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STATE OF CALIFORNIA 

Received CFTC 

Records Section 

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PUBLIC UTILITIES COMMISSION 505 VAN NESS AVENUE 

SAN FRANCISCO, CA 94102-3298 

October 23, 2009 

VIA EMAIL 

ARNOLD SCHWARZENEGGER, Governor 

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David A. Stawick, Secretary fT1 • 

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Commodity Futures Trading Commission, 

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Re: CFTC Notice of Intent to Determine Whether Seven Electricity SPINP Contracts (SP-15 

Financial Day-Ahead LMP Peak Contract; SP-15 Financial Day-Ahead LMP Peak Daily 

Contract; SP-15 Financial Day-Ahead LMP Off-Peak Daily Contract; SP-15 Financial 

Swap Real Time LMP Peak Daily Contract; SP-15 Financial Day-Ahead LMP Off-Peak 

Contract; NP-15 Financial Day-Ahead LMP Peak Daily Contract; and NP-15 Financial 

Day-Ahead LMP Off-Peak Daily Contract) Offered for Trading on the Intercontinental 

Exchange, Inc., Perform Significant Price Discovery Functions. (Federal Register /Vol. 

74. No. 192 October 6, 2009) 

Dear Mr. Stawick: 

The California Public Utilities Commission staff (CPUC staff) appreciates the opportunity to 

comment on the Commodity Future Trading Commission's (CFTC) Notice oflntent to 

determine whether seven power contracts 1 (collectively, the "SP/NP 15 contracts") traded on the 

Intercontinental Exchange (ICE) perform significant price discovery functions under Sections 

2(h)(3)-(5) ofthe Commodity Exchange Act. While the due date for comments was noticed in 

the Federal Register as October 21, 2009, the CPUC staff respectfully requests that the CFTC 

accept these comments two days late. 

The CPUC is a constitutionally established agency charged with the responsibility for regulating 

electric corporations within the State of California. In addition, the CPUC has a statutory 

1 For contract details see, CFTC Notice oflntent to Determine Whether Seven Contracts Offered for 

Trading on the IntercontinentalExchange, Inc., Perform Significant Price Discovery Functions. (Federal 

RegisterNol. 74. No. 192 October 6, 2009). 

403142 
David A. Stawick, Secretary 

October 23, 2009 

Page 2 

mandate to represent the interests of electric consumers throughout California in proceedings 

before fed~ral agencies. Since the California energy crisis of2000 the CPUC staff has supported 

greater oversight and transparency of California's energy markets and in particular over-thecounter (OTC) and online energy trading. The CPUC staff supports the CFTC in exercising its 

regulatory authority over the SP/NP 15 contracts and believes that they qualify as significant 

price discovery contracts (SPDCs ). 

The SP/NP 15 contracts traded on the ICE have significant price linkages to energy prices in 

California. In April of2009 the California Independent System Operator (CAISO) launched 

newly designed, centrally cleared day-ahead and real-time wholesale energy markets with 

locational marginal pricing (LMP) at over 3,000 nodes. California's investor-owned utilities 

hedge some of the risks associated with these markets through OTC trading of the SP/NP 15 

contracts. Further, the CPUC is currently developing a price-benchmark and review process for 

short-term and bilateral renewable energy contracts. The proposed price benchmark 

methodology compares the levelized renewable contract price to the forward market prices from 

the ICE afternoon power settlement report for the west coast.2 · 

CFTC oversight of the SP/NP 15 contracts may discourage market manipulation that could 

impact California's energy markets. The CPUC staff supports CFTC regulatory oversight of 

these seven contracts as in the best interest of California's ratepayers. 

The names and addresses of persons to whom communications should be addressed are: 

Chris Clay/Legal Division 

California Public Utilities 

Commission 

505 Van Ness Avenue 

San Francisco, California 941 02 

(415) 703-1123 

cec@cpuc.ca.gov 

Respectfully submitted, 

Is/ CHRISTOPHER CLAY 

CHRISTOPHER CLAY 

Attorney for the 

California Public Utilities Commission Staff 

2 CPUC Decision 09-06-050, June 18, 2009. 

Bishu Chatterjee/Energy Division 

California Public Utilities 

Commission 

505 Van Ness Avenue 

San Francisco, California 941 02 

(415) 703-1247 

bbc@cpuc.ca.gov