CFTC Proposed Exemption from Swaps Regulation for Certain Electricity Contracts (CFTC - Fed. Reg. Version)

The CFTC has requested comment on a proposed exemption issued in response to a consolidated petition from certain regional transmission organizations (RTOs) and independent system operators (ISOs) to exempt specified transactions from the provisions of the Commodity Exchange Act and CFTC regulations.

The Proposed Exemption would exempt the contracts, agreements and transactions for the purchase or sale of the limited electricity-related products which are specifically described within the proposed order from the provisions of the CEA and CFTC regulations, with the exception of CEA Sections 2(a)(1)(B), 4b, 4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 6(c), 6(d), 6(e), 6c, 6d, 8, 9and 13, or any implementing CFTC regulations thereunder.

To be eligible for the Proposed Exemption, the contract, agreement or transaction would be required to be offered or entered into in a market administered by a Petitioner pursuant to that Petitioner's tariff or protocol for the purposes of allocating such Petitioner's physical resources; the relevant tariff or protocol would be required to have been approved or permitted to have taken effect by either the Federal Energy Commission (FERC) or the Public Utility Commission of Texas (PUCT), as applicable; and the contract, agreement or transaction would be required to be entered into by persons who are "appropriate persons," as defined in section 4(c)(3)(A) through (J) of the Act, or "eligible contract participants," as defined in section 1a(18) of the Act and CFTC regulations. The exemption as proposed also would extend to any person or class of persons offering, entering into, rendering advice or rendering other services with respect to such transactions. Finally, the exemption would be subject to other conditions set forth therein.

Comments Due: September 27, 2012

View proposed order here: 77 FR 52137Additional Materials: Submit Comments to the CFTC; View Comments.