FEDERAL ENERGY REGULATORY COMMISSION 

WASHINGTON, D. C. 20426 

OFFICE OF THE GENERAL COUNSEL 

November 10, 2009 

David Stawick, Secretary 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st Street, NW 

Washington, DC 20581 

COMMENT 

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

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

Whether Certain PJM WH Contracts Offered for Trading on the 

IntercontinentalExchange, Inc., Perform Significant Price Discovery Functions 

(Comment File 09-032) 

Comments of the Staff of the Federal Energy Regulatory Commission 

Dear Mr. Stawick: 

On October 14, 2009, the Commodity Futures Trading Commission (CFTC) 

issued a notice of action and request for comment on whether certain cash-settled 

electricity contracts offered for trading on the IntercontinentalExchange, Inc. (ICE), an 

exempt commercial market (ECM), perform significant price discovery functions. 1 

These are the comments of the staff of the Federal Energy Regulatory Commission 

(FERC). 

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

with significant price discovery contracts (SPDCs) is subject to certain self-regulatory 

and reporting requirements, as well as certain CFTC oversight authorities, with respect to 

those contracts. Specifically, such regulatory authority applies to agreements, contracts 

or transactions in exempt commodities (which includes electricity) executed on an 

electronic trading facility by certain eligible commercial entities on a principal-to1 The contracts are: the PJM WH Real Time Peak Daily Contract; the PJM WH 

Real Time Peak Contract; the PJM WH Real Time Off-Peak Contract; the PJM WH Day 

Ahead LMP Peak Daily Contract; and the PJM WH Real Time Off-Peak Daily Contract. 

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Mr. David Stawick, Secretary 

November 10,2009 

Page2 

principal basis if the CFTC determines, in its discretion, that any such agreement, 

contract or transaction performs a significant price discovery function. If the CFTC 

determines that a particular agreement, contract or transaction performs a significant 

price discovery function, the ECM must demonstrate, with respect to that contract, 

compliance with nine "core principles" set forth in the section 2(h)(7)(C) of the 

Commodity Exchange Act (CEA) and the CFTC's rules thereunder. 

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

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

FERC's exclusive jurisdiction under the Federal Power Act (FPA) over the transmission 

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

responsibilities under the FPA, the FERC staffwill continue to monitor for any such 

conflict. Moreover, the FERC staff will monitor other similar determinations that could 

conflict with the FERC's regulation of wholesale electric markets. In this regard, many 

PERC-regulated public utilities, in particular regional transmission organizations (RTOs) 

and independent system operators (ISOs ), have electronic trading facilities used to 

provide PERC-jurisdictional services .. With respect to RTOs and ISOs, the FERC 

comprehensively regulates transmission in interstate commerce and related fmancial 

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

and ancillary services, all of which are conducted using electronic trading facilities and 

which are provided in accordance with detailed market rules contained in tariffs and 

contracts on file at the FERC. Congress has recognized that FERC's regulation ofRTOs, 

ISOs and their markets was not intended to be affected by the SPDC amendments to the 

CEA.2 Accordingly, the FERC staff will monitor proposed SPDC determinations and 

advise the CFTC of any potential conflicts with the FERC's exclusive jurisdiction over 

RTOs, ISOs or other jurisdictional entities. 

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

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

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

contract" provision not have any impact on FERC's authority over regional transmission 

organizations). 
Mr. David Stawick, Secretary 

November 10,2009 

Page 3 

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

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

The Federal Energy Regulatory Commission 

Office of the General Counsel 

888 First Street, NE 

Washington, DC 20426 

Attention: Andrew F. MacDonald 

Phone:202-502-6541 

Sincere! 

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cc: Jon Wellinghoff, Chairman 

Suedeen G. Kelly, Commissioner 

Phillip D. Moeller, Commissioner 

Marc L. Spitzer, Commissioner 

Thomas R. Sheets 

General Counsel 

Office of the General Counsel 

Federal Energy Regulatory Commission