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September 17, 2004
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.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 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.

Policy Chairs and Presenters Requested to Participate on Conference Call

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. Only Member/Attendees who dial in will be introduced as speaking on behalf of the industry at this event.

The first call was held today, and minutes will be circulated shortly. 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.

GAO Recommends both FERC and GSA Consider Demand-Response Programs

Demand-response programs allow customers to react to higher energy prices, such as by electing to reduce usage in the late afternoon when prices are the highest. According to a GAO report, such programs are beneficial, first, because they match price more closely to cost of supply, enabling markets to function better. These programs may also serve to lower prices and help to neutralize market power and price spikes. GAO estimates savings ranging from $12 - $114 million over a four-year period of General Services Administration (GSA) utilization of demand-response programs in its buildings. The report lists the barriers to implementation of such programs as a lack of customer awareness and appropriate equipment as well as regulations preventing customer exposure to a market price. GAO presents three recommendations for overcoming these barriers and implementing demand-response programs: 1) provide sufficient incentives, 2) ensure state regulators and market participants are receptive to the programs, and 3) engage in sufficient cutomer outreach and education. It also recommends that both FERC and GSA take demand-response into account during decisionmaking processes. The full text of the report is available on the NEM web site.

FERC Seeks Comments on RTO/ISO Financial Practices

FERC seeks comments concerning the differences in business practices among the five ISOs and RTOs that have begun market operations. Specifically, FERC seeks comments on three issues: 1) whether new accounting regulations concerning RTO and ISO cost information are necessary, 2) whether sufficient incentives exist to ensure the cost effectiveness of RTOs and ISOs, and 3) whether the Commission's current rate reviews are adequate. The Commission plans to review whether existing accounting regulations detail adequate and appropriate cost information for RTOs and ISOs, which do not have the same business functions as public utilities. Comments are due November 4, 2004. The full text of the Press Release is available on the NEM website, and the full text of the Order will be posted when made available electronically.

New York
Staff Submits Testimony for Con Ed Electric Case

In its testimony in the Con Ed electric rate case, Staff's retail access issue panel echoed many of the recommendations from the Commission's recently released Policy Statements. First, the Panel proposed migration incentive payments for every block of 25,000 customers migrated, setting a maximum payment of $7.5 million for 200,000 customers migrated. The Panel endorsed O&R's Switch and Save program and conditioned its approval of $1.5 million for retail choice promotion on Con Ed's institution of a similar program. Likewise, the Panel proposed $1.85 million for outreach and education and Con Ed's "Power Your Way" Campaign. No change was proposed in Con Ed's retail access credits, pending Con Ed's submission of its embedded cost-based rate unbundling filing. Finally, the Panel recommended the adoption of Market Match and Market Expo programs as well as for the company to appoint an ESCO ombudsman and to accelerate its progress in unbundling customer bills. The full text of the Retail Access Panel's testimony is available on the NEM web site.

Staff's metering issues panel testified that only strategic and remote automated meter reading (AMR) initiatives should go forward, but Con Ed's other metering programs should be postponed. The remote and strategic AMR programs replace old equipment as well as use AMR for locations which are dangerous, expensive or otherwise ineffecient for meter reading. The Panel recommended postponing progress on other metering initiatives, stating that metering is a function that could be performed by competitive suppliers and that because metering technology is developing, current equipment could become obsolete in the near future. The full text of the Metering Panel's testimony is available on the NEM web site.

FirstEnergy Proposes Pricing Plan

FirstEnergy submitted a plan concerning customers returning to POLR service under its Rate Stabilization Plan. Assuming that MISO Day 2 pricing has been finalized including nodal Locational Marginal Pricing (LMP), the plan provides for prices based on the highest hourly real time LMPs for any Elemental Pricing Node. Losses from providing POLR service will be recovered by either adjusting LMPs or through a separate charge. Billing for C&I customers will utilize actual hourly interval metered data multiplied by the hourly LMPs. If, on the other hand, MISO Day 2 pricing has not yet been implemented, billing will utilize a weighted blend of prices from Cinergy and PJM West, weighted 40% and 60% respectively, plus any real power losses. Weekend and NERC holiday pricing will be the same as published off-peak prices for the preceding weekday/non-holiday. Like the Day 2 scheme, billing will utilize actual hourly interval metered data multiplied by the blended price. Under either scenario, returning customers will be charged under these plans as opposed to FirstEnergy's standard service offer tariff, with the provision that their charges will not be less than those in the Rate Stabilization Plan. The full text of FirstEnergy's plan is available on the NEM web site.

NEM Submits Do Not Call Comments

NEM submitted comments encouraging the Commission to clarify its rule, making only the Ohio portion of the Federal Do Not Call (DNC) list applicable to competitive suppliers. Likewise, NEM urges the Commission to increase the effectiveness of customer data by facilitating telephonic enrollment in compliance with DNC rules. The current DNC exceptions prohibit telephone enrollment without a customer's prior consent or invitation or an existing business relationship. Not only does this exclude a large portion of potential customers, who most likely do not readily know the names of competitive suppliers, but it also prevents suppliers from reaching customers in either a time- or cost-effective manner. One solution NEM presented was a customer list of individuals who would like to be contacted by a competitive supplier, compiled by the utility on an opt-out basis. Alternatively, NEM suggested use of bill inserts for customers to indicate their interest in being contacted by a competitive supplier. The full text of NEM's comments is available on the NEM web site.

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