Abstract
Regional Transmission Organizations and Independent System Operators are a relatively new platform to buy and sell wholesale electricity and transmission service of that electricity. These groundbreaking organizations have been around since 1996 after the Federal Energy Regulatory Commission (“FERC”) issued Order 888. FERC regulates the physical electricity wholesale sale and transmission service market managed by a Regional Transmission Organization (“RTO”) or Independent System Operator (“ISO”),through its Federal Power Act mandate. Many RTOs and ISOs offer a product called a Financial Transmission Right (“FTR”). Traditionally, FTRs assist the holder by providing price certainty, or a hedge, in the capacity market. This product is unique in the RTO/ISO marketplace because it is a derivative of the electricity commodity. Recently FTRs have been the subject of speculation by individual entities who are not a conventional member of the electricity marketplace; that is, a power producer, transmission owner/operator, or retail buyer or seller. In fact, investors have turned to the RTO/ISO marketplace as a profit initiative for their portfolios. This practice raises the question of whether the FERC is appropriately asserting jurisdiction over FTRs or whether the Commodity Futures Trading Commission (“CFTC”) is the appropriate regulatory body over this product. As a normal rule, commodity derivatives are governed by the CFTC through the Commodity Exchange Act. Notwithstanding a rule promulgated by CFTC commissioners after the Dodd-Frank Act, both the Federal Power Act and Commodity Exchange Act are conspicuously silent with respect to who is the appropriate regulatory agency to assert jurisdiction over FTRs. This paper examines whether the FERC or the CFTC is the appropriate agency to regulate FTRs, concluding the CFTC is the appropriate regulatory authority based on the legislative intent of both the Commodity Exchange Act and the Federal Power Act, which empowers the CFTC to regulate a product squarely within the scope of financial instruments Congress intended it regulate through the Dodd-Frank Act.
Recommended Citation
Timothy K. Shaw II,
GreenHat’s Greenlight to the CFTC: The Case For A Jurisdictional Shift Of Financial Transmission Rights From The Federal Energy Regulatory Commission To The Commodity Futures Trading Commission,
23
DePaul Bus. & Com. L.J.
(2025)
Available at:
https://via.library.depaul.edu/bclj/vol23/iss1/3
Included in
Accounting Law Commons, Administrative Law Commons, Antitrust and Trade Regulation Commons, Banking and Finance Law Commons, Bankruptcy Law Commons, Business Organizations Law Commons, Civil Law Commons, Commercial Law Commons, Comparative and Foreign Law Commons, Computer Law Commons, Conflict of Laws Commons, Constitutional Law Commons, Construction Law Commons, Consumer Protection Law Commons, Contracts Commons, Disability Law Commons, Dispute Resolution and Arbitration Commons, Estates and Trusts Commons, First Amendment Commons, Government Contracts Commons, Housing Law Commons, Human Rights Law Commons, Intellectual Property Law Commons, International Law Commons, International Trade Law Commons, Internet Law Commons, Labor and Employment Law Commons, Law and Economics Commons, Law and Politics Commons, Law and Psychology Commons, Legal Ethics and Professional Responsibility Commons, Legal Profession Commons, Nonprofit Organizations Law Commons, Oil, Gas, and Mineral Law Commons, Organizations Law Commons, Property Law and Real Estate Commons, Retirement Security Law Commons, Second Amendment Commons, Secured Transactions Commons, Securities Law Commons, State and Local Government Law Commons, Supreme Court of the United States Commons, Taxation-Federal Commons, Taxation-Federal Estate and Gift Commons, Taxation-State and Local Commons, Taxation-Transnational Commons, Tax Law Commons, Transportation Law Commons, Workers' Compensation Law Commons