February 8, 2001
NEM's National Energy Restructuring Conference and Annual Membership Meeting
NEM will host its National Energy Restructuring Conference and Annual Membership Meeting on April 3-4, 2001, in Washington, D.C. A number of prominent leaders from Congress, NARUC, academia and the industry have confirmed. A hotlink to the event is provided here for your convenience. NEM, Keyspan, Lodestar and PowerTrust are hosting a VIP Reception in the U.S. Capitol Building the evening of April 3rd. All members and spouses, conferees, regulators, lawmakers and staff are invited and encouraged to attend free of charge. However, everyone who wishes to go must provide their name, social security number and birth date to headquarters ASAP for security reasons.
NEM Conference Call on Government Funding to Implement the NEM Technology Policy Initiative
NEM will host a conference call with the Program Manager of the Office of Natural Gas and Petroleum Technology at DOE, to discuss how to fund the NEM technology policy initiative. The conference call will be held on February 15, 2001, at 2 P.M. EST. The conference call number is 303-248-1820 and the passcode is 428358.
NEM Conference Call on Implementation Problems in Ohio Electric Programs and Settlement Conference on FirstEnergy Market Support Generation Program (MSG)
A number of NEM members have encountered implementation problems in the Ohio electric programs such as MSG allocation issues, affiliate conduct issues, charges for interval meter data, collateral requirements, minimum stay rules, and billing issues. NEM will host a conference call on February 13, 2001, at 2 P.M. EST to discuss how to improve these implementation issues. The call in number is 303-248-1820 and the passcode is 428358.
Relatedly, the Hearing Examiner in the FirstEnergy proceeding has ordered that a settlement conference be convened to discuss and clarify the terms of the settlement pertaining to the MSG program and FirstEnergy's protocol for distribution of MSG. The settlement conference will be held on February 22, 2001, at 1:30 PM, in Hearing Room D of the Commission's Columbus offices.
NEM Member Opportunity
A leading provider of information and information services is seeking a Director of Research to report to the company President. Interested NEM members should contact headquarters.
Comments Sought on Gas and Petroleum Supplier Surveys
EIA is seeking comments on proposed surveys to be required for natural gas suppliers, petroleum product suppliers and their customers for the Northeast region to assess interactions of natural gas and distillate energy markets in the region during winter 2000-01 and the effects of fuel-switching customers on demand and market prices. The "Biweekly Gas Supplier Survey" will collect information from a sample of Northeast gas suppliers on deliveries and interruptions of service for the period of October through December 2000. Comments on the proposed surveys are due April 9, 2001. The full text of the Notice of the Proposed Surveys will be posted on the NEM Website when made available electronically.
FERC Staff Reports on Northwest Energy Situation
Staff has released reports on California plant outages and Northwest power markets and responses to questions raised at the Northwest Governors conference. Staff reported that it did not find evidence in its audits that companies were scheduling maintenance or incurring outages in an effort to influence prices but rather were accelerating maintenance to bring facilities back on-line. Staff also reported that the California plant outages did not necessarily correlate to the changes in prices on a given day.
Staff found that the high prices in the Northwest were caused by: increased demand through the 1990s, without increased generation capacity in either the Pacific Northwest or in California; extreme cold weather, high natural gas prices, low storage levels, and low water, precipitation and stream flow levels in November-December 2000; an operating environment with a large number of outages and environmental constraints; and the general atmosphere of market uncertainty. The full texts of Staff's Reports on California Plant Outages, Northwest Power Markets and Northwest Governors Conference Responses are available on the NEM Website.
Complaint Filed Against All U.S. Natural Gas Suppliers
An attorney has filed a complaint at FERC under the name, "National Association of Gas Consumers," against "all sellers of natural gas in the United States of America in interstate commerce." The complaint requests that FERC issue an Order setting a benchmark price of $2.74 per MMBtu for natural gas prices in the U.S. and provide that any sales in excess of the benchmark be subject to complaint and refunds of unjust and unreasonable rates for three years commencing on January 1, 2001. Alternatively, they request that the present level of natural gas prices be set for investigation and hearing as unjust and unreasonable and subject to refunds. The full text of the Complaint is available on the NEM Website. NEM will be filing a response to the Complaint.
