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January 16, 2004
Allegro Nominated to the Executive Committee

NEM is pleased to announce that Allegro Development has been nominated to the Executive Committee of the National Energy Marketers Association. Allegro Development will be represented within NEM by its Solutions Director, Brian Cervantes.

Allegro develops software for the energy industry, with twenty years experience providing uniquely flexible and configurable solutions. Allegro Development application components manage the production, purchase, transport, sale, and consumption of natural gas, electric power, crude oil, natural gas liquids, refined products, and coal. Allegro Development customers include the worldís leading oil and gas producers, gas processors, pipelines, petrochemical producers, coal producers, first purchasers, crude oil traders, refiners, fuel distributors, energy merchants, municipals, natural gas utilities, power generators, power utilities, energy retailers, and energy consumers.

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 meeting will be held at the Pennzoil North Tower, 700 Milam, 20th Floor, Room 20014 (Pennzoil Conference Tower) Houston, TX 77002. The Executive Committee will prioritize the states, issues, utilities and advocacy positions for NEM in 2004. A summary NEM Year End Review is available on the NEM Website. NEM's Retail Issues, Wholesale Issues, and Technology and Services Issues for 2004 are also available on the NEM Website. Interested parties should contact Headquarters if they have an opinion on these issues.

NEM Member Opportunity - Two Position Openings

A NEM member is currently searching for qualified candidates for the positions of Director of Product Management and Vice President of Finance to be based in its Farmington Hills, Michigan headquarters. The Director of Product Management will: 1) manage and direct the development of new products and product enhancements as well as manage the existing product life cycle; 2) manage a team of Product Managers; 3) serve as primary relationship manager with the serving Utility; and 4) ensure the business support functions understand the market requirements and are able to fulfill those requirements. The Vice President of Finance will direct and manage the companyís accounting and finance function. For a more complete description of these positions and/or to obtain contact information, contact NEM headquarters.

Energy Policy for 2004

NEM's article "Energy Policy for 2004" appears in the January 2004 issue of Harts Energy Markets. The article postulates that future energy policy will be formed, in large part, by energy tax policy. The article urges: 1) Congress to quickly eliminate the uncertainty of when energy and tax laws will become law; 2) FERC to continue using all of its authority to push for RTO formation, standardized market designs and encourage advanced transmission technologies; and 3) state PUCs to tie the normalization of any new tax reductions to the percentage of customer migration. The full text of the Article is available on the NEM Website.

NEM's Annual Membership Meeting and National Restructuring Conference

Please register early for NEM's Annual Membership Meeting and National Restructuring Conference. It will be held on March 31 and April 1, 2004, in Washington, DC at the Capitol Hyatt. House Energy and Air Quality Subcommittee Chairman Barton, FERC Chairman Wood, CFTC Chairman Newsome, FERC Commissioner Brownell, CFTC Commissioner Brown-Hruska, NARUC President Wise, NJBPU President Fox, PUCT Chair Klein, ICC Chair Hurley, NARUC BPL Committee Chair and MIPSC Commissioner Chappelle have all confirmed that they will be presenting keynote addresses at the NEM event.

If you wish to sponsor this event, please use this hotlink and contact headquarters. Harts Magazine has offered to do a special section featuring our VIP sponsors. You may view the agenda and register for the event by using this hotlink. Registration Information is also available on the NEM Website.

FERC Supply Margin Assessment Conference

FERC held a technical conference on January 13 and 14, 2004, to discuss modifications or alternatives to the "Supply Margin Assessment" (SMA) interim generation market power screen and its mitigation measures. The SMA screen was announced in 2001 in the SMA Order. Under the SMA screen, an applicant will pass if, "it or its affiliates own or control an amount of generation located in a control area which is less than the supply margin (generation in excess of load) in the control area." The SMA Order required applicants that failed the SMA screen to offer uncommitted capacity for spot market sales in the relevant market. On December 20, 2001, FERC deferred the date by which public utilities failing the screen must implement its mitigation measures. This conference is being held to re-evaluate the SMA screen in preparation for a generic ruling on this subject.

FERC's two-day SMA conference was comprised of four panels. The first panel was on "How to Define the Relevant Geographic Markets," the second panel focused on the "Appropriate Interim Generation Dominance Screen," the third panel involved the "Appropriate Mitigation Measure for Those That Fail the Screen," and the fourth panel focused on "Data Concerns." All four commissioners attended the conference. A NEM Analysis of the Conference is available from Headquarters.

