Dive Brief:

• Public power utilities should save money by being able to hedge commercial operations risk with more counterparties, now that the Commodity Futures Trading Commission (CFTC) has issued long-sought relief from a regulation the utilities have fought since 2012.
• In a “no action” letter, the CFTC said counterparties – natural gas companies, other utilities, power producers – may do “swaps” deals with public power operations without having to register as swaps dealers as long as their aggregate swaps deals do not exceed $8 billion a year, the same as other energy companies. That’s a far cry from the $25 million in the contested CFTC regulations. The onerous obligation to register has kept traditional counterparties, except big banks, from doing these deals with municipal utilities.
• “The real winners here are public power customers, who will benefit from the cost savings and rate stability this no-action letter will make possible,” said American Public Power Association President and CEO Mark Crisson.

Dive Insight:

The CFTC’s letter “puts public power utilities on an even playing field with investor-owned utilities and rural electric cooperatives,” APPA said. Fighting for a change in the regulation, the organization and other groups could not get the commission to act but has made progress in Congress. Last week the House Agriculture Committee approved the Public Power Risk Management Act to address the issue. APPA’s Crisson commended new CFTC acting Chairman Mark Wetjen for taking care of the matter and for showing “a much needed, and much appreciated, focus on issues affecting end-users.”