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September 26, 2003
NEM Fall Leadership Roundtable

NEM's Fall 2003 Leadership Roundtable will be held on October 7-8, 2003. Centrica has generously offered to host the meeting at the fabulous Queen’s Landing Inn and Conference Resort at Niagara-on-the-Lake in Ontario. Please reserve your room ASAP at (905) 468-2195 and remember to bring your passport.

The easiest way to arrive is to fly into Buffalo and drive across the border. However, there is shuttle service available at the Toronto Airport. At the meeting we will discuss the recent blackout, Congressional action, and NEM policy positions. Given the size, diverse expertise and desire of the group to develop detailed advocacy positions there will be break out sessions for: (1) Wholesale, Trading, Credit, Clearing, Price Reporting/Manipulation issues, (2) Retail, National Consumer Education, and PR issues, (3) Technology Standards and Implementation issues. The current draft Agenda is hotlinked for your convenience. All members are encouraged to attend. Prospective members are also invited subject to space availability.

A block of rooms for October 6-7, 2003, at the NEM rate of $265/night (Canadian) is available only on a courtesy hold. Registration Information is available on the NEM Website. Click here for more information on the event and a Letter from Nick Fulford.

NEM Winter Executive Committee Policy and Planning Meeting

The Winter Executive Committee Policy and Planning Meeting is scheduled for January 20th and 21st, 2004, in Houston, Texas. The conference will be held at the Hyatt Regency - Downtown in the Pennzoil Conference Tower.

NEM's Annual Membership Meeting and National Restructuring Conference

Mark your calendars for March 31 and April 1, 2004, for NEM's Annual Membership Meeting and National Restructuring Conference. It will be held in Washington, DC at the Capitol Hyatt. Energy Subcommittee Chairman Barton, Chairman Wood, Commissioner Brownell, CFTC Commissioner Brown-Hruska, NARUC President-elect Wise, NJBPU President Fox, Illinois Chairman Hurley, Michigan Commissioner Chappelle, Ohio Commissioner Mason, Massachusetts Commissioner Keating and a number of other important speakers have already confirmed. If you wish to be listed as a sponsor of this event, please contact headquarters. The exhibit space for this year is three times larger than last year's space, and Harts Magazine has offered to do a special section featuring our sponsors. Registration Information is available on the NEM Website.

NEM To Meet With Chairman Flynn

NEM's meeting with Chairman Flynn has been scheduled for 10:30 AM on September 30, 2003, in Albany. The following NEM members will participating on behalf of the organization: Nick Fulford, Bill Kinneary, Michael D'Angelo, Steve Wemple, Kyle Storie, Luke Stewart, Terry McInerney, Michael Meath, Barry Green, Sara O'Neill, and Paul Bunge. We will all meet at the cafeteria on the Concourse Level of the Empire Plaza in Albany at 9:45 on September 30, 2003.2003. Attached is a final version of the Agenda for the meeting.

NEM To Meet With NJBPU President

President Fox of the New Jersey Board of Public Utilities has offered to meet with NEM leadership on October 21, 2003, at 11AM EST to discuss the issues of competitive markets in New Jersey. NEM members participated in a conference call on Wednesday, September 17, 2003, to discuss the agenda for the meeting with President Fox. NEM has scheduled another call on October 14, 2003, at 12 PM EST to go over the agenda before the meeting. All members wishing to participate in this meeting should dial into the conference call. The dial in number is 703-788-0600, and the pass code is 209353.

NEM Requesting Member Articles

NEM Headquarters is requesting member articles to be published in various national publications. Articles must be received by the 10th of every month and should be no longer than 1,000 words. Please forward articles to Headquarters as soon as possible as there is an immediate opportunity available.

Federal Court Finds That FTC Does Not Have Authority To Promulgate National DNC List

A federal district court judge ruled that the Federal Trade Commission did not have the authority to promulgate a national "do-not-call" list. The judge ruled that it is the FCC, not the FTC, that has the authority to run a national database of people who object to receiving telephone solicitations. The FCC was granted that authority under the 1994 Telemarketing and Consumer Fraud and Abuse Prevention Act. House Energy and Commerce Committee Chairman Billy Tauzin, and Rep. John Dingell stated that they were confident the ruling would be reversed. The full text of the Order is available on the NEM Website.

