CFTC’s Exemption Orders and 

Private Rights of Action in Energy 

Markets 

1 

COMMISSIONER KENNETH W. ANDERSON, JR. 

PUBLIC UTILITY COMMISSION OF TEXAS

PRESENTATION FOR COMMODITY FUTURES TRADING 

COMMISSION ENERGY AND ENVIRONMENTAL MARKETS 

ADVISORY COMMITTEE

FEBRUARY 25, 2016
The CFTC’s 

Proposed SPP Exemption Order

 The Public Utility Commission of Texas (PUCT), with one

important exception, supports the CFTC’s proposed order 

exempting SPP transactions, SPP members, and SPP from all but

the CFTC’s anti-fraud and anti-manipulation enforcement

authority under the Commodity Exchange Act (CEA). 

 The proposed exemption is consistent with exemption orders 

already issued by the CFTC to other ISOs in the country. 

 The PUCT’s concern arises from language in the preamble to the

proposed SPP order that states that CFTC had intended to

preserve private causes of action under Section 22 of the CEA in

the final SPP order and the ISO-RTO final exemption order that

was issued in 2013. 

2 
Consequences of CFTC’s Statement of Intent

 The CFTC’s stated intent to preserve private claims raises a number of

troubling issues. 

 FERC and PUCT allow for greater efficiency in resolving disputes than 

private legal proceedings

 Private causes of action will allow collateral attacks on FERC and PUCT

authorized valid market rules, undermining the efficient operation and

regulation of electricity markets. 

 ISO’s-RTO’s are essentially non-profit entities whose expenses are borne

by electricity consumers. 

3 
FERC and PUCT Regulatory Framework Is Structured To 

Resolve Conflict and For Enforcement

 Both FERC and PUCT have oversight and enforcement

divisions.

 Their enforcement divisions are familiar with each agency’s

rules and procedures.

 PUCT has an Independent Market Monitor that reviews

market activity by all market participants and works closely

with the PUCT’s oversight and enforcement division.

 Aggrieved market participants and third-parties with

standing can bring their non-contract disputes against each

other and ERCOT to the PUCT for resolution. The PUCT

staff has the option to participate in these proceedings

representing the public interest.

4
Private Causes of Action Will Allow For Collateral Attacks

 Transactions that are lawful under FERC or PUCT

approved ISO-RTO rules can be challenged under the CEA

by third parties without the participation of the regulator in

the proceedings.

 Federal court’s will be interpreting PUCT and FERC

regulations and RTO-ISO market rules, instead of the

regulatory authority.

 It is likely that inconsistent determinations by different

federal courts will result.

 This will weaken the market and regulatory structure and

cause market uncertainty regarding what conduct is

permitted under the rules.

5
Private Causes of Action Will Allow For Collateral Attacks 

(cont’d)

 Potential for regulation by the courts results rather than by

the expert regulator. 

 This provides an end-run around the absence of a private right

of action in the FPA and PURA. 

 Enforcement will be conducted by a court, instead of being

resolved by the agency where the expertise resides. 

6 
Private Causes of Action Will Increase Cost to Consumers

 ISOs-RTOs are non-profit entities whose costs are borne by

electricity consumers. 

 If an RTO must participate in a federal court proceeding it

will incur litigation costs (particularly if the ISO-RTO is

made a party) that will be passed to consumers. 

 If a party, the ISO-RTO could become subject to potential

damages. Any damages will be passed on to consumers. 

7 
Contact Information

8 

Kenneth W. Anderson, Jr.

512-936-7005 

kenneth.anderson@puc.texas.gov