FERC Conference on The Methods of Compensating "Must Run" Generators

FERC will convene a two-part technical conference on compensation of must run generating units in organized markets. The first part of the conference (February 4, 2004, 9:30AM) will focus on broad general principles for pricing of must-run generating units and the general framework FERC should use to address this issue. The second part of the conference (February 5, 2004, 9:30AM) will focus on PJMís specific proposal regarding compensation for must-run generating units. The Agenda for the FERC meeting is available on the NEM Website.

Many thanks to NEM's Norteast Wholesale Policy Chair Stephen Wemple for offering to testify at this conference.

Postponement of FERC's Interconnection Rule Requested

The Mississippi Public Service Commission (MPSC) is asking FERC to postpone application of FERC's rule governing standardization of generator interconnection agreements and procedures. The MPSC stated that it is concerned about the impact the rule will have on the reliability of transmission systems serving consumers in the state and that the rule may increase electricity rates. The MPSC asked FERC to decide by January 16, 2004, if it will grant the request to postpone the rule since the rule is supposed to go into effect on January 20, 2004. Forty-four entities have requested rehearing of FERC's interconnection rule including several Southeast Public Service Commissions. The MPSC Motion, as well as Mississippi Power Company and Southern Company Services Motion, is available from NEM Headquarters.

New Jersey
Board Order on Customer Usage Data

The NJBPU issued an Order regarding modifications to the process by which Third Party Suppliers (TPSs) obtain customer historical usage data from electric distribution companies and gas distribution companies. The Board held that as an alternative to the customerís written signature, a TPS may receive historical usage data from the Electric Distribution Company or Gas Distribution Company by obtaining: (1) the customerís electronic signature; (2) an audio recording of a telephone call initiated by the customer; (3) independent third-party voice-log authorization of a telephone call initiated by the TPS; or (4) pursuing alternative forms of verification that the Board may permit for switching electric power suppliers or gas suppliers and for contract renewal. The full text of the NJBPU Order is available on the NEM Website.

New York
Collaborative to Monitor Progress on Pro-Ration

A collaborative meeting will be held on January 22, 2004, at the New York Department of Public Services' New York City offices at 10:30AM to monitor utilities' progress in preparing to implement pro-ration by February 3, 2004. The meeting will discuss questions regarding pro-ration as well as establish a procedure to identify and design pro-ration and HEFPA driven modifications to the Uniform Business Practices and Electronic Data Interchange. Parties wishing to attend should contact Shirley Rabideau by email at by January 20. Parties not able to attend in person may participate via conference call at 518-408-1500 (local) or 866-266-3697.

NEM continues to urge the NYPSC to require utilities to offer to purchase marketers' accounts receivable.

NEM Submits Motion to Intervene in Creditworthiness Case

NEM is seeking party status in Metromedia Energy's (MME) financial security case. MME is objecting Washington Gas Light Company's plan to refuse to permit MME to continue to sell natural gas supplies to its customers connected to Washington Gas' system unless MME provides Washington Gas with additional financial security. NEM stated that the implementation of Washington Gas Light's proposed increased credit requirements for natural gas marketers could impair the ability of suppliers to make competitive offerings in the Washington Gas Light service territory. The full text of NEM's Motion to Intervene is available on the NEM Website.

On January 14, 2004, Washington Gas proposed to once again revise its methodology for calculating the level of security required from MME and other suppliers. Washington Gas separated its risk into three components: 1) volume; 2) price; and 3) time. The volume component is based on seasonal requirements, while the price component is based on the seasonal, delivered cost of gas to the company. Lastly, the time component is based on Washington Gas processing, administrative, and notification activities in the event of non-performance by a competitive service provider. Existing suppliers would be assessed based on these three factors.

Washington Gas proposes to access new suppliers a security amount of $5,000 if commencing service outside of the heating season, or $10,000 if beginning service during the heating season.

Under this new proposed methodology for calculating the level of security, the amount of heating-season security required from MME would be less than the level currently requested, but would still be above the level of security Washington Gas currently holds. The full text of Washington Gas' Motion to File Proposed Tariff Provisions will be available as soon as it is in electronic form.

Many thanks to Debbie Wernet and Joseph del Moral of Ontatio Energy Savings Corp. for alerting us and helping us intervene in this important case.

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