COMMODITY FUTURES TRADING COMMISSION

Final Order in Response to an Application From Southwest Power Pool, Inc. to 

Exempt Specified Transactions Authorized by a Tariff Approved by the Federal 

Energy Regulatory Commission From Certain Provisions of the Commodity 

Exchange Act Pursuant to the Authority Provided in Section 4(c)(6) of the Act; 

Amendment to the Final Order Exempting Specified Transactions of Certain 

Independent System Operators and Regional Transmission Organizations 

Authorized by a Tariff or Protocol Approved by the Federal Energy Regulatory 

Commission or the Public Utility Commission of Texas from Certain Provisions of 

the Commodity Exchange Act. 

AGENCY: Commodity Futures Trading Commission.

ACTION: Final order.

SUMMARY: The Commodity Futures Trading Commission (“CFTC” or 

“Commission”) is issuing a final order in response to an application from Southwest 

Power Pool, Inc. (“SPP”) to exempt specified transactions from certain provisions of the 

Commodity Exchange Act (“CEA” or “Act”) and Commission regulations. In this 

release, the Commission is also amending an order issued on March 28, 2013 exempting 

other specified transactions from certain provisions of the CEA and Commission 

regulations. 

DATES: Effective date: The effective date for the SPP Final Order and the Amended 

RTO-ISO Order is [DATE OF FEDERAL REGISTER PUBLICATION].

FOR FURTHER INFORMATION CONTACT: Robert B. Wasserman, Chief 

Counsel, 202-418-5092, rwasserman@cftc.gov, Alicia L. Lewis, Special Counsel, 202-
2

418-5862, alewis@cftc.gov, or Andrée Goldsmith, Special Counsel, 202-418-6624, 

agoldsmith@cftc.gov, Division of Clearing and Risk; David P. Van Wagner, Chief 

Counsel, 202-418-5481, dvanwagner@cftc.gov, or Riva Spear Adriance, Senior Special 

Counsel, 202-418-5494, radriance@cftc.gov, Division of Market Oversight, in each case 

at the Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street 

NW., Washington, DC 20581.

SUPPLEMENTARY INFORMATION:

Overview

The Commission is issuing a final order (“SPP Final Order”) in response to an 

application (“Exemption Application”)1 from SPP to exempt certain Transmission 

Congestion Rights, Energy Transactions, and Operating Reserve Transactions 

(collectively, the “SPP Covered Transactions”) from certain provisions of the CEA2 and 

Commission regulations. The SPP Final Order exempts contracts, agreements, and 

transactions for the purchase or sale of the limited electric energy-related products that 

are specifically described within the SPP Final Order from certain provisions of the CEA 

and Commission regulations, with the exception of the Commission’s general anti-fraud 

and anti-manipulation authority, and scienter-based prohibitions, under CEA sections 

2(a)(1)(B), 4(d), 4b, 4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 6(c), 6(d), 6(e), 6c, 6d, 8, 9, and 

13 of the Act, and any implementing regulations promulgated under these sections 

including, but not limited to, Commission regulations 23.410(a) and (b), 32.4, and part 

 1 In the Matter of the Application for an Exemptive Order Under Section 4(c) of the Commodity Exchange 

Act by Southwest Power Pool, Inc., Oct. 17, 2013, as amended Aug. 1, 2014.

2 7 U.S.C. 1 et seq.
3

180.3 The exemption in the SPP Final Order also will exempt such transactions from 

private actions pursuant to CEA section 22.

4

 To be eligible for the exemption contained 

in the SPP Final Order, the contract, agreement, or transaction must be offered or entered 

into in a market administered by SPP pursuant to SPP’s tariff, rate schedule, or protocol 

(collectively, “Tariff”), and the Tariff must have been approved by the Federal Energy 

Regulatory Commission (“FERC”). In addition, the contract, agreement, or transaction 

must be entered into by persons who are “appropriate persons,” as defined in sections 

4(c)(3)(A) through (J) of the Act,5 “eligible contract participants,” as defined in section 

1a(18)(A) of the Act and Commission regulations,6 or persons who are in the business of: 

(i) generating, transmitting, or distributing electric energy, or (ii) providing electric 

energy services that are necessary to support the reliable operation of the transmission 

system. The SPP Final Order also extends to any person or class of persons offering, 

entering into, rendering advice, or rendering other services with respect to the SPP 

Covered Transactions. Finally, the SPP Final Order is subject to other conditions set 

forth therein. Authority for issuing the exemption is found in section 4(c)(6) of the Act.

7

 

The Commission issued a proposed order and request for comment with respect to SPP’s 

Exemption Application (“SPP Proposed Order”) on May 18, 2015.8

 3 The foregoing provisions are referred to as the “Excepted Provisions.” 

4 7 U.S.C. 25.

5 7 U.S.C. 6(c)(3)(A)-(J).

6 7 U.S.C. 1a(18)(A). See also Further Definition of “Swap Dealer,” “Security-Based Swap Dealer,” 

“Major Swap Participant,” “Major Security-Based Swap Participant” and “Eligible Contract Participant,” 

77 FR 30596, May 23, 2012.

7 7 U.S.C. 6(c)(6). 

8 Notice of Proposed Order and Request for Comment on an Application for an Exemptive Order From 

Southwest Power Pool, Inc. From Certain Provisions of the Commodity Exchange Act Pursuant to the 
4

A copy of the Exemption Application is available on the Commission’s website at 

http://www.cftc.gov/stellent/groups/public/@requestsandactions/documents/ifdocs/spp4c

amdappl080114.pdf; the attachments to the Application are posted at 

http://www.cftc.gov/stellent/groups/public/@requestsandactions/documents/ifdocs/spp4c

attach-a-gg080114.pdf. A chart submitted by SPP that sets forth the status of its 

implementation of the standards set forth in FERC Order No. 741 is posted at 

http://www.cftc.gov/stellent/groups/public/@requestsandactions/documents/ifdocs/spp4c

addendum_b.pdf. A copy of the SPP Proposed Order is available at 80 FR 29490, and on 

the Commission’s website at 

http://www.cftc.gov/ucm/groups/public/@lrfederalregister/documents/file/2015-

12346a.pdf. A copy of the comment file with respect to the SPP Proposed Order is 

available on the Commission’s website at 

http://comments.cftc.gov/PublicComments/CommentList.aspx?id=1586. 

The Commission is also amending an order issued on March 28, 2013 pursuant to 

the authority in section 4(c)(6) of the Act exempting specified electric energy transactions 

from certain provisions of the CEA and Commission regulations (“RTO-ISO Order”).9

 

The RTO-ISO Order was issued in response to a consolidated petition from certain 

regional transmission organizations (“RTOs”) and independent system operators 

(“ISOs”). The RTO-ISO Order exempted contracts, agreements, and transactions for the 

 

Authority Provided in Section 4(c)(6) of the Act, 80 FR 29490, May 21, 2015. The SPP Proposed Order 

was published in the Federal Register on May 21, 2015.

9 Final Order in Response to a Petition From Certain Independent System Operators and Regional 

Transmission Organizations to Exempt Specified Transactions Authorized by a Tariff or Protocol 

Approved by the Federal Energy Regulatory Commission or the Public Utility Commission of Texas From 

Certain Provisions of the Commodity Exchange Act Pursuant to the Authority Provided in the Act, 78 FR 

19880, Apr. 2, 2013. The RTO-ISO Order was published in the Federal Register on April 2, 2013.
5

purchase or sale of the limited electric energy-related products that are specifically 

described within the RTO-ISO Order from certain provisions of the CEA and 

Commission regulations, with the exception of the Commission’s general anti-fraud and 

anti-manipulation authority, and scienter-based prohibitions, under CEA sections 

2(a)(1)(B), 4(d), 4b, 4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 6(c), 6(d), 6(e), 6c, 6d, 8, 9, and 

13 of the Act, and any implementing regulations promulgated under these sections 

including, but not limited to, Commission regulations 23.410(a) and (b), 32.4, and part 

180. The RTO-ISO Order did not specifically mention CEA section 22. The 

Commission issued a proposal to amend the RTO-ISO Order and request for comment on 

May 9, 2016 (“RTO-ISO Order Proposed Amendment”).10 The Commission is 

amending the text of the RTO-ISO Order to also exempt the transactions covered under 

that order from private actions pursuant to CEA section 22 (“Amended RTO-ISO 

Order”). 

A copy of the RTO-ISO Order is available at 78 FR 19880, and on the 

Commission’s website at 

http://www.cftc.gov/idc/groups/public/@lrfederalregister/documents/file/2013-

07634a.pdf. A copy of the RTO-ISO Order Proposed Amendment is available at 81 FR 

30245, and on the Commission’s website at 

http://www.cftc.gov/idc/groups/public/@lrfederalregister/documents/file/2016-

11385a.pdf. A copy of the comment file with respect to the RTO-ISO Order Proposed 

 10 Notice of Proposed Amendment to and Request for Comment on the Final Order in Response to a 

Petition from Certain Independent System Operators and Regional Transmission Organizations to Exempt 

Specified Transactions Authorized by a Tariff or Protocol Approved by the Federal Energy Regulatory 

Commission or the Public Utility Commission of Texas From Certain Provisions of the Commodity 

Exchange Act Pursuant to the Authority Provided in the Act, 81 FR 30245, May 16, 2016. The RTO-ISO

Order Proposed Amendment was published in the Federal Register on May 16, 2016.
6

Amendment is available on the Commission’s website at 

http://comments.cftc.gov/PublicComments/CommentList.aspx?id=1697.

Table of Contents

I. Relevant Dodd-Frank Provisions

II. Background

A. RTO-ISO Order

B. SPP Exemption Application

C. SPP Proposed Order

1. Transactions Proposed to Be Exempted

2. Conditions to the SPP Proposed Order

3. Additional Limitations

D. Aspire v. GDF Suez

E. RTO-ISO Order Proposed Amendment

III. Summary of Comments

A. Overview of Comments

B. Private Right of Action Under CEA Section 22

1. Summary of Comments

2. Commission Determination

C. Use of the Term “Member” in the SPP Proposed Order

IV. Section 4(c) Determinations

A. Section 4(c) Analysis

1. Overview of CEA Section 4(c)

a. Sections 4(c)(6)(A) and (B)

b. Section 4(c)(1)

c. Discussion of Comments on Sections 4(c)(6) and 4(c)(1)

d. Section 4(c)(2)

e. Section 4(c)(3)

2. CEA Section 4(c) Determinations—SPP Final Order

a. Commission Jurisdiction

b. Consistent With the Public Interest and Purposes of the 

CEA

c. CEA Section 4(a) Should Not Apply to the Transactions or 

Entities Eligible for the Exemption

d. Appropriate Persons

e. Effect on the Commission’s or Any Contract Market’s 

Ability to Discharge Its Regulatory or Self-Regulatory 

Duties Under the CEA

3. CEA Section 4(c) Determinations—Amended RTO-ISO Order

a. Consistent With the Public Interest and Purposes of the 

CEA

b. Other Section 4(c) Determinations

B. Additional Limitations and Provisions—SPP Final Order

V. Related Matters

A. Regulatory Flexibility Act
7

1. Introduction

2. SPP Final Order

3. Amended RTO-ISO Order

B. Paperwork Reduction Act

1. Introduction

2. SPP Final Order

3. Amended RTO-ISO Order

C. Cost-Benefit Considerations

1. Introduction

2. SPP Final Order

a. Background

b. SPP Proposed Order and Request for Comment on the 

Commission’s Proposed Consideration of Costs and 

Benefits

c. Summary of the SPP Final Order

d. Baseline

e. Benefits

f. Costs

g. Consideration of Alternatives

h. Consideration of CEA Section 15(a) Factors

3. Amended RTO-ISO Order

a. Background

b. RTO-ISO Order Proposed Amendment and Request for 

Comment on the Commission’s Proposed Consideration of 

Costs and Benefits

c. Summary of the Amended RTO-ISO Order

d. Baseline

e. Benefits

f. Costs

g. Consideration of Alternatives

h. Consideration of CEA Section 15(a) Factors

VI. SPP Final Order

VII. Amended RTO-ISO Order

I. Relevant Dodd-Frank Provisions11

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform 

and Consumer Protection Act (“Dodd-Frank Act”).12 Title VII of the Dodd-Frank Act 

 11 For a fuller discussion, see RTO-ISO Order at 19881-82.

12 See Dodd-Frank Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010). The text of the Dodd-Frank Act may 

be accessed at http://www.cftc.gov/ucm/groups/public/@swaps/documents/file/hr4173_enrolledbill.pdf.
8

amended the CEA and altered the scope of the Commission’s exclusive jurisdiction.13 In 

particular, it expanded the Commission’s exclusive jurisdiction, which had included 

futures traded, executed, and cleared on CFTC-regulated exchanges and clearinghouses, 

to also cover swaps traded, executed, or cleared on CFTC-regulated exchanges or 

clearinghouses.14 As a result, the Commission’s exclusive jurisdiction now includes 

swaps as well as futures.

The Dodd-Frank Act also added a savings clause that addresses the roles of the 

Commission, FERC, and state regulatory authorities as they relate to certain agreements, 

contracts, or transactions traded pursuant to the tariff or rate schedule of an RTO or ISO 

that has been approved by FERC or the state regulatory authority.15 That savings clause, 

paragraph (I)(i) of CEA section 2(a)(1), preserves the statutory authority of FERC and 

state regulatory authorities over agreements, contracts, or transactions “entered into 

pursuant to a tariff or rate schedule approved by [FERC] or a State regulatory authority,” 

that are “(I) not executed, traded, or cleared on” an entity or trading facility subject to 

registration, or “(II) executed, traded, or cleared on a registered entity or trading facility 

owned or operated by” an RTO or ISO.16 However, paragraph (I)(ii) of CEA section 

2(a)(1) also preserves the Commission’s statutory authority over such agreements, 

contracts, or transactions.17 

 13 Section 722(e) of the Dodd-Frank Act.

14 See 7 U.S.C. 2(a)(1)(A). The Dodd-Frank Act also added section 2(h)(1)(A), which requires swaps to be 

cleared if required to be cleared and not subject to a clearing exception or exemption. See 7 U.S.C. 

2(h)(1)(A).

15 See 7 U.S.C. 2(a)(1)(I).

16 7 U.S.C. 2(a)(1)(I)(i).

17 See 7 U.S.C. 2(a)(1)(I)(ii). 
9

The Dodd-Frank Act granted the Commission specific powers to exempt certain 

contracts, agreements, or transactions from duties otherwise required by statute or 

Commission regulation by adding, as relevant here, new section 4(c)(6) to the CEA. 

Section 4(c)(6) provides that the Commission shall, if certain conditions are met, issue 

exemptions from the “requirements” of the CEA for certain transactions entered into 

pursuant to a tariff or rate schedule approved or permitted to take effect by FERC or a 

state regulatory authority.

18

The Commission must act “in accordance with” sections 4(c)(1) and (2) of the 

CEA when issuing an exemption under section 4(c)(6).19 Section 4(c)(1) grants the 

Commission the authority to exempt any agreement, contract, or transaction or class of 

transactions, including swaps, from certain provisions of the CEA, in order to “promote 

responsible economic or financial innovation and fair competition.”20 Section 4(c)(2)21

of the Act further provides that the Commission may not grant exemptive relief unless it 

determines that: (1) the exemption would be consistent with the public interest and the 

purposes of the CEA; (2) the transaction will be entered into solely between “appropriate 

persons” as that term is defined in section 4(c);22 and (3) the exemption will not have a 

 18 See 7 U.S.C. 6(c)(6). CEA section 4(c)(6) provides that the Commission shall issue an exemption only 

“[i]f the Commission determines that the exemption would be consistent with the public interest and the 

purposes of this Act.” Moreover, the Commission must act “in accordance with [4(c)(1) and 4(c)(2)]” 

when issuing an exemption under section 4(c)(6).

19 7 U.S.C. 6(c)(6).

20 7 U.S.C. 6(c)(1).

21 7 U.S.C. 6(c)(2).

22 Section 4(c)(3) of the CEA further outlines who may constitute an appropriate person for the purpose of a 

particular 4(c) exemption and includes, as relevant to the SPP Final Order: 

(a) any person that qualifies for one of ten defined categories of appropriate persons; or 
10

material adverse effect on the ability of the Commission or any contract market to 

discharge its regulatory or self-regulatory responsibilities under the CEA.23 In enacting 

section 4(c), Congress noted that the purpose of the provision is to give the Commission a 

means of providing certainty and stability to existing and emerging markets so that 

financial innovation and market development can proceed in an effective and competitive 

manner.

24

II. Background

A. RTO-ISO Order

On March 28, 2013, the Commission issued the RTO-ISO Order, which exempts

specified transactions of particular RTOs and ISOs25 from certain provisions of the CEA 

and Commission regulations. The scope of the RTO-ISO Order includes transactions that 

fall within the definitions of “Financial Transmission Rights,” “Energy Transactions,” 

“Forward Capacity Transactions,” or “Reserve or Regulation Transactions”26

(collectively, the “RTO-ISO Covered Transactions”) and that are offered or sold in a 

market administered by one of the petitioning RTOs or ISOs pursuant to a tariff, rate 

schedule, or protocol that has been approved or permitted to take effect by FERC or 

 

(b) such other persons that the Commission determines to be appropriate in light 

of their financial or other qualifications, or the applicability of appropriate 

regulatory protections.

23 7 U.S.C. 6(c)(2). 

24 H.R. Rep. No. 102-978, 102d Cong. 2d Sess., 1992 U.S.C.C.A.N. 3179, 3213 (1992). 

25 Six entities (the “Requesting Parties”) jointly filed a petition requesting the exemption provided in the 

RTO-ISO Order: Midwest Independent Transmission System Operator, Inc. (“MISO”), ISO New England, 

Inc. (“ISO NE”), and PJM Interconnection, L.L.C. (“PJM”) are RTOs subject to regulation by FERC; 

California Independent System Operator Corporation (“CAISO”) and New York Independent System 

Operator, Inc. (“NYISO”) are ISOs subject to regulation by FERC; and the Electric Reliability Council of 

Texas, Inc. (“ERCOT”) performs the role of an ISO and is subject to regulation by the Public Utility 

Commission of Texas (“PUCT”). See RTO-ISO Order at 19882. 

26 See id. at 19912-13. 
11

PUCT.27 In addition, to be eligible for the exemption in the RTO-ISO Order, all parties 

to the agreements, contracts, or transactions that are covered by the RTO-ISO Order must 

be: (1) “appropriate persons,” as defined in section 4(c)(3)(A) through (J) of the CEA; 

(2) “eligible contract participants,” as defined in section 1a(18)(A) of the CEA and in 

Commission regulation 1.3(m); or (3) in the business of (i) generating, transmitting, or 

distributing electric energy, or (ii) providing electric energy services that are necessary to 

support the reliable operation of the transmission system.28 To be eligible for the 

exemption in the RTO-ISO Order, the transactions must comply with all other 

enumerated terms and conditions in the RTO-ISO Order.29 The relief granted in, and the 

conditions imposed by, the SPP Proposed Order are consistent with the analogous 

provisions of the RTO-ISO Order.

In the RTO-ISO Order, the Commission excepted from the exemption the 

Commission’s general anti-fraud and anti-manipulation authority, and scienter-based 

prohibitions, under CEA sections 2(a)(1)(B), 4(d), 4b, 4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 

6(c), 6(d), 6(e), 6c, 6d, 8, 9, and 13 of the Act, and any implementing regulations 

promulgated under these sections including, but not limited to, Commission regulations 

23.410(a) and (b), 32.4, and part 180.30 The RTO-ISO Order did not discuss CEA 

section 22. 

 27 See id. at 19913. The exemption in the RTO-ISO Order also applies to “any person or class of persons 

offering, entering into, rendering advice, or rendering other services with respect” to any of the RTO-ISO 

Covered Transactions. See id. at 19912. These entities, including the six Requesting Parties (see supra

note 25) are hereinafter referred to collectively as the “RTO-ISO Covered Entities.”

28 See id. at 19913-14.

29 See id. at 19912-15.

30 See id. at 19912. 
12

B. SPP Exemption Application

On October 17, 2013, SPP filed an Exemption Application31 with the 

Commission requesting that the Commission exercise its authority under section 4(c)(6) 

of the CEA32 and section 712(f) of the Dodd-Frank Act33 to exempt certain contracts, 

agreements, and transactions for the purchase or sale of specified electric energy

products, that are offered pursuant to a FERC-approved Tariff, from most provisions of 

the Act.34 SPP is an RTO subject to regulation by FERC. As described in greater detail 

below, FERC encouraged the formation of RTOs to administer the electric energy 

transmission grid on a regional basis.35

SPP specifically requested that the Commission exempt from most provisions of 

the CEA certain “transmission congestion rights,” “energy transactions,” and “operating 

reserve transactions,” as those terms are defined in the Exemption Application, if such 

transactions are offered or entered into pursuant to a Tariff under which SPP operates that 

has been approved by FERC, as well as any persons (including SPP, its members and its 

market participants) offering, entering into, rendering advice, or rendering other services 

with respect to such transactions.36 SPP asserted that each of the transactions for which 

an exemption is requested is: (a) subject to a long-standing, comprehensive regulatory 

framework for the offer and sale of such transactions established by FERC, and (b) part 

 31 SPP filed an amended Exemption Application on August 1, 2014. Citations herein to “Exemption 

Application” are to the amended Exemption Application.

