FEDERAL ENERGY REGULATORY COMMISSION 

WASHINGTON, D. C.20426 

OFFICE OF THE GENERAL COUNSEL 

October 20, 2009 

David Stawick, Secretary 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st Street, NW 

Washington, DC 20581 

COMMENT 

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Re: Notice of Intent, Pursuant to the Authority in Section 2(h)(7) of the 

Commodity Exchange Act and Commission Rule 36.3(c)(3), To Undertake 

a Determination Whether the Mid-C Financial Peak Contract, et al., Offered 

for Trading on the IntercontinentalExchange, Inc., Perform Significant 

Price Discovery Functions (Comment File 09-011) 

Comments of the Staff of the Federal Energy Regulatory Commission 

Dear Mr. Stawick: 

On September 22, 2009, the Commodity Futures Trading Commission (CFTC) 

issued a notice of action and request for comment on whether. certain electricity 

contracts, referred to in the subject line of this letter, offered for trading on the 

IntercontinentalExchange, Inc. (ICE), an exempt commercial market (ECM), 

perform significant price discovery functions. 1 These are the comments of the 

staff ofthe Federal Energy Regulatory Commission (FERC). 

Under the CFTC's rules implementing the Reauthorization Act of2008, an 

ECM with ·significant price discovery contracts (SPDCs) is subject to certain selfregulatory and reporting requirements, as well· as certain CFTC oversight 

authorities, with respect to those contracts. Specifically, such regulatory authority 

applies to agreements, contracts or transactions in exempt commodities (which 

includes.electricity) executed on an electronic trading facility by certain eligible 

commercial entities on a principal-to-principal basis if the CFTC determines, in its 

discretion, that any such agreement, contract or transaction performs a significant 

1 74 Fed. Reg. 51261 (October 6, 2009). 
Mr. David Stawick, Secretary 

October 20, 2009 

Page2 

price discovery function. If the CFTC determines that a particular agreement, 

contract or transaction performs a significant price discovery function, the ECM 

must demonstrate, with respect to that contract, compliance with nine "core 

principles" set forth in the section 2(h)(7)(C) of the Commodity Exchange Act 

(CEA) and the CFTC's rules thereunder. 

While a determination by the CFTC that any of the above-referenced ICE 

contracts serves a significant price discovery function would not appear to conflict 

with PERC's exclusive jurisdiction under the Federal Power Act (FPA) over the 

transmission or sale for resale of electric energy in interstate commerce or with its 

other regulatory responsibilities under the FP A, the FERC staff will continue to 

monitor for any such conflict. Moreover, the FERC staff will monitor other 

similar determinations that could conflict with the PERC's regulation of wholesale 

electric markets. In this regard, many PERC-regulated public utilities, in 

particular regional transmission organizations (RTOs) and independent system 

operators (ISOs ), have electronic trading facilities used to provide PERCjurisdictional services. With respect to RTOs and ISOs, the FERC 

comprehensively regulates transmission in interstate commerce and related 

financial transmission rights (FTRs ), real-time and day-ahead energy markets, 

capacity markets, and ancillary services, all of which are conducted using 

electronic trading facilities and which are provided in accordance with detailed 

market rules contained in tariffs and contracts on file at the FERC. Congress has 

recognized that PERC's regulation ofRTOs, ISOs and their markets was not 

intended to be affected by the SPDC amendments to the CEA.2 Accordingly, the 

FERC staff will monitor proposed SPDC determinations and advise the CFTC of 

any potential conflicts with the PERC's exclusive jurisdiction over RTOs, ISOs or 

other jurisdictional entities. 

2 See, H.R. Conf. Rep. No. 110-627, 110 Cong., 2d Sess. at 986 (2008); and 

Cong. Record, Dec. 13, 2007, S15447 (confirming the intent of the sponsors ofthe 

Senate amendment, which added Title XIII to H.R. 2419, that the "significant 

price discovery contract" provision not have any impact on PERC's authority over 

regional transmission organizations). 
Mr. David Stawick, Secretary 

October 20, 2009 

Page3 

The FERC staff thanks the CFTC for soliciting comments on its review of the 

ICE contracts. Any questions or comments on this submission may be directed to: 

The Federal Energy Regulatory Commission 

Office of the General Counsel 

888 First Street, NE 

Washington, DC 20426 

Attention: Andrew F. MacDonald 

Phone:202-502-6541 

Sincerely, 

er._t.___ 

Cc: Jon Wellinghoff, Chairman 

Suedeen G. Kelly, Commissioner 

Phillip D. Moeller, Commissioner 

Marc L. Spitzer, Commissioner 

Thomas R. Sheets 

General Counsel 

Office of the General Counsel 

Federal Energy Regulatory Commission