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 AGA Commends CFTC Commissioner Chilton's "End User Bill of Rights"   

Seeking Guidance on Contracts for Physical Delivery of Natural Gas Within Dodd Frank Regulation

Washington, D.C. – The American Gas Association (AGA) commends U.S. Commodity Futures Trading Commissioner Bart Chilton’s “End User Bill of Rights.” America’s natural gas utilities, along with other end user energy market participants, enter into both financial and physical commodity transactions that are being regulated by the Commodity Futures Trading Commissioner (CFTC) for the first time under the Dodd-Frank Act. AGA member companies are regulated entities and are committed to compliance with the CFTC’s regulations. In order to effectively comply with these regulations, AGA has sought further guidance from the Commission to clarify the extent to which non-financial contracts for the physical delivery of natural gas are within the scope of Dodd Frank regulation of “swaps.”

“The current lack of regulatory certainty as to the treatment of physical natural gas transactions has created immense confusion in the industry, resulting in enormous compliance challenges and serious impacts on the physical natural gas market,” said Andrew Soto, AGA’s Senior Managing Counsel for Regulatory Affairs. “We hope the agency will provide clarity on the scope of the definition of ‘swaps’ and the requirements for reporting ‘trade options’ so that natural gas utilities can determine which of their physical gas contracts are subject to the Dodd-Frank regulations and how they must be reported. We urge the CFTC to take action before next Wednesday, April 10, to issue temporary no-action relief from compliance with the ‘swap’ reporting and recordkeeping requirements until the clarity is provided.”

AGA has sought clarity through comments filed in response to the CFTC’s interim final rules, and through a separate request for interpretative guidance. AGA applauds Commissioner Chilton’s decision to not support an enforcement action against an end user, exchange, or anyone else on an issue deserving clarity that is the subject of an outstanding request for interpretive guidance. The absence of reasonable regulations and regulatory certainty on issues such as how a “swap” is defined and how trade options are to be reported is threatening innovation and efficiency in the gas markets, making it more difficult for utilities to plan for the future needs of their gas customers.

Soto added, “AGA commends Commissioner Chilton for re-affirming the agency’s commitment to transparency, and hope that the Commission can provide the natural gas market as much legal certainty as possible, and as soon as possible.”

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The American Gas Association, founded in 1918, represents more than 200 local energy companies that deliver clean natural gas throughout the United States. There are more than 71 million residential, commercial and industrial natural gas customers in the U.S., of which 94 percent — over 68 million customers — receive their gas from AGA members. Today, natural gas meets almost one-fourth of the United States' energy needs.

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