Please see the good news below regarding the CFTC proposed order

Sincerely,

Michelle Hershel
Director of Regulatory Affairs
Florida Electric Cooperatives Assoc.
2916 Apalachee Parkway
Tallahassee, FL  32301
(850)877-6166 ext.3
(850)656-5485 (fax)

-----Original Message-----
From: Russell Wasson [mailto:russell.wasson@nreca.coop]
Sent: Friday, August 17, 2012 1:06 PM
To: Finance Community Listserv
Subject: [fincom] CFTC Issues Proposed Exemptive Order for Electric Cooperatives

On Friday, August 17th, the CFTC issued a Proposed Order in the Federal Register which would largely exempt from CFTC oversight certain transactions among and between municipal, cooperative and Indian Tribe utilities.  The Proposed Order includes cooperatives covered under section 201(f) of the Federal Power Act as well as all non-201(f) cooperatives.  The Proposed Order defines Exempt Non-Financial Energy Transactions as those agreements, contracts, or transactions entered into between Exempt Entities primarily in order “to satisfy existing or anticipated contractual obligations to facilitate the generation, transmission, and/or delivery of electric energy service to customers at the lowest cost possible, and the agreement, contract, or transaction is intended for making or taking physical delivery of the commodity upon which the agreement, contract, or transaction is based.”  Exempt Non-Financial Energy Transactions are limited to six categories of agreements, contracts, or transactions, as described in further detail in the Proposed Order, which facilitate: i) the generation of electric energy by an Exempt Entity, including fuel supply; ii) the purchase or sale and transmission of electric energy by/to an Exempt Entity; and iii) compliance with electric system reliability obligations applicable to the Exempt Entity and its facilities or operations. These include:

1. Electric Energy Delivered

2. Generation Capacity

3. Transmission Services

4. Fuel Delivered

5. Cross-Commodity Pricing

6. Other Goods and Services

The Proposed Order also references the recently published “Product Definitions” release (the “definition of swap” rules) in terms of explaining that transactions excluded from the definition of “swap” thereunder – such as full requirements contracts and emissions allowance contracts were not referenced in the Proposed Order, as they would otherwise not be subject to the Commission’s jurisdiction under the Product Definitions release, even if between or among Exempt Entities.

We are continuing to review the Proposed Order and the questions on which the CFTC is still seeking public comment. The comment period is expected to be for 30 days after the Proposed Order is published in the Federal Register.  We will be back in touch in the near future with further analysis. Nonetheless we wanted you to know immediately of this important and very positive development in NRECA’s CFTC efforts.

If you hae any questions, please let me know.

Russ Wasson
703-907-5802

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