Energy Buyers Urge Domenici to Reconsider Deal Delaying SMD

The Business Alliance for Reliable Energy, a group comprised of major energy purchasers sent a letter to Senator Domenici urging him to reconsider a deal backed by Senator Shelby that would delay implementation of SMD for several years. International Paper, Shell Oil, Smurfit Stone Container Corp. and Walgreens are among the nation's largest users of electricity, and are the first members of the alliance. They stated in the letter that the blackout "demonstrates the need for a new approach to managing the nation's electricity grids." The major energy purchasers stated that they prefer regional approaches to manage the flow of electricity across the multiple infrastructures and political jurisdictions that make up the nation's system. The letter also said that efforts in Congress to delay regional approaches "prolong the regulatory uncertainty that constrains private sector investment in the nation's energy infrastructure, prevents greater coordination among states as they plan and manage their energy needs, and leaves businesses with multi-state operations vulnerable to varied standards of reliability."

Earlier this week, a bipartisan group of more than a dozen U.S. senators argued that Congress should not delay the SMD proposal. "The vision of today's Congress should be to complete the transition to competitive markets by allowing the wholesale power market platform of the Federal Energy Regulatory Commission to move forward," the 20 senators wrote in their letter to Domenici and Senator Bingaman.

Meanwhile, Representative Barton has reportedly approached the White House in an effort to forge a compromise deal over SMD. Reuters reported that Barton plans to meet with Vice-President Dick Cheney to talk about a compromise plan, which would apparently give power companies based in the South some leeway in the formation of regional electrical grid operators.

Domenici & Tauzin Will Release 2nd Discussion Draft of Energy Provisions

Senate Energy and Natural Resources Chairman Pete V. Domenici and House Energy & Commerce Chairman Billy Tauzin announced plans to release on Monday, September 29, a second discussion draft of provisions that have already been released. The full text of the discussion draft will be available on NEM's Website as soon as it is available. The chairmen issued the following joint statement:

“We have made excellent progress on this energy conference. We have now released discussion drafts on every major issue except ethanol and electricity. While we have not finalized those drafts, we hope to do so in the next couple of days.

“Yesterday, Mr. Dingell requested that we delay the final conference meeting and issue another discussion draft that reflects bipartisan input over the last 10 days. We have worked closely with Mr. Dingell and have appreciated his leadership in ensuring open and bipartisan negotiations. We are happy to honor his request.

“On Monday, our committee staff will issue a second draft of the sections already released. This draft will reflect revisions proposed over 10 days of bipartisan staff meetings. We will take further input on this draft early next week. We anticipate meeting later in the week to consider a proposed final conference report.”

FERC Approves NYISO Creditworthiness Requirements

NYISO proposed a new comprehensive financial assurance policy. The Commission approved the policy with modifications, adopting many of the recommendations of NEM. With respect to the proposed creditworthiness requirements for customers participating in the NYISO-administered markets, and consistent with NEM's recommendation, the Commission rejected NYISO's proposal to require 90 days of security for Non-Investment Grade and unrated customers. The Commission found that the process for determining the amount of security should be the same for all customers and that, "since the maximum period between the time a customer incurs a charge and the time the NYISO is able to terminate service to the customer is approximately 50 days, the NYISO would be protected against credit risk of Non-Investment Grade or unrated customers if it obtains approximately 50 days of collateral." The Commission required NYISO to permit netting across NYISO-administered markets to reduce credit requirements, but decided against permitting netting across RTOs/ISOs. The Commission also found that surety bonds with a “pay now/fight later” provisions are a sufficiently reliable form of security for small market participants. The Commission also ordered the application of new working capital rules, requiring contributions from generators and wholesale suppliers, to reallocations of the existing $47,000,000 of working capital that NYISO has collected from LSEs. The Commission also directed that the NYISO stakeholder process examine other ways to decrease collateral requirements for example through, "faster procedures for clearing bids, more frequent billing and payment by customers that do not have investment grade debt, as well as any other proposals that would improve credit exposure protection while enhancing non-discriminatory market access." The full text of the Order is available on the NEM Website.

Many thanks to Kyle Storie of Advantage Energy and Steve Wemple of ConEd Solutions for their assistance with this matter.