32 7 U.S.C. 6(c)(6).

33 See section 712(f) of the Dodd-Frank Act. 

34 See Exemption Application at 1. 

35 See id. at 2 n.7.

36 See id. at 11-15.
13

of, and inextricably linked to, SPP’s delivery of electric energy and the organized 

wholesale electric energy markets that are subject to regulation and oversight by FERC.37 

SPP expressly excluded from the Exemption Application any request for relief from the 

Commission’s general anti-fraud and anti-manipulation authority, and scienter-based 

prohibitions, under sections 2(a)(1)(B), 4(d), 4b, 4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 6(c), 

6(d), 6(e), 6c, 6d, 8, 9, and 13 of the Act, and any implementing regulations promulgated 

under these sections including, but not limited to, Commission regulations 23.410(a) and 

(b), 32.4 and part 180,38 and such provisions explicitly have been carved out of the SPP 

Proposed Order. SPP asserted that it is seeking the requested exemption in order to 

provide greater legal certainty with respect to the regulatory requirements that apply to 

the transactions that are the subject of the Exemption Application.39

As discussed above,40 the relief that SPP requested is substantially similar to the 

relief the Commission granted in the RTO-ISO Order. 

C. SPP Proposed Order

On May 18, 2015, the Commission issued the SPP Proposed Order.

41 The 

exemptive relief proposed in the SPP Proposed Order was substantially similar to the 

exemptive relief granted by the Commission in the RTO-ISO Order. 

 37 See id. at 17.

38 See id. at 1.

39 See id. at 11.

40 See supra section II.A.

41 80 FR 29490.
14

1. Transactions Proposed to Be Exempted

In the SPP Proposed Order, the Commission proposed to exempt the purchase and 

sale of three types of SPP Covered Transactions: (1) Transmission Congestion Rights 

(“TCRs”), (2) Energy Transactions, and (3) Operating Reserve Transactions, each as 

defined below, pursuant to section 4(c)(6) of the CEA.

42 

A TCR43 was proposed to be defined as “a transaction, however named, that 

entitles one party to receive, and obligates another party to pay, an amount based solely 

on the difference between the price for electric energy, established on an electric energy 

market administered by SPP, at a specified source (i.e., where electric energy is deemed 

injected into SPP’s grid) and a specified sink (i.e., where electric energy is deemed 

withdrawn from SPP’s grid).”44 As set forth in the SPP Proposed Order, TCRs would be 

exempt only where each TCR is linked to, and the aggregate volume of TCRs for any 

period of time is limited by, the physical capability (after accounting for counterflow) of 

SPP’s electric energy transmission system for such period; SPP serves as the market 

 42 Id. at 29493-94, 29516-17. As set forth in the SPP Proposed Order, SPP represents that the terms 

“Transmission Congestion Rights,” “Energy Transactions,” and “Operating Reserve Transactions” are 

SPP’s equivalent of the following terms set forth in the RTO-ISO Order: “Financial Transmission Right,” 

“Energy Transactions,” and “Reserve or Regulation Transactions,” respectively. SPP also avers that its 

transactions are defined in a manner consistent with the terms set forth in the RTO-ISO Order. Id. at 29493 

n.51.

43 As set forth in the SPP Proposed Order, SPP’s markets will also include Auction Revenue Rights 

(“ARRs”). ARRs are allocated to transmission customers based on historical network load or transmission 

service reservations (or equivalent service taken under a grandfathered agreement between an SPP 

transmission owner and a customer). ARRs are granted exclusively to transmission service customers (i.e., 

not to other market participants or speculators) based on their transmission service (or grandfathered 

service) and are subject to SPP's simultaneous feasibility analysis of the capability of the SPP Transmission 

System. ARRs are not traded in SPP’s market; instead, ARRs entitle the holder to a share of revenues from 

SPP-administered transmission congestion right auctions or may be "self-converted" at the customer's 

election into a transmission congestion right. Id. at 29493 n.52.

44 Id. at 29493; see also id. at 29517. The proposed definition of TCR is similar to the definition of 

financial transmission right (“FTR”) in the RTO-ISO Order. However, the proposed definition of TCR 

does not include TCR options, whereas the RTO-ISO Order’s definition of FTR includes such rights in the 

form of options. Id. at 29493 n.53; cf. RTO-ISO Order at 19913 (defining the term FTR to include FTRs 

and FTRs in the form of options).
15

administrator for the market on which the TCRs are transacted; each party to the 

transaction is a market participant of SPP (or is SPP itself) and the transaction is executed 

on a market administered by SPP; and the transaction does not require any party to make 

or take physical delivery of electric energy.45

“Energy Transactions” were proposed to be defined as transactions in the SPP 

“Day-Ahead Market”46 or “Real-Time Balancing Market,”47 as those terms are defined in 

the SPP Proposed Order, for the purchase or sale of a specified quantity of electric energy 

at a specified location (including virtual bids and offers) where the price of electric 

energy is established at the time the transaction is executed.48 Performance occurs in the 

Real-Time Balancing Market by either the physical delivery or receipt of the specified 

electric energy or a cash payment or receipt at the price established in the Day-Ahead 

Market or Real-Time Balancing Market; and the aggregate cleared volume of both 

physical and cash-settled energy transactions for any period of time is limited by the 

physical capability of the electric energy transmission system operated by SPP for that 

period of time.49

“Operating Reserve Transactions” were proposed to be defined as 

transactions:

 45 80 FR at 29493.

46 “Day-Ahead Market” was defined in the SPP Proposed Order as “an electric energy market administered 

by SPP on which the price of electric energy at a specified location is determined, in accordance with SPP’s 

Tariff, for specified time periods, none of which is later than the second operating day following the day on 

which the Day Ahead Market clears.” Id. at 29517.

47 “Real-Time Balancing Market” was defined in the SPP Proposed Order as “an electric energy market 

administered by SPP on which the price of electric energy at a specified location is determined, in 

accordance with SPP’s Tariff, for specified time periods within the same 24-hour period.” Id.

48 Id. at 29493; see also id. at 29517. The definition of Energy Transactions is similar to the definition used 

by the Commission in the RTO-ISO Order. See RTO-ISO Order at 19913. 

49 80 FR at 29493; see also id. at 29517.
16

(1) In which SPP, for the benefit of load-serving entities and resources, 

purchases, through auction, the right, during a period of time as specified 

in SPP’s Tariff, to require the seller of such right to operate electric energy 

facilities in a physical state such that the facilities can increase or decrease 

the rate of injection or withdrawal of a specified quantity of electric 

energy into or from the electric energy transmission system operated by 

SPP with:

(a) physical performance by the seller’s facilities within a response time 

interval specified in SPP’s Tariff (Reserve Transaction); or

(b) prompt physical performance by the seller’s facilities (Area Control 

Error Regulation Transaction);

(2) For which the seller receives, in consideration, one or more of the 

following:

(a) Payment at the price established in SPP’s Day-Ahead or Real-Time 

Balancing Market, as those terms are defined in the SPP Proposed Order, 

price for electric energy applicable whenever SPP exercises its right that 

electric energy be delivered (including “Demand Response,” as defined in 

the SPP Proposed Order);

(b) Compensation for the opportunity cost of not supplying or consuming 

electric energy or other services during any period during which SPP 

requires that the seller not supply energy or other services;

(c) An upfront payment determined through the auction administered by 

SPP for this service;

(d) An additional amount indexed to the frequency, duration, or other 

attributes of physical performance as specified in SPP’s Tariff; and

(3) In which the value, quantity, and specifications of such transactions 

for SPP for any period of time shall be limited to the physical capability of 

the electric energy transmission system operated by SPP for that period of 

time.50

Finally, in the SPP Proposed Order, the Commission clarified that financial 

transactions that are not tied to the allocation of the physical capabilities of an electric

energy transmission grid would not be suitable for exemption, and were therefore not 

 50 Id. at 29517; see also id. at 29493-94.
17

covered by the SPP Proposed Order, because such activity would not be inextricably 

linked to the physical delivery of electric energy.

51

2. Conditions to the SPP Proposed Order

In the SPP Proposed Order, the Commission proposed four conditions, each of 

which is consistent with the RTO-ISO Order. First, the Commission proposed that all 

parties to the agreements, contracts, or transactions that are covered by the SPP Proposed 

Order must be “appropriate persons,” as such term is defined in sections 4(c)(3)(A) 

through (J) of the Act, “eligible contract participants,” as such term is defined in section 

1a(18)(A) of the Act and in Commission regulation 1.3(m),52 or persons who are in the 

business of: (i) generating, transmitting, or distributing electric energy, or (ii) providing 

electric energy services that are necessary to support the reliable operation of the 

transmission system.53

Second, the Commission proposed that the agreements, contracts, or transactions 

that are covered by the SPP Proposed Order must be offered or sold pursuant to SPP’s 

Tariff, which has been approved or permitted to take effect by FERC.54

Third, the Commission proposed that neither SPP’s Tariff nor other governing 

documents may include any requirement that SPP notify a member prior to providing 

 51 See id. at 29494.

52 Id. Consistent with the RTO-ISO Order, the Commission proposed to use its authority pursuant to CEA 

section 4(c)(3)(K) to include eligible contract participants as appropriate persons for the purposes of this 

SPP Final Order. See RTO-ISO Order at 19896, 19913; see also 7 U.S.C. 1a(18)(A) and Further Definition 

of “Swap Dealer,” “Security-Based Swap Dealer,” “Major Swap Participant,” “Major Security-Based Swap 

Participant” and “Eligible Contract Participant,” 77 FR 30596, May 23, 2012.

53 80 FR at 29494. Consistent with the RTO-ISO Order, the Commission also proposed to use its authority 

pursuant to CEA section 4(c)(3)(K) to include persons who are in the business of: (i) generating, 

transmitting, or distributing electric energy, or (ii) providing electric energy services that are necessary to 

support the reliable operation of the transmission system. See RTO-ISO Order at 19899, 19913, 19914.

54 80 FR at 29494.
18

information to the Commission in response to a subpoena or other request for information 

or documentation.55

Finally, the Commission proposed that information-sharing arrangements that are 

satisfactory to the Commission between the Commission and FERC must remain in full 

force and effect.56 The Commission proposed that this condition also requires that SPP 

comply with the Commission’s requests on an as-needed basis for related transactional 

and positional market data.57

3. Additional Limitations

In the SPP Proposed Order, the Commission expressly noted that the proposed 

exemption was based upon the representations made in the Exemption Application and in 

the supporting materials provided by SPP and its counsel, and that any material change or 

omission in the facts and circumstances that alter the grounds for the SPP Proposed Order

might require the Commission to reconsider its finding that the exemption contained 

therein is appropriate and/or in the public interest and consistent with the purposes of the 

CEA.

58 The Commission highlighted several of SPP’s representations as being of 

particular importance, including: (1) the exemption sought by SPP relates to the 

transactions described in the SPP Proposed Order, which are primarily entered into by 

commercial participants that are in the business of generating, transmitting, and 

 55 Id.

56 Id. The CFTC and FERC signed a Memorandum of Understanding (“MOU”) Regarding Information 

Sharing and Treatment of Proprietary Trading and Other Information on January 2, 2014 (“CFTC-FERC 

Information Sharing MOU”), which addresses the sharing of information in connection with market 

surveillance and investigations into potential market manipulation, fraud, or abuse. The MOU is available 

at http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/cftcfercismou2014.pdf.

57 80 FR at 29494.

58 See id.; see also id. at 29518. These limitations are consistent with the RTO-ISO Order. See RTO-ISO 

Order at 19914-15.
19

distributing electric energy;

59 (2) SPP was established for the purpose of providing 

affordable, reliable electric energy to consumers within its geographic region;60 (3) the 

transactions described in the SPP Proposed Order are an essential means, designed by 

FERC as an integral part of its statutory responsibilities, to enable the reliable delivery of 

affordable electric energy;

61 (4) each of the transactions defined in the SPP Proposed 

Order taking place on SPP’s markets is monitored by both a market administrator (SPP) 

and an independent market monitor (“SPP Market Monitor”) responsible to FERC;

62 and 

(5) each transaction defined in the SPP Proposed Order is directly tied to the physical 

capabilities of SPP’s electric energy grid.63 

In the SPP Proposed Order, the Commission explicitly reserved the authority to, 

in its discretion, revisit any of the terms of the relief provided by the SPP Proposed 

Order, including, but not limited to, making a determination that certain entities and 

transactions should be subject to the Commission’s jurisdiction.64 The Commission also 

explicitly reserved the authority to, in its discretion, suspend, terminate, or otherwise 

modify or restrict the exemption granted in the SPP Proposed Order.

65 Finally, the 

Commission announced its intention to exclude from the exemptive relief its general antifraud and anti-manipulation authority, and scienter-based prohibitions, under the CEA 

over SPP and the transactions defined in the SPP Proposed Order, including sections 

 59 See 80 FR at 29494; see also Exemption Application at 17.

60 See 80 FR at 29494; see also Exemption Application at 2, 17.

61 See 80 FR at 29494; see also generally FERC Order No. 888; FERC Order No. 2000; 18 CFR 

35.34(k)(2); Exemption Application at 17.

62 See 80 FR at 29494; see also Exemption Application at 17.

63 See 80 FR at 29494; see also Exemption Application at 12-15. 

64 See 80 FR at 29518.

65 See id.
20

2(a)(1)(B), 4(d), 4b, 4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 6(c), 6(d), 6(e), 6c, 6d, 8, 9, and 

13 of the CEA and any implementing regulations promulgated thereunder including, but 

not limited to, Commission regulations 23.410(a) and (b), 32.4, and part 180.66 

The Commission explained in the SPP Proposed Order that neither the proposed 

nor the final RTO-ISO Order discussed, referred to, or mentioned CEA section 22, which 

provides for private rights of action for damages against persons who violate the CEA, or 

persons who willfully aid, abet, counsel, induce, or procure the commission of a violation 

of the Act.67 The Commission explained that by enacting CEA section 22, Congress 

provided private rights of action as a means for addressing violations of the Act as an 

alternative or supplement to Commission enforcement action.68 The Commission 

observed that it would be highly unusual for the Commission to reserve to itself the 

power to pursue claims for fraud and manipulation—a power that includes the option of 

seeking restitution for persons who have sustained losses from such violations or a 

disgorgement of gains received in connection with such violations—while at the same 

time, without explanation, denying private rights of action and damages remedies for the 

same violations.69 The Commission stated that if it intended to take such a differentiated 

approach (i.e., to limit the rights of private persons to bring such claims while reserving 

to itself the right to bring the same claims), the RTO-ISO Order would have included a 

discussion or analysis of the reasons therefore.70 The Commission therefore stated that, 

 66 See id. at 29515, 29516. 

67 Id. at 29493.

68 Id.

69 Id.

70 Id.
21

in the Commission’s view, the RTO-ISO Order does not prevent private claims for fraud 

or manipulation under the CEA.71 The Commission further stated that this view would 

apply equally to the SPP Proposed Order.72

D. Aspire v. GDF Suez

In February 2015, the United States District Court for the Southern District of 

Texas dismissed a private lawsuit on the ground that the CEA section 22 private right of 

action was not available to the plaintiffs under the RTO-ISO Order.73 The lawsuit 

alleged that certain electricity generators in ERCOT’s market manipulated the market 

price of electricity by, among other things, intentionally withholding electricity 

generation during times of tight supply.74 The suit further alleged that this conduct 

created artificial and unpredictable prices in the secondary futures markets.75 The claim 

thus alleged that defendants were manipulating contract prices in the derivatives 

commodities market in violation of the Act.76 The District Court dismissed the claim, 

finding that under the RTO-ISO Order, the private right of action in CEA section 22 was 

“unavailable to [p]laintiffs.”77 In February 2016, the United States Court of Appeals for 

the Fifth Circuit affirmed the District Court’s ruling.78

 71 Id.

72 Id.

73 Aspire Commodities, L.P. v. GDF Suez Energy N. Am., Inc., No. H-14-1111, 2015 WL 500482 (S.D. 

Tex. Feb. 3, 2015). 

74 Id. at *1-*2.

75 Id. at *2.

76 See id.

77 Id. at *5.

78 See Aspire Commodities, L.P. v. GDF Suez Energy N. Am., Inc., No. 15-20125, 640 F. App’x 358 (5th 

Cir. Feb. 25, 2016).
22

E. RTO-ISO Order Proposed Amendment

On May 9, 2016, the Commission issued a notice of proposed order and request 

for comment which proposed to amend the text of the RTO-ISO Order to explicitly 

provide that the RTO-ISO Order does not exempt the entities covered under the RTOISO Order from the private right of action found in section 22 of the CEA79 with respect 

to the Excepted Provisions.80

In the RTO-ISO Order Proposed Amendment, the Commission noted that, 

currently, Paragraph 1 of the RTO-ISO Order states that the Commission:

Exempts, subject to the conditions and limitations specified herein, the 

execution of the electric energy-related agreements, contracts, and 

transactions that are specified in paragraph 2 of this Order and any person 

or class of persons offering, entering into, rendering advice, or rendering 

other services with respect thereto, from all provisions of the CEA, except, 

in each case, the Commission’s general anti-fraud and anti-manipulation 

authority, and scienter-based prohibitions, under CEA sections 2(a)(1)(B), 

4(d), 4b, 4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 6(c), 6(d), 6(e), 6c, 6d, 8, 9, 

and 13, and any implementing regulations promulgated under these 

sections including, but not limited to, Commission regulations 23.410(a) 

and (b), 32.4, and part 180. 81 

The RTO-ISO Order Proposed Amendment stated that, under the RTO-ISO Order, for 

those CEA requirements from which the RTOs and ISOs are exempt, there can be no 

claim under CEA section 22 with respect to those requirements.82 The Commission 

further stated RTO-ISO Order did not specifically note that the exemption contained 

 79 7 U.S.C. 25.

80 81FR 30245.

81 81 FR at 30247; see also RTO-ISO Order at 19912. 

82 81 FR 30247.
23

therein did not apply to actions pursuant to CEA section 22 with respect to the Excepted 

Provisions.83

In light of the Aspire court ruling discussed above,84 in the RTO-ISO Order 

Proposed Amendment, the Commission proposed to amend the text of the RTO-ISO 

Order to clarify that the RTO-ISO Covered Entities are not exempt from the private right 

of action in CEA section 22 with respect to the Excepted Provisions. Specifically, the 

Commission proposed to amend Paragraph 1 of the RTO-ISO Order to read as follows 

(the additional language is italicized):

Exempts, subject to the conditions and limitations specified herein, the 

execution of the electric energy-related agreements, contracts, and 

transactions that are specified in paragraph 2 of this Order and any person 

or class of persons offering, entering into, rendering advice, or rendering 

other services with respect thereto, from all provisions of the CEA, except, 

in each case, the Commission’s general anti-fraud and anti-manipulation 

authority, and scienter-based prohibitions, under CEA sections 2(a)(1)(B), 

4(d), 4b, 4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 6(c), 6(d), 6(e), 6c, 6d, 8, 9, 

and 13, and any implementing regulations promulgated under these 

sections including, but not limited to, Commission regulations 23.410(a) 

and (b), 32.4, and part 180. This exemption also does not apply to actions 

pursuant to CEA section 22 with respect to the foregoing enumerated 

provisions.

85

The Commission proposed the foregoing amendment to the RTO-ISO Order in order to 

ensure clarity.

86 In addition, the RTO-ISO Order Proposed Amendment gave the 

following additional reasons for proposing the amendment: (1) amending the RTO-ISO 

Order to explicitly preserve the private right of action with respect to fraud and manipulation 

would not cause regulatory uncertainty or duplicative or inconsistent regulation; (2) 

 83 Id.

84 See supra section II.D.

85 81 FR 30248. The RTO-ISO Order Proposed Amendment did not alter any of the other terms or 

conditions of the RTO-ISO Order.

86 Id.
24

conflicting judicial interpretations regarding the nature of the RTO-ISO Covered 

Transactions would not affect the jurisdiction of FERC or any relevant state regulatory 

authority; (3) the private right of action in the CEA is instrumental in protecting the 

American public, deterring bad actors, and maintaining the credibility of the markets subject 

to the Commission’s jurisdiction; (4) the private right of action under CEA section 22 was 

established by Congress as an integral part of the CEA’s enforcement and remedial 

scheme; and (5) the Commission’s preservation of section 22 liability with respect to the 

Excepted Provisions is consistent with the Commission’s actions in prior 4(c) orders.87 

III. Summary of Comments

A. Overview of Comments

The Commission requested public comments on both the SPP Proposed Order and 

the RTO-ISO Order Proposed Amendment.

The public comment period on the SPP Proposed Order ended on June 22, 2015. 

