Tracy Warren, NRECA
Phone: (703) 907-5746
Mobile: (703) 517-3411
ARLINGTON, VA; May 4, 2011 – The National Rural Electric Cooperative Association (NRECA) is making available today comments delivered by Russ Wasson, NRECA Director of Tax, Finance and Accounting Policy, to a joint public roundtable of the Commodity Futures Trading Commission (CFTC)/Securities and Exchange Commission (SEC) on May 3, 2011. Wasson made the remarks on behalf of the American Public Power Association, the Large Public Power Council, the Edison Electric Industry and the Electric Power Supply Association in addition to the nation’s more than 900 electric cooperatives.
Wasson expressed the concern of electric utilities who participate in over-the-counter markets for non-cleared (or “uncleared”) energy commodity products that the final rules could eliminate a valuable risk management tool for utilities and, ultimately, expose consumers to the consequences of price volatility.
"…if the markets that exist now are dismantled or made 'unlawful', we will have lost a valuable risk management tool that has helped the electric industry keep America's electric rates affordable and its electric supply reliable for decades. And if these new markets (when they become operational) are too expensive or too cumbersome to allow commercial end users to cost-effectively hedge commercial risk, American businesses will not use the new markets," Wasson said.
Wasson noted general agreement among end-users that the sequence of rules issued by the CFTC is problematic:
"We believe the CFTC (and the SEC) should sequence issuance of the Dodd-Frank final rules, and implementation of those rules, by asset class. The CFTC and the SEC should first focus on evaluating data currently collected in each market, and the unique attributes of each market, and then issue appropriate rules and register market infrastructure entities, then register market professionals, then register financial entities with new roles in each asset class," said Wasson.
NRECA is the national service organization for more than 900 not-for-profit electric cooperatives, municipals and public power districts. NRECA’s members provide electricity to approximately 42 million consumers in 47 states and sell approximately twelve percent of all electric energy sold in the United States.