FERC Sets "State of the Gas Market" Conference

FERC intends to hold a conference on October 14, 2003, at its Washington, D.C., headquarters to engage industry members and the public in a dialogue about policy issues facing the natural gas industry today and FERC's regulation of the industry for the future. According to FERC, this "state of the gas market" conference will focus on the findings and recommendations contained in the National Petroleum Council's soon to be released report: Balancing Natural Gas Policy-Fueling the Demands of a Growing Economy. This report will soon be available at FERC invites the public to attend. FERC has not yet released contact information for this conference. Furhter information will be available on the NEM Website as soon as it is available.

Survey Concerning Reporting of Energy Trade Data

FERC issued its Survey Concerning Reporting of Energy Trade Data. FERC requested a response to this survey by October 15, 2003. The survey has two parts, each consisting of the same ten questions but referring to different time periods. The first part addresses the time period after the issuance of the Policy Statement and the second part addresses the period before the Policy Statement was issued. Transactions covered in this survey include negotiated purchases or sales of natural gas and/or electricity with non-affiliates in the same-day, next-day, day-ahead, balance of month or prompt month terms. The full text of the Survey is available on the NEM Website.

Ruling Setting Forth Scope of Phase 2 Demand Response Rulemaking

The California PUC issued a ruling specifying the scope of further interagency efforts in Phase 2 of the demand response rulemaking. The PUC's key focus will be developing an analysis framework for use in the respondents' business cases for possible widespread advanced metering infrastructure deployment. The Commission will consider: 1) revisions to the standard practice manual (SPM) methodology necessary to evaluate additional demand response programs; and 2) how air conditioner (AC) cycling can be presented as an alternative to full scale deployment of advanced metering infrastructure. The purpose of this phase is to develop the framework for how the Commission should evaluate a business case for deployment of advanced metering and then require utilities to submit a substantive case in future proceeding or application. By the end of phase 2, the PUC expects to have a fully detailed real-time tariff proposal that can be adopted for use by large customers for the summer of 2004. Parties that wish to comment on the proposed Phase 2 scope must do so by October 6, 2003. The full text of the CPUC Order is available at NEM Headquarters and Attachment A to the order is available on the CPUC Website.

Commission Finds That Choice Customers Saved Money

The Commission issued an Order extending Columbia Gas of Kentucky's Choice Program to March 31, 2005. The Commission found that customers that switched to a marketer have, in the aggregate, saved on their gas bills, contrary to what Columbia Gas of Kentucky stated in its filings. The Commission also reminded the parties that a previous Order instructed that an outside consultant should be retained to review all aspects of the Choice Program. The Commission stated that such an assessment will assist them in evaluating the various issues associated with the Choice Program prior to the revised termination date of the pilot. The full text of the KYPSC Order is available at NEM Headquarters.

Request for Comments on Status of Emissions Disclosure

In a December 2001 Order, the Commission determined that the use of the PJM Generation Attributes Tracking System (GATS) would satisfy the obligation of electric companies and suppliers to ensure the provision of adequate and accurate fuel mix and emissions information. However, the GATS has not been completed, nor is it currently operational. Therefore, the PSC is seeking comments by October 22, 2003, on the current status of emissions disclosure in Maryland and the position of parties on the program currently under consideration at PJM.

The program currently under consideration at PJM includes a GATS database that will maintain a one-for-one match between energy produced and energy consumed in PJM, as well as imports and exports. The GATS will contain hourly generation information, for each individual PJM generation unit, and will create generator specific certificates that identify the relevant generation attributes necessary for LSEs to satisfy state policies and regulations. The system creates and places into generators' GATS accounts a certificate for every MWH and certificates can be traded separately from the underlying energy. To minimize seams, the system will allow for the import of certificates from neighboring regions that offer reciprocal treatment of PJM certificates. The full text of the Request for Comments and the GATS Draft Concept Paper is available at NEM Headquarters.

Meeting on Draft Electric Supplier Survey

There will be a meeting to receive feedback on the draft Electric Supplier Survey at 9:30, Friday, October 3, 2003. The following is a walk-through of the survey/data request: Question 1 provides baseline service numbers to derive percentages for all of the other questions. Questions 2-6 work through increasing levels of seasonal and time-of-use price differentiation. Question 7 asks about the number of customers on curtailable service. Questions 8 and 9 ask about "green" power. Question 10 asks about other energy related services. Question 11 asks the number of customers billed by suppliers. Questions 12 and 13 ask about two different types of billing arrangements. Questions 14-16 ask about contract term lengths. The full text of the Draft Survey is available on the NEM Website.