The Commission received thirteen (13) comment letters on the SPP Proposed Order from 

twelve (12) commenters,

88 the majority of which provided general support for the 

 87 See id. at 30248-49.

88 All comment letters are available through the Commission’s Web site at: 

http://comments.cftc.gov/PublicComments/CommentList.aspx?id=1586. Comments addressing the SPP 

Proposed Order were received from: Aspire Commodities, LP (“Aspire (1)”); Association of Electric 

Companies of Texas, Inc. (“AECT”); Coalition of Physical Energy Companies (“COPE”); Staff of the 

Federal Energy Regulatory Commission (“FERC Staff (1)”); First Principles Economics, LLC (“First 

Principles”); GDF Suez Energy North America, Inc. (“GSENA (1)”); International Energy Credit 

Association (“IECA (1)”); Joint Trade Associations (collectively referring to the American Public Power 

Association, Edison Electric Institute, Electric Power Supply Association, and the National Rural Electric 

Cooperative Association); Public Utility Commission of Texas (“PUCT (1)”); RTO-ISO Commenters 

(collectively referring to PJM Interconnection, L.L.C., Electric Reliability Council of Texas, Inc., and the 

California Independent System Operator Corporation); SPP; and Texas Competitive Power Advocates 

(“TCPA”). COPE submitted an original comment letter on June 22, 2015 and submitted a second comment 

letter on June 23, 2015. The second comment letter, which was dated June 22, 2015, contained a correction 

to the version of COPE’s comment letter that was originally submitted, and therefore superseded COPE’s 

original comment letter. The corrected version of COPE’s comment letter is herein referred to as “COPE 

(1).” COPE submitted a third comment letter after the expiration of the comment period, on June 25, 2015. 
25

proposed exemption.89 The comment letters on the SPP Proposed Order addressed the 

following issues: preservation of the private right of action found in section 22 of the 

CEA; the Commission’s jurisdiction; and the use of the term “member” in the SPP 

Proposed Order. In determining the scope and content of the SPP Final Order, the 

Commission has taken into account the issues raised by commenters.

The public comment period on the RTO-ISO Order Proposed Amendment ended 

on June 15, 2016. The Commission received forty-eight (48) comment letters on the 

RTO-ISO Order Proposed Amendment from forty-six (46) commenters,

90 all of which 

 89 See, e.g., Aspire at 1; AECT at 1; COPE (1) at 2; First Principles at 1; GSENA (1) at 2; IECA at 3; Joint 

Trade Associations at 2; PUCT (1) at 2; SPP at 1; and TCPA at 2.

90 All comment letters are available through the Commission’s Web site at: 

http://comments.cftc.gov/PublicComments/CommentList.aspx?id=1697. Comments addressing the RTOISO Order Proposed Amendment were received from: AKCSC; American Electric Power Company, Inc. 

(“AEP”); American Gas Association (“AGA”); Arizona Electric Power Cooperative, Inc.; Aspire 

Commodities, LP (“Aspire (2)”) Basin Electric Power Cooperative (“Basin”); Better Markets; Catherine 

Corn; bilmem ne; Coalition of Physical Energy Companies (“COPE (2)”); Commercial Energy Working 

Group (“CEWG”); Delaware Division of the Public Advocate, Indiana Office of Utility Consumer 

Counselor, Maryland Office of People’s Counsel, Office of People’s Counsel for the District of Columbia, 

New Jersey Division of Rates Council, Pennsylvania Office of Consumer Advocate, Consumer Advocate 

Division of the Public Service Commission of West Virginia (“PJM JCA”); East Kentucky Power 

Cooperative, Inc.; East Texas Electric Cooperative, Inc.; Edison Electric Institute (“EEI”); Electric Power 

Supply Association (“EPSA”); Exelon Generation Company (“Exelon”); Staff of the Federal Energy 

Regulatory Commission Staff (“FERC Staff (2)”); GDF Suez Energy North America, Inc. (“GSENA (2)”); 

Golden Spread Electric Cooperative (“Golden Spread”); Hoosier Energy Rural Electric Cooperative, Inc.; 

International Energy Credit Association (“IECA (2)”); ISO/RTO Council (“IRC”); ITC Great Plains, LLC 

(“ITC”); Kansas City Power & Light Company (“KCP&L”); Large Public Power Council (“LPPC”); 

Minnkota Power Cooperative, Inc.; MISO Transmission Owners; Missouri Joint Municipal Electric Utility

Commission (“MJMEUC”); National Association of Regulatory Utility Commissioners (“NARUC”); 

National Rural Electric Cooperative Association and American Public Power Association (collectively, the 

“NFP Electric Associations”); North Carolina Electric Membership Corporation; Oklahoma Municipal 

Power Authority (“OMPA”); Old Dominion Electric Cooperative; Omaha Public Power District (“OPPD”); 

Prairie Power, Inc.; PSEG Companies (“PSEG”); Public Utility Commission of Texas (“PUCT (2)”); 

Raiden Commodities (“Raiden”); Southern Illinois Power Cooperative; Sunflower Electric Power 

Corporation; Tenaska Energy, Inc. (“Tenaska”); Texas Industrial Energy Consumers (“TIEC”); Westar 

Energy, Inc. (“Westar”); Western Farmers Electric Cooperative; and Xcel Energy Services Inc. (“Xcel”). 

Both Exelon and Golden Spread submitted two duplicate comments; any reference to either commenter 

below refers to the letter attachment on the Commission’s Web site at the above link. In addition, twelve 

electric cooperatives submitted substantively identical comment letters: Arizona Electric Power 

Cooperative, Inc., East Kentucky Power Cooperative, Inc., East Texas Electric Cooperative, Inc., Golden 

Spread Electric Cooperative, Inc., Hoosier Energy Rural Electric Cooperative, Inc., Minnkota Power 

Cooperative, Inc., North Carolina Electric Membership Corporation, Old Dominion Electric Cooperative, 

Prairie Power, Inc., Southern Illinois Power Cooperative, Sunflower Electric Power Corporation, and 
26

addressed the proposed preservation of the private right of action found in section 22 of 

the CEA. In determining the scope and content of the Amended RTO-ISO Order, and the 

scope and content of the portions of the SPP Final Order related to the private right of 

action, the Commission has taken into account the issues raised by commenters.

B. Private Right of Action Under CEA Section 22

1. Summary of Comments

In response to the SPP Proposed Order, a number of commenters objected to the 

inclusion in the SPP Proposed Order of language proposing to preserve, in the RTO-ISO 

Order, private rights of action under CEA section 22 with respect to the Excepted 

Provisions, and these commenters asked that such language not be included in the SPP 

Final Order.91 Some commenters asserted that the Commission’s proposed clarification 

of the RTO-ISO Order would deprive the RTOs and ISOs of due process and the right to 

comment on this aspect of the RTO-ISO Order. The Joint Trade Associations, for 

example, argued that the Commission’s preservation of a private right of action under 

section 22 of the CEA in the proposed exemption would retroactively impose

requirements that were not contemplated or discussed in prior proceedings.92 GSENA 

likewise stated that the Commission cannot retroactively alter the RTO-ISO Order “by 

simply reciting its belief or intent.”93 COPE echoed this objection.94 A number of 

 

Western Farmers Electric Cooperative. These twelve commenters are collectively referred to in the 

discussion that follows as the “Electric Cooperative Commenters,” and any citations to such commenters 

are to the letter of the Arizona Electric Power Cooperative.

91 See, e.g., Joint Trade Associations at 5; COPE (1) at 3, 5; GSENA (1) at 3; PUCT (1) at 3.

92 Joint Trade Associations at 5.

93 GSENA (1) at 3.

94 COPE (1) at 5 (“[A] retroactive statement of agency intent” is not sufficient to change the plain meaning 

of the RTO-ISO Order).
27

commenters asserted that the language regarding the preservation of private rights of 

action under CEA section 22 would amount to a retroactive alteration of the RTO-ISO 

Order, so the Commission should have provided notice to market participants and an 

opportunity to comment on the alteration.95 Also, commenters argued that the inclusion 

in the SPP Proposed Order of language stating that the intent of the RTO-ISO Order was 

to preserve such private rights of action would be contrary to the plain meaning of the 

RTO-ISO Order.96 In addition, in response to the SPP Proposed Order, commenters 

asserted that allowing private rights of action could (1) create a regulatory conflict that 

would be inconsistent with Congress’ directive that the CFTC and FERC coordinate their 

actions to avoid conflicting or duplicative regulation;97 (2) give rise to inconsistent 

rulings among the Commission, FERC, state regulatory agencies and federal district 

courts regarding the regulatory scheme for transactions in the RTO-ISO markets;

98 (3)

adversely affect the ability of the Commission and FERC to determine under the CFTCFERC jurisdictional MOU99 how to exercise their respective authorities;100 (4) result in 

inconsistent court decisions;101 (5) be costly;102 and (6) be inconsistent with other orders 

 95 Joint Trade Associations at 5-6; COPE (1) at 5; IECA (1) at 2; RTO-ISO Commenters at 3; PUCT (1) at 

4.

96 See, e.g., Joint Trade Associations at 5; COPE (1) at 3; PUCT (1) at 3-4.

97 Joint Trade Associations at 7; IECA at 3.

98 RTO-ISO Commenters at 5.

99 Memorandum of Understanding Between the Federal Energy Regulatory Commission and the 

Commodity Futures Trading Commission (“CFTC-FERC Jurisdictional MOU”), Jan. 2, 2014, available at

http://www.cftc.gov/idc/groups/public/@newsroom/documents/file/cftcfercjmou2014.pdf.

100 RTO-ISO Commenters at 5-6; 9-10.

101 Joint Trade Associations at 6; RTO-ISO Commenters at 8-9.

102 COPE (1) at 4; PUCT (1) at 6.
28

issued by the Commission pursuant to the authority in CEA section 4(c).

103 Separately, 

in response to the SPP Proposed Order, FERC Staff raised concerns about the effect of 

allowing private rights of action under CEA section 22 on FERC’s regulatory authority, 

and requested that the Commission clarify that its action on SPP’s application does not 

limit or otherwise affect FERC’s authority.104

In light of the comments received with respect to the SPP Proposed Order, the 

Commission proposed an amendment to the RTO-ISO Order to address the private right 

of action issue directly and to solicit further comment from the public on that issue. 

As noted above, the Commission received comments in response to the RTO-ISO 

Order Proposed Amendment. Specifically, a number of commenters asserted that the 

private right of action is not necessary in the context of the RTO-ISO markets given the 

comprehensive regulatory scheme to which those markets are subject. For example, IRC 

asserted that the RTO-ISO markets are “comprehensively regulated” by FERC and 

PUCT, with substantial enforcement tools, resources, and experience.105 According to 

several commenters, FERC’s broad enforcement authority over the RTO-ISO markets, 

including the authority to conduct investigations, re-settle markets, grant refunds, order 

disgorgement, impose civil penalties, and refer cases to the Department of Justice for 

criminal prosecution, renders the private right of action unnecessary in such markets.

106 In 

addition, FERC Staff noted that section 206 of the Federal Power Act (“FPA”) authorizes 

FERC to determine, either on its own motion or as a result of a complaint, that an existing 

 103 RTO-ISO Commenters at 6-7.

104 FERC Staff (1) at 2. 

105 IRC at 5-6. The IRC also argued that a Commission order should not be amended, expanded, or 

withdrawn absent a change in the law or the facts underlying the order. Id. at 12.

106 See, e.g., EPSA at 4; GSENA (2) at 3; MISO Transmission Owners at 5; PSEG at 2.
29

rate or market feature is unjust and unreasonable, and to establish prospectively a just and 

reasonable rate.107 Similarly, PUCT argued that it has an established complaint process to 

accommodate claims of fraud and manipulation.108 More broadly, commenters asserted that 

both FERC and PUCT have sufficient processes in place for private parties to air their 

concerns.109 Commenters also noted that the RTO-ISO markets are subject to an additional 

layer of oversight by independent market monitors, which are tasked with tracking the 

behavior of RTO-ISO market participants and reporting suspicious behavior to FERC or 

PUCT.

110 On the other hand, Aspire, Better Markets, and Raiden asserted that the private 

right of action protects market participants by deterring fraudulent or manipulative conduct in 

the RTO-ISO markets, and that private rights of action serve as a vital tool to augment the 

Commission’s limited resources.111 Aspire and Raiden further argued that market 

participants are in the best position to observe and take action with respect to market 

manipulation, and that they are properly incentivized to bring private claims to seek 

compensation for any damages suffered.112 

In addition, several commenters argued that preserving the CEA section 22 

private right of action in this context would result in regulatory and/or legal uncertainty. 

A number of commenters asserted that private rights of action could disrupt the 

regulatory framework in place over the RTO-ISO markets,113 undermine the efficiency 

 107 FERC Staff (2) at 3.

108 PUCT (2) at 11. 

109 See, e.g., AGA at 3; EPSA at 5; GSENA (2) at 3; PUCT (2) at 11.

110 See, e.g., EEI at 10; PJM JCA at 4; MISO Transmission Owners at 5-6; PUCT (2) at 11-12; Xcel at 2.

111 Aspire (2) at 2; Better Markets at 2-3; Raiden at 4.

112 Aspire (2) at 6; Raiden at 6.

113 See, e.g., Basin at 1; EEI at 8; ITC at 2; OMPA at 1; TIEC at 1-2.
30

and effectiveness of the RTO-ISO markets,114 interfere with FERC’s and PUCT’s ability 

to maintain the integrity and efficiency of the RTO-ISO markets,

115 and interfere with 

FERC’s and PUCT’s ability to determine how the transactions in the RTO-ISO markets 

should be regulated so as to produce just and reasonable rates.116 Several commenters 

asserted that a judicial determination regarding the nature of the transactions in the RTOISO markets (i.e., whether a particular transaction is a swap) could affect FERC’s or 

PUCT’s jurisdiction over such transactions.117 In response to the Commission’s question 

regarding the effect of the CEA’s savings clause on such concerns, several commenters 

expressed the view that such clause is subject to differing interpretations, and as such, it 

is not clear how a court would interpret the interaction between the savings clause in 

CEA section 2(a)(1)(I) and the “exclusive jurisdiction” language in section 2(a)(1)(A).118 

Better Markets and Aspire, on the other hand, argued that allowing private rights of 

action in the RTO-ISO markets would not blur the boundaries of the Commission’s and 

FERC’s jurisdiction over such markets, and that the savings clause in CEA section 

2(a)(1)(I) would prevent any judicial interpretations regarding the nature of the 

transactions in the RTO-ISO markets from affecting FERC’s or PUCT’s jurisdiction over 

such transactions.119 Separately, FERC Staff requested that, if the Commission were to 

amend the RTO-ISO Order to provide a private right of action under the CEA in the 

 114 Westar at 2.

115 EPSA at 8.

116 IRC at 8.

117 See, e.g., EEI at 7; IRC at 9; MISO Transmission Owners at 12.

118 See, e.g., MISO Transmission Owners at 12; PUCT at 11. 

119 Better Markets at 3-4; Aspire at 7.
31

RTO-ISO markets, the Commission reiterate in its final order that the Commission does 

not have exclusive jurisdiction over transactions covered by the RTO-ISO Order.120 

Separately, a number of commenters argued that permitting private actions under 

CEA section 22 against RTO-ISO market participants could result in conflicting or

inconsistent court decisions.121 In addition, commenters claimed that allowing private 

rights of action in the RTO-ISO markets could provide an opportunity for private 

plaintiffs to collaterally attack market rules, tariffs, or filed rates that have been approved 

or permitted to take effect by the relevant regulator.122 Such a result, commenters 

argued, could make it difficult for market participants to rely on the established market 

rules, resulting in a chilling effect on otherwise appropriate market behavior, and could

inject uncertainty and instability into the RTO-ISO markets.123 Several commenters also 

suggested that private rights of action could create an opportunity for courts to secondguess policy decisions made by FERC and PUCT,124 or for private litigants to force 

judicial revision of RTO-ISO market rules with which they disagree.125 Aspire and 

Better Markets argued, on the other hand, that the private right of action does not present 

 120 FERC Staff (2) at 4.

121 See, e.g., AGA at 3-4; PUCT (2) at 5. 

122 See, e.g., AEP at 2; AGA at 3; COPE (2) at 6, 7; EPSA at 7; Exelon at 2; GSENA at 2; IRC at 10; MISO 

Transmission Owners at 7; OPPD at 5; PUCT (2) at 5; Tenaska at 2; Westar at 3. In response to the 

Commission’s request for comments regarding the filed rate doctrine, the IRC and PUCT noted that courts 

have identified several exceptions to the filed rate doctrine, so there is no guarantee that a federal judge 

would grant a motion to dismiss based on such doctrine. IRC at 11; PUCT (2) at 10-11; see also MISO 

Transmission Owners at 11-12. The IRC further argued that, to the extent the filed rate doctrine would bar 

the types of private claims brought under CEA section 22, such a fact would undercut the rationale for 

allowing such private claims. IRC at 11.

123 See, e.g., PUCT (2) at 5; MISO Transmission Owners at 7; COPE (2) at 7; EPSA at 7; GSENA (2) at 2-

3; OMPA at 3; OPPD at 5; PSEG at 3; Tenaska at 2-3; TIEC at 3-4; Xcel at 3.

124 AGA at 4; TIEC at 3.

125 EEI at 10. 
32

any increased risk of inconsistent judicial decisions, as the Commission already has the 

authority to bring actions under the fraud and manipulation provisions that are reserved in 

the RTO-ISO Order.126

Furthermore, a number of commenters argued that allowing private rights of 

action in the RTO-ISO markets would be contrary to congressional intent. Several 

commenters pointed out that the FPA expressly prohibits private rights of action; thus, 

commenters argued that allowing CEA section 22 private actions in the RTO-ISO 

markets would be contrary to the express intent of Congress.127 Commenters also urged 

that allowing private rights of action would create a regulatory conflict that is 

inconsistent with Congress’ directive that the CFTC and FERC coordinate their actions to 

avoid conflicting or duplicative regulation,128 and would adversely affect the ability of 

the Commission and FERC to determine under the CFTC-FERC Jurisdictional MOU129

how to exercise their respective authorities.130 On the other hand, Better Markets argued 

that preserving the private right of action would not be contrary to congressional intent, 

since Congress specifically included a private right of action in the CEA.131

Several commenters also claimed that preserving the CEA section 22 private right 

of action would be inconsistent with prior Commission action. According to EEI, the 

RTO-ISO Order was consistent with previous orders issued by the Commission in that it 

 126 Aspire at 7; Better Markets at 3.

127 See, e.g., CEWG at 2; EEI at 8; Exelon at 2; IRC at 6; KCP&L at 7; MISO Transmission Owners at 9; 

IECA at 4; FERC Staff (2) at 2-3.

128 AGA at 3; CEWG at 5; FERC Staff (2) at 3.

129 See supra note 99.

130 OPPD at 2-3; FERC Staff (2) at 2. 

131 Better Markets at 3.
33

did not contain any reference to or discussion of CEA section 22.132 EEI further pointed 

to a grant of temporary exemptive relief from provisions of the CEA added or amended 

by Title VII of the Dodd-Frank Act that referenced certain terms that the Commission 

had not yet defined.133 That order expressly stated that “[t]o the extent that the Final 

Order provides [4(c)] exemptive relief [from certain provisions of the CEA], such 

exemptive relief would, in effect, preclude a person from succeeding in a private right of 

action under CEA section 22(a) for violation of such provisions.”134 Both the IRC and 

EEI noted that the Commission has only expressly preserved the CEA section 22 private 

right of action in two prior 4(c) orders, both of which were superseded by Congress.135 

The IRC claimed that it is not unusual for the Commission to reserve its own authority to 

address fraud and manipulation without also reserving private litigants’ right to do so.136 

COPE argued that there is no valid policy argument to require all orders issued under 

CEA section 4(c) to be the same.137 EPSA echoed this argument, noting that the 

Commission’s actions in prior 4(c) orders should not control its decision on the private 

right of action here.138

A number of commenters addressed the cost implications of allowing private 

rights of action in the RTO-ISO markets. For instance, several commenters argued that 

allowing private actions in the RTO-ISO markets would be costly, and that costs will be 

 132 EEI at 6. 

133 Effective Date for Swap Regulation, 76 FR 42508, July 19, 2011.

134 EEI at 6-7.

135 EEI at 7 n.19; IRC at 12 n.32.

136 IRC at 12.

137 COPE (2) at 8. 

138 EPSA at 11. 
34

passed onto electricity consumers.139 The Electric Cooperative Commenters noted that 

costs will arise due to private litigation whether or not a private plaintiff can prove that 

market manipulation occurred.140 In addition, COPE asserted that private litigants could 

be motivated in part by monetary gain, whereas FERC, PUCT, and the Commission are 

motivated by the public interest.

141 A number of commenters further asserted that 

consumers will bear the indirect costs of increased private litigation in the RTO-ISO 

markets, claiming that such costs would include indirect costs due to (1) increased 

regulatory uncertainty;142 (2) increased risk;143 (3) decreased liquidity in RTO-ISO products 

that are used to hedge and manage risk as market participants limit or forego activity in the 

RTO-ISO markets; 144 and (4) court decisions forcing RTOs and ISOs to change their 

infrastructure.145 PUCT also argued that allowing private litigants to bring actions against 

participants in the RTO-ISO markets would increase the costs associated with operating 

those markets.146 On the other hand, Better Markets argued that if the private right of 

action were available, market participants would not incur any increased costs of 

 139 See, e.g., AGA at 4; CEWG at 4; EPSA at 5-6; Exelon at 3-4; IRC at 10; KCP&L at 4; MISO 

Transmission Owners at 9; MJMEUC at 3; NFP Electric Associations at 6; PUCT (2) at 5; and TIEC at 4.

