September 7, 2001


 CMS Energy Marketing, Services and Trading Nominated to NEM Executive Committee

NEM is pleased to announce that CMS Energy Marketing, Services and Trading (CMS MS&T) has been nominated to become a member of NEM's Executive Committee. CMS MS&T is one of the fastest growing energy marketing companies in North America. CMS MS&T specializes in the trading and marketing of energy commodities as well as the special products designed to help performance driven customers get the most from their energy purchases. CMS MS&T's products include commodity supply, commodity management, and risk management. CMS MS&T's core service area is the Midwest, but they also serve wholesale and retail energy services customers throughout the United States and Canada and are in the market every day. Tamela "Tami" Pallas, President and Chief Operating Officer, and Steve Husband, Vice President of Business Solutions, will represent CMS MS&T on the Executive Committee.

 NEM's Fall and Spring Meetings

All NEM members and prospective members are invited to join the Executive Committee for an open meeting on October 3-5, 2001, at the Palmer House Hilton in Chicago. A block of rooms has been reserved at the rate of $179 per night. In order to receive the special rate, reservations must be received by September 14, 2001, at 312-726-5500. A revised agenda for the meeting is hotlinked here for your convenience. Many thanks to Exelon, Nicor, Peoples, InBusiness Teleservices and Encorp for sponsoring the 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.

Federal Issues

 New Energy Legislation Under Consideration

NEM is conferring with key staffers on the Hill about a new energy bill that will likely be introduced in the House and focused primarily on wholesale issues. There are a number of important provisions that will impact NEM members such as: 1) interconnection standards for distributed generation and independent power producers; 2) net metering for renewables; 3) repeal of PURPA and PUHCA; (4) possible mandates for utility participation in RTOs ; (5) enforceable standards for open access with federal back-stop authority for transmission siting when a state fails to timely act with a the focus is on what will incent private capital investment in transmission. This legislation will be part of the discussion in Chicago, however, NEM members should note that support for net metering for Micro-turbines will be needed to add that provision to the bill.


 Midwest ISO Order 2000 Supplemental Compliance Filing

As ordered by the Commission, the Midwest ISO filed a supplemental Order 2000 compliance filing mainly intended to demonstrate conformance with scope and configuration requirements. The Midwest ISO maintains that as currently configured it meets these requirements and that its recent westward expansion, potential for combination with the Southwest Power Pool, and mitigation of seams issues through the Inter-RTO Cooperation Agreement with the Alliance RTO further satisfies the scope and configuration requirements. The full text of the Midwest ISO Supplemental Compliance Filing is available on the NEM Website.

 Midwest ISO Filing to Implement Super-Regional Rate Adjustment Rates

As ordered by the Commission, the Midwest ISO submitted a filing to amend its OATT to implement Super-Regional Rate Adjustment (SRA) Rates in the Midwest ISO zones. The full text of the Midwest ISO SRA Rate Filing is available on the NEM Website.

State Issues

New York

 NEM Comments on Standby Rates Considered

A standby rate design proposal was presented to the NYPSC for a decision on its August calendar. The Commission did not decide the matter. Instead, the ALJ in the standby rate proceeding has circulated the standby rate design proposal, which incorporated a number of NEM's suggestions, for an additional round of comments to be submitted by September 12, 2001. Comments are only to address the changes which include: 1) recognition that credits should apply to standby customers to reflect savings uniquely attributable to such customers; 2) development of rates within each service classification to reflect the different cost causation characteristics of standby service customers; 3) imposition of a daily as-used demand charge applicable only to a customer's daily maximum metered demand that occurs during the utility's peak periods (as opposed to the prior proposal which had an as-used demand charge applicable to a customer's maximum metered demand); and 4) interval metering requirements. NEM members should forward comments on the standby rate proposal to headquarters by Friday, September 7, 2001. The full text of the Standby Rate Proposal is available on the NEM Website.

 NYSEG Price Protection Plan

The parties have filed responses to NYSEG's modified price protection plan (PPP). NEM argued that NYSEG's PPP should be rejected and that granting NYSEG default provider status with a floating wires charge, hedging fees hidden in delivery rates and unlimited deferrals in the form of "uncontrollable costs" would give NYSEG multiple unfair competitive advantages while retaining its incumbent monopoly status.

