CFTC Requests Comment on Joint Guidance with SEC on Treatment of Energy Capacity Contracts (Fed. Reg.)

The CFTC solicited comment on proposed joint guidance with the SEC that relates to the appropriate treatment of certain peaking supply and capacity contracts. The CFTC request for comment was published in the Federal Register.

The proposed guidance is meant to address circumstances in which these contracts should not be considered "swaps" for the purposes of the Commodity Exchange Act ("CEA").

The CFTC proposed that certain capacity contracts in electric power markets and certain natural gas contracts, known as "peaking supply contracts," should not be considered "swaps" under the CEA because they are examples of customary commercial arrangements – as described in the final rule defining the term "swap." In particular, the CFTC pointed out that the contracts (i) are entered into in response to regulatory requirements, (ii) are necessary to maintain reliable supplies and (iii) facilitate storage or transport considerations that arise in the course of the normal operation of at least one party's business.

Comments on the proposed guidance must be submitted by May 9, 2016.