New York
NYPSC Votes To Extend NFG's Rate and Restructuring Plan

The NYPSC voted to extend NFG's existing rate plan and to preserve current natural gas delivery rates for customers through September 30, 2004. The plan will continue to provide a competition backout credit ($3.30 per month) and a billing credit ($0.80 per month) at current levels to marketers that provide services to customers who otherwise would receive those services from NFG. The Order did not require NFG to purchase ESCOs' accounts receivable at this time, but stated that it is possible that utility purchase of some accounts receivable in some circumstances might be warranted to encourage more customer migration and a more competitive market.

The Rate Plan also contains the following elements: (1) reduction in the rates transportation customers pay for storage of accumulated surplus gas; (2) modification of the provisions for daily balancing to make them more attractive and to increase their uniformity with other upstate gas utilities; (3) adoption of a schedule for installing real time meters for NFG's largest customers; (4) reduction of the percentage of storage inventory that marketers are required to maintain. The full text of the NYPSC Order is available on the NEM Website.


The NYPSC adopted a Joint Proposal (JP) addressing mainly two aspects of NYSEG's interaction with independent marketers: (1) the balancing services that NYSEG offers the marketers and (2) the delineation of responsibility between NYSEG and the marketers for maintaining system reliability. More specifically, the JP resolves the following outstanding issues: (1) Cash-out and balancing charges; (2) Reliability capacity factor; (3) System development for implementation of the Dominion Transmission, Inc.'s (DTI's) Delivery Point Operator/City gate Swing Customer Program ("DPO/CSC Program"); and (4) Intra-day meter reads.

In terms of cash-out charges (charges whereby NYSEG and the marketer compensate one another for over- or under-deliveries [respectively] at the city gate), the JP lowers the effective unit price by reducing the applicable multiplier currently used in the cash-out formula. The largest remaining multipliers will also be reduced in the summer months. Additionally, under the JP all payments will be based on a mid-point price, and NYSEG's payments to marketers will be increased by including an allowance for pipeline variable and fuel costs. Also under the JP, in the two NYSEG districts where the pipeline supplier is DTI, NYSEG will make the arrangements necessary to enable marketers to take advantage of DTI's "no-notice" storage program. The JP also discusses reliability issues. Under the JP, marketers would be required to expand their own reliability responsibilities by maintaining primary point firm capacity not only for their customers whose daily metered transportation service began after November 1995, as currently required, but for all their daily metered transportation customers. The full text of the Order Adopting NYSEG's JP is available on the NEM Website.

NEM Responded to Utility HEFPA Compliance Filings

NEM submitted its response to KeySpan, NIMO, NYSEG, CH and NFG's HEFPA compliance filings proposing temporary charges to be assed to ESCOs that request suspension of customers' gas or electric services. NEM previously responded to ConEd and O&R's compliance filings. In both responses, NEM urged the Commission to encourage the utilities to purchase ESCO receivables as this model will eliminate many HEFPA implementation, including the calculation of disconnection charges at issue in the utilities's compliance filings. NEM submitted that the utilities' filings should be suspended pending the issuance of a Commission Order on the purchase of receivables as well as the other matters raised in the Petitions for Rehearing. In the alternative, if the Commission does not adopt the utility purchase of receivables model, NEM requested that the Commission delay implementation of disconnection charges for ESCOs pending utility provision of appropriate embedded cost based charge documentation and the completion of the unbundling proceeding. NEM requested clarification of the Commission's Order with respect to utility cost recovery for the incremental costs of providing ESCOs with bundled bills. The full text of NEM's Response is available on the NEM Website.

PUCO Rejects FirstEnergy's Application to Reduce Shopping Credits

PUCO denied FirstEnergy's application to reduce its shopping credits. PUCO stated that the market development has not matured to the point of deviating from the existing credits. PUCO held that there is real possibility that reduction to the credits could cause certain customer classes to fall below 20% shopping or make the market not viable or attractive to suppliers. The PUCO order decided the matter of shopping credits for the year 2004 only. PUCO encouraged FirstEnergy to consider and develop plans for 2005 and beyond, which balance three objectices: (1) rate certainty; (2) financial stability for the electric distribution utilities; and (3) furthering competitive market development. The full text of the PUCO Orderis available on the NEM Website.