140 Electric Cooperative Commenters at 3. The Electric Cooperative Commenters also requested that, if the 

Commission were to allow private rights of action under CEA section 22 in the RTO-ISO markets, such 

actions not be allowed (1) against commercial end-user-only entities, or (2) to challenge commercial-enduser-only hedging transactions. Id.

141 COPE (2) at 6; see also AEP at 2-3; EEI at 11; NFP Electric Associations at 5-6; Xcel at 3.

142 AEP at 2.

143 Exelon at 3-4.

144 Id.

145 EPSA at 6.

146 PUCT (2) at 5.
35

compliance because they would already be on notice of, and complying with, the fraud 

and manipulation provisions in the CEA.147 

Lastly, Xcel and GSENA argued that allowing private rights of action in the 

RTO-ISO markets would ultimately result in reduced investment in renewable and 

efficient energy.148

2. Commission Determination

The Commission has determined, in the limited context of the RTO-ISO markets 

which are the subject of the Amended RTO-ISO Order and the SPP Final Order, to issue 

a complete exemption from the private right of action in CEA section 22, including with 

respect to claims based on fraud or manipulation. The Commission is persuaded by

several factors raised by the commenters. Considering all of these factors together, rather 

than any of these factors alone, or any subset of these factors, the Commission concludes 

that in the limited context of activities within the RTO-ISO markets, there should be a 

complete exemption from private claims under CEA section 22.

Initially, the Commission agrees that the unique nature of the RTO-ISO markets 

differentiates this issue from other contexts in which a private right of action is essential. 

The RTO-ISO markets are heavily regulated by FERC and PUCT, with whom the 

Commission shares jurisdiction. This regulation is “pervasive” and it includes rate 

monitoring, tariff approval, authorization of market rules and pricing mechanisms, and 

real-time oversight of markets.149 As part of an articulated regulatory structure, these 

markets are also subject to close surveillance not only by the regulators but also by 

 147 Better Markets at 3.

148 Xcel at 3-4; GSENA (2) at 4. 

149 FERC Staff (2) at 1-3.
36

independent market monitors.150 In addition, FERC and PUCT support their regulation 

of the electric power markets with an enforcement program that includes the authority to 

order civil penalties, disgorgement, and to resettle the market.151 

Furthermore, the Commission will continue to police these markets for fraud, 

manipulation and other unfair trading activities and, as contemplated by Congress, it can 

and will cooperate with these fellow regulators to deter and prevent unlawful trading 

activities in the RTO-ISO markets. In the same vein, the Commission and FERC both 

have the authority to take enforcement action, and to seek restitution on behalf of injured 

market participants that fall in their jurisdiction.152

Moreover, the Commission is further persuaded to issue an express exemption

from the private right of action in the context of the RTO-ISO markets because private 

rights of action appear in tension with the intent of Congress in this context. In 2005, 

Congress amended the FPA to give FERC the authority to pursue manipulation of the 

electricity markets.153 At that time, Congress focused on whether there should be a 

private right of action for manipulation of these specific markets. Congress explicitly 

declined to grant such a right of action.154 This was a more particularized determination 

regarding the merits of private enforcement in these unique markets than the legislative 

 150 E.g., FERC Staff (2) at 2; PJM JCA at 4; PUCT (2) at 11-12.

151 FERC Staff (2) at 2; EPSA at 3-4.

152 7 U.S.C. 13a-1(d)(3) (Commission authority to seek restitution); 16 U.S.C. 825h (describing FERC’s 

remedial authority under the FPA); Pub. Util. Comm’n of Cal. v. FERC, 462 F.3d 1027, 1047-48 (9th Cir. 

2006) (holding that section 309 of the FPA authorizes FERC to order restitution for profits gained as a 

result of a statutory or tariff violation); see also Consol. Edison Co. of N.Y., Inc. v. FERC, 347 F.3d 964, 

967 (D.C. Cir. 2003) (same).

153 E.g., FERC Staff (2) at 2-3 & n.2. 

154 Id.
37

judgment reflected in CEA section 22 that there should be a generally applicable private 

right of action for fraud and manipulation in the Commission’s jurisdictional markets. 

Finally, the Commission is persuaded that there is a potential for private rights of 

action regarding the entities and transactions in the RTO-ISO markets to interfere with 

FERC and PUCT oversight of these markets. Based on the totality of these factors, the 

Commission concludes that in the limited context of activities within these unique 

markets, there should be a complete exemption from private claims under CEA section 

22.

The Commission’s determination regarding the CEA section 22 private right of 

action does not in any way affect the Commission’s own authority to address fraudulent 

or manipulative conduct in these markets within the Commission’s jurisdiction And, in 

cooperation with electricity regulators, the Commission will remain vigilant in policing 

these markets for fraud, manipulation and other illegal activity. 

In addition, in light of the above, the Commission encourages market participants 

who observe potential fraud or manipulation in the markets subject to the Commission’s 

jurisdiction to bring their concerns to the Commission. The whistleblower provisions of 

the Commodity Exchange Act and Commission regulations continue to apply in this 

context and are available pursuant to their terms.155

 155 The Commission recognizes the arguments of Aspire, Raiden, and Better Markets regarding the fact that 

the existence of a private right of action would protect market participants by deterring fraudulent or 

manipulative conduct in the RTO-ISO markets. Aspire (2) at 2; Raiden at 4; Better Markets at 2-3. 

However, the Commission is of the view that, for all of the reasons stated in this section, such concerns are 

mitigated. 
38

C. Use of the Term “Member” in the SPP Proposed Order

With respect to the Commission’s use of the term “member” in the SPP Proposed 

Order, the Joint Trade Associations noted that the Commission used the term “member” 

throughout the SPP Proposed Order, and that while such term may have a defined 

meaning within the context of other Commission-regulated markets, such term is not 

defined for purposes of the SPP Proposed Order in the context of RTO and ISO 

markets.156 The Joint Trade Associations urged the Commission to clarify that the term 

“member,” as used in the context of RTO and ISO markets, refers to a market participant 

that is bound by the relevant tariff and that also meets the conditions to be considered an 

“appropriate person” that are set forth in the SPP Proposed Order.157 The Commission 

notes that this is consistent with its understanding of the term “member” in this 

context.158

IV. Section 4(c) Determinations

A. Section 4(c) Analysis

1. Overview of CEA Section 4(c)

a. Sections 4(c)(6)(A) and (B)

As discussed above in section I., the Dodd-Frank Act amended CEA section 4(c) 

to add sections 4(c)(6)(A) and (B), which provide authority to exempt certain transactions 

entered into: (a) pursuant to a tariff or rate schedule approved or permitted to take effect 

by FERC, or (b) pursuant to a tariff or rate schedule establishing rates or charges for, or 

 156 Joint Trade Associations at 8.

157 Id.

158 This is also intended to address the concerns raised in SPP’s comment letter with respect to the use of 

the terms “member” and “market participant.” SPP at 3-4.
39

protocols governing, the sale of electric energy approved or permitted to take effect by 

the regulatory authority of the State or municipality having jurisdiction to regulate rates 

and charges for the sale of electric energy within the State or municipality.159 Indeed, 

section 4(c)(6) provides that “[i]f the Commission determines that the exemption would 

be consistent with the public interest and the purposes of this Act, the Commission shall” 

issue such an exemption.160 However, any exemption considered under section 

4(c)(6)(A) and/or (B) must be done “in accordance with [CEA sections 4(c)(1) and 

(2)].”161 

b. Section 4(c)(1)

As described above in section I., CEA section 4(c)(1) requires that the 

Commission act “by rule, regulation, or order, after notice and opportunity for hearing.” 

It also provides that the Commission may act “either unconditionally or on stated terms 

or conditions or for stated periods and either retroactively or prospectively, or both” and 

that the Commission may provide an exemption from any provisions of the CEA except 

subparagraphs (C)(ii) and (D) of section 2(a)(1).

 159 The exemption language in section 4(c)(6) reads:

(6) If the Commission determines that the exemption would be consistent with the public interest 

and the purposes of this Act, the Commission shall, in accordance with paragraphs (1) and (2), 

exempt from the requirements of this Act an agreement, contract, or transaction that is entered 

into—

(A) pursuant to a tariff or rate schedule approved or permitted to take effect by the Federal 

Energy Regulatory Commission;

(B) pursuant to a tariff or rate schedule establishing rates or charges for, or protocols 

governing, the sale of electric energy approved or permitted to take effect by the regulatory 

authority of the State or municipality having jurisdiction to regulate rates and charges for the sale 

of electric energy within the State or municipality; or 

(C) between entities described in section 201(f) of the Federal Power Act (16 U.S.C. 824(f)).

160 7 U.S.C. 6(c)(6) (emphasis added).

161 CEA section 4(c)(6) explicitly directs the Commission to consider any exemption proposed under 

4(c)(6) “in accordance with [CEA sections 4(c)(1) and (2)].”
40

c. Discussion of Comments on Sections 4(c)(6) and 4(c)(1)

The Commission noted in the RTO-ISO Order Proposed Amendment that, based 

on the difference in language between CEA sections 4(c)(6) and 4(c)(1), it is not clear 

that section 4(c)(6) provides the Commission with the authority to exempt from the 

section 22 private right of action. The Commission further noted that, while section 

4(c)(1) authorizes the Commission to grant exemptions from the Act’s “requirements” or 

“from any other provision of this Act,” section 4(c)(6) authorizes the Commission to 

exempt from the Act’s “requirements” only.162

In response to this discussion, Aspire argued that section 4(c)(6), in authorizing 

exemptions from the CEA’s “requirements” only, does not authorize the Commission to 

grant an exemption from the section 22 private right of action, since the private right of 

action is not a “requirement” of the CEA.163 IRC argued, on the other hand, that the 

narrower language in section 4(c)(6) does not limit the scope of the exemptions that the 

Commission may grant under sections 4(c)(1) and 4(c)(2).164 

As noted above in section IV.A.1.a., in granting an exemption under section 

4(c)(6) of the CEA, the Commission must act “in accordance with” section 4(c)(1), which 

grants the Commission the discretionary authority to exempt from the Act’s 

“requirements” or “from any other provision of this Act” if it makes certain findings.165 

The policy basis for the Commission’s decision to grant an exemption from the CEA 

 162 See 81 FR 30249.

163 See Aspire (2) at 4. 

164 See IRC at 13.

165 7 U.S.C. 6(c)(1). The Commission has also considered that CEA section 22 may in fact be interpreted 

to impose a “requirement.” Section 22 states that certain persons who violate the Act or Commission 

regulations “shall be liable for actual damages.” 7 U.S.C. 25(a). This could be construed as a 

“requirement” to compensate the victim.
41

section 22 private right of action under section 4(c)(6) applies equally, in the context of 

the present issue, to a decision to take the same action pursuant to section 4(c)(1), and the 

Commission has made the findings required under that provision in sections III.B.2., 

IV.A.2., and IV.A.3. Accordingly, even if the Commission were limited under section 

4(c)(6) from granting an exemption from the CEA section 22 private right of action in the 

present context, the Commission would and does, for the reasons discussed above in 

section III.B.2., in the alternative exercise its discretion to grant such an exemption 

pursuant to its authority in section 4(c)(1) of the Act.

d. Section 4(c)(2)

As set forth above in section I., CEA section 4(c)(2) requires the Commission to 

determine that: to the extent an exemption provides relief from any of the requirements 

of CEA section 4(a), the requirement should not be applied to the agreement, contract or 

transaction; the exempted agreement, contract, or transaction will be entered into solely 

between appropriate persons;166 and the exemption will not have a material adverse effect 

on the ability of the Commission or any contract market to discharge its regulatory or 

self-regulatory duties under the CEA.167 

e. Section 4(c)(3)

As explained in section I. above, CEA section 4(c)(3) outlines who may constitute 

an appropriate person for the purpose of a 4(c) exemption, including as relevant to this 

SPP Final Order: (a) any person that fits in one of ten defined categories of appropriate 

persons; or (b) such other persons that the Commission determines to be appropriate in 

 166 See CEA section 4(c)(2)(B)(i) and the discussion of CEA section 4(c)(3) below.

167 See CEA section 4(c)(2)(B)(ii). CEA section 4(c)(2)(A) also requires that the exemption would be 

consistent with the public interest and the purposes of the CEA, but that requirement duplicates the 

requirement of section 4(c)(6). 
42

light of their financial or other qualifications, or the applicability of appropriate 

regulatory protections.168

2. CEA Section 4(c) Determinations—SPP Final Order 

a. Commission Jurisdiction

Subject to the limitations set forth in the CEA, sections 4(c)(6)(A) and (B) of the 

Act grant the Commission the authority to exempt certain electric energy transactions 

provided that the Commission determines, among other things, that such exemption is 

consistent with the public interest and purposes of the CEA.169 The Commission 

received a comment from FERC in response to the SPP Proposed Order relating to the 

Commission’s interpretation of its jurisdiction pursuant to section 4(c)(6).170

 168 CEA section 4(c)(3), 7 U.S.C. 6(c)(3), provides that the term “appropriate person” shall be limited to the 

following persons or classes thereof: (A) A bank or trust company (acting in an individual or fiduciary 

capacity); (B) A savings association; (C) An insurance company; (D) An investment company subject to 

regulation under the Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.); (E) A commodity pool 

formed or operated by a person subject to regulation under this Act; (F) A corporation, partnership, 

proprietorship, organization, trust, or other business entity with a net worth exceeding $1,000,000 or total 

assets exceeding $5,000,000, or the obligations of which under the agreement, contract or transaction are 

guaranteed or otherwise supported by a letter of credit or keepwell, support, or other agreement by any such 

entity or by an entity referred to in subparagraph (A), (B), (C), (H), (I), or (K) of this paragraph; (G) An 

employee benefit plan with assets exceeding $1,000,000, or whose investment decisions are made by a 

bank, trust company, insurance company, investment adviser registered under the Investment Advisers Act 

of 1940 (15 U.S.C. 80a-1 et seq.), or a commodity trading advisor subject to regulation under this Act; (H) 

Any governmental entity (including the United States, any state, or any foreign government) or political 

subdivision thereof, or any multinational or supranational entity or any instrumentality, agency, or 

department of any of the foregoing; (I) A broker-dealer subject to regulation under the Securities Exchange 

Act of 1934 (15 U.S.C. 78a et seq.) acting on its own behalf or on behalf of another appropriate person; (J) 

A futures commission merchant, floor broker, or floor trader subject to regulation under this Act acting on 

its own behalf or on behalf of another appropriate person; (K) Such other persons that the Commission 

determines to be appropriate in light of their financial or other qualifications, or the applicability of 

appropriate regulatory protections.

169 See discussion regarding CEA section 4(c)(6) in section IV.A.1.a. supra. As noted above in section 

IV.A.1.c., to the extent that the Commission’s action on the private right of action issue, with respect to 

both the SPP Final Order and the Amended RTO-ISO Order, requires further authority under section 

4(c)(1), the Commission can and does exercise its discretion to take such action pursuant to such authority. 

170 FERC Staff (1) at 2. The Commission received the same comment from FERC Staff in response to the 

RTO-ISO Order Proposed Amendment. See FERC Staff (2) at 2. The Commission’s determination with 

respect to this comment applies to both the SPP Final Order and the Amended RTO-ISO Order.
43

FERC argued that the Commission should “interpret the [Dodd-Frank Act] as not 

applying to any contract or instrument traded in an RTO or ISO market pursuant to a 

FERC-accepted or approved tariff or rate schedule.”171 Specifically, in its comment letter 

in response to the SPP Proposed Order, FERC maintained that RTO and ISO markets and 

transmission services are “tightly integrated” and “regulated to a greater extent than other 

commodity markets.”172 FERC thus asserted that interpreting the Dodd-Frank Act to not 

apply to contracts or instruments traded in an RTO or ISO market pursuant to a FERCaccepted or approved tariff or rate schedule is “the most appropriate application of [the 

Dodd-Frank Act] to these circumstances.”173 FERC further asserted that, while it does 

not take issue with the Commission’s retention of anti-manipulation authority in the SPP 

Proposed Order, FERC also “retains its anti-manipulation authority, as well as its 

regulatory and oversight responsibilities, with respect to RTO and ISO markets.”174 

FERC accordingly requested that the Commission “clarify that its action on SPP’s 

application, including any statements in this proceeding with respect to private claims for 

fraud or manipulation under the Commodity Exchange Act, do not limit or otherwise 

affect FERC’s authority.”175

In response to FERC’s comment, the Commission notes that the interpretation of 

the Dodd-Frank Act proffered by FERC is contrary to the express language of that 

statute. The Dodd-Frank Act added a savings clause to the CEA that addresses the roles 

 171 FERC Staff (1) at 2; see also FERC Staff (2) at 2.

172 FERC Staff (1) at 2.

173 Id.

174 Id.

175 Id.
44

of the Commission, FERC, and state agencies as they relate to transactions traded 

pursuant to FERC- or state-approved tariffs or rate schedules. As noted above in section 

I., section 2(a)(1)(I) of the Act states that nothing in the Act limits or affects the statutory 

authority of FERC and state regulatory authorities over agreements, contracts, or 

transactions entered into pursuant to a tariff or rate schedule approved by FERC or a state 

regulatory authority, and also preserves the Commission’s statutory authority over such 

agreements, contracts, or transactions. Moreover, while section 4(c)(6) of the CEA, 

added by the Dodd-Frank Act, empowers the Commission to exempt contracts, 

agreements, or transactions traded pursuant to a Tariff or rate schedule that has been 

approved or permitted to take effect by FERC or a state regulatory authority, it does not 

permit the Commission to automatically or mechanically apply the exemption. Instead, 

section 4(c)(6) mandates that the Commission initially determine that the exemption 

would be in the public interest and consistent with the purposes of the CEA, that the 

exemption would be applied only to agreements, contracts, or transactions that are 

entered into solely between appropriate persons, and that the exemption will not have a 

material adverse effect on the ability of the Commission or any contract market to 

discharge its regulatory or self-regulatory duties under the CEA.

The Commission further notes, for purposes of clarification and as requested by 

FERC, that nothing in the SPP Final Order (or in the Amended RTO-ISO Order) limits or 

otherwise affects FERC’s authority.

b. Consistent with the Public Interest and the Purposes of the CEA

As required by CEA section 4(c)(2)(A), as well as section 4(c)(6), the 

Commission determines that the SPP Final Order is consistent with the public interest 

and the purposes of the CEA. Section 3(a) of the CEA provides that transactions subject 
45

to the CEA affect the national public interest by providing a means for managing and 

assuming price risks, discovering prices, or disseminating pricing information through 

trading in liquid, fair and financially secure trading facilities.176 Section 3(b) of the CEA 

identifies the purposes of the CEA: 

It is the purpose of this Act to serve the public interests described in 

subsection (a) through a system of effective self-regulation of trading 

facilities, clearing systems, market participants and market professionals 

under the oversight of the Commission. To foster these public interests, it 

is further the purpose of this Act to deter and prevent price manipulation 

or any other disruptions to market integrity; to ensure the financial 

integrity of all transactions subject to this Act and the avoidance of 

systemic risk; to protect all market participants from fraudulent or other 

abusive sales practices and misuses of customer assets; and to promote 

responsible innovation and fair competition among boards of trade, other 

markets and market participants.177 

Consistent with the proposed determinations set forth in the SPP Proposed 

Order,

178 the Commission finds that: (a) the SPP Covered Transactions have been, and 

are, subject to a long-standing regulatory framework for the offer and sale of the 

Transactions established by FERC; and (b) the SPP Covered Transactions administered 

by SPP are part of, and inextricably linked to, the organized wholesale electric energy 

markets that are subject to FERC regulation and oversight. For example, FERC Order 

No. 2000 (which, along with FERC Order No. 888, encouraged the formation of RTOs 

and ISOs to operate the electronic transmission grid and to create organized wholesale 

electric energy markets) requires an RTO to demonstrate that it has four minimum 

characteristics: (1) independence from any market participant; (2) a scope and regional 

configuration which enables the RTO to maintain reliability and effectively perform its 

 176 7 U.S.C. 5(a).

177 7 U.S.C. 5(b).

178 See 80 FR at 29495-96.
46

required functions; (3) operational authority for its activities, including being the security 

coordinator for the facilities that it controls; and (4) short-term reliability.179 In addition, 

SPP stated that an RTO must demonstrate to FERC that it performs certain selfregulatory and/or market monitoring functions.

