Comment Text:
End User Exception Meeting with Not For Profit Electricity End Users
Wednesday, January 19, 2011
Memo from
Fajfar, Mark
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
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.
End User Exception from Clearing: NFPEEU members would prefer to notify the CFTC of the collateral provisions of their non-cleared swaps on a periodic basis (e.g., annually or quarterly) with respect to all swaps entered into during the period. Wilmer Cutler requested clarification that a board may approve classes of swaps to be cleared rather than approving individual swaps (End User proposed rule 39.6(b)(6)(ii)).
