CFTC Staff Letter 12-11: No-Action Relief for RTOs, ISOs, and Participants Regarding Certain CEA Provisions

CFTC Letter No. 12-11
No-Action
October 11, 2012
Division of Market Oversight
Division of Swap Dealer and Intermediary Oversight Division of Clearing and Risk Staff No-Action Relief: Preservation of the Regulatory Status Quo with Respect to Certain CEA Provisions That May Apply to RTOs, ISOs, and/or Their Participants On August 28, 2012 the Commodity Futures Trading Commission (the “Commission”) published a Notice of Proposed Order and Request for Comment on a Petition From Certain Independent System Operators and Regional Transmission Organizations to Exempt Specified Transactions Authorized by a Tariff or Protocol Approved by the Federal Energy Commission or the Public Utility Commission of Texas From Certain Provisions of the Commodity Exchange Act Pursuant to the Authority Provided in Section 4(c)(6) of the Act (the “Proposed Order”). 1 The Proposed Order would exempt certain contracts, agreements and transactions for the purchase or sale of certain electricity-related products defined in the Proposed Order (the “Subject Transactions”) from the provisions of the Commodity Exchange Act (“CEA”) and Commission regulations (the “Exempted Provisions”), with the exception of sections 2(a)(1)(B), 4b, 4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 6(c), 6(d), 6(e), 6c, 6d, 8, 9 and 13 of the CEA and any implementing regulations promulgated thereunder including, but not limited to Commission regulations 23.410(a) and (b), 32.4 and part 180 (the “Enforcement Provisions”). Each of Subject Transactions is offered or sold pursuant to a Petitioner’s Tariff 2 that has been approved or permitted to take effect by: (1) in the case of the Electricity Reliability Council of Texas, the Public Utility Commission of Texas or (2) in the case of all other Petitioners, the Federal Energy Regulatory Commission (each such Tariff, an “Approved Tariff”). The Commission solicited comments on the Proposed Order over a thirty day comment period, which closed on September 27, 2012. However, upon the effective date of the product definitions rule, certain provisions of the Commission’s regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) will become effective, prior to the issuance of a final version of the Proposed Order. 3 In light of the pendency of this Section 4(c)(6) petition, as discussed in further detail below, the Divisions are granting this no action relief to preserve the regulatory status quo as of the Effective Date and through the Termination Date, as those terms are defined below.