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June 14, 2002
NEM Executive Committee Leadership Meeting and Nominations

The Leadership of the NEM Executive Committee circulated nominations for the National, Regional and State Policy Chairs and Co-Chairs for the coming year. All Executive Committee members are invited to Salons D and E of the Metro Center Marriott from 6PM to 8PM on June 19, 2002, for a cocktail hour and an Executive Committee meeting on strategies to address the growing crisis in our industry. Members will then be free to pair off and go out to dinner thereafter. EC members who cannot attend and wish to cast votes or send comments are urged to do so by email before the meeting.

NEM Annual Membership Meeting and National Restructuring Conference to Focus on Crisis in Energy and Financial Markets

Senators, FERC, PUC and FTC Commissioners have confirmed for NEM's Annual Membership Meeting and National Restructuring Conference to be held June 20 and 21, 2002, at the Marriott Metro Center in Washington, DC. An updated agenda, registration form and electronic brochure is hotlinked here for your convenience. All Congressional members and Staff of the Conference Committee on the Energy Bill have been invited to the NEM VIP reception to be held on the evening of June 20, 2002, in the Senate Hart Office Building Room SH-216. If you plan to attend the conference and the reception, we need your security information ASAP. Firm headcounts are needed ASAP. If you need help signing up, please call headquarters at 202-333-3288.

NEM's National Restructuring Conference has been refocused to the growing crisis in the energy and financial markets. NEM's Risk Valuation, Management and Financial Accountability Task Force will be developing guidelines and a code of conduct to address the credit, risk and financial issues facing the industry in the wake of Enron, and the preliminary findings of the Taskforce will be reviewed at the Conference.

NEM-EEI Master Netting Agreement

A final working session of the Master Netting Working Group will be held on June 24, 2002, at EEI's Washington, DC office beginning at 10AM. A revised draft of the MNA has been prepared, and comments on the draft are due by June 21, 2002, to and It is expected that a final version of the MNA will be introduced on July 1, 2002. The full texts of the Revised MNA Draft (Clean) and Revised MNA Draft (Redlined) are available on the NEM Website.

Many thanks to Dede Russo, Marty-Jo Rogers, Chris Bernard, Vince Duane and others for their leadership and hard work on this important project.

NEM-NAESB Meeting on Credit, Risk Management and Financial Disclosure Issues

NEM has agreed to co-sponsor with NAESB (North American Energy Standards Board) an inter-industry/inter-agency meeting on all of the credit, risk management and financial disclosure issues contained in the strawman of NEM's Risk Taskforce (to be introduced at the NEM conference next week) on July 22, 2002, in Washington DC. A formal announcement will be forthcoming shortly. Please mark your calendars accordingly.

NEM Comments on Standards of Conduct

NEM submitted supplemental comments on the Commission's standards of conduct. NEM supported FERC's proposal to separate transmission providers' retail sales function from their transmission function. NEM argued the measure is within FERC's jurisdiction as recognized by the Supreme Court and is necessary to ensure that all participants have access to the same information. NEM requested that the Commission provide guidance as to how companies can perform the risk management function within the constructs of either of the "automatic imputation" or "no conduit" information-sharing prohibitions. The full text of NEM's Comments is available on the NEM Website.

NEM Comments on Generation Interconnection

NEM submitted comments supporting the Commission's initiative to develop a standard interconnection agreement and standard interconnection procedures. NEM argued that the marketplace will benefit from standards for smaller distributed generation units as well as the uniform development of "negawatt" programs that treat all participants fairly and permit distributed generators to sell their output as a commodity on the wholesale market. The full text of NEM's Comments is available on the NEM Website.

Commission Approves CAISO Aggregated Distributed Generation Pilot Project

FERC issued an Order approving the CAISO's aggregated distributed generation pilot project. The pilot will run from June 1, 2002, through December 31, 2002, for DG units with a rated capacity of less than 1 MW. The DG units will be aggregated to form an Aggregated Distributed Unit that will be able to schedule its output with the CAISO and bid into the ISO Supplemental Energy market. The full text of the Order is available on the NEM Website.

Commission NOPR on Marketer Billing Rules

The Commission issued a NOPR to revise its rules on gas marketer billing practices. Rulemaking proposals include: 1) a 20 day (increased from 15 day) grace period for bill payment; 2) requiring that marketer bills be based on actual meter reads but allowing for an estimated bill, for a maximum of two consecutive months, when the utility doesn't make actual meter readings available; 3) increased bill format requirements; 4) retention of billing dispute records for two years; and 5) a billing dispute resolution process. If a marketer issues a bill in violation of the billing rules it must pay, "the consumer $100, plus either $5 per day, accruing from the date the Commission notified the marketer it was investigating the dispute, that the consumerís billing situation was not rectified or an amount determined by Order of the Commission. A marketer found at a hearing to be in non-compliance with this Commission Rule shall be subject to a fine of $100 per violation." The full text of the NOPR is available on the NEM Website.

