Meeting Date:
Wednesday, January 19, 2011
CFTC Staff:
Dan Berkovitz
Julian Hammar
Lee Ann Duffy
Mark Fajfar
Jeff Burns
Susan Nathan
David Taylor
Irina Leonova
Tom Leahy
Jeff Steiner
Peter Sanchez
Organization(s):
National Rural Electric Cooperative Association
American Public Power Association
American Public Gas Association
Large Public Power Council
ACES Power Marketing
Schiff Hardin LLP
Wilmer Cutler Pickering Hale and Dorr LLP
External Attendees:
Russell Wasson (National Rural Electric Cooperative Association)
Julie Barkemeyer (National Rural Electric Cooperative Association)
Susan Kelly (American Public Power Association)
David Schryver (American Public Gas Association)
Noreen Carter-Roche (Large Public Power Council)
Jeffrey Walker (ACES Power Marketing)
Patricia Dondanville (Schiff Hardin LLP)
Paul M. Architzel (Wilmer Cutler Pickering Hale and Dorr LLP)
Josh Kans (SEC)
Peter Curley (SEC)
Additional Information:
NFPEEU, as a whole, stressed that they are not financial entities, engage in no speculation and perform a public service.
NFPEEU believes its members are in a special situation because they are all non-profit entities and any increased costs they bear must be passed directly to ratepayers (i.e.., they do not have shareholders to absorb losses). Also, in terms of their use of swaps, they are required to enter into a variety of different types of customized swaps to reduce the risks of energy commodity price fluctuations because they are mandated to provide continuous electric service to their customers and must deal with a variety of variable conditions, such as changing weather patterns and different sized customer bases. The swaps they use are mostly energy commodity swaps.
NFPEEU commented on several rulemakings.
Interim Final Rule on Record Retention: Which records should NFPEEU members retain regarding the valuation of electricity and other energy commodity swaps, and regarding the risks hedged by the swaps? NFPEEU commented that its members should be required to retain the records that they believe in good faith are relevant to valuation and hedging. Also, NFPEEU believes that its members will have special difficulty in distinguishing records when a single master agreement covers both financial swaps and physical electricity and other commodity swaps. The smaller members will have difficulty managing and tracking the documentation.
Real Time Reporting: NFPEEU believes it would be difficult for its members to report in real time all of their swaps that are entered into between end users. NFPEEU members would prefer to report the swaps on a quarterly basis; or perhaps some of the larger members could report on a weekly basis. NFPEEU also believes it would be difficult for their members to distill some of their electricity swaps into a standardized form for reporting. NFPEEU believes a phase-in period for the reporting requirement would be helpful.
General: NFPEEU asked that the CFTC endeavor to provide consistent definitions of terms (e.g. “off-facility transactions”) that appear in multiple rulemakings. They would like an opportunity to comment on all the rules after the last Dodd-Frank Act rulemaking has been proposed. They would like the opportunity to comment on the impacts under the Regulatory Flexibility Act and the Paperwork Reduction Act of all the rulemakings as a whole.
