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September 10, 2004
Interview: Is Reliability Undervalued?

NEM CEO and President Craig G. Goodman discusses reliability as a high-value product line for The 21st Century Utility Industry, outsourcing competitive investments to the "at-risk" capital markets. He also discusses reliability as a commodity, its impact on infrastructure, and the emergence of the new Energy Services, Information Technology Industry. The full text of the interview is hotlinked here for your convenience.

Upcoming NEM Events

Please reserve the dates September 29-30, for NEM's Fall Industry Leadership Roundtable to be held in Boston. The meeting will be held at the Hyatt Harborside. Please reserve your room ASAP (617-568-1234 or 1-800-233-1234) to receive the NEM rate of $189 per night. Many thanks to Nate Owen and Bob Potter of Energy Services Group for hosting the meeting. Many thanks also to Mike Foley of First Data Corporation for offering to sponsor other parts of the meeting. A hotlink is provided here for registration.

NEM's Winter Executive Committee Meeting will be held in Newport Beach, California on January 19-20, 2005. Many thanks to Peter Weigand and Ian Carter of Commonwealth Energy (now called Commerce Energy Group) for offering to host this event.

Lastly, NEM's Annual Restructuring Conference in Washington, DC, will be held at the Marriott Metro Center on either April 26-27, 2005. Please email or call headquarters if you wish to speak at or sponsor this event. Advertisements will begin later this month.

NEM Policy Chairs and presenters are requested to participate on a conference call

NEM's Leadership Roundtable is open to the industry at no charge beginning at 9:00 a.m. on September 29. Attendees must register at this hotlink to be accommodated. NEM Policy Chairs and Members who wish to participate in the dialogue with officials are requested to participate in one or both upcoming conference calls to ensure consistency of industry message.

The first call is Friday, September 17 at 2:00. The second call is Tuesday, September 21 at 2:00. (A back-up date of Friday, September 24 at 2:00 is also reserved.) The dial-in number is 703-788-0600. The passcode is 209353. Only Member/Attendees who dial in will be introduced as speaking on behalf of the industry at this event. An agenda will be circulated to all those who have registered for the event.

Upcoming Retail Gas Market Conference

On Wednesday, September 22, 2004 at 10:00 a.m., the Commission will hold a conference to discuss preparations for the winter supply. The Commission seeks to review plans already made to meet winter demand and to raise customer awareness about market conditions. The conference will be held at the Commission's 16th floor hearing room and participants wishing to make presentations should contact James W. Boone at 410-767-8086 to discuss order of presentations. The full text of the notice is available on the NEM web site.

ALJ Issues Proposed Decision in Detroit Edison (DTE)

In the Detroit Edison (DTE) case, the ALJ proposes to accept Staff's computation of $43,613,000 in stranded costs to be charged to both choice and bundled customers. This order, however, would be the last time choice customers would be charged stranded costs for investment in production plant.

The ALJ found that minimum stay periods are counterproductive in the move to a competitive market, given the lack of evidence of customer gaming, and proposed that customers returning to regulated service pay the higher of the market rate or the bundled rate.

The ALJ also accepted Staff's proposal that DTE work collaboratively with the parties on a plan to overcome metering differences. Exceptions must be filed by September 16, 2004 and replies must be filed by October 7, 2004. The full text of the ALJ's Proposed Decision is available on the NEM web site.

New York
NY Retail Choice Program Details

Please be advised that there are analyses and program details for each utility in the State of New York available to Members on the NEM web site. The analyses cover both natural gas and electricity program details. If you have forgotten your password to the site, please contact headquarters.

NYISO Filed Service Tariff Revisions

The NYISO proposed modifications of its the Day-Ahead Demand Reduction Program (DADRP) to take effect during the Winter 2004/2005 Capability Period, beginning November 1, 2004. The proposal raises the zonal floor bid price from $50 per Megawatt hour to $75 per Megawatt hour for DADRP Resource bids in the Day-Ahead energy market. The NYISO argues this increase is necessary to reduce free riders and to increase net social welfare.

The proposal also eliminates the October 31, 2004, sunset date for the Demand Reduction Incentive Payment and thus extends the program. Finally, the NYISO reiterates its position that Distributed Generation (DG) should be prohibited from participating in the program. Comments are due by September 22, 2004. The full text of NYISO's proposal is available on the NEM web site.

FirstEnergy Seeks Approval of Competitive Bidding Process

As directed by by the Commission, FirstEnergy has filed a proposal for a competitive bidding process (CBP) for their Provider of Last Resort (POLR) load from January 1, 2006 - January 31, 2009. FirstEnergy will use a multiple round, descending clock auction to take place in November 2004. At the close of the auction, the results will be presented to the Commission, and if accepted, bidders will become authorized POLR suppliers and will begin full requirements service at 12:00:01 on January 1, 2006. In the event that the Commission does not approve the results, the Rate Stabilization Plan (RSP) pricing will go into effect. The load will be divided into 100 tranches (each representing 1% of load) and, in each round, bidders will have to indicate how many tranches they wish to serve at the price announced at the beginning of the round by the Auction Manager. If, at the end of a round, there are more bids for tranches than tranches needed, the Auction Manager will reduce the price a decrement and the bidding rounds will continue until the number of bids and the number of tranches equalize. Suppliers wishing to participate in the auction must complete a two-part application process and pay a fee per tranche won to offset the cost of the auction. More information is available on the auction web site. Comments on the CBP proposal must be submitted to the Commission by September 13, 2004 with reply comments due September 17, 2004. The full text of the CBP is available on the NEM web site.

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