NEM Testimony in Detroit Edison Unbundling Proceeding

NEM filed testimony in the Detroit Edison unbundling proceeding urging the Commission to require DTE to implement embedded cost-based unbundled rates in order to facilitate consumers' ability to make price comparisons with competitive options as well customer migration in general. NEM urged that rates should be unbundled in more detail than simply generation, transmission and distribution, to include information about competitive services such as billing, metering, customer care and enrollment. NEM also urged that the unbundled rate information be made available on customer bills. The full text of NEM's Testimony is available on the NEM Website.

Many thanks to Phil O'Connor of AES NewEnergy and Jennifer Frye of Dickinson Wright for their assistance with this proceeding.

New York
NYSEG and ConEd Submit Standby Rate Filings for On-Site or Wholesale Generation

NYSEG and ConEd have submitted draft standby rate filings. NYSEG's filing is applicable to "existing customers, and potential customers, where all or a portion of the customer's electricity is supplied from On-Site Generating facilities that produce electricity primarily to serve that customer's native load, or wholesale generators that operate mainly to produce and sell electricity in the wholesale market." NYSEG's filing provides that: 1) the customer charge will be based on marginal cost; 2) the as-used demand for customers with mandatory interval metering with contract demand of 50kw or more is the maximum metered demand during on-peak hours for each daily occurence, subject to an as-used demand charge, per kilowatt, per day; 3) the as-used demand for customers with demand metering is monthly metered kilowatts, subject to an as-used demand charge per kilowatt; 4) customers with less than 50kw of contract demand that want to be billed on an interval meter rate must install the meter at their own expense; 5) the as-used demand for customers without demand metering and less than 50kw of connected load is monthly metered kilowatt-hours, subject to an as-used demand charge, per kilowatt-hour; 6) a contract demand charge will be assessed, and contract demand is the customer's maximum load supplied by all sources. The full text of NYSEG's Standby Rate Filing and Exhibit A is available on the NEM Website.

ConEd's standby rate filing is applicable to delivery of power and energy, "to replace or supplement power and energy ordinarily generated by an on-site generator and for 'station use' by a wholesale generator." The filing includes an interconnection charge, transmission contract demand charge, distribution contract demand charge, customer charge, as-used transmission demand charge and an as-used distribution demand charge. The full text of ConEd's filing will be posted on the NEM Website when made available electronically.

PUC Issues Investigation Report on PJM ICAP Market

A PJM Market Monitoring Unit report concluded that an entity, later identified as PPL Energy, raised the price of ICAP during the period of January-April 2001 "above the competitive level." The Commission initiated an investigation into the PJM ICAP market subsequent to the PJM report. The Commission has concluded that, "anticompetitive or discriminatory conduct including the unlawful exercise of market power and the threat of future recurrences of similar conduct is preventing the retail customers in this Commonwealth from obtaining the benefits of a properly functioning and workable competitive retail electricity market." The Commission referred the matter to the state Attorney General, the U.S. Department of Justice, and FERC. The Commission suggests that FERC utilize a standard condition in every market-based rate authorization that forbids anticompetitive behavior, the exercise of market power or the misuse and abuse or gaming of tariffed or non-tariffed rules or regulations. The Commission also suggested that FERC strengthen the authority of RTO market monitors. The full texts of the Investigation Report, Statement of Chairman Thomas and Statement of Commissioner Wilson are available on the NEM Website.

Competitive Provision of Default Service

Commission Staff has begun an effort to examine the competitive provision of default service. Staff has requested comments on: 1) supplier interest in providing competitive default service; 2) the technical, regulatory and legal barriers to competitive provision of default service; 3) the desirability and feasability of utilizing a competitive bidding process and what procedures should be used to facilitate such a process; and 4) Commission or legislative action that could be taken to improve competitive provision of default service. Comments are due August 15, 2002, and a follow-up meeting will be held on October 4, 2002, at 10AM in the Commission's 3rd floor conference room. Members should submit their comments to headquarters ASAP.

Staff Review of Wires Charge Methodology

Staff is examining revisions to the calculation of projected market prices and resulting wires charges. Staff has requested comments on potential changes to the methods applicable to the utilities' July 1, 2002, filings. Comments may include conceptual changes or additional sources of data for computing the projected market prices. Comments are due July 17, 2002, and an informal meeting will be held on July 24, 2002, at 9:30AM in the Commission's 3rd floor training room. Members should forward their comments to headquarters ASAP.

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