Excerpt:
The Edison Electric Institute (“EEI”),
1
the American Public Power Association
(“APPA”)2
and the National Rural Electric Cooperative Association (“NRECA”)3
(hereafter “Joint Trade Associations”) submit the following comments in response to the Commodity
Futures Trading Commission’s (hereafter “CFTC” or “Commission”) Proposed Guidance on
certain natural gas and electric power contracts.4
Joint Trade Associations’ members are physical commodity market participants in the
energy industry and rely on commodity derivative contracts primarily to hedge or mitigate
commercial risks arising from ongoing electric operations. As commercial end users, Joint
Trade Associations’ members rely on commodity derivative contracts to protect themselves and
their customers from volatile changes in the prices of electricity, natural gas and other
commodities related to the generation, purchase, sale, and transmission of electricity with the
ultimate goal of providing safe, affordable electricity at just and reasonable rates. Regulations
that make effective risk management opportunities more expensive for commercial end users of
swaps will likely lead to higher energy prices if the costs associated with those regulations are
passed through to consumers, commercial and industrial electricity and natural gas consumers, or
will result in more volatile energy prices if commercial end users decide to hedge a smaller
portion of their commercial risks of ongoing operations. Accordingly, the Joint Trade
Associations’ members have a direct and significant interest in the Commission’s rules and
interpretations that may adversely affect commercial end users’ ability to cost-effectively hedge
or mitigate commercial risk which includes the classification of natural gas and electric power
contracts as contained in the Proposed Guidance.
FULL FILING