March 28, 2013
Washington, DC – The Commodity Futures Trading Commission (CFTC) approved by a seriatim vote of 5 - 0 a Final Order that exempts 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 (CEA). The entities eligible for the relief are charged with a unique public service mission of providing their customers with reliable, affordable electric energy service. 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 issued a Proposed Order on August 23, 2012, and requested public comments for 30 days. The Final Order makes changes, mostly clarifying and technical, to the Proposed Order based on the comments received.
Specifically, the transactions covered by the Final Order are entered into for the primary purpose of managing supply or price risks arising from current or anticipated public service obligations to physically generate, transmit, and deliver electric energy service to customers. Under the Final Order, the Commission retains its general anti-fraud and anti-manipulation authority, as well as certain scienter-based prohibitions under the CEA, and can continue to inspect the books and records associated with the covered transactions.
Last Updated: March 28, 2013