In 2012, PJM, along with other regional transmission organizations and independent transmission system operators (except for the Southwest Power Pool), filed a joint petition with the Commodities Future Trading Commission asking it to exempt transactions for the sale of electricity from most provisions of the Commodity Exchange Act. The exemption would apply solely to energy transactions that are subject to a Federal Energy Regulatory Commission-approved tariff.
The CFTC issued a final order in 2013 granting the exemption as requested, but specifically retained the CFTC’s general anti-fraud, anti-manipulation authority with respect to such transactions.
More recently, a civil litigation case in Texas arising out of market conduct in ERCOT raised questions as to whether the CFTC intended to also preserve the ability for a private party to sue a market participant for alleged market manipulation. While this civil case was pending, SPP asked the commission to apply the same exemption to its market transactions that PJM and others had received in 2013. SPP’s request was the subject of a draft order issued by the CFTC and recently published for public comment.
In the draft order, the CFTC generally addressed whether private parties could bring actions against RTO/ISO market participants they allege to have manipulated energy products and markets which had otherwise been exempted from CFTC regulation. However, rather than clarifying the CFTC’s intent on private rights of action, the draft order is confusing and could increase legal exposure to RTO/ISO market participants.
After consulting with other ISO and RTOs, the Federal Energy Regulatory Commission and industry trade groups, PJM, ERCOT and the California ISO have filed comments on the commission’s draft SPP order. The comments raise both procedural and substantive concerns and request that the commission remove language relating to private rights of action.