180 SPP also represented that it is

“responsible for ensur[ing] the development and operation of market mechanisms to 

manage transmission congestion”181 and for establishing “market mechanisms [that] must 

accommodate broad participation by all market participants, and must provide all 

transmission customers with efficient price signals that show the consequences of their 

transmission usage decisions.”182

Furthermore, as explained by SPP and discussed in the SPP Proposed Order, the 

Commission notes that the SPP Covered Transactions are entered into by commercial 

participants that are in the business of generating, transmitting, and distributing electric 

energy,183 and that SPP was established for the purpose of providing affordable, reliable 

 179 See id. at 29495. 

180 See id.; see also id. at 29495 n.81 (explaining that, according to SPP, SPP must employ a transmission 

pricing system that promotes efficient use and expansion of transmission and generation facilities; develop 

and implement procedures to address parallel path flow issues within its region and with other regions; 

serve as a provider of last resort of all ancillary services required by FERC Order No. 888 including 

ensuring that its transmission customers have access to a Real-Time balancing market; be the single OASIS 

(Open-Access Same-Time Information System) site administrator for all transmission facilities under its 

control and independently calculate Total Transmission Capacity and Available Transmission Capability; 

provide reliable, efficient, and not unduly discriminatory transmission service, it must provide for objective 

monitoring of markets it operates or administers to identify market design flaws, market power abuses and 

opportunities for efficiency improvements; be responsible for planning, and for directing or arranging, 

necessary transmission expansions, additions, and upgrades; and ensure the integration of reliability 

practices within an interconnection and market interface practices among regions). See Exemption 

Application at 18.

181 See 80 FR at 29495-96; see also Exemption Application at 18.

182 See 80 FR at 29496; see also Exemption Application at 18-19; 18 CFR 35.34(k)(2).

183 See 80 FR at 29496; see also Exemption Application at 17.
47

electric energy to consumers within its geographic region.184 Additionally, the SPP

Covered Transactions that take place on SPP’s markets are overseen by the SPP Market 

Monitor, required by FERC to identify manipulation of electric energy on SPP’s

markets.185 

Moreover, fundamental to the Commission’s “public interest” and “purposes of 

the [Act]” analysis is the fact that the SPP Covered Transactions are inextricably tied to 

SPP’s physical delivery of electric energy.186 Another important factor is that the SPP 

Final Order is explicitly limited to SPP Covered Transactions taking place on markets 

that are monitored by the SPP Market Monitor, SPP, or both, and FERC. In contrast, an 

exemption for transactions that are not so monitored, or not related to the physical 

capacity of an electric transmission grid, or not directly linked to the physical generation 

and transmission of electric energy, or not limited to appropriate persons,187 is unlikely to 

be in the public interest or consistent with the purposes of the CEA, taking such 

transactions outside the scope of the SPP Final Order. 

Finally, the extent to which the SPP Final Order is consistent with the public 

interest and the purposes of the Act can, in major part, be assessed by the extent to which 

the Tariff and activities of SPP, and supervision by FERC, are congruent with, and 

sufficiently accomplish, the regulatory objectives of the relevant Core Principles set forth 

in the CEA for derivatives clearing organizations (“DCOs”) and swap execution facilities

 184 See id.

185 See id. 

186 See 80 FR at 29496; see also Exemption Application at 12-15, 17 (describing the SPP Covered 

Transactions and noting that each of them “is part of, and inextricably linked to, the organized wholesale 

electric energy markets that are subject to FERC’s regulation and oversight”). 

187 See appropriate persons discussion infra IV.A.2.d. 
48

(“SEFs”). Specifically, ensuring the financial integrity of the SPP Covered Transactions 

and the avoidance of systemic risk, as well as protection from the misuse of participant 

assets, are addressed by the Core Principles for DCOs. Providing a means for managing 

or assuming price risk and discovering prices, as well as prevention of price manipulation 

and other disruptions to market integrity, are addressed by the Core Principles for SEFs. 

Deterrence of price manipulation (or other disruptions to market integrity) and protection 

of market participants from fraudulent sales practices is achieved by the Commission 

retaining and exercising its jurisdiction over these matters. Therefore, the Commission 

has incorporated its DCO and SEF Core Principle analyses, set forth in the SPP Proposed 

Order,

188 into its consideration of the SPP Final Order’s consistency with the public 

interest and the purposes of the Act. In the same way, the Commission has considered 

how the public interest and the purposes of the CEA are also addressed by the manner in 

which SPP complies with FERC’s credit reform policy.189 

The Commission specifically requested comment on (a) whether it used the 

appropriate standard in making its section 4(c) determination, and (b) whether the SPP 

Proposed Order is consistent with the public interest and the purposes of the CEA. The 

Commission received no comments in response to these requests. The Commission 

therefore determines that it used the appropriate standard in making its public interest and 

purposes of the CEA determination. The Commission believes that the standards set 

forth in FERC regulation 35.47 appear to achieve goals similar to the regulatory 

 188 See 80 FR at 29499-515.

189 See section IV.B. infra; 80 FR at 29498-99. 
49

objectives of the Commission’s DCO Core Principles.190 Moreover, as set forth in the 

Commission’s DCO Core Principle analysis in the SPP Proposed Order, the Commission 

determines that SPP’s policies and procedures appear to be consistent with, and to 

accomplish sufficiently for purposes of this SPP Final Order, the regulatory objectives of 

the DCO Core Principles in the context of the SPP Covered Transactions.191 Also, as set 

forth in the Commission’s SEF Core Principles analysis in the SPP Proposed Order, the 

Commission has determined that SPP’s policies and procedures appear to be consistent 

with, and to accomplish sufficiently for purposes of this SPP Final Order, the regulatory 

objectives of the SEF Core Principles in the context of the SPP Covered Transactions.192 

The Commission further determines that, for the reasons set forth in this SPP Final Order, 

the requested exemptive relief is consistent with the public interest and the purposes of 

the CEA.

c. CEA Section 4(a) Should Not Apply to the Transactions or Entities Eligible for 

the Exemption

CEA section 4(c)(2)(A) requires, in part, that the Commission determine that the 

SPP Covered Transactions described in the SPP Final Order should not be subject to 

CEA section 4(a)—generally, the Commission’s exchange trading requirement for a 

contract for the purchase or sale of a commodity for future delivery. As set forth in the 

SPP Proposed Order, the Commission has examined the SPP Covered Transactions, SPP, 

and its markets using the CEA Core Principle requirements applicable to a DCO and to a 

 190 Cf. RTO-ISO Order at 19900-01.

191 Cf. id. at 19901.

192 Cf. id. at 19902.
50

SEF as a framework for its public interest and purposes of the CEA determination.193 As 

further support for this determination, the Commission also is relying on the public 

interest and the purposes of the Act analysis in subsection IV.A.2.b. above. In so doing, 

the Commission has determined that, due to the FERC regulatory scheme and the RTO 

market structure applicable to the SPP Covered Transactions, the linkage between the 

SPP Covered Transactions and that regulatory scheme, and the unique nature of the 

market participants that would be eligible to rely on the exemption,194 CEA section 4(a) 

should not apply to the SPP Covered Transactions under the SPP Final Order.

195

d. Appropriate Persons

Section 4(c)(2)(B)(i) of the CEA196 requires that the Commission determine that 

the exemption is restricted to SPP Covered Transactions entered into solely between 

“appropriate persons,” as that term is defined in section 4(c)(3) of the Act.197 Section 

4(c)(3) defines the term “appropriate person” to include: (1) any person that falls within 

one of the ten categories of persons delineated in sections 4(c)(3)(A) through (J) of the 

Act; or (2) such other persons that the Commission determines to be appropriate pursuant 

to the limited authority provided by section 4(c)(3)(K).198 The Commission may 

determine that persons that do not meet the requirements of sections 4(c)(3)(A) through 

(J) are “appropriate persons” for purposes of section 4(c) only if it determines that such 

 193 See 80 FR at 29499-515.

194 See appropriate persons analysis, section IV.A.2.d. infra; see also 80 FR at 29496-97. 

195 The Commission notes that such a determination would be consistent with a similar determination made 

in the RTO-ISO Order. See RTO-ISO Order at 19895.

196 7 U.S.C. 6(c)(2)(B)(i). 

197 7 U.S.C. 6(c)(3). 

198 Id.; see also supra note 168.
51

persons are “appropriate in light of their financial or other qualifications, or the 

applicability of appropriate regulatory protections.”199 

Consistent with the RTO-ISO Order, the Commission proposed to limit the 

exemption to transactions where all parties thereto are “appropriate persons,” as defined 

in sections 4(c)(3)(A) through (J) of the Act,200 “eligible contract participants,” as defined 

in section 1a(18)(A) of the Act201 and in Commission regulation 1.3(m),202 or persons 

who are in the business of: (i) generating, transmitting, or distributing electric energy, or 

(ii) providing electric energy services that are necessary to support the reliable operation 

of the transmission system.203 The Commission did not receive any comments objecting 

to this proposed limitation. Therefore, pursuant to the authority set forth in section 

4(c)(3)(K) of the CEA and consistent with the RTO-ISO Order, the Commission has 

determined that “eligible contract participants,” as defined in section 1a(18)(A) of the 

CEA and in Commission regulation 1.3(m), and “persons who are in the business of: (i) 

generating, transmitting, or distributing electric energy, or (ii) providing electric energy 

services that are necessary to support the reliable operation of the transmission system,” 

are appropriate persons for purposes of the SPP Final Order, in light of their financial or 

other qualifications. Accordingly, this limitation has been incorporated into the SPP 

Final Order unchanged.

 199 7 U.S.C. 6(c)(3)(K).

200 7 U.S.C. 6(c)(3)(A)-(J).

201 7 U.S.C. 1a(18)(A).

202 17 CFR 1.3(m).

203 80 FR 29496-97. The Commission notes that the proposed limitation is consistent with the RTO-ISO 

Order. See RTO-ISO Order at 19913.
52

The Commission believes that this expansion, when combined with the 

“appropriate persons” definition delineated in sections 4(c)(3)(A) through (J) of the CEA, 

would appear to strike the appropriate balance because the exemption would apply only 

to those market participants that can demonstrate the financial wherewithal or the 

requisite business activities and congruent expertise to qualify as appropriate persons 

under section 4(c)(3)(K) of the CEA.204 The Commission has determined that “eligible 

contract participants,” as defined in section 1a(18)(A) of the CEA and in Commission 

regulation 1.3(m), are appropriate persons for purposes of the SPP Final Order in light of 

their financial or other qualifications, or the applicability of regulatory protections. 

Moreover, the Commission is using the authority provided by section 4(c)(3)(K) of the 

CEA to determine that a “person who actively participates in the generation, 

transmission, or distribution of electric energy,” as defined within the SPP Final Order, is 

an appropriate person for purposes of the exemption provided therein.205 The SPP Final 

Order defines a “person who actively participates in the generation, transmission, or 

distribution of electric energy” as “a person that is in the business of: (1) generating, 

transmitting, or distributing electric energy; or (2) providing electric energy services that 

are necessary to support the reliable operation of the transmission system.” The 

Commission has determined that the inclusion of transactions entered into by such 

persons is proper because such persons’ active participation in the physical markets 

provides them with the requisite “qualifications” necessary to be deemed an “appropriate 

person” under CEA section 4(c)(3)(K) for purposes of the SPP Final Order.

 204 Cf. RTO-ISO Order at 19899.

205 Cf. id. at 19897.
53

e. Effect on the Commission’s or Any Contract Market’s Ability to Discharge Its 

Regulatory or Self-Regulatory Duties Under the CEA

CEA section 4(c)(2)(B)(ii) requires the Commission to make a determination 

regarding whether exempting the SPP Covered Transactions will have a material adverse 

effect on the ability of the Commission or any contract markets to perform regulatory or 

self-regulatory duties.206 In making this determination, the Commission should consider 

such regulatory concerns as “market surveillance, financial integrity of participants, 

protection of customers, and trade practice enforcement.”207 These considerations are 

similar to the purposes of the CEA as defined in section 3, initially addressed in the 

public interest and purposes of the CEA discussion.

The Commission proposed to determine that the exemption would not have a 

material adverse effect on the Commission’s or any contract market’s ability to discharge 

its regulatory function.208 In the SPP Proposed Order, the Commission noted the 

following assertion by SPP as support for its determination:

Under Section 4(d) of the Act, the Commission will retain authority to 

conduct investigations to determine whether SPP is in compliance with 

any exemption granted in response to this request. . . . [T]he requested 

exemptions would also preserve the Commission’s existing enforcement 

jurisdiction over fraud and manipulation. This is consistent with section 

722 of the Dodd-Frank Act, the existing MOU between the FERC and the 

Commission and other protocols for inter-agency cooperation. SPP will 

continue to retain records related to the Transactions, consistent with 

existing obligations under FERC regulations.

The regulation of exchange-traded futures contracts and significant price 

discovery contracts (“SPDCs”) will be unaffected by the requested 

exemptions. Futures contracts based on electricity prices set in SPP’s 

markets that are traded on a designated contract market and SPDCs will 

 206 7 U.S.C. 6(c)(2)(B)(ii).

207 See H.R. Rep. No. 102-978, 102d Cong. 2d Sess., 1992 U.S.C.C.A.N. 3179, 3211 (1992).

208 80 FR 29497-98.
54

continue to be regulated by and subject to the requirements of the 

Commission. No current requirement or practice of SPP or of a contract 

market will be affected by the Commission’s granting the requested 

exemptions.

209

In addition, the Commission stated that the limitation in the SPP Proposed Order to SPP 

Covered Transactions between certain appropriate persons avoids potential issues 

regarding financial integrity and customer protection.210

Moreover, the Commission did not propose to exempt SPP from certain CEA 

provisions, including sections 2(a)(1)(B), 4(d), 4b, 4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 

6(c), 6(d), 6(e), 6c, 6d, 8, 9, and 13, and any implementing regulations promulgated 

thereunder including, but not limited to, Commission regulations 23.410(a) and (b), 32.4, 

and part 180, to the extent that those sections prohibit fraud or manipulation of the price 

of any swap, contract for the sale of a commodity in interstate commerce, or for future 

delivery on or subject to the rules of any contract market.211 As such, the Commission 

proposed to expressly retain authority to pursue fraudulent or manipulative conduct.212 

In addition, the Commission proposed that granting the SPP Proposed Order for 

the SPP Covered Transactions would not have a material adverse effect on the ability of 

any contract market to discharge its self-regulatory duties under the Act.213 Specifically, 

with respect to TCRs and Operating Reserve Transactions, the Commission found that 

the exemption would not have a material adverse effect on any contract market carrying 

 209 Id. at 29497 (quoting Exemption Application at 22).

210 Id.

211 Id.

212 Id. Nor did SPP seek an exemption from these provisions. See id. at 29497 n.107; Exemption 

Application at 1. 

213 80 FR at 29497.
55

out its self-regulatory function because these transactions did not appear to be used for 

price discovery or as settlement prices for other transactions in Commission-regulated 

markets.214 With respect to Energy Transactions, the Commission proposed that, while 

these transactions did have a relationship to Commission-regulated markets because they 

can serve as a source of settlement prices for other transactions within Commission 

jurisdiction, they should not pose regulatory burdens on a contract market because SPP

has market monitoring systems in place to detect and deter manipulation that takes place 

on its markets.215 In addition, the Commission noted that, as a condition to the SPP 

Proposed Order, the Commission would be able to obtain data from FERC with respect to 

activity on SPP’s markets that may impact trading on Commission-regulated markets.216 

Finally, the Commission noted that if the SPP Covered Transactions ever could be 

used in combination with trading activity or in a position in a designated contract market 

(“DCM”) contract to conduct market abuse, both the Commission and DCMs have 

sufficient independent authority over DCM market participants to monitor for such 

activity.217

While the Commission did not receive any comments on its proposed 

determination that the exemption would not have a material adverse effect on the 

Commission’s ability to discharge its regulatory duties, an important caveat should be 

made. With regard to the SEF Core Principle 3 analysis and general statements regarding 

the SPP Market Monitor’s ability to detect and deter manipulation, the Commission notes 

 214 Id.

215 Id.; see also id. at 29494, 29496.

216 Id. at 29497.

217 Id. at 29497-98.
56

that such statements were not meant to be construed as a final and irrevocable approval of 

the integrity of reference prices derived from SPP’s markets. The Commission retains 

the authority to question and obtain additional information in a timely manner regarding 

the underlying prices to which TCRs and other electric energy contracts, which are 

subject to the Commission’s jurisdiction, settle. As previously discussed, the 

Commission maintains the responsibility of ensuring that exchange-traded and cleared 

financial electric energy contracts are constructed such that the settlement mechanism 

produces prices that accurately reflect the underlying supply and demand fundamentals of 

SPP’s markets and are not readily susceptible to manipulation. For this reason, as 

originally proposed, the Commission has conditioned the SPP Final Order upon access to 

related transactional and positional data from SPP’s markets.218

For the reasons set forth herein and in the SPP Proposed Order, the Commission 

determines that the exemption for the SPP Covered Transactions in this SPP Final Order

would not have a material adverse effect on the Commission’s or any contract market’s 

ability to discharge its regulatory function.

3. CEA Section 4(c) Determinations—Amended RTO-ISO Order

a. Consistent with the Public Interest and Purposes of the CEA

As required by CEA section 4(c)(2)(A), as well as section 4(c)(6), the 

Commission previously determined that the exemption set forth in the RTO-ISO Order is 

consistent with the public interest and the purposes of the CEA.219 The amendment to the 

 218 See section IV.B. infra.

219 See RTO-ISO Order at 19894-95, 19900-02. The Commission’s prior determination was based on a 

number of findings, including that (a) the RTO-ISO Covered Transactions have been, and are, subject to a 

long-standing, regulatory framework for the offer and sale of the Transactions established by FERC or 

PUCT; (b) the RTO-ISO Covered Transactions administered by the RTOs, ISOs, or ERCOT are part of, 
57

RTO-ISO Order does not alter the Commission’s prior determinations with respect to the 

public interest and purposes of the CEA, and the Commission incorporates such prior 

determinations into the Amended RTO-ISO Order.

In addition, the Commission determines that the current amendment to the RTOISO Order, which explicitly provides that the exemption set forth therein extends to 

private actions under CEA section 22, is in the public interest for all of the reasons stated 

in section III.B.2.

220

b. Other Section 4(c) Determinations

In the RTO-ISO Order, the Commission made a number of other determinations 

under CEA section 4(c), including:

 and inextricably linked to, the organized wholesale electric energy markets that are subject to FERC and 

PUCT regulation and oversight; (c) the RTO-ISO Covered Transactions are entered into primarily by 

commercial participants that are in the business of generating, transmitting, and distributing electric energy; 

(d) the Requesting Parties were established for the purpose of providing affordable, reliable electric energy 

to consumers within their geographic region; (e) the RTO-ISO Covered Transactions that take place on the 

Requesting Parties’ markets are overseen by Market Monitoring Units, required by FERC and PUCT to 

identify manipulation of electric energy on the RTO-ISO Covered Entities’ markets; (f) the RTO-ISO 

Covered Transactions are inextricably tied to the Requesting Parties’ physical delivery of electric energy; 

(g) the RTO-ISO Order is explicitly limited to RTO-ISO Covered Transactions taking place on markets that 

are monitored by either an independent Market Monitoring Unit, a market administrator (the RTO, ISO, or 

ERCOT), or both, and a government regulator (FERC or PUCT); (h) the standards set forth in FERC 

regulation 35.47 appear to achieve goals similar to the regulatory objectives of the Commission’s DCO 

Core Principles, and substantial compliance with such requirements was key to the Commission’s 

determination that the tariffs and activities of the Requesting Parties and supervision by FERC or PUCT are 

congruent with, and—in the context of the RTO-ISO Covered Transactions—sufficiently accomplish, the 

regulatory objectives of each DCO Core Principle; (i) the Requesting Parties’ policies and procedures 

appear to be consistent with, and to accomplish sufficiently for purposes of the RTO-ISO Order, the 

regulatory objectives of the DCO Core Principles in the context of the RTO-ISO Covered Transactions; and 

(j) the Requesting Parties’ policies and procedures appear to be consistent with, and to accomplish 

sufficiently for purposes of the RTO-ISO Order, the regulatory objectives of the SEF Core Principles in the 

context of the RTO-ISO Covered Transactions. Id.

