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.

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.

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.

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.

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 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 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 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.

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 csbc@cinergy.com by the close of business on Thursday, October 9, 2003. An Agenda for the meeting is available on the NEM Website.

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.

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.