WPS Petitions PUCO to Grandfather Shopping Credits

WPS Energy Services petitioned PUCO for an order grandfathering the shopping credits in certain Northwest Ohio communities as computed under the current authorized formula for residential customers. WPS requested that PUCO waive any subsequent Commission order altering the shopping credits established under the Stipulation in the electric transition plan case of FirstEnergy for 2004-2005. Green Mountain petitioned PUCO to grant WPS's waiver, but on an across-the-board basis applicable to all suppliers (except FirstEnergy's unregulated affiliate) and as to both the residential and the commercial customer classes in all the service areas of Ohio Edison Company, Cleveland Electric Illuminating Company, and Toledo Edison Company. Ohio marketers submit that reducing the credits will diminish the savings that customers relied upon in making their decision to shop and will cause retail choice in Ohio to disappear. The full text of WPS's Application and Green Mountain's Motion to Intervene is available on the NEM Website.

Gas Operations and Logistics Support Working Group

CG&E has rescheduled its informational meeting for Competitive Retail Natural Gas Suppliers participating in its Gas Firm Transportation Program for Thursday, October 23, 2003 from 9:00 a.m. to no later than 3:00 p.m. E.D.T. at the Kings Island Resort & Conference Center located in Kings Island, Ohio.

The primary topics to be covered at this meeting include updates regarding CG&E's forecasting methodology and the operation of its gas system, as well as CG&E's implementation of H.B. 9 requirements.

If you plan to attend this meeting, please complete the attached registration form and send it to Cinergy/CG&E via fax to the attention of Ginny Lemon at 513.287.2718 or e-mail the form to by the close of business on Thursday, October 9, 2003. An Agenda for the meeting is available on the NEM Website.

PAPUC NOPR on Standards of Conduct

The PAPUC initiated a rulemaking proceeding to adopt regulations governing the relationships between Natural Gas Distribution Companies (NGDCs) and their affiliated Natural Gas Suppliers (NGSs). The PAPUC stated that the industry has had three years of operating experience under the Binding Interim Standards of Conduct, and therefore it believes that it is appropriate to adopt permanent Standards of Conduct.

The Commission proposed to establish regulations governing the relationship among natural gas distribution companies, their natural gas suppliers, and the rest of the natural gas industry. These proposed regulations are substantially the same as the binding interim Standards of Conduct. Comments on these regulations are due 30 days after the proposed regulations are published in the Pennsylvania Bulletin. The PAPUC stated that it is important that these regulations help to promote and not impede the open market for natural gas. The full text of the PAPUC NOPR is available on the NEM Website and full text of the Annex will be posted when made available electronically.

TNMP Proposes Competitive Metering Service Credit

Texas-New Mexico Power Company (TNMP) submitted a compliance filing regarding the competitive metering service credit. According to the testimony, TNMP understands that non-residential customers will be able to own an ERCOT approved competitive meter begining January 1, 2004. The credit will include a rate of return on the actual physical meter, depreciation and other taxes on that meter. The credit will be an offset to the tariffed meter charge that non-residential customers are being charged under the Retail Delivery Service Tariff and will be presented as a separate line item on the Retail Electric Providers Invoice. According to TNMP's testimony, the current meter charge, in addition to the rate of return on the actual physical meter, depreciation and other taxes on that meter, also includes meter maintenance as well as meter reading costs.

TNMP stated in its testimony that, in order to implement competitive metering, the utility will be required to provide additional services to the non-residential customers who choose to own their own meter. TNMP proposed the following discretionary services and associated fees: (1) Competitive Meter Installation Service Fee ($145.00 - $180.00); (2) Competitive Meter Non Standard Programming Service Fee ($50/hr); (3) Competitive Meter Removal Service Fee ($100.00); (4) Competitive Meter Communication Failure; (5) Competitive Meter Test; and (6) Competitive Meter Temporary Service Fee ($145.00 - $180.00).

TNMP proposed the following competitive metering credits by class: (1) $0.36 per customer per month for secondary < = 5 KW; (2) $1.62 per customer per month for secondary > 5 KW; (3) $2.66 per customer per month for primary; and (4) $35.53 per meter per month for transmission. The full text of TNMP's Compliance Filing is available at NEM Headquarters.

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