220 The Commission received one comment regarding the public interest findings in the RTO-ISO Order 

Proposed Amendment. EPSA argued that in the RTO-ISO Order Proposed Amendment, the Commission 

proposed to “automatically or mechanically bypass the required analysis” under CEA sections 4(c)(1) and 

4(c)(2), and that the Commission’s proposed public interest findings with respect the proposed amendment 

to explicitly preserve the CEA section 22 private right of action were insufficient. EPSA at 7-8. The 

Commission is of the view that the public interest analysis in the RTO-ISO Order Proposed Amendment, 

and that set forth herein, is neither automatic nor mechanical, and that such analyses meet the requirements 

of sections 4(c)(1) and 4(c)(2). Moreover, given the Commission’s determination with respect to the 

private right of action issue, the Commission is of the view that EPSA’s concern is now moot.
58

• The Dodd-Frank Act applies to contracts and instruments traded in RTO 

or ISO markets pursuant to a FERC- or state-approved tariff or rate schedule, subject to 

the Commission’s authority under CEA section 4(c)(6) to exempt contracts, agreements, 

or transactions traded pursuant to such a tariff or rate schedule upon determining that the 

exemption would be in the public interest and consistent with the purposes of the CEA;

that the exemption would be applied only to agreements, contracts, or transactions that 

are entered into solely between appropriate persons; and that the exemption will not have 

a material adverse effect on the ability of the Commission or any contract market to 

discharge its regulatory or self-regulatory duties under the CEA.221

• Due to the FERC or PUCT regulatory scheme and the RTO or ISO market 

structure already applicable to the SPP Covered Transactions, the linkage between the 

SPP Covered Transactions and those regulatory schemes, and the unique nature of the 

market participants that are eligible to rely on the exemption in the RTO-ISO Order, CEA 

section 4(a) should not apply to the SPP Covered Transactions under the RTO-ISO 

Order.222

• Eligible contract participants, as defined in section 1a(18)(A) of the CEA 

and in Commission regulation 1.3(m), are appropriate persons for purposes of the RTOISO Order in light of their financial or other qualifications, or the applicability of 

regulatory protections.223 In addition, a “person who actively participates in the 

 221 See RTO-ISO Order at 19893-94; see also CEA section 4(c)(6).

222 See RTO-ISO Order at 19895; see also CEA section 4(c)(2)(A).

223 See RTO-ISO Order at 19896; see also CEA section 4(c)(2)(B)(i).
59

generation, transmission, or distribution of electric energy,” as defined within the RTOISO Order, is an appropriate person for purposes of the exemption provided therein.224

• The exemption in the RTO-ISO Order for the SPP Covered Transactions 

would not have a material adverse effect on the Commission’s or any contract market’s 

ability to discharge its regulatory function.225

The amendment to the RTO-ISO Order does not alter the Commission’s 

determination with respect to any of the above 4(c) determinations. Therefore, the 

Commission hereby incorporates such prior 4(c) determinations, and the findings on 

which such determinations are based, into the Amended RTO-ISO Order. All 

transactions that were permitted pursuant to the exemption set forth in the RTO-ISO 

Order are still permitted under the Amended RTO-ISO Order. The only change made by

the amendment to the RTO-ISO Order is that the Amended RTO-ISO Order provides 

explicitly that the exemption set forth therein also extends to actions pursuant to CEA 

section 22.

B. Additional Limitations and Provisions—SPP Final Order

As described in detail above,

226 the Commission expressly noted in the SPP 

Proposed Order227 that the proposed exemption was based upon the representations made 

in the Exemption Application and in the supporting materials provided by SPP and its 

counsel,228 and that any material change or omission in the facts and circumstances that 

 224 See RTO-ISO Order at 19897; see also CEA section 4(c)(2)(B)(i). 

225 See RTO-ISO Order at 19903-04; see also CEA section 4(c)(2)(B)(ii).

226 See section II.C.3. supra.

227 See 80 FR at 29494, 29518.

228 As part of its Exemption Application, SPP provided the Commission with a legal opinion that provided 

the Commission with assurance that the netting arrangements contained in the approach selected by SPP to 
60

alter the grounds for the SPP Proposed Order might require the Commission to reconsider 

its finding that the exemption contained therein is appropriate and/or in the public interest

and consistent with the purposes of the CEA. The Commission did not receive any 

comments on this proposal. As such, the SPP Final Order is based on the representations 

made by SPP and its counsel in the Exemption Application, the supplemental 

information, and supporting materials filed with the Commission. In particular, the 

Commission notes that the following representations are of particular importance and 

integral to the Commission’s decision to grant the exemption set forth in this SPP Final 

Order: (1) the exemption requested by SPP relates to SPP Covered Transactions that are 

primarily entered into by commercial participants that are in the business of generating, 

transmitting and distributing electric energy;

229 (2) SPP was established for the purpose 

of providing affordable, reliable electric energy to consumers within its geographic 

region;230 (3) the SPP Covered Transactions are an essential means, designed by FERC as 

an integral part of its statutory responsibilities, to enable the reliable delivery of 

affordable electric energy;

231 (4) each of the SPP Covered Transactions taking place on 

SPP’s markets is monitored by both a market administrator (SPP) and the SPP Market 

Monitor;

232 and (5) each SPP Covered Transaction is directly tied to the physical 

 

satisfy the obligations contained in FERC regulation 35.47(d) will, in fact, provide SPP with enforceable 

rights of setoff against any of its market participants under Title 11 of the United States Code in the event 

of the bankruptcy of the market participant. See Memorandum regarding Enforceability of Netting 

Practices from Hunton & Williams LLP to SPP, dated December 2, 2013.

229 See 80 FR at 29494; see also Exemption Application at 17.

230 See 80 FR at 29494; see also Exemption Application at 2, 17. 

231 See 80 FR at 29494; see also generally FERC Order No. 888; FERC Order No. 2000; 18 CFR 

35.34(k)(2); see also Exemption Application at 17.

232 See 80 FR at 29494; see also Exemption Application at 17.
61

capabilities of SPP’s electric energy grid.233 Therefore, the Commission affirms that any 

material change or omission in the facts and circumstances that alter the grounds for the 

SPP Final Order might require the Commission to reconsider its finding that the 

exemption contained therein is appropriate and consistent with the public interest and 

purposes of the CEA. The Commission reiterates that the SPP Covered Transactions 

must be tied to the allocation of the physical capabilities of an electric energy 

transmission grid in order to be suitable for exemption because such activity would be 

inextricably linked to the physical delivery of electric energy. 

In addition, the Commission proposed to exclude from the exemptive relief its 

general anti-fraud and anti-manipulation, and scienter-based prohibitions over SPP and 

the SPP Covered Transactions under the CEA, including sections 2(a)(1)(B), 4(d), 4b, 

4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 6(c), 6(d), 6(e), 6c, 6d, 8, 9, and 13 of the CEA and 

any implementing regulations promulgated thereunder including, but not limited to, 

Commission regulations 23.410(a) and (b), 32.4, and part 180.234 The Commission 

received no comments regarding this reservation of authority. 

The Commission believes it prudent to reserve in the SPP Final Order its antifraud and anti-manipulation authority, as well as those scienter-based prohibitions in the 

specified provisions of the Act and Commission regulations (without finding it necessary 

in this particular context to preserve other enforcement authority). The Commission 

notes that reservation of enforcement authority is standard practice with exemptive orders 

issued pursuant to CEA section 4(c). The Commission also believes it is important to 

 233 See 80 FR at 29494; see also Exemption Application at 12-15.

234 See 80 FR at 29515, 29516. 
62

highlight that, as with all exemptions issued pursuant to CEA section 4(c), the exemption 

“shall not affect the authority of the Commission under any other provision of [the CEA] 

to conduct investigations in order to determine compliance with the requirements or 

conditions of such exemption or to take enforcement action for any violation of any 

provision of [the CEA] or any rule, regulation or order thereunder caused by the failure to 

comply with or satisfy such conditions or requirements.”235 

In the SPP Proposed Order, the Commission also proposed to make a number of 

additional determinations, including but not limited to the following: 

• The Commission proposed to determine that the requirements set forth in 

FERC regulation 35.47 appear to achieve goals similar to the regulatory objectives of the 

Commission’s DCO Core Principles, and substantial compliance with such requirements 

is key to the Commission’s determination that the Tariff and activities of SPP and 

supervision by FERC are congruent with, and—in the context of the SPP Covered 

Transactions—sufficiently accomplish, the regulatory objectives of each DCO Core 

Principle.236

• The Commission proposed to determine that, on the basis of SPP’s 

representations and consistent with the RTO-ISO Order, it is not necessary, when 

considering the requisite public interest and purposes of the CEA determinations, to 

impose position limits on SPP’s Integrated Marketplace.

237

 235 See 7 U.S.C. 6(d).

236 80 FR 29498-99.

237 Id. at 29511.
63

• The Commission proposed to determine that SPP’s practices or Tariff and 

supervision by FERC are congruent with, and, in the context of the SPP Covered 

Transactions, sufficiently accomplish, the regulatory objectives of the Core Principles set 

forth in the CEA for DCOs.238

• The Commission proposed to determine that SPP’s practices or Tariff and 

supervision by FERC are congruent with, and, in the context of the SPP Covered 

Transactions, sufficiently accomplish, the regulatory objectives of the Core Principles set 

forth in the CEA for SEFs.239

In the SPP Proposed Order, the Commission proposed to limit the scope of the 

exemption to certain specified transactions:

• The SPP Proposed Order would exempt Transmission Congestion Rights, 

Energy Transactions, and Operating Reserve Transactions from most requirements of the 

CEA, and the SPP Proposed Order would not extend the exemption beyond these three 

specifically-defined transactions.

240 The SPP Proposed Order would include any 

modifications to existing transactions that do not alter the SPP Covered Transactions’ 

characteristics in a way that would cause them to fall outside the definitions of the SPP 

Covered Transactions, and that are offered by SPP pursuant to a FERC-approved Tariff.

• The SPP Proposed Order would exempt products that qualify as one of the 

three defined SPP Covered Transactions, regardless of whether or not SPP offers the 

particular product at the present time.241

 238 Id. at 29499-508.

239 Id. at 29508-15.

240 Id. at 29515.

241 Id. at 29516.
64

In the SPP Proposed Order, the Commission proposed to condition the exemption 

on the following:

• The SPP Proposed Order would be conditioned upon requiring (1) that an 

information sharing arrangement acceptable to the Commission be executed between the 

Commission and FERC and continue to be in effect, and (2) “SPP’s compliance with the 

Commission’s requests through FERC to share, on an as-needed basis and in connection 

with an inquiry consistent with the CEA and Commission regulations, positional and 

transactional data within SPP’s possession for products in SPP’s markets that are related 

to markets that are subject to the Commission’s jurisdiction, including any pertinent 

information concerning such data.”242 

• The SPP Proposed Order would be conditioned upon requiring that 

“[n]either the Tariff nor any other governing documents of SPP shall include any 

requirement that SPP notify its members prior to providing information to the 

Commission in response to a subpoena or other request for information or 

documentation.”243

The Commission received no comments on the above proposed determinations,

limitations, and conditions, and hereby incorporates such determinations, limitations, and 

conditions into the SPP Final Order. As noted in the SPP Proposed Order and earlier in 

this SPP Final Order, the SPP Covered Transactions are inextricably tied to SPP’s 

physical delivery of electric energy, and they take place on markets that are monitored by 

the SPP Market Monitor, SPP, or both, and FERC. Specifically, with respect to TCRs 

 242 Id. at 29517.

243 Id.
65

and Operating Reserve Transactions, the Commission found that the exemption would 

not have a material adverse effect on any contract market carrying out its self-regulatory 

function because these transactions did not appear to be used for price discovery or as 

settlement prices for other transactions in Commission-regulated markets. With respect 

to Energy Transactions, while Energy Transactions did have a relationship to 

Commission-regulated markets because they can serve as a source of settlement prices 

for other transactions within Commission jurisdiction, they should not pose regulatory 

burdens on a contract market because SPP has market monitoring systems in place to 

detect and deter manipulation that takes place on its markets. Furthermore, conditioning 

the exemption provided in the SPP Final Order upon the Commission’s ability to obtain 

related transactional and positional data from SPP, and SPP’s compliance with such 

requests by sharing the requested information, is meant to enable the Commission to 

continue discharging its regulatory duties under the Act as set forth in CEA section 3.244

V. Related Matters

A. Regulatory Flexibility Act

1. Introduction

The Regulatory Flexibility Act (“RFA”) requires that the Commission consider 

whether the exemptions set forth in the SPP Final Order and in the Amended RTO-ISO 

Order will have a significant economic impact on a substantial number of small entities 

and, if so, provide a regulatory flexibility analysis respecting the impact.245 

 244 7 U.S.C. 5.

245 5 U.S.C. 601 et seq.
66

2. SPP Final Order

In the SPP Proposed Order, the Commission found that SPP should not be 

considered a small entity based on the central role it plays in the operation of the 

electronic transmission grid and the creation of organized wholesale electric markets that 

are subject to FERC regulatory oversight,246 analogous to functions performed by DCMs 

and DCOs, which the Commission has previously determined not to be “small 

entities.”247 The SPP Proposed Order included entities that qualify as (1) “appropriate 

persons” pursuant to CEA sections 4(c)(3)(A) through (J), (2) “eligible contract 

participants” (“ECPs”), as defined in CEA section 1a(18)(A) and Commission regulation 

1.3 (m), or (3) persons who are in the business of: (i) generating, transmitting, or 

distributing electric energy, or (ii) providing electric energy services that are necessary to 

support the reliable operation of the transmission system.248 The Commission previously 

determined that ECPs are not “small entities” for purposes of the RFA.249 As a result, the 

Commission certified that the SPP Proposed Order would not have a significant 

economic impact on a substantial number of small entities for purposes of the RFA, and 

 246 80 FR at 29518. See Enhancement of Electricity Market Surveillance and Analysis Through Ongoing 

Electronic Delivery of Data From Regional Transmission Organizations and Independent System 

Operators, 77 FR 26674, 26685-86, May 7, 2012 (RFA analysis as conducted by FERC regarding six RTOs 

and ISOs, including SPP). 

Commission staff also performed an independent RFA analysis based on Subsector 221 of sector 22 

(utilities companies) of the Small Business Administration (“SBA”), which defines any small utility 

corporation as one that does not have more than 250 employees. See 13 CFR 121.201 (1–1–15 Edition). 

Staff concludes that SPP is not a small entity, since SPP represents that it employs more than 500 

employees. See Exemption Application Attachments at 8. 

247 See A New Regulatory Framework for Clearing Organizations, 66 FR 45604, 45609, Aug. 29, 2001 

(DCOs); Policy Statement and Establishment of Definitions of “Small Entities” for Purposes of the 

Regulatory Flexibility Act, 47 FR 18618, 18618-19, Apr. 30, 1982 (DCMs).

248 See 80 FR at 29517. Under CEA section 2(e), only ECPs are permitted to participate in a swap, subject 

to the end-user clearing exception.

249 See Opting Out of Segregation, 66 FR 20740, 20743, Apr. 25, 2001.
67

requested written comments regarding this certification.250 The Commission did not 

receive any comments with respect to its RFA analysis in the SPP Proposed Order. 

The relief provided in the SPP Final Order to a person who actively participates in 

the generation, transmission, or distribution of electric energy may impact some small 

entities to the extent they may fall within standards established by the SBA regulations 

defining any small utility corporation as one that does not have more than 250 

employees.251 However, based on the Commission’s existing information about SPP’s

markets, its market participants consist mostly of entities exceeding the thresholds 

defining “small entities” set out above. 

The Commission is of the view that the SPP Final Order alleviates the economic 

impact that the exempt entities, including any small entities that may opt to take 

advantage of the exemption set forth in the SPP Final Order, otherwise would be 

subjected to by exempting certain of their transactions from the application of substantive 

regulatory compliance requirements of the CEA and Commission regulations thereunder. 

Accordingly, the Commission is of the view that the SPP Final Order does not have a 

significant economic impact on a substantial number of small entities. Therefore, the 

Chairman, on behalf of the Commission, hereby certifies, pursuant to 5 U.S.C. 605(b), 

that the exemption set forth in the SPP Final Order would not have a significant 

economic impact on a substantial number of small entities. 

 250 80 FR at 29518.

251 See note 246 supra (citing 13 CFR 121.201). 
68

3. Amended RTO-ISO Order

With respect to the Amended RTO-ISO Order, the Commission previously 

determined that the RTO-ISO Order would not have a significant economic impact on a 

substantial number of small entities.252 The Amended RTO-ISO Order does not 

substantively change the scope of the exemption set forth in the RTO-ISO Order. 

Furthermore, the RFA analysis in the RTO-ISO Order is still valid. Specifically, the 

RTOs and ISOs covered by the Amended RTO-ISO Order should not be considered 

small entities based on the central role they play in the operation of the electronic 

transmission grid and the creation of organized wholesale electric markets that are subject 

to FERC and PUCT regulatory oversight,253 analogous to functions performed by DCMs 

and DCOs, which, as noted above, the Commission has previously determined not to be 

“small entities.”254 In addition, the Amended RTO-ISO Order includes entities that 

qualify as (1) “appropriate persons” pursuant to CEA sections 4(c)(3)(A) through (J), (2) 

ECPs, as defined in CEA section 1a(18)(A) and Commission regulation 1.3 (m), or (3) 

persons who are in the business of: (i) generating, transmitting, or distributing electric 

energy, or (ii) providing electric energy services that are necessary to support the reliable 

operation of the transmission system. As noted above, the Commission has previously 

determined that ECPs are not “small entities” for purposes of the RFA.255 The 

Commission is of the view that, based on the Commission’s existing information about 

 252 See RTO-ISO Order at 19906-07. 

253 See note 246 supra; see also RTO-ISO Order at 19906. 

254 See note 247 supra; see also RTO-ISO Order at 19906.

255 See note 249 supra; see also RTO-ISO Order at 19906.
69

the RTOs’ and ISOs’ markets, their market participants consist mostly of entities 

exceeding the thresholds defining “small entities.”256 

Also, the Amended RTO-ISO Order would continue to alleviate the economic 

impact that the exempt entities, including any small entities that may opt to take 

advantage of the exemption set forth in the RTO-ISO Order, otherwise would be 

subjected to by continuing to exempt certain of their transactions from the application of 

substantive regulatory compliance requirements of the CEA and Commission regulations

thereunder. Accordingly, the Commission does not expect the Amended RTO-ISO Order 

to have a significant economic impact on a substantial number of small entities. 

Therefore, the Chairman, on behalf of the Commission, hereby certifies, pursuant to 5 

U.S.C. 605(b), that the exemption set forth in the Amended RTO-ISO Order would not 

have a significant economic impact on a substantial number of small entities.257

B. Paperwork Reduction Act

1. Introduction

The purposes of the Paperwork Reduction Act of 1995 (“PRA”) 258 are, among 

other things, to minimize the paperwork burden to the private sector, ensure that any 

collection of information by a government agency is put to the greatest possible uses, and 

 256 See note 246 supra (citing 13 CFR 121.201). The threshold established by the SBA regulations define 

any small utility corporation as one that does not have more than 250 employees; see also RTO-ISO Order 

at 19907.

257 The Commission received one comment with respect to the RFA analysis in the RTO-ISO Order 

Proposed Amendment. The NFP Electric Associations argued that the RFA analysis in the RTO-ISO Order 

Proposed Amendment was “abbreviated and conclusory,” that the members of the NFP Electric 

Associations are “small entities” for purposes of the RFA, and that the amendment proposed in the RTOISO Order Proposed Amendment would have a negative impact on such entities. See NFP Electric 

Associations at 8. The Commission is of the view that the RFA analysis in the RTO-ISO Order Proposed 

Amendment, and that set forth herein, is sufficiently detailed and not conclusory. Moreover, given the 

Commission’s determination with respect to the private right of action issue, the Commission is of the view 

that the NFP Electric Associations’ concern is now moot. 

258 44 U.S.C. 3501 et seq.
70

minimize duplicative information collections across the government. The PRA applies to 

all information, “regardless of form or format,” whenever the government is “obtaining, 

causing to be obtained [or] soliciting” information, and includes and requires “disclosure 

to third parties or the public, of facts or opinions,” when the information collection calls 

for “answers to identical questions posed to, or identical reporting or recordkeeping 

requirements imposed on, ten or more persons.”259 

2. SPP Final Order

The SPP Proposed Order provided that the exemption would be expressly 

conditioned upon information sharing arrangements between the Commission and FERC 

that are acceptable to the Commission continuing to be in effect.260 The Commission 

determined that the PRA would not apply because the SPP Proposed Order did not 

impose any new recordkeeping or information collection requirements, or other 

collections of information on ten or more persons that require approval of the Office of 

Management and Budget (“OMB”). The Commission did not receive any comments 

regarding this determination. The SPP Final Order thus incorporates the information 

sharing condition unchanged from the SPP Proposed Order, and this condition is 

consistent with the RTO-ISO Order.

3. Amended RTO-ISO Order

With respect to the Amended RTO-ISO Order, the Commission previously 

determined that the RTO-ISO Order did not impose any new recordkeeping or 

information collection requirements, or other collections of information on ten or more 

 259 44 U.S.C. 3502(3).

260 80 FR at 29517.
71

persons that require OMB approval.261 The Amended RTO-ISO Order does not impose 

any recordkeeping or information collection requirements, or other collections of 

information on ten or more persons that require OMB approval. 

C. Cost-Benefit Considerations

1. Introduction

Section 15(a) of the CEA262 requires the Commission to “consider the costs and 

benefits” of its actions before promulgating a regulation under the CEA or issuing certain 

orders. In issuing the SPP Final Order and the Amended RTO-ISO Order, the

Commission is required by CEA sections 4(c)(6) and 4(c)(1) to ensure that they are 

consistent with the public interest. In much the same way, section 15(a) further specifies 

that the costs and benefits shall be evaluated in light of five broad areas of market and 

public concern: (1) protection of market participants and the public; (2) efficiency, 

competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound 

risk management practices; and (5) other public interest considerations. The Commission 

considers the costs and benefits resulting from its discretionary determinations with 

respect to the section 15(a) factors.

1. SPP Final Order

a. Background

On October 17, 2013, SPP filed an Exemption Application263 with the 

Commission requesting that the Commission exercise its authority under section 4(c)(6) 

 261 See RTO-ISO Order at 19907-08. 

262 7 U.S.C. 19(a).