NYISO Report on Virtual Bidding
NYISO has filed a report pursuant to Commission Order on its plan to implement bidding by non-physical entities ("virtual bidding"). NYISO reports that it has concluded that zonal price-capped load bidding is a prerequisite to "virtual bidding." NYISO plans to implement zonal price-capped load bidding prior to summer 2001 and to have virtual bidding operational by November 1, 2001. A strawman proposal on virtual bidding market rules will be distributed March 3, 2001. The full text of the NYISO Report is available on the NEM Website.
Reliability Collaborative Meeting
Commission Staff convened a reliability collaborative meeting on February 7, 2001. With respect to upstate, Staff wants to retain the five month primary delivery point requirement and may be open to expanding it to six or seven months. With respect to downstate, a proposal outline was discussed in which LDCs would continue buying capacity (and/or bundled products) and releasing it to marketers at weighted average cost of capacity. The five-month rule would remain in effect for marketers who do not want to take it from the LDC. If a marketer takes from the LDC, a three year commitment must be made so the marketer can't change if market capacity gets cheaper. If the marketer loses customers or leaves the market, it can turn capacity back. A marketer could also have a combination portfolio of some LDC release and some five-month rule. The next steps will entail LDCs informally canvassing marketers to see which are interested in LDC released capacity and then putting together a program proposal. At some point, Staff will want a non-binding expression of interest from marketers as to what they will take/want. Staff is concerned with a "back slide" to the LDC holding 100% of the capacity.
Many thanks to Bill Kinneary and Martha Duggan for their assistance in this proceeding.
POLR Draft Consensus Report Released
A draft consensus report on phases I and II of the POLR Proceeding has been released setting forth an analysis of policy options associated with the evolution of retail energy markets. Comments are due on the Report by March 16, 2001. The full text of the Draft Consensus Report is available on the NEM Website.
Staff Straw Proposal on Price Mitigation in ConEd Electric Proceeding
Staff has prepared a straw proposal on price mitigation in the ConEd electric proceeding. The proposal discusses the implementation of price caps upon certain triggers. Due to confidentiality concerns, NEM members that wish to review the straw proposal should contact headquarters. The next price mitigation collaborative will be held February 12, 2001, at the Commission's Penn Plaza offices.
NYSEG Tariff Filing to Implement Market-Based Retail Access Credit
NYSEG submitted a tariff filing to implement the market-based retail access credit with a fixed price adder, for electricity procurement costs and retail customer care costs, in the amount of 0.4 cents/kWh for residential and small commercial customers and 0.2 cents/kWh for large commercial and industrial customers, as was ordered by the Commission. The full text of the NYSEG Tariff Filing is available on the NEM Website.
Keyspan Gas Proceeding
At the first Phase 2 meeting of the Keyspan gas proceeding, Staff discussed its interest in developing a cost-based back-out credit for the merchant function. Staff proposed the negotiation of a second interim settlement during which time Keyspan would conduct the cost of service studies needed to properly devise the back-out credit. During the Phase 2 interim, a cost-based back-out proxy would be developed and applied. Staff also included daily balancing and telemarketing complaints on the agenda.
Keyspan indicated that it would not support another 8% credit, and it was not certain that it was interested in another short-term deal. Keyspan also indicated grave concern about what it perceived as Commission back-pedaling on its commitment to competition, citing statements made during the Competitive Markets proceeding and Staff's Straw Proposal.
Keyspan did agree to set up small working groups to devise a back-out proxy, to examine interruptible and temperature control pricing, to examine setting up a low income aggregation program, to examine setting up a cooking only aggregation program, and for therm billing.
The next meeting is scheduled for March 1, 2001.
Many thanks to Martha Duggan of Amerada Hess for this summary.
Bill Introduced on Clean Environment and Energy
House Bill 431 has been introduced pertaining to the impacts of power plants on air quality and ecosystems, lowering energy costs through increased investments in energy efficiency and promoting clean energy resources such as solar, wind and fuel cells. The full text of House Bill 431 is available on the NEM Website.
