[Federal Register: August 12, 1999 (Volume 64, Number 155)]
[Page 43989]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]



Proposed Amendments to New York Mercantile Exchange California-
Oregon-Border and Palo Verde Electricity Futures Contracts Regarding
the Contract Size, Hourly Rate of Delivery, Price Limits and Related

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of availability of proposed amendments to contract terms
and conditions.


SUMMARY: The New York Mercantile Exchange (NYMEX or Exchange) has
proposed amendments to the California-Oregon-Border and Palo Verde
electricity futures contracts that would halve both the hourly rate of
delivery, to one megawatt per hour from two megawatts per hour, and the
contract size, to 432 megawatt hours (MWhs) from 864 MWhs. In addition,
the Exchange proposes conforming amendments to halve the specified
monthly delivery-unit amounts (based on the number of on-peak delivery
days in the month) to reflect the reduced contract size. In addition,
for both contracts, the Exchange proposes certain modifications to the
price limit provisions, including setting a uniform price limit of $10
per MWh expandable to $20 and $30 per MWh following a trading halt(s).
The Acting Director of the Division of Economic Analysis (Division) of
the Commission, acting pursuant to the authority delegated by
Commission Regulation 140.96, has determined that publication of the
proposals for comment is in the public interest, will assist the
Commission in considering the views of interested persons, and is
consistent with the purposes of the Commodity Exchange Act.

DATES: Comments must be received on or before August 27, 1999.

ADDRESSES: Interested persons should submit their views and comments to
Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three
Lafayette Centre, 21st Street, NW., Washington, DC 20581. In addition,
comments may be sent by facsimile transmission to facsimile number
(202) 418-5521, or by electronic mail to [email protected] Reference
should be made to the proposed amendments to contract size and price
limits of the NYMEX California-Oregon-Border and Palo Verde electricity
futures contracts.

FOR FURTHER INFORMATION CONTACT: Please contact Joseph Storer of the
Division of Economic Analysis, Commodity Futures Trading Commission,
Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581,
telephone (202) 418-5282. Facsimile number: (202) 418-5527. Electronic
mail: [email protected]

SUPPLEMENTARY INFORMATION: The Exchange justified the proposals by
stating that:

    These rule changes [to the contract size] are being proposed in
order to provide more consistency between the futures and cash
markets. Currently the standard cash market transaction requires a
delivery rate of 25 MW. Since the delivery rate of many cash market
contracts is not divisible by two 2 MW--the delivery rate of the
futures contract--it is difficult to use the futures contracts for
hedging. A delivery rate of 1 MW would allow traders to more
precisely hedge with 25 futures contracts per standard cash market
    These changes [to the price limit provisions] help to ensure
that futures market prices are able to reflect cash market pricing
by not subjecting them to artificial price constraints at times when
the market is reacting to fundamental changes in the supply/demand
balance. Rule language identical to the language proposed in this
submission has already been approved by the Commission for the
Exchange's Cinergy, Entergy and PJM contracts.

    The NYMEX stated in its submission that it plans to make the
amendment effective 60 days following notice of Commission approval for
application to existing and newly listed months. Exchange staff
indicated that the planned implementation date is November 1, 1999.
According to the Exchange, ``implementation for contracts with open
interest would be executed between trading sessions and all open
positions will be split so that any open positions would be converted
to two open positions. For example, if a trader held a short position
of 20 contracts at the end of the trading session before the effective
date of the rules, the trader would hold a short position of 40
contracts at the beginning of the next session. The total value of the
position would be unchanged since each old position based on 864 MWhs
would be converted to two positions based on 432 MWhs which is an
equivalent MWh total.''
    The Division requests comment on the proposed amendments. In
addition, the Division requests comment on the Exchange proposal to
apply the amendments to certain existing contract months, as noted
    Copies of the proposed amendments will be available for inspection
at the Office of the Secretariat, Commodity Futures Trading Commission,
Three Lafayette Centre, 21st Street NW, Washington, DC 20581. Copies of
the proposed amendments can be obtained through the Office of the
Secretariat by mail at the above address, by phone at (202) 418-5100,
or via the Internet on the CFTC website at www.cftc.gov under ``What's
New & Pending''.
    Other materials submitted by the NYMEX in support of the proposal
may be available upon request pursuant to the Freedom of Information
Act (5 U.S.C. 552) and the Commission's regulations thereunder (17 CFR
part 145 (1987)), except to the extent they are entitled to
confidential treatment as set forth in 17 CFR 145.5 and 145.9. Requests
for copies of such materials should be made to the FOI, Privacy and
Sunshine Act Compliance Staff of the Office of Secretariat at the
Commission's headquarters in accordance with 17 CFR 145.7 and 145.8.
    Any person interested in submitting written data, views, or
arguments on the proposed amendments, or with respect to other
materials submitted by the NYMEX, should send such comments to Jean A.
Webb, Secretary, Commodity Futures Trading Commission, Three Lafayette
Centre, 1155 21st Street NW, Washington, DC 20581 by the specified

    Issued in Washington, DC, on August 9, 1999.
John Mielke,
Acting Director.
[FR Doc. 99-20856 Filed 8-11-99; 8:45 am]

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