263 As noted above, SPP filed an amended Exemption Application on August 1, 2014, and citations to 

“Exemption Application” herein are to the amended Exemption Application. See note 31 supra.
72

of the CEA and section 712(f) of the Dodd-Frank Act to exempt certain contracts, 

agreements, and transactions for the purchase or sale of specified electric energy 

products, that are offered pursuant to a FERC-approved Tariff, from most provisions of 

the Act.264 SPP asserted that each of the transactions for which an exemption is 

requested is (a) subject to a long-standing, comprehensive regulatory framework for the 

offer and sale of such transactions established by FERC, and (b) part of, and inextricably 

linked to, the organized wholesale electric energy markets that are subject to regulation 

and oversight by FERC. SPP expressly excluded from the Exemption Application any 

request for relief from the Commission’s general anti-fraud and anti-manipulation 

authority, and scienter-based prohibitions, under sections 2(a)(1)(B), 4(d), 4b, 4c(b), 4o, 

4s(h)(1)(A), 4s(h)(4)(A), 6(c), 6(d), 6(e), 6c, 6d, 8, 9, and 13 of the Act, and any 

implementing regulations promulgated under these sections including, but not limited to, 

Commission regulations 23.410(a) and (b), 32.4 and part 180,265 and such provisions 

explicitly have been carved out of the SPP Final Order.

266 

b. SPP Proposed Order and Request for Comment on the Commission’s Proposed 

Consideration of Costs and Benefits

Upon consideration of the Exemption Application, the Commission issued the 

SPP Proposed Order, which proposed to exempt Transmission Congestion Rights, Energy 

Transactions, and Operating Reserve Transactions pursuant to section 4(c)(6) of the 

CEA.267 The Commission proposed to limit the exemption set forth in the SPP Proposed 

Order to persons who are (1) “appropriate persons,” as defined in CEA sections

 264 See 80 FR at 29491; see also Exemption Application at 1-2, 11-15.

265 See 80 FR at 29491; see also Exemption Application at 1.

266 See paragraph 1 of the SPP Final Order. 

267 See 80 FR at 29516-18; see also section II.C.1. supra.
73

4(c)(3)(A) through (J); (2) “eligible contract participants,” as defined in CEA section 

1a(18)(A) and Commission regulation 1.3(m); or (3) persons who actively participate in 

the generation, transmission, or distribution of electric energy.268 Furthermore, under the 

SPP Proposed Order, the agreement, contract, or transaction must be offered or sold 

pursuant to SPP’s Tariff, which has been approved by FERC.269 The exemption in the 

SPP Proposed Order would extend to any person or class of persons offering, entering 

into, rendering advice, or rendering other services with respect to the SPP Covered 

Transactions.270

In the SPP Proposed Order, the Commission clarified that financial transactions 

that are not tied to the allocation of the physical capabilities of an electric energy 

transmission grid would not be suitable for exemption, and were therefore not covered by 

the SPP Proposed Order because such activity would not be inextricably linked to the 

physical delivery of electric energy.271

The SPP Proposed Order expressly requested public comment on the 

Commission’s proposed cost-benefit considerations, including with respect to reasonable 

alternatives; the magnitude of specific costs and benefits, and data or other information to 

estimate a dollar valuation; and any impact on the public interest factors specified in CEA 

section 15(a).272 The Commission did not receive any comments on its proposed costbenefit considerations as set forth in the SPP Proposed Order. 

 268 See 80 FR at 29517.

269 See id.

270 See id. at 29516.

271 See id. at 29494.

272 See id. at 29522. As a general matter, in considering the costs and benefits of its actions, the 

Commission endeavors to quantify estimated costs and benefits where reasonably feasible. Here, however, 
74

c. Summary of the SPP Final Order

As discussed above, the SPP Final Order makes certain determinations with 

respect to the scope of relief, including the scope of the SPP Covered Transactions.

273

The Commission determined that any products that are offered by SPP, presently or in 

the future, pursuant to a Tariff that has been approved by FERC and that fall within the 

provided definitions of the SPP Covered Transactions, as well as any modifications to 

existing products that are offered by SPP pursuant to a Tariff that has been approved by 

FERC and that do not alter the characteristics of the SPP Covered Transactions in a way 

that would cause such products to fall outside these definitions, are intended to be 

included within the SPP Final Order.

274 In this way, the Commission’s SPP Final Order

provides beneficial flexibility and efficiency in that, if the product qualifies as one of the 

three SPP Covered Transactions in the SPP Final Order, SPP would not be required to 

request or to obtain future supplemental relief for a modified product. At the same time, 

however, the Commission declined to include the phrase “directly related to, and a 

logical outgrowth of” in the definitions of the SPP Covered Transactions because such 

phrase is too vague and too potentially far reaching to permit meaningful analysis under 

the Commission’s statutory standard of review.

The SPP Final Order also sets forth certain conditions to the effectiveness of the 

exemption set forth therein. First, the Commission must be able to obtain through FERC 

positional and transactional data within SPP’s possession for products in SPP’s markets 

 the Commission considers the costs and benefits of this SPP Final Order mostly in qualitative terms 

because the commenters provided no such data or information to assist the Commission in doing so despite 

the SPP Proposed Order’s request.

273 See section IV.B. supra.

274 See id.
75

that are related to markets subject to the Commission’s jurisdiction, including any 

pertinent information concerning such data.275 Second, the exemption is expressly 

conditioned upon the requirement that neither the Tariff nor any other governing 

documents of SPP shall include any requirement that SPP notify its members prior to 

providing information to the Commission in response to a subpoena or other request for 

information or documentation.276

In the discussion that follows, the Commission considers the costs and benefits of 

the SPP Final Order to the public and market participants generally, and to SPP 

specifically. It also considers the costs and benefits of the exemption described in the 

SPP Final Order, in light of the public interest factors enumerated in CEA section 15(a). 

d. Baseline

The Commission’s baseline for consideration of the costs and benefits of the SPP 

Final Order is the costs and benefits that the public and market participants (including 

SPP) would experience in the absence of this proposed regulatory action. In other words, 

the baseline is a situation in which the Commission takes no action and exercises 

jurisdiction, meaning that the transactions that are the subject of SPP’s Exemption 

Application would be required to comply with all of the CEA and Commission 

regulations, as applicable.277 In such a scenario, the public and market participants would 

experience the full benefits and costs related to the CEA and Commission regulations, but 

 275 Paragraph 4(a) of the SPP Final Order.

276 Paragraph 4(b) of the SPP Final Order.

277 Under this situation, the statutory private right of action in CEA section 22 would remain intact and 

would apply, in accordance with its terms, to all applicable provisions of the CEA. 
76

as discussed in detail above, the transactions would still be subject to the congruent 

regulatory regime of FERC.278

The Commission also considers the regulatory landscape as it exists outside the 

context of the Dodd-Frank Act’s enactment. In this instance, it also is important to 

highlight the fact that each of the transactions for which an exemption is requested is 

already subject to a long-standing, comprehensive regulatory framework for the offer and 

sale of such transactions established by FERC.279 For example, the costs and benefits 

attendant to the Commission’s condition that transactions be entered into between 

“appropriate persons” as described in CEA section 4(c)(3) has an analog outside the 

context of the Dodd-Frank Act in FERC’s minimum criteria for RTO market participants 

as set forth in FERC Order No. 741. Moreover, the Commission has granted similar 

relief to other RTOs and ISOs regulated by either FERC or PUCT.

280

In the discussion that follows, the Commission endeavored to, where reasonably 

feasible, estimate quantifiable dollar costs of the SPP Final Order. The benefits and costs 

of the SPP Final Order, however, are not presently susceptible to meaningful 

quantification. Most of the costs arise from limitations on the scope of the SPP Final 

Order, and many of the benefits tied to those limitations arise from avoiding defaults and 

their implications that are clearly large in magnitude, but impracticable to estimate. 

Being unable to quantify, the Commission discusses proposed costs and benefits in 

qualitative terms.

 278 Some benefits of CFTC regulation overlap with benefits of FERC regulation and, therefore, are 

attributable to both regimes.

279 See supra section IV.A.2.b.

280 See RTO-ISO Order; see also supra section II.A.
77

e. Benefits

The Commission’s comprehensive action in this SPP Final Order benefits the 

public and market participants in several substantial if unquantifiable ways, as discussed 

below. First, by cabining the SPP Covered Transactions to the definitions provided in 

this SPP Final Order, the Commission limits the financial risk that may impact the 

markets. The mitigation of such risk inures to the benefit of SPP, market participants, 

and the public, especially SPP’s members and electric energy ratepayers. 

The condition that only “appropriate persons” may enter into the SPP Covered 

Transactions benefits the public and the entities that fall under the “appropriate persons” 

definition themselves, by ensuring that only persons with resources sufficient to 

understand and manage the risks of the transactions are permitted to engage in the same. 

Further, the condition requiring that the SPP Covered Transactions only be offered or 

sold pursuant to a FERC-approved Tariff benefits the public by, for example, ensuring 

that the SPP Covered Transactions are subject to a regulatory regime that is focused on 

the physical provision of reliable electric energy, and also has credit requirements that are 

designed to achieve risk management goals congruent with the regulatory objectives of 

the Commission’s DCO and SEF Core Principles. Absent these and other similar 

limitations on participant- and financial-eligibility, the integrity of the markets at issue 

could be compromised, and members and ratepayers left unprotected from potentially 

significant losses resulting from purely financial, speculative activity. 

The Commission’s retention of power to redress any fraud or manipulation in 

connection with the SPP Covered Transactions protects market participants and the 

public generally, as well as the financial markets for electric energy products. For 

example, the SPP Final Order is conditioned upon the Commission’s ability to obtain 
78

certain positional and transactional data within SPP’s possession from SPP. Through this 

condition, the Commission expects that it will be able to continue discharging its 

regulatory duties under the CEA. Further, the condition that SPP may not, in the future, 

maintain any Tariff provisions that would require SPP to notify members prior to 

providing the Commission with information will help maximize the effectiveness of the 

Commission’s enforcement program. 

In addition, explicitly providing an exemption from private claims under CEA 

section 22 will benefit market participants by allowing them to avoid legal and 

compliance costs due to an increased risk of private litigation under section 22. 

Moreover, granting an explicit exemption from the CEA section 22 private right of action 

reflects Congress’ intent regarding how manipulation and fraud in the context of the 

RTO-ISO markets should be addressed. Lastly, providing an exemption from private 

actions pursuant to CEA section 22 will prevent any potential tension between the 

enforcement programs of FERC and PUCT, on the one hand, and private enforcement 

under the CEA, on the other. 

f. Costs

The SPP Final Order is exemptive and provides “appropriate persons” engaging 

in SPP Covered Transactions relief from certain requirements of the CEA and attendant 

Commission regulations. As with any exemptive rule or order, the exemption in the SPP 

Final Order is permissive, meaning that SPP was not required to request it and is not 

required to rely on it. Accordingly, the Commission assumes that SPP would rely on the 

exemption only if the anticipated benefits warrant the costs of the exemption. 

The Commission is of the view that SPP, market participants, and the public will 

experience minimal, if any, ongoing costs as a result of the determinations and conditions 
79

set forth in the SPP Final Order because, as SPP certifies pursuant to Commission 

regulation 140.99(c)(3)(ii), the attendant conditions are substantially similar to 

requirements that SPP and its market participants already incur in complying with FERC 

regulations. 

The requirement that all parties to the agreements, contracts, or transactions that 

are covered by the exemption in the SPP Final Order must be (1) an “appropriate person,” 

as defined sections 4(c)(3)(A) through (J) of the CEA; (2) an “eligible contract 

participant,” as defined in section 1a(18)(A) of the CEA and in Commission regulation 

1.3(m); or (3) a “person who actively participates in the generation, transmission, or 

distribution of electric energy,” as defined in paragraph 5(f) of the SPP Final Order—is 

not likely to impose any significant, incremental costs on SPP because its existing legal 

and regulatory obligations under the FPA and FERC regulations mandate that only 

eligible market participants may engage in the SPP Covered Transactions. 

The requirement that the SPP Covered Transactions must be offered or sold 

pursuant to SPP’s Tariff, which has been approved by FERC, is a statutory requirement 

for the exemption set forth in CEA section 4(c)(6) and therefore is not a cost attributable 

to an act of discretion by the Commission.281 Moreover, requiring that SPP not operate 

outside its approved Tariff derives from existing legal requirements and is not a cost 

attributable to this SPP Final Order.

As described above, FERC imposes on SPP and the SPP Market Monitor various 

information management requirements.282 These existing requirements are not materially 

 281 See 7 U.S.C. 6(c)(6)(A), (B).

282 See section IV.A.2.b. supra.
80

different from the condition that neither SPP’s Tariff nor other governing documents may 

include any requirement that SPP notify a member prior to providing information to the 

Commission in response to a subpoena, special call, or other request for information or 

documentation. This requirement is not likely to impose any significant, incremental 

costs on SPP because SPP’s existing Tariff governing the sharing of information meets 

this condition. 

Requiring that an information sharing arrangement between the Commission and 

FERC be in full force and effect is not a cost to SPP or to other members of the public 

because it has been an inter-agency norm since 2005.283 The requirement that SPP 

comply with the Commission’s requests on an as-needed basis for related transactional 

and positional market data will impose only minimal costs on SPP to respond because the 

Commission contemplates that any information requested will already be in SPP’s

possession.

284 

In addition, in granting an explicit exemption from the CEA section 22 private 

right of action, the Commission notes that there may be minimal costs associated with the 

fact that private litigants will not be permitted to vindicate their own interests or directly 

contribute to those interests through litigation with respect to fraud and manipulation in 

the RTO-ISO markets. However, as stated above in section III.B.2., such costs are 

mitigated by the fact that FERC and PUCT will continue to pervasively regulate such 

 283 The CFTC and FERC first signed an information sharing MOU on October 12, 2005. On January 2, 

2014, as directed by Congress under the Dodd-Frank Act, the Commission and FERC entered into the 

CFTC-FERC Information Sharing MOU, which superseded the 2005 MOU and provided for the sharing of 

information for use in analyzing market activities and protecting market integrity. See supra note 56.

284 SPP represents that its Tariff requires the sharing of information with the Commission without prior 

notice to market participants. See Exemption Application Attachments at 52, 54; see also section IV.B.

supra.
81

markets. In addition, nothing in the SPP Final Order affects the Commission’s own 

authority to address fraudulent or manipulative conduct in the RTO-ISO markets, 

including the Commission’s authority to seek restitution for the benefit of victims. Also, 

as noted above in section III.B.2., the Commission encourages market participants who 

observe potential fraud or manipulation in the markets subject to the Commission’s 

jurisdiction to bring their concerns to the Commission. 

g. Consideration of Alternatives

The Commission considered the costs and benefits of not issuing the exemption 

found in the SPP Final Order. The Commission declined this approach as inconsistent 

with Congressional intent and contrary to the public interest, since Congress, in the 

Dodd-Frank Act, required the Commission to exempt certain contracts, agreements or 

transactions from duties otherwise required by statute or Commission regulation by 

adding a new section that requires the Commission to exempt from its regulatory 

oversight agreements, contracts, or transactions traded pursuant to a FERC-approved 

tariff, where such exemption is in the public interest and consistent with the purposes of 

the CEA. In addition, not issuing the exemption found in the SPP Final Order would 

result in SPP being treated differently from the RTOs and ISOs covered by the 

Commission’s previous RTO-ISO Order. 

The Commission also considered the costs and benefits of expanding the 

definition of SPP Covered Transactions to include future products that are “directly 

related to, and a logical outgrowth of” existing products, as requested by SPP. The 

Commission declined this approach in part because of the concern that such an openended definition could present risks beyond those contemplated. At the same time, the 

Commission made clear that any new transactions that fall within the SPP Covered 
82

Transactions, which are explicitly defined in the SPP Final Order, and any modifications 

to existing transactions that do not alter the SPP Covered Transactions’ characteristics in 

a way that would cause them to fall outside those definitions, that are offered by SPP 

pursuant to a FERC-approved Tariff, are intended to be included within the exemption in 

the SPP Final Order.

285 This provides a benefit in that no supplemental relief for such 

products would be required, which is a cost-mitigating efficiency gain for SPP. 

The Commission also considered expressly preserving the statutory private right 

of action found in CEA section 22 with respect to fraud and manipulation. The 

Commission has considered the costs and benefits of such action in light of the comments 

received, and, for the reasons stated in section III.B.2., has been persuaded that issuing an 

explicit exemption from CEA section 22 is the appropriate course of action.

h. Consideration of CEA Section 15(a) Factors

i. Protection of Market Participants and the Public

As explained above, the Commission does not foresee that the SPP Final Order

will have any negative effect on the protection of market participants and the public. 

More specifically, the SPP Covered Transactions, in light of the representations of SPP

and in the context of SPP’s regulation by FERC, do not appear to generate significant 

risks of the nature of those addressed by the CEA. The Commission has attempted to 

delineate the definitional boundaries for the SPP Covered Transactions in a manner that 

appropriately ring-fences against the possibility that they could generate such risks, either 

now or as they may evolve in the future. In addition, the Commission has limited the 

exemption set forth in the SPP Final Order to persons with resources sufficient to 

 285 See section IV.B. supra.
83

understand and manage the risks of the SPP Covered Transactions. This requirement 

serves to protect excluded market participants and it minimizes the risk of potential 

misuse of the exempt transactions. 

ii. Efficiency, Competitiveness, and Financial Integrity of Futures Markets

The Commission foresees little, if any, negative impact from the SPP Final Order

on the efficiency, competitiveness, and financial integrity of markets regulated under the 

CEA. As discussed above, the Commission believes that the SPP Final Order will 

promote efficiency by allowing entities who partake of the exemption delineated therein 

transactional flexibility that the Commission understands to be valuable to their ability to 

efficiently deploy their limited resources. Further, the Commission believes that the SPP 

Final Order will increase competition by granting an exemption to SPP and appropriate 

persons, as defined in the SPP Final Order, that is similar in scope to the exemption 

granted to other RTOs and ISOs in the RTO-ISO Order. In addition, as discussed above, 

the Commission’s retention of its full enforcement authority will help ensure that any 

misconduct in connection with the exempted transactions does not jeopardize the 

financial integrity of the markets under the Commission’s jurisdiction.

iii. Price Discovery

The Commission does not believe that the SPP Final Order will materially impair 

price discovery in non-exempt markets subject to the Commission’s jurisdiction. As 

discussed above, the SPP Covered Transactions are used to manage unique electric 

industry operational risks. As such, Transmission Congestion Rights and Operating 

Reserve Transactions appear to be ill-suited for exchange trading and/or to serve a useful 

price discovery function. In addition, as discussed above, while Energy Transactions can 

serve as a source of settlement prices for other transactions in Commission-regulated 
84

markets, SPP has a market monitoring system in place to detect and deter manipulation 

that takes place on its markets. 

iv. Sound Risk Management Practices

The Commission believes that the SPP Final Order will promote the ability of 

SPP and its market participants to manage the operational risks posed by unique electric 

energy market characteristics, including the non-storable nature of electric energy and 

demand that can and frequently does fluctuate dramatically within a short time-span. As 

discussed above, the Commission understands that the SPP Covered Transactions are an 

important tool facilitating SPP’s ability to efficiently manage operational risk in 

fulfillment of its public service mission to provide affordable, reliable electric energy.

v. Other Public Interest Considerations

In exercising its sections 4(c)(1) and 4(c)(6) exemptive authority in the SPP Final 

Order, the Commission is acting to promote the broader public interest by facilitating the 

supply of affordable, reliable electric energy, as contemplated by Congress.

286

3. Amended RTO-ISO Order

a. Background

As discussed above, the RTO-ISO Order currently exempts contracts, agreements, 

and transactions for the purchase or sale of the limited electric energy-related products 

that are specifically described within the RTO-ISO Order from certain provisions of the 

CEA and Commission regulations, with the exception of the Commission’s general antifraud and anti-manipulation authority, and scienter-based prohibitions, under CEA 

sections 2(a)(1)(B), 4(d), 4b, 4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 6(c), 6(d), 6(e), 6c, 6d, 

 286 See related discussion in section I. supra.
85

8, 9, and 13, and any implementing regulations promulgated under these sections 

including, but not limited to, Commission regulations 23.410(a) and (b), 32.4, and part 

180.287 The RTO-ISO Order did not discuss CEA section 22. 

b. RTO-ISO Order Proposed Amendment and Request for Comment on the 

Commission’s Proposed Consideration of Costs and Benefits

As discussed above, the Commission issued the RTO-ISO Order Proposed 

Amendment on May 9, 2016. The RTO-ISO Order Proposed Amendment proposed to 

amend the RTO-ISO Order to clarify that the RTO-ISO Order would not exempt the 

RTO-ISO Covered Entities from the private right of action found in section 22 of the 

CEA with respect to the Excepted Provisions.288 

The RTO-ISO Order Proposed Amendment expressly requested public comment 

on the Commission’s proposed cost-benefit considerations, including with respect to 

reasonable alternatives; the magnitude of specific costs and benefits, and data or other 

information to estimate a dollar valuation; and any impact on the public interest factors 

specified in CEA section 15(a).289

The Commission received four comments regarding the cost-benefit analysis in 

the RTO-ISO Order Proposed Amendment. The four commenters argued that the 

Commission’s cost-benefit analysis of the amendment proposed in the RTO-ISO Order 

Proposed Amendment was inadequate or insufficient, and/or that the Commission 

 287 See RTO-ISO Order at 19912.

288 See supra section II.E.

289 81 FR at 30253. 
86

underestimated the legal and regulatory costs of allowing private claims against market 

participants in the RTO-ISO markets.290

c. Summary of the Amended RTO-ISO Order

The Amended RTO-ISO Order exempts the RTO-ISO market participants and 

RTO-ISO Covered Transactions from private actions pursuant to CEA section 22.

