Donnelly Welcomes CFTC Rule to Give Regulatory Relief to Public Utilities

Published on 9/19/2014

 

Contact: Donnelly_Press@Donnelly.Senate.Gov
Phone: 202-224-0972
 
Washington, D.C. — U.S. Senator Joe Donnelly welcomed the Commodity Futures Trading Commission’s (CFTC) announcement that it approved a final rule to provide relief to public power utilities in Indiana and across the country in order to keep energy affordable for American families. This action is in line with Donnelly’s bipartisan Public Power Risk Management Act, legislation he introduced last December with Senator Jim Inhofe (R-OK). Donnelly will continue to push for consideration of the bill, which seeks to provide a permanent legislative fix to the problem by clarifying provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This would level the playing field between public and private power utilities, once and for all.
 
Donnelly said, “I am pleased the CFTC has announced it will provide relief to public power utilities in Indiana and around the country. This is a step forward for Hoosier families and businesses, who deserve reliable, affordable energy prices. While the CFTC’s rule is welcome progress, we will continue to work for passage of the Public Power Risk Management Act so that we can fix this problem permanently.”
 
Indiana Municipal Power Agency (IMPA) President and CEO Raj Rao said, “IMPA is extremely pleased that the CFTC has adopted a final rule exempting utility operations-related swaps with utility special entities from the $25 million ‘special entity’ sub-threshold. This action makes permanent the relief that public power utilities, like IMPA, need in order to continue providing our municipal members and their customers with a low cost and reliable power supply.  IMPA is grateful to Senator Joe Donnelly for his tireless efforts, both legislatively and through his work with the CFTC.  His help to put public power entities like IMPA on an even footing with industry when it comes to the ability to hedge power supply risk and mitigate cost volatility for our customers has been extraordinary.”
 
The rule approved by the CFTC will create a level playing field for public and privately owned utilities. Previously, rules set by the Securities and Exchange Commission and the CFTC required any entity entering into more than $25 million worth of swaps with a public power utility to register as a “swap-dealer,” requiring them to follow stricter business conduct standards and take on higher costs.  Private utilities, on the other hand, were able to enter into up to $8 billion worth of swaps before the entities need to register. Public power utilities reported that this had made it more difficult for them to enter into such a swap, consequently making it less likely that they would be able to attain the risk-management they need in order to provide stable costs for their customers.
 
The Public Power Risk Management Act would require that public and private power utilities be treated the same by not requiring the entities they swap with to register as a “swap-dealer” until the swap amount exceeds $8 billion per year. The CFTC’s action Wednesday accomplishes that; however the Donnelly-Inhofe legislation would help ensure that this regulatory relief is not revisited in the future and eliminate any ambiguities. Therefore, passage of the Public Power Risk Management Act is still needed to make the changes permanent.
 
Read Senator Donnelly’s full Public Power Risk Management Act here

Related Links:
11610 North College Avenue
Carmel, Indiana 46032
317-573-9955    317-575-3372 (fax)
1-800-826-IMPA    info@impa.com

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