Electricity pylon

CFTC issues proposed order to exempt certain non-financial energy derivative transactions

Mon, 20/08/2012 - 12:04

The Commodity Futures Trading Commission has approved a proposed order that would exempt certain non-financial energy derivative transactions between and amongst government-owned electric utilities and cooperatively-owned electric utilities from most of the requirements of the Commodity Exchange Act.

The entities eligible for the proposed relief are not-for-profit electric utilities charged with a public service mission of providing their customers with reliable, affordable electric energy. 

The Dodd-Frank Wall Street Reform and Consumer Protection Act directed the Commission to provide such an exemption for certain transactions between certain electric utilities if it is in the public interest. The Commission voted five to nil via seriatim, and the comment period will be open for 30 days after publication in the Federal Register.

Specifically, the transactions eligible for the proposed relief are all physically settled and entered into for the primary purpose of meeting current or anticipated contractual obligations to facilitate the generation, transmission, and/or delivery of electricity. 

Under the proposed order, the Commission’s general anti-fraud, anti-manipulation, enforcement, and books and records inspection authorities will continue to apply.


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