utilities should exit non-monopoly functions in order to provide market participants with certainty in formulating business plans to enter and compete in the Maryland gas market and to provide consumers with the benefits of a fully open, competitive market. The full text of NEM's Comments is available on the NEM Website.


 NEM to Testify in ComEd Delivery Services Proceeding

NEM is to testify as an expert witness at the hearing on ComEd's delivery service rates on November 14, 2001, on the propriety of embedded cost methodologies for rate design and credit calculations, use of electronic signatures, use of distributed generation, and the exit of utilities from all competitive products, services, information and technology.

 Rebuttal Testimony in Illinois Power Delivery Services Proceeding

Staff filed its rebuttal testimony in the Illinois Power delivery services proceeding arguing that is unclear whether account agents could be considered third party collectors, and therefore subject to the requirement of executing a contract on payment arrangements with the utility. Staff also discussed its support of the concept of splitting gas and electric accounts. The full text of the Staff's Rebuttal Testimony is available on the NEM Website.


 Marketers Respond to Motion on Historic Usage Information

The Attorney General filed a Motion opposing DTE's Order allowing release of customers' historic usage information on an opt-out basis to competitive suppliers. NEM and other marketers filed a letter urging that the order be allowed to stand because it carefully balanced the interests of consumer protection and fostering a competitive market. The full text of the Attorney General's Motion and the Marketers' Letter is available on the NEM Website.


 Commission Orders Review of Retail Gas Markets

The Commission directed Staff to initiate a review of whether uncollectible revenue is the reason that retail natural gas rates are not tracking wholesale rates. Pursuant to that review, the four leading marketers in the state are required to provide information pertaining to total uncollectibles and bad debt for all customers, monthly operating reports, balance sheets, income statements, annual reports, a description of gas supply contract terms, monthly average weighted cost for supplier contracts, and pricing methodologies for the twenty-two month period prior to October 2001. Staff will also analyze the impact of deregulation on customers and compare Georgia's retail natural gas prices with prices paid in other states. The National Regulatory Research Institute will perform an analysis of whether marketers are able to exercise market power in Georgia. The full texts of the Order and Supplement are available on the NEM Website. NEM filed a letter of protest with the Commission opposing audits of marketer books and records. A copy of NEM's Protest is available on the NEM Website.


 Hearing on Suspension of Direct Access

A prehearing conference was held this week on matters pertaining to the suspension of direct access. Commissioner Wood indicated that he is seriously considering supporting the suspension of contracts executed before September 20, 2001. Commissioner Wood was also interested in the proposal to assess exit fees or surcharges on direct access customers as an alternative to suspending contracts entered into before September 20, 2001. Another conference has been scheduled for December 12, 2001.

Many thanks to Bob Dickerman and Glen Sullivan of Sempra Energy Solutions for this summary.

Other Issues

 DOE-NEM-ELCON-EPSA Meeting on Electric Industry Standards

DOE will sponsor a meeting to be facilitated by NEM, EPSA and ELCON on the issue of a wholesale market electricity standards organization. The meeting will be held on December 7, 2001, at 10AM, at DOE. The full text of the Draft Agenda is available on the NEM Website. All NEM members interested in participating in this meeting are urged to contact NEM headquarters immediately.

 GISB Advisory Committee

NEM has also been selected to serve on the GISB Advisory Committee and will be attending an upcoming meeting of the committee on November 28, 2001, at 9AM at the Baltimore Hyatt Regency. The topics of discussion pertain to GISB endorsement of an energy standards organization. All NEM members interested in participating in this meeting are urged to contact NEM headquarters immediately.