CFTC Staff Letter 02-59: No-Action Relief for Power Marketer Providing Commodity Trading Advice

CFTC Letter 02-59
CFTC Letter No. 02-59
May 17, 2002
No-Action
Division of Trading and Markets
Re: Section 4m(1) of the Commodity Exchange Act Dear :
This is in response to your letter dated June 21, 2000 to the Division of Trading & Markets (the “Division”) of the Commodity Futures Trading Commission (the “Commission”) on behalf of your client, the “Company,” as supplemented by additional correspondence[1] and telephone conversations with Division staff.[2] By your letter, you request an interpretation that the Company will be exempt from registration as a commodity trading advisor (“CTA”) pursuant to Rule 4.14(a)(1),[3] based on the facts and circumstances described therein. Facts Based upon representations made in the aforementioned correspondence and conversations, as well as information provided by the Company to the Federal Energy Regulatory Commission (the “FERC”) in publicly available documents,[4] we understand the facts to be as follows:
The Company was formed in 1998 by four electric generation and transmission cooperatives (“G&Ts”). [5] The Company’s primary purpose is to act as an agent for the purchase and sale of power in the wholesale energy market. The current members of the Company are “P”, “Q”, “R”, “S”, “T”, “U”, and “V”. Each member is a wholesale G&T that provides the electric requirements of the distribution cooperatives that it serves. The Company is organized as a for-profit company, with its profits divided among its members according to their proportion of ownership. By order of [ ], the FERC accepted the Company’s rate schedule for filing, thereby authorizing the Company to act as a registered power marketer. As such, the Company is authorized to sell to its members, to sell to third parties at negotiated rates and terms, and to market, third-party capacity and energy. The Company does not, itself, own any generation or transmission facilities. To assist member and non-member customers in managing their portfolios and enhancing reliability, the Company offers a full range of services, including contract management, scheduling, portfolio modeling, and energy execution services.[6] The Company primarily markets its services to G&Ts and file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/02letters/tm02-59.htm (1 of 9) [5/6/2010 5:51:13 PM]