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EPSA Testifies Before Key House Committee on OTC Derivatives Legislation
WASHINGTON, D.C. - Today, Electric Power Supply Association (EPSA) President & CEO John E. Shelk testified before the House Energy and Committee's Subcommittee on Energy and Environment on impacts on energy markets of proposed over-the-counter (OTC) derivatives legislation. The testimony noted that "There is no more important issue likely to be acted upon by Congress in the near future that will impact the ability of the electric power sector to operate existing plants to best serve consumers and to invest in new energy infrastructure than whether our members will continue to have access to the [OTC] derivatives markets on fair and reasonable terms."
Stating EPSA's support for the goal of reducing systemic risk in the economy as outlined by the Treasury Department and other policymakers, Shelk said, "At the same time, EPSA joins a unanimous energy end-user sector in strenuously advocating that financial regulatory reform, as it relates to derivatives, should not punish us and the consumers we serve for the actions of others who nearly brought down our financial system last year. This would occur through overly broad requirements that would essentially require energy end-user derivatives products, presently transacted on the OTC markets, be handled on an exchange and cleared through a central clearinghouse associated with the exchange."
Shelk commended the House Committees on Financial Services and Agriculture for versions of legislation they passed and their changes to the original Treasury Department proposal. The EPSA testimony outlined areas where more details are necessary including (1) definitions of key terms (e.g., major swap participant, swap dealer, swap, and substantial net position) to ensure that energy firms access to OTC derivatives to manage risks associated with their commercial activities is in fact fully protected as intended, (2) excluding costly and unnecessary margin requirements from being imposed on those who utilize OTC markets for that purpose, and (3) as clear a jurisdictional line as possible is drawn between the important responsibilities of the Federal Energy Regulatory Commission, the Public Utility Commission of Texas, and the Commodity Futures Trading Commission.
EPSA continues to appreciate the dialogue with Congress and the regulatory agencies "to strike the proper balance between greater financial transparency and maintaining access to necessary energy risk management products on fair and reasonable terms. Doing so will allow us to best serve our customers while investing tens of billions of dollars in new, cleaner energy infrastructure."
EPSA Testimony for E&C OTC Hearing
CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660
EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.