October 12, 2001


 Caminus Elected to NEM's Executive Committee

NEM is pleased to announce that Caminus Corporation has been elected to NEM's Executive Committee. Caminus Corporation is the world's leading vendor of Energy Trading and Risk Management Systems for participants in competitive energy markets. Dr. Ralph D. Masiello, Executive Vice President of Corporate Development, John A. Andrus, Executive Vice President of North American Software Operations, and Dr. Michael J. Denton, Vice President, North American Strategic Consulting, will represent Caminus Corporation within NEM.

 NEM Fall, Winter and Spring Meetings

Many thanks to Exelon, Nicor, Peoples, InBusiness Teleservices and Encorp for sponsoring the NEM meeting on October 4-5, 2001, in Chicago. The meeting was a resounding success and included briefings on energy infrastructure security, utility antitrust violations and NEM's Supreme Court Brief on the state action defense, and advanced energy technologies. The full text of NEM's Press Release on the meeting is available on the NEM Website.

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. Please also mark your calendar for April 1 and 2, 2002, the Annual Membership Meeting and National Restructuring Conference, that will be held at the Marriott Metro Center in Washington, DC.

 Restructuring Today Articles on NEM's State Action Defense Brief

Restructuring Today featured two articles on NEM's state defense brief filed with the U.S. Supreme Court. NEM argues in the brief that the state action defense was improperly applied to a utility's anti-competitive conduct. NEM argues that in order to qualify for the state action defense, the state must specifically approve the conduct at issue and it must actively supervise such conduct. Utilities are not entitled to this defense merely because they are utilities and are regulated by the state. The full texts of the October 2, 2001, Restructuring Today Article and the October 3, 2001, Restructuring Today Article are available on the NEM Website.

Federal Issues

 FTC Staff Report on Retail Competition

FTC Staff issued a report on retail competition endorsing a number of NEM's recommendations. The Report concerns wholesale and retail markets, standard offer service and consumer protection issues. Recommendations and conclusions set forth in the Report were as follows: 1) independent and nondiscriminatory, open access to the transmission grid is essential for effective wholesale competition; 2) interconnection standards and retail tariffs for distributed resources should be streamlined and made as uniform as practicable on a regional or national basis; 3) competitive suppliers should be able to offer competitive metering and billing services in order to implement real-time pricing and demand response measures; 4) standard offer service policies should be designed to incent new entrants to enter markets, i.e. allowing standard offer service providers to pass on changes in fuel costs and wholesale electricity prices; and 5) state implementation of consistent regulatory frameworks for consumer protection matters such as supplier licensing requirements and customer switching rules can lead to significant cost reductions for market participants and consumers. The full text of the FTC Staff Report on Retail Competition and Appendix A-Overview of State Retail Competition Plans and Market Responses are available on the NEM Website.

 NEM Comments on EIA Electric Surveys

NEM filed comments on EIA's revised electric surveys arguing that: 1) EIA's proposal to require unregulated entities to develop, design and construct the systems necessary to report the data requested by EIA as well as the imposition of the significant ongoing costs necessary to produce, verify and store the data required for compliance exceeds EIA's statutory authority; 2) EIA's issuance of the proposed surveys constitutes a major rulemaking for which EIA has not conducted a proper cost-benefit analysis; and 3) EIA's failure to change its previous policy on confidential treatment of data elements will cause market participants competitive harm. The full text of NEM's Comments is available on the NEM Website.


 Interconnection Standards NOPRs to Be Issued

FERC considered the issue of interconnection standards at this week's agenda meeting. It was decided that a two-phase NOPR approach be used. The first phase will involve development of a standardized generation interconnection agreement and procedures. The second phase will consider assignment of responsibility for the cost of interconnections and system upgrades. The full text of FERC Staff's Briefing Memo on Interconnection Issues is available on the NEM Website.

State Issues

New York

 Draft Settlement in Keyspan Proceeding

A draft settlement agreement has been circulated in the Keyspan proceeding. Due to confidentiality concerns, NEM members interested in reviewing the document should contact headquarters.


 Rebuttal Testimony Filed in Peoples Gas Choice Proceeding

Staff filed rebuttal testimony in the Peoples gas choice proceeding arguing that: 1) the utility's logo should not appear on supplier single bills; 2) suppliers should not be required to also offer the option of utility single billing service; 3) the utility should provide a calculation of the single billing credit based on embedded costs; 4) Peoples' assertion that it realizes no gas storage inventory savings from customers participating in the choice program is incorrect; 5) a credit should be used to ensure that savings from reduced gas storage inventory requirements are returned to customers; and 6) the proposal that default service should be competitively bid should be rejected. The full text of Staff's Rebuttal Testimony is available on the NEM Website.

 Illinois Power Testimony in Delivery Services Proceeding

Illinois Power (IP) filed rebuttal testimony in its delivery services proceeding arguing that: 1) IP's allocation of metering expenses was proper; 2) the twelve month minimum stay requirement should be retained; 3) IP will accept a program that used electronic signatures on letters of agency; 4) RESs performing the single bill option for residential customers should have 21 days to pay residential bills, rather than 15 days as previously proposed; and 5) IP has not provided for split billing because customers have not indicated sufficient interest to warrant incurring the start-up costs. The full text of Illinois Power's Rebuttal Testimony is available on the NEM Website.


 NEM Comments on Staff Report on Mid-Sized LDC Gas Choice Programs

NEM filed comments on Staff's Report on mid-sized LDC gas choice programs. NEM argued that: 1) buy/sell agreements should not be implemented because they cast the competitive supplier as the provider for the LDC rather than the choice customer, and competitive suppliers should have the ability to bill their customers. 2) the proposed enrollment caps would frustrate competitive suppliers efforts to achieve economies of scale in mid-sized LDC service territories and should not be adopted; 3) the proposed twelve-month minimum stay requirement will unnecessarily restrict customers from exercising the option to choose another supplier; 4) the three-month term for customers returning to utility service on a market-based rate will inhibit customers from participating in the choice program; 5) the Supplier of Last Resort function should be competitively bid for all customer classes; 6) the proposed allocation method for over- and under-deliveries is inequitable; and 7) proposed requirements for demonstration of primary firm capacity should not be adopted. The full text of NEM's Comments is available on the NEM Website.


 PSC to Examine Authority to Order Gas Utilities to Cease Retail Gas Sales Service

The PSC has requested briefs on its authority to order or authorize discontinuance of retail gas sales service by the utilities. The PSC is seeking analysis pertaining to its authority under current law and/or whether a specific grant of authority from the legislature is required. The full text of the Request for Briefs is available on the NEM Website.


 Order Issued on Minimum Stay Requirements

The Commission issued an order on minimum stay requirements providing that local distribution companies may require a twelve-month minimum stay period for electricity customers with an annual peak demand of 500 kW or greater. Customers that return to capped rate service provided by the local distribution company as a result of a competitive service provider's abandonment of service in the state may choose another competitive service provider at any time without the requirement to remain for the minimum stay period of twelve months. Staff was ordered to issue a report on March 31, 2003, reviewing the requirement and considering possible alternatives. The full text of the Order is available on the NEM Website.