Electric Co-op Today

Federal agencies should consider how their regulation of energy and energy-related commodities under a recently enacted financial reform measure will impact the end users of such products, NRECA and other associations urged.

Gary Gensler

The trade groups—NRECA, American Public Power Association, American Public Gas Association and Large Public Power Council—offered their advice to the Commodity Futures Trading Commission. The agency will conduct a rulemaking as part of its implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

NRECA and its counterparts wrote the commission on Sept. 20 as the Not-for-Profit Energy End User Coalition, following up a Sept. 15 meeting with agency staff. Their members have been drawn into the new regulatory environment, the groups wrote, because broad statutory language could be read to redefine traditional commercial contracts as transactions within the agency’s purview.

However, the associations said, all of their members’ natural gas, electric energy and energy-related transactions are tied to the physical commodities that they deliver.

“NFP Energy End Users transact only to obtain and deliver energy to retail consumers and to manage commercial risks, so that the ultimate cost of reliable natural gas and electric energy to consumers is as low and predictable as possible,” they wrote.

Accordingly, NRECA and its counterparts informed the commission, “any new regulatory burdens, direct or indirect costs or requirements will result, dollar for dollar, in higher costs” to customers and owners.

The financial reform act gives CFTC Chairman Gary Gensler broad discretion regarding interpretation, noted Rich Meyer, NRECA senior regulatory counsel. “He appears to be interpreting the Act to regulate to the maximum extent possible,” Meyer said.

“The prospect of facing possible CFTC jurisdiction over our business is a good example of how quickly things can change,” noted Russ Wasson, NRECA director of tax, finance and accounting policy.

“Even though our mission has not changed, external events can create regulatory risks which must be managed if we are to fulfill our mission to our members,” Wasson added.

“We manage those regulatory risks by actively participating in the regulatory process, both as NRECA and as part of two broader energy end user coalitions,” he added.

Tags: Business and Finance