I have conferred with industry representatives on the CFTC's suggestion.  We 
have a problem with it from a couple of perspectives:

1.  Although NYMEX is the benchmark for pricing of a few energy commodities, 
most of the pricing of transactions is done based on price reporting services 
such as Platt's, Megawatt Daily and Reuters.  These services collect 
information on transactions from industry representatives and report usually 
on a daily basis benchmark prices for a large number of energy commodities.  
This activity has never been regulated by anyone.  Obviously, these price 
reporting services have provided valuable price information to the 
industry.   We do not see a need for regulation of price reporting whether it 
from a price reporting service or an electronic trading system.

2.  We are concerned that the manner in which the CFTC would regulate/oversee 
price reporting would be very awkward and difficult.  The drafting of such a 
provision would be complex and the discretion it would give the CFTC to 
potentially regulate through price reporting would be troubling.

We are very interested in achieving the exclusion that the draft legislation 
currently provides.  We would be prepared to discuss the matter further in 
the hope of maintaining the exclusion.  Please let me know what you think.

>>> <Walter_Lukken@agriculture.senate.gov> 05/02 11:52 AM >>>
Thanks for the language.  We will make sure that weather derivatives are
included.  We met with the CFTC yesterday and they oppose excluding energies
from the Act.  Our bill would require that these excluded products, if traded 
on
an electronic trading system, to be subject to the antimanipulation authority 
of
the CFTC and not allow these products to require delivery.  One issue they
raised was price discovery and that these markets are not very transparent. 
What would be your reaction if we added a third provision (again this is only
for energies traded on a electronic trading facility--bilateral transactions
would not be subject to these provisions) that required some sort of price
disclosure for these markets.  That might help placate the CFTC, but I'm not
sure what the industry reaction might be.  Let me know.

____________________Reply Separator____________________
Subject:    Energy Language
Author: RAISLERK@sullcrom.com
Date:       5/2/00 10:32 AM

Attached is a revised Section 1a(13).  The new language is underlined.  I
suggest that we retain Section (B).  It seems to me to be helpful and captures
products such as weather derivatives.  I have bracketed the manipulation
language as a place-holder consistent with our discussions.  Please let me 
know
if you think these revisions work.


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