State utility regulators back energy antispeculation measures
State utility regulators, during their organization's 2009 winter meeting Feb. 18, expressed support for federal legislation to reduce energy market speculation.
OGJ Washington Editor
WASHINGTON, DC, Feb. 19 -- State utility regulators, during their organization's 2009 winter meeting Feb. 18, expressed support for federal legislation to reduce energy market speculation.
Members of the National Association of Regulatory Utility Commissioners adopted a resolution which also supports the US Commodity Futures Trading Commission's efforts to close the so-called Enron loophole, which exempts electronically traded energy commodities from regulatory oversight.
The provision in the 2000 Commodity Futures Modernization Act severely limits the ability of both the Federal Energy Regulatory Commission and CFTC to identify and prevent excessive natural gas market speculation, NARUC said.
The organization also backed new federal legislation to address the flow of investment capital into financial markets in ways that produce commodity price movements harmful to consumers, businesses, and financial markets.
"NARUC supports proposals such as increasing margin requirements for futures contracts on speculators who do not intend to take delivery on essential commodities such as natural gas, and requiring over-the-counter natural gas derivative contracts to be cleared by exchanges as simple steps to combat excessive speculation," the resolution continued.
However, any federal legislation and regulations addressing futures markets should fully accommodate legitimate hedging activities by gas and electric utilities as a strategy to manage the risk of price volatility and mitigate the impacts of such volatility on consumers, it added.
NARUC supports FERC and CFTC actions that increase gas supply and availability; help reduce gas prices; and vigorously enforce against fraud, manipulation, and abusive practices, the resolution concluded.
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