Staff argued that NYSEG's rates under its PPP would be unjust and unreasonable throughout the PPP's entire term and should be rejected. Staff suggested that the Commission should adopt temporary rates for NYSEG reflecting a $205 million rate reduction, as of October 1, 2001. Staff further argued that the Commission should also require NYSEG to file a full rate case within 60 days of an Order imposing temporary rates.

The Consumer Protection Board (CPB) argued that NYSEG's proposed plan is too long in duration and could interfere with the development of competitive markets. The CPB argued that any long-term rate plan for NYSEG should extend no longer than four years.

The Attorney General (AG) urged the Commission to reject NYSEG's rate proposal, make NYSEG's current electric rates temporary and institute an evidentiary proceeding to determine what rates would be just and reasonable. The AG argued that the proposed duration of NYSEG's plan is too long. Also, the AG argued that because the floating non-bypassable wires charge would restrict the way ESCOs can market their services (make it impossible for ESCOs to offer a fixed rate in competition with a NYSEG fixed rate), NYSEG's ESCO charge proposal does not serve the goals of establishing a competitive retail market and should be rejected.

The full text of Responses filed by NEM, Staff, the Consumer Protection Board, and the Attorney General are available on the NEM Website.

 NFG Proceeding

NFG has circulated a draft settlement agreement to be discussed in Buffalo on September 10-11, 2001. Due to confidentiality concerns, NEM members interested in reviewing the document should contact headquarters.


 Peoples' Gas Choice Proceeding

Staff filed testimony in the Peoples' gas choice proceeding recommending that: 1) suppliers should be permitted to offer single billing services to customers through account agency, and in the future, through a single billing tariff subject to standards of conduct; 2) suppliers should be permitted to enroll customers via internet and telephone; 3) customer payments should be applied first to outstanding Peoples' charges, then to outstanding supplier charges, next to current Peoples' charges and finally, current supplier charges; 4) Peoples' proposed charges should be set as follows: application charge-$2000, aggregation charge-$200 per pool plus $1.25 per customer in each pool, customer pool activation charge-$10, LDC billing option-$.50 customer charge; and 5) the proposed daily delivery tolerance on non-critical days should be increased to plus or minus 10% of the estimated average daily usage for the pool for the month for November through April, and the estimated average daily deliveries for the month for May through October. On critical days the daily delivery tolerance should be eliminated. The full text of Staff's Testimony is available on the NEM Website.

CUB and the Attorney General filed joint testimony arguing that the aggregation charge, customer account charge, customer pool activation charge and LDC billing option charge are unreasonable and should be eliminated. They further maintained that Peoples' cash-out procedures should be modified to provide for the carryover of consumption imbalances and provide the opportunity for suppliers to cure consumption imbalances through storage. They also argued that suppliers should be able to trade imbalances. The full text of the Joint Testimony is available on the NEM Website. NEM is a party this proceeding. NEM members interested in providing input for NEM's participation in this proceeding should contact headquarters.


 Detroit Edison Electric Unbundling Proceeding

The ALJ in the Detroit Edison unbundling proceeding issued a proposed decision recommending that the Commission dismiss Detroit Edison's current filing and require a new filing setting forth explicitly unbundled rates as required by statute. Exceptions to the decision are due September 13, 2001, and replies are due September 24, 2001. The full text of the Proposed Decision is available on the NEM Website. NEM is a party to this proceeding. NEM members interested in providing input on NEM's participation should contact headquarters.


 Commission Delays Decision on Prospective Suspension of Direct Access

The Commission delayed the issuance of an order on the suspension of direct access to a special meeting to be held September 13, 2001, at which time all orders relating to ABx1-1 will be issued. A new draft decision has reportedly been drawn prospectively suspending direct access effective September 6, 2001, rather than retroactively to July. All other issues dealing with contracts signed before September 6, 2001, including renewals of such contracts, remain under consideration by the Commission to be resolved in a subsequent decision.

Many thanks to Rebecca A. Schlanert, Chief Administrator of Regulatory, Governmental & Utility Relations, of Commonwealth Energy Corporation for this summary.

Other Issues

 Washington Post Article on Falling Energy Prices

The Washington Post recently featured an article discussing the multiple causes behind declining energy prices. The full text of the article is available at: