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