NEM is pleased to announce that Amerex has been nominated to the Executive Committee. Amerex is a leading over-the-counter commodity brokerage, providing voice and electronic brokerage services to the energy and other related markets. Amerex will be represented within NEM by Steven W. Town, Co-CEO of the Amerex group of North American Companies and Michael Prokop, CIO of the Amerex group of North American companies. Steve Town can be reached at 281-340-5201 or Stevet@amerexenergy.com. Mike Prokop can be reached at 281-340-5290 or mikep@amerexenergy.com.

NEM will convene a meeting to start the drafting of a Master Margin and Netting Agreement. The first NEM meeting on a Master Margin and Netting Agreement will take place by conference call on March 27, 2002,at 2PM.(The Meeting in Houston for March 29 has been cancelled as it is Good Friday.) The bridge number for the conference is 703-788-0600, and the passcode is 209353. Chris Bernard from Entergy-Koch has offered to coordinate this effort. Given the various agreements currently in use, the Enron collapse underscores the importance of standardizing margin and netting requirements to avoid future credit crunches in the energy wholesale marketplace. Maximum participation is encouraged. Those interested in participating should call NEM headquarters at 202-333-3288 or Chris Bernard at 713-544-5433 or email us at info@energymarketers.com. A draft document will be circulated to those who are interested before the meeting.

EEI will discuss this topic at a Standard Contract Working Group meeting on April 11, 2002 at EEI's Washington, D.C. offices. The Agenda for the EEI Meeting is available on the NEM Website. NEM and its members will also be present for this meeting.

NEM's Risk Valuation, Management and Financial Accountability Taskforce will hold a one day meeting at the Georgetown Club in Washington, DC on April 18, 2002, beginning at 11AM and lasting no later than 5:30PM. The purpose of the meeting is to forge consensus on accounting and disclosure standards to promote the proper valuation of energy assets, equity securities and forward energy contracts, including derivatives.

Maximum industry participation is encouraged. We need a firm headcount to order food at the Georgetown Club. Please RSVP as soon as possible. Call (202) 333-3288 or email info@energymarketers.com.

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.

NAESB will hold a meeting on April 5, 2002, in Houston, Texas to discuss segment identification and definitions for the wholesale electric quadrant. The full text of the Meeting Announcement is available on the NEM Website.

Senator Feinstein introduced modifications to her derivatives bill this week after attempting to negotiate langauge with Senator Gramm. Senator Gramm wants exemptions for energy swaps and electronic exchanges, but Feinstein disagrees. The modified bill would: 1) give regulatory oversight to the CFTC over all energy and metals derivative transactions (with no delivery); 2) require electronic exchanges that trade derivatives to be subject to the same requirements as formal trading exchanges like the NYMEX or MERC; and 3)require everyone who trades to keep records of the transactions. The full text of Feinstein's Modified Derivatives Bill is available on the NEM Website.

FERC has issued a "Working Paper on Standardized Transmission Service and Wholesale Electric Market Design," as a precursor to the standard market design "Giga-NOPR" it intends to issue this summer.

Significant provisions of the working paper include: 1) transmission providers should offer non-discriminatory, standard transmission service called "Network Access Service" to all customers that will combine existing open access transmission services, universal access of network integration transmission service, and the reassignment rights of point-to-point service. Customers will have the right to transmit power between a source and a sink and will have access to all sources and sinks on the system; 2) Locational Marginal Pricing (LMP) is to be used as the system for congestion management; 3) the two options for consideration for the initial assignment of transmission rights are either: a) direct allocation to customers that pay the embedded costs of the system followed by an auction for any unclaimed rights or b) conduct an auction to apportion the rights and allocate the proceeds to the customers that pay the embedded costs of the system; 4) the transmission provider must run a voluntary, bid-based, security-constrained day-ahead energy market and a bid-based, security constrained real-time energy market; 5) the LSE has the obligation to procure regulation and operating reserves or to pay for the reserves procured by a transmission provider on its behalf; 6) A bid cap and mitigation rules that limit bidding flexibility will initially be needed until sufficient demand response develops; 7) each RTO should have a market monitoring unit (MMU) that is independent of RTO management, and the MMU will monitor all markets in its region; 8) the standard market design rule will be implemented on a phased-in basis. The first phase will include offering physical trading hubs and application of pro forma tariff clarifications issued over the years on a consistent basis; and 9) the software to implement standard market design should be modular to allow multiple vendors to provide the components of the overall platform, and standardized data formats and data transfer protocols may also be appropriate.

Comments on the Working Paper are due March 27, 2002. NEM's draft comments on the Working Paper will be circulated for comment next week. Member comments should be forwarded to headquarters ASAP. The full texts of the Notice of Working Paper and Working Paper are available on the NEM Website.