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May 10, 2002
Deloitte & Touche Elected to NEM Executive Committee

NEM is very pleased to announce that Deloitte & Touche has been elected to the Executive Committee. Deloitte & Touche is one of the nation's leading professional services firms. Deloitte & Touche provides accounting, assurance and advisory, tax, and management and financial and human capital consulting services through 30,000 people in more than 100 U.S. cities. Deloitte & Touche will be represented within NEM by Bob Young, Firm Director in the Global Energy Markets practice, and Kim Detiveaux, Senior Manager in the Global Energy Markets practice.

NEM Executive Committee Leadership Nominations Sought

The Leadership of the NEM Executive Committee is seeking nominations for the National, Regional and State Policy Chairs and Co-Chairs for the comming year. If you would like to volunteer for a leadership role or wish to nominate someone for such a role, please forward the name and position to headquarters at your ealiest convenience. All the nominations will be circulated prior to the Annual June 20 Membership Meeting and Conference, and a special meeting of the Executive Committee is scheduled for the evening of June 19 from 6PM-8PM to vote on the nominations at a location to be determined.

NEM Annual Membership Meeting and National Restructuring Conference

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. We are planning the reception and would appreciate an early head count. Also there are only a limited number of rooms left at our discounted rate of $139/night.

NEM-EEI Master Netting Agreement

A meeting of the Master Netting Working Group will be held on May 30, 2002, from 10AM–4PM at the Omni Houston Hotel (Galleria area), Four Riverway, Houston, Texas. The purpose of the meeting is to present a final version of the NEM-EEI Master Netting Agreement and Collateral Annex. The final agreement will be posted on the NEM website by close of business May 28, 2002. Further details about the meeting will be released shortly.

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

DOE Releases National Transmission Grid Study

DOE Secretary Abraham released a National Transmission Grid Study. Recommendations set forth in the study include: 1) RTOs should be responsible for maintaining grid reliability and ensuring that transmission bottlenecks are addressed; 2) FERC should have limited transmission siting authority in instances where bottlenecks of national interest are not addressed; 3) DOE, in conjunction with NARUC and others, will develop best practices for transmission siting; 4) DOE will perform a cost-benefit review of imlementation of smaller, electrically independent interconnections; 5) reliability standards should be mandatory; and 6) standard interconnection agreements and business practices for distribution generation should be developed. As part of its analysis, DOE also commissioned six issue papers on transmission system operation and interconnection, reliability management and oversight, alternative business models for transmission ownership and operation, transmission planning and the need for new capacity, transmission siting and permitting, and advanced transmission technologies. The full texts of the National Grid Transmission Study and Issue Papers are available on the NEM Website.

California Market Investigation-Death Star, Get Shorty, Fat Boy and the Fall-Out

FERC has issued Requests for Admissions and data requests to be signed under oath by sellers of wholesale electricity and ancillary services to the CAISO and CalPX during 2000 and 2001. Analysis (attached) suggests that these strategies were used to counter gaming by the CA utilities and the PX by their consistent and well-documented underestimation of demand. The data requests pertain to whether these entities engaged in trading strategies utilized by Enron as detailed in the attached a series of memos Enron's December 6 Memo, Enron's December 8 Memo, Enron's Status Report on Trading Strategies, FERC's Data Request, and the Attachment to FERC's Data Request are available on the NEM Website.

Standards of Conduct Technical Conference

Staff will convene a technical conference on its proposed revisions to the standards of conduct rulemaking on May 21, 2002, at 9:30AM. Discussion will be held on the following topics: 1) the definition of "energy affiliate"; 2) application of the rules to the bundled sales function for retail native load; 3) the independent functioning requirement; 4) information disclosure rules; and 5) the posting of specific information. Requests to participate in the conference are due by May 15, 2002. Additional comments and alternative proposals may be filed by June 14, 2002. The full texts of the Notice Organizing Technical Conference and Staff's Analysis and Recommendations on Standards of Conduct are available on the NEM Website.

Standard Market Design Technical Conference Postponed

The Commission postponed the standard market design conference that had been scheduled for May 22, 2002. The conference was to have addressed data and software needs to implement standard market design. A replacement date has not yet been announced.

Metering, Demand Response and Dynamic Pricing Proceeding

The subject of opening a proceeding to examine metering, demand response and dynamic pricing is on the Commission's May 16, 2002, agenda. The purpose of the proceeding will be to develop demand response capability in the California market. The proceeding will be split into two tracks, an infrastructure development track and a program and pricing track. The infrastructure development track will focus primarily on metering hardware and software. This track will involve consideration of universal advanced meter deployment, granting individual consumers universal choice of metering technology, facilitation of value-added services to metering and billing, costs and benefits of advanced meters, and cost allocation and financing for advanced meters. The program and pricing track will examine use of financial incentives for demand reduction as well as charging customers higher rates for electric consumption during certain periods. The full text of the Draft Order is available on the NEM Website.

Detroit Edison Unbundling Proceeding

Staff has sought an extension of the procedural schedule in the Detroit Edison unbundling proceeding. Pursuant to Staff's request, filing dates will be modified as follows: Staff/Intervenor filing-June 7; Rebuttal-July 19; Motions to Strike-August 23; Cross-examination-September 24-26; Initial Briefs-October 11; and Reply Briefs-November 4.

Many thanks to the NEM Michigan task force, particularly Phil O'Connor of AES NewEnergy and Dan Oginksy of Dickinson and Wright for their assistance with this proceeding.

New York
Order on ESCO Payments

The Commission issued an Order requiring ESCOs to provide evidence of creditworthiness before requesting deposits or prepayments from their customers. ESCOs must demonstrate a minimum bond rating standard in conformance with the UBP. If an ESCO is unable to provide a bond rating it may still request deposits if it has a letter of credit or escrow account with a financial institution with at least an A credit rating. ESCOs must submit their bond ratings to utilities beginning on August 1, 2002, and continuing annually thereafter. ESCOs and their customers are permitted to negotiate deposit amounts. ESCOs must provide notice to customers describing the methods used to secure customer deposits and prepayments and stating that the deposits will be returned in the event that ESCO discontinues service. ESCO records of customer deposits and prepayments must be maintained and the information must be made available upon Commission request. These requirements are applicable with respect to residential and small commercial customers. The full text of the Order is available on the NEM Website.

Gas Operations and Logistics Support Working Group

The next meeting of the Gas Operations and Logistics Support Working Group will be held May 30, 2002, at 10AM in Commission Hearing Rooms 11B and C. Staff has also provided a telephone bridge for the meeting of 614-644-1099.

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