In the discussion that follows, the Commission considers the costs and benefits of 

the Amended RTO-ISO Order to the public and market participants generally, and to the 

RTO-ISO Covered Entities specifically. It also considers the costs and benefits of the

Amended RTO-ISO Order in light of the public interest factors enumerated in CEA 

section 15(a).

d. Baseline 

In the RTO-ISO Order Proposed Amendment, the Commission proposed to 

exclude from the exemption set forth in the RTO-ISO Order the private right of action 

under CEA section 22. Thus, the Commission’s proposed baseline for consideration of 

the costs and benefits was the opposite of that action, i.e. the costs and benefits that the 

public and market participants would experience if the existing RTO-ISO Order were to

be interpreted to exempt market participants from liability under the CEA section 22 

private right of action.291 As discussed above,292 the Commission received a number of 

comments in response to the RTO-ISO Order Proposed Amendment, and was persuaded 

by specific points made by such commenters to amend the RTO-ISO Order to grant an 

explicit exemption from the CEA section 22 private right of action. Given this change, 

 290 EEI at 11; EPSA at 10; IRC at 13; NFP Electric Associations at 7. 

291 See 81 FR at 30252.

292 See supra sections III.B.1. and III.B.2.
87

the Commission believes it is more informative, for purposes of this analysis, to use as 

the baseline the costs and benefits that the public and market participants would have 

experienced if the RTO-ISO Order were amended as the Commission originally proposed 

to do in the RTO-ISO Order Proposed Amendment (in other words, if the RTO-ISO 

Order were amended to explicitly preserve the CEA section 22 private right of action).

293

In the discussion that follows, the Commission endeavored to, where reasonably 

feasible, estimate quantifiable dollar costs of the amendment to the RTO-ISO Order. The 

costs and benefits of the amendment, however, are not presently susceptible to 

meaningful quantification. Being unable to quantify, the Commission discusses proposed 

costs and benefits in qualitative terms.

e. Benefits

Using the baseline described above,294 amending the RTO-ISO Order to address 

the issue of exemption from the CEA section 22 private right of action one way or 

another will prevent future uncertainty with respect to the scope of the RTO-ISO Order.

Amending the RTO-ISO Order to provide an express exemption from CEA section 22 

will benefit RTO-ISO market participants by allowing them to avoid legal and 

compliance costs due to an increased risk of private litigation under section 22. 

Moreover, granting an explicit exemption from the CEA section 22 private right of action 

reflects Congress’ intent regarding how manipulation and fraud in the context of the 

RTO-ISO markets should be addressed. Lastly, providing an exemption from private 

actions pursuant to CEA section 22 will prevent any potential tension between the 

 293 See 81 FR 30247-48.

294 See supra section V.C.3.d.
88

enforcement programs of FERC and PUCT, on the one hand, and private enforcement 

under the CEA, on the other. 

f. Costs

Using the baseline described above,295 the Commission notes that there may be 

minimal costs associated with the fact that private litigants will not be permitted to 

vindicate their own interests or directly contribute to those interests through litigation 

with respect to fraud and manipulation in the RTO-ISO markets. However, as stated 

above in section III.B.2., such costs are mitigated by the fact that FERC and PUCT will 

continue to pervasively regulate such markets. In addition, nothing in the Amended 

RTO-ISO Order affects the Commission’s own authority to address fraudulent or 

manipulative conduct in the RTO-ISO markets, including the Commission’s authority to 

seek restitution for the benefit of victims. Also, as noted above in section III.B.2., the 

Commission encourages market participants who observe potential fraud or manipulation 

in the markets subject to the Commission’s jurisdiction to bring their concerns to the 

Commission.

g. Consideration of Alternatives

The Commission considered not issuing the Amended RTO-ISO Order. The 

Commission considered the uncertainty that has arisen with respect to the scope of the 

RTO-ISO Order and the availability of a private right of action under the RTO-ISO 

Order, particularly following the court rulings in the Aspire v. GDF Suez action,296 and 

 295 See id.

296 See supra section II.D.
89

has determined that a no-amendment alternative would prolong such uncertainty and thus 

be contrary to the public interest.

The Commission also proposed to amend the RTO-ISO Order to explicitly 

preserve the CEA section 22 private right of action with respect to fraud and 

manipulation.297 The Commission has considered the costs and benefits of its proposed 

amendment in light of the comments received, and, for the reasons stated in section 

III.B.2., has been persuaded that issuing an explicit exemption from CEA section 22 is 

the appropriate course of action.

h. Consideration of CEA Section 15(a) Factors

i. Protection of Market Participants and the Public

The Commission notes that, while under the Amended RTO-ISO Order, private 

litigants will not be permitted to pursue fraud or manipulation claims under CEA section 

22 with respect to the RTO-ISO markets, market participants will still be protected 

through the pervasive regulation of those markets by FERC and PUCT, and by the 

Commission’s own authority to address fraud and manipulation in such markets. 

ii. Efficiency, Competitiveness, and Financial Integrity of Futures Markets

The Commission does not believe that the amendment to the RTO-ISO Order will 

have an effect on the efficiency, competitiveness, and financial integrity of the futures 

markets. 

iii. Price Discovery

The Commission does not believe that the amendment to the RTO-ISO Order will 

have an effect on price discovery.

 297 See 81 FR 30245. 
90

iv. Sound Risk Management Practices

The Commission does not believe that the amendment to the RTO-ISO Order will 

have a material effect on sound risk management practices. 

v. Other Public Interest Considerations

The Commission believes that the amendment to the RTO-ISO Order will foster 

the public interest for the reasons discussed above in section III.B.2.

VI. SPP Final Order

Upon due consideration and consistent with the determinations set forth above, 

the Commission hereby issues the following order (“Order”):

Pursuant to its authority under sections 4(c)(1) and 4(c)(6) of the Commodity 

Exchange Act (“CEA” or Act”) and in accordance with sections 4(c)(1) and (2) of the 

Act, the Commodity Futures Trading Commission (“CFTC” or “Commission”)

1. Exempts, subject to the conditions and limitations specified herein, the 

execution of the electric energy-related agreements, contracts, and transactions that are 

specified in paragraph 2 of this Order and any person or class of persons offering, 

entering into, rendering advice, or rendering other services with respect thereto, from all 

provisions of the CEA, except, in each case, the Commission’s general anti-fraud and 

anti-manipulation authority, and scienter-based prohibitions, under CEA sections 

2(a)(1)(B), 4(d), 4b, 4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 6(c), 6(d), 6(e), 6c, 6d, 8, 9, and 

13, and any implementing regulations promulgated under these sections including, but 

not limited to, Commission regulations 23.410(a) and (b), 32.4, and part 180. For the 

avoidance of doubt, this exemption applies to private actions pursuant to CEA section 22 

with respect to all provisions of the Act, including the foregoing enumerated provisions, 
91

but does not restrict the Commission’s enforcement authority pursuant to those 

provisions.

2. Scope. This exemption applies only to agreements, contracts and transactions 

that satisfy each of the following requirements:

a. The agreement, contract or transaction is for the purchase and sale of one of 

the following electric energy-related products:

(1) “Transmission Congestion Rights” defined in paragraph 5(a) of this Order, 

except that the exemption shall only apply to such Transmission Congestion Rights 

where:

(a) Each Transmission Congestion Right is linked to, and the aggregate volume of 

Transmission Congestion Rights for any period of time is limited by, the physical 

capability (after accounting for counterflow) of the electric energy transmission system 

operated by SPP for such period;

(b) SPP serves as the market administrator for the market on which the 

Transmission Congestion Rights are transacted;

(c) Each party to the transaction is a member of SPP (or is SPP itself) and the 

transaction is executed on a market administered by SPP; and

(d) The transaction does not require any party to make or take physical delivery 

of electric energy.

(2) “Energy Transactions” as defined in paragraph 5(b) of this Order.

(3) “Operating Reserve Transactions” as defined in paragraph 5(c) of this Order.

b. Each party to the agreement, contract or transaction is:
92

(1) an “appropriate person,” as defined in sections 4(c)(3)(A) through (J) of the 

CEA;

(2) an “eligible contract participant,” as defined in section 1a(18)(A) of the CEA 

and in Commission regulation 1.3(m); or

(3) a “person who actively participates in the generation, transmission, or 

distribution of electric energy,” as defined in paragraph 5(f) of this Order.

c. The agreement, contract or transaction is offered or sold pursuant to SPP’s 

Tariff and that Tariff has been approved by the Federal Energy Regulatory Commission 

(“FERC”).

3. Applicability to SPP. Subject to the conditions contained in the Order, the 

Order applies to SPP with respect to the transactions described in paragraph 2 of this 

Order.

4. Conditions. The exemption provided by this Order is expressly conditioned 

upon the following:

a. Information sharing: Information sharing arrangements between the 

Commission and FERC that are acceptable to the Commission continue to be in effect, 

and SPP’s compliance with the Commission’s requests through FERC to share, on an asneeded basis and in connection with an inquiry consistent with the CEA and Commission 

regulations, positional and transactional data within SPP’s possession for products in 

SPP’s markets that are related to markets that are subject to the Commission’s 

jurisdiction, including any pertinent information concerning such data.

b. Notification of requests for information: Neither the Tariff nor any other 

governing documents of SPP shall include any requirement that SPP notify its members 
93

prior to providing information to the Commission in response to a subpoena or other 

request for information or documentation.

5. Definitions. The following definitions shall apply for purposes of this Order:

a. A “Transmission Congestion Right” is a transaction, however named, that 

entitles one party to receive, and obligates another party to pay, an amount based solely 

on the difference between the price for electric energy, established on an electric energy 

market administered by SPP, at a specified source (i.e., where electric energy is deemed 

injected into the grid of SPP) and a specified sink (i.e., where electric energy is deemed 

withdrawn from the grid of SPP).

b. “Energy Transactions” are transactions in a “Day-Ahead Market” or “RealTime Balancing Market,” as those terms are defined in paragraphs 5(d) and 5(e) of this 

Order, for the purchase or sale of a specified quantity of electric energy at a specified 

location (including virtual bids and offers), where:

(1) The price of the electric energy is established at the time the transaction is 

executed;

(2) Performance occurs in the Real-Time Balancing Market by either:

(a) Delivery or receipt of the specified electric energy, or

(b) A cash payment or receipt at the price established in the Day-Ahead Market or 

Real-Time Balancing Market (as permitted by SPP in its Tariff); and

(3) The aggregate cleared volume of both physical and cash-settled energy 

transactions for any period of time is limited by the physical capability of the electric 

energy transmission system operated by SPP for that period of time.

c. “Operating Reserve Transactions” are transactions:
94

(1) In which SPP, for the benefit of load-serving entities and resources, purchases, 

through auction, the right, during a period of time as specified in SPP’s Tariff, to require 

the seller of such right to operate electric energy facilities in a physical state such that the 

facilities can increase or decrease the rate of injection or withdrawal of a specified 

quantity of electric energy into or from the electric energy transmission system operated 

by SPP with:

(a) Physical performance by the seller’s facilities within a response time interval 

specified in SPP’s Tariff (Reserve Transaction); or

(b) prompt physical performance by the seller’s facilities (Area Control Error 

Regulation Transaction);

(2) For which the seller receives, in consideration, one or more of the following:

(a) Payment at the price established in SPP’s Day-Ahead or Real-Time Balancing 

Market, as those terms are defined in paragraphs 5(d) and 5(e) of this Order, price for 

electric energy applicable whenever SPP exercises its right that electric energy be 

delivered (including “Demand Response,” as defined in paragraph 5(g) of this Order);

(b) Compensation for the opportunity cost of not supplying or consuming electric 

energy or other services during any period during which SPP requires that the seller not 

supply energy or other services;

(c) An upfront payment determined through the auction administered by SPP for 

this service;

(d) An additional amount indexed to the frequency, duration, or other attributes of 

physical performance as specified in SPP’s Tariff; and
95

(3) In which the value, quantity, and specifications of such transactions for SPP 

for any period of time shall be limited to the physical capability of the electric energy 

transmission system operated by SPP for that period of time.

d. “Day-Ahead Market” means an electric energy market administered by SPP 

on which the price of electric energy at a specified location is determined, in accordance 

with SPP’s Tariff, for specified time periods, none of which is later than the second 

operating day following the day on which the Day-Ahead Market clears.

e. “Real-Time Balancing Market” means an electric energy market administered 

by SPP on which the price of electric energy at a specified location is determined, in 

accordance with SPP’s Tariff, for specified time periods within the same 24-hour period.

f. “Person who actively participates in the generation, transmission, or 

distribution of electric energy” means a person that is in the business of: (1) generating, 

transmitting, or distributing electric energy; or (2) providing electric energy services that 

are necessary to support the reliable operation of the transmission system.

g. “Demand Response” means the right of SPP to require that certain sellers of 

such rights curtail consumption of electric energy from the electric energy transmission 

system operated by SPP during a future period of time as specified in SPP’s Tariff.

h. “SPP” means Southwest Power Pool, Inc. or any successor in interest to 

Southwest Power Pool.

i. “Tariff.” Reference to a SPP “Tariff” includes a tariff, rate schedule or 

protocol.

j. “Exemption Application” means the application for an exemptive order under 

4(c)(6) of the CEA filed by SPP on October 17, 2013, as amended August 1, 2014.
96

6. Effective Date. This Order is effective upon publication in the Federal 

Register.

7. Delegation of Authority. The Commission hereby delegates, until such time 

as the Commission orders otherwise, to the Director of the Division of Market Oversight 

(“Division”) and to such members of the Division’s staff acting under his or her direction 

as he or she may designate, in consultation with the General Counsel or such members of 

the General Counsel’s staff acting under his or her direction as he or she may designate, 

the authority to request information from SPP pursuant to section 4(a) of this Order.

This Order is based upon the representations made in the Exemption Application 

for an exemptive order under section 4(c) of the CEA filed by SPP,298 including those 

representations with respect to compliance with FERC regulation 35.47. It is also based 

on supporting materials provided to the Commission by SPP and its counsel, including a 

legal memorandum that, in the Commission’s sole discretion, provides the Commission 

with assurance that the netting arrangements contained in the approach selected by SPP 

to satisfy the obligations contained in FERC regulation 35.47(d) will, in fact, provide SPP 

with enforceable rights of setoff against any of its market participants under title 11 of the 

United States Code in the event of the bankruptcy of the market participant. Any 

material change or omission in the facts and circumstances pursuant to which this Order 

is granted might require the Commission to reconsider its finding that the exemption 

contained therein is appropriate and/or consistent with the public interest and purposes of 

the CEA. Further, the Commission reserves the right, in its discretion, to revisit any of 

 298 In the Matter of the Application for an Exemptive Order Under Section 4(c) of the Commodity 

Exchange Act by Southwest Power Pool, Inc., amended Aug. 1, 2014.
97

the terms and conditions of the relief provided herein, including but not limited to, 

making a determination that certain entities and transactions described herein should be 

subject to the Commission’s full jurisdiction, and to condition, suspend, terminate or 

otherwise modify or restrict the exemption granted in this Order, as appropriate, upon its 

own motion.

VII. Amended RTO-ISO Order

The Preamble to and Paragraph 1 of the RTO-ISO Order are revised to read as 

follows:

Pursuant to its authority under sections 4(c)(1) and 4(c)(6) of the Commodity 

Exchange Act (“CEA”) or (“Act”) and in accordance with sections 4(c)(1) and (2) of the 

Act, the Commodity Futures Trading Commission (“Commission”)

1. Exempts, subject to the conditions and limitations specified herein, the 

execution of the electric energy-related agreements, contracts, and transactions that are 

specified in paragraph 2 of this Order and any person or class of persons offering, 

entering into, rendering advice, or rendering other services with respect thereto, from all

provisions of the CEA, except, in each case, the Commission’s general anti-fraud and 

anti-manipulation authority, and scienter-based prohibitions, under CEA sections 

2(a)(1)(B), 4(d), 4b, 4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 6(c), 6(d), 6(e), 6c, 6d, 8, 9, and 

13, and any implementing regulations promulgated under these sections including, but 

not limited to, Commission regulations 23.410(a) and (b), 32.4, and part 180. For the 

avoidance of doubt, this exemption applies to private actions pursuant to CEA section 22 

with respect to all provisions of the Act, including the foregoing enumerated provisions, 
98

but does not restrict the Commission’s enforcement authority pursuant to those 

provisions.

Issued in Washington, DC, on October 17, 2016, by the Commission.

Christopher J. Kirkpatrick,

Secretary of the Commission.

Appendices to Final Order in Response to an Application From Southwest Power 

Pool, Inc. to Exempt Specified Transactions; and Amendment to the Final Order 

Exempting Specified Transactions of Certain Independent System Operators and 

Regional Transmission Organizations – Commission Voting Summary, Chairman’s 

Statement, and Commissioner’s Statement

Appendix 1 – Commission Voting Summary

On this matter, Chairman Massad and Commissioners Bowen and Giancarlo 

voted in the affirmative. No Commissioner voted in the negative.

Appendix 2 – Statement of Chairman Timothy G. Massad

I support this order, which comes after careful review of the issue, including 

comments from many market participants.

Our electric markets are subject to regulation by the Federal Energy Regulatory 

Commission (FERC) and state regulators. Those regulators work to ensure that energy 

rates remain reasonable, transmission systems function reliably, and the interests of 

market participants are balanced with the protection of electricity consumers. In light of 
99

this, the CFTC exempted certain transactions in the regional transmission organization 

(RTO) and independent system operator (ISO) markets from most provisions of the 

Commodity Exchange Act (CEA), other than our own authority to pursue fraud and 

manipulation in those markets.

One issue was left uncertain, which was whether private rights of action under the 

CEA could be brought against RTOs, ISOs, and other market participants. As a general 

matter, private rights of action are important to our regulatory structure. They can deter 

bad actors and protect market participants. But many market participants expressed 

concern that private actions could create costs within the markets in ways regulators did 

not anticipate. For example, several state consumer advocate offices noted that private 

rights of action could inadvertently introduce regulatory uncertainty and increase costs 

for consumers. So while private rights of action will remain critical overall in our 

markets, I am persuaded that, in this limited instance, they could cause instability and 

adversely affect consumers without necessarily enhancing supervision of markets or 

consumer protection.

In making this determination, it is important that the CFTC continues to retain the 

authority to pursue fraud and manipulation within those markets. Aggrieved market 

participants and consumers also still have the ability to file complaints with the CFTC

and our Whistleblower program.

I thank the CFTC staff and my fellow Commissioners for their work on this 

matter, as well as those who took the time to provide us with feedback.
100

Appendix 3 – Statement of Commissioner J. Christopher Giancarlo

I support this commonsense decision that it is not in the public interest to allow 

private lawsuits against electric utilities trading in wholesale energy markets.

Two months ago, I visited a construction site for a state-of-the-art electric power 

plant in my home state of New Jersey. The facility was being built to withstand future 

weather events like Superstorm Sandy. The power it will produce will serve millions of 

local residents.

Without today’s practical decision, power utilities across the country may have 

hesitated or delayed building such new power plants because of the regulatory 

uncertainty and costs associated with private litigation—costs that surely would be 

passed on to millions of ratepayers throughout the country.

As I have observed, preserving the Section 22 private right of action is not 

necessary in these heavily regulated markets.1

 Both the CFTC and the FERC have the 

authority to seek redress for the claims of private persons who raise meritorious 

allegations of fraud or manipulation.

I am heartened that the Commission now agrees and has concluded, with today’s 

action, that allowing private lawsuits is not in the public interest.

It is just commonsense.

 1 See Notice of Proposed Amendment to and Request for Comment on the Final Order in Response to a

Petition From Certain Independent System Operators and Regional Transmission Organizations To Exempt 

Specified Transactions Authorized by a Tariff or Protocol Approved by the Federal Energy Regulatory 

Commission or the Public Utility Commission of Texas From Certain Provisions of the Commodity 

Exchange Act Pursuant to the Authority Provided in the Act, 81 FR 30245, 30254-55 (May 16, 2016) 

(Statement of Dissent by Commissioner J. Christopher Giancarlo); J. Christopher Giancarlo, Op-Ed, 

Unneeded mandate would hurt N.J. consumers, The Record, Aug. 18, 2016, available at 

http://www.northjersey.com/opinion/opinion-guest-writers/unneeded-mandate-would-hurt-n-j-consumers1.1647129.