Distributed Generation Working Group Forming
The Commission has ordered the establishment of a working group to consider whether unnecessary barriers currently impede the interconnection of distributed generation resources to the electric distribution company (EDC) distribution grid and the feasibility of developing uniform interconnection standards to be followed by all the EDCs. NEM has joined this working group. Members are encouraged to contact headquarters to coordinate industry representation. The full text of the Order is available on the NEM Website.
Bill Introduced on Gas Marketer Certification
House Bill 9 has been introduced in the state legislature to subject retail natural gas suppliers to Commission certification. The bill contains requirements pertaining to certification of managerial, technical and financial capability to provide service, contract disclosures, and bill content, and customer complaint procedures and penalties. The full text of House Bill 9 is available on the NEM Website.
NEM Rebuttal Testimony in Nicor Gas Proceeding
NEM filed rebuttal testimony of President, Craig Goodman in the Nicor Gas proceeding. The testimony argues that pilot programs must be of a sufficient size to allow marketers to achieve economies of scale; reasonable and uniform rules governing affiliate relations should be established; charges for injection, storage and withdrawal should be separated from LDC services and made available on a non-discriminatory basis; and a marketer should be considered the agent of the customer for all competitive service-related issues. The full text of NEM's Rebuttal Testimony is available on the NEM Website.
Notices of Inquiry (NOIs) on Natural Gas Prices
The Commission has issued an NOI and a Supplemental NOI on the increase in natural gas prices. Initial comments are due March 2, 2001, and reply comments are due March 12, 2001. The full texts of the Notice of Inquiry and the Supplemental Notice are available on the NEM Website.
Utilities Ordered to File Interconnection Standards for Merchant Plants
The Commission has ordered the utilities to file proposed interconnection standards for merchant plants consistent with Staff's recommendations on categories of merchant plants, application of the Commission-approved seven factor test and FERC-approved standards for interconnection, and the timely review of applications. The full text of the Order is available on the NEM Website.
Exelon-NEM Testimony in Detroit Edison Proceeding
Testimony was filed in the Detroit Edison proceeding arguing against the utility's proposed Distribution Contract Capacity requirement that would charge rates to an on-site generation user as if it were always taking maximum requirements regardless of what actually happens. The full text of the Testimony is available on the NEM Website.
Many thanks to Scott Brown of Exelon Energy for his assistance in this matter.
Report on Michigan Electric Competition
The Commission has issued a report on the status of electric competition finding that the pilot programs have been helpful in developing the operational systems that will be needed for the implementation of full-scale customer choice and in demonstrating the importance of transmission in making customer choice effective. The Commission stated that the existing transmission system is physically not adequate to support a vibrant competitive market, and that in addition to physical limitations, operating procedures under FERC regulation make it difficult for new suppliers to meaningfully participate in the process of obtaining adequate transmission. The Commission reports that it is working with stakeholders in state and FERC proceedings to attempt to address both issues. The full text of the Commission's Report is available on the NEM Website.
Restructuring Bill Introduced in Senate
Senate Bill 80 on restructuring has been introduced. The bill raises a number of concerns for marketers as follows: the utility does all metering and billing; institution of a 2 MW threshold for customers to shop and no aggregation allowed to get to the 2 MW; no reduction of stranded costs based on the value of generation assets that will be sold to the utility affiliate at book costs; no commitment to unbundle utility services; no affiliate protection rules to deal with transfers between an affiliate supplier and affiliate Genco; all alternate supplier activity (supply, billing, etc.) must be done through the utility, limiting the connection with the customer and the ability to develop innovative offerings; payment order is invoked on partial payments, and the utility is paid first; the utility has the ability to set the rules for interaction outside the PUC; switching requires 30 days notice; the utility can conduct rate "experiments" directly with customers; in-state offices are required for marketers; a number of fees; at least one year (or more) minimum stay required for returning customers; and customers are only permitted to return to utility rates one time. The full text of Senate Bill 80 is available on the NEM Website.
Many thanks to Scott Brown of Exelon Energy and George Phillips of MidAmerican Energy for assistance in this state