In anticipation of certain provisions of the Dodd-Frank Act coming into effect on October 12, in late August, the Commodity Futures Trading Commission ("CFTC") issued two proposed orders intended to provide relief from certain provisions of the Commodities Exchange Act ("CEA") for transactions relating or linked to the physical delivery of electricity.

In the first of the proposed orders, the CFTC would exempt certain non-financial energy transactions (generation, transmission or delivery transactions intended for physical delivery) between not-for-profit electric utilities from all but the anti-fraud, anti-manipulation and enforcement provisions of the CEA (the "Enforcement Provisions"). In the second of the proposed orders, the CFTC would exempt transactions for the purchase and sale of financial transmission rights, energy transactions, forward capacity transactions and reserve or regulation transactions from all but the Enforcement Provisions provided that all parties to the transaction are "appropriate persons" or "eligible contract participants" and the transaction is offered or sold pursuant to a tariff that has been approved or permitted to take effect by PUCT or FERC.

Under usual procedures, each proposed order was subject to a 30 day public comment period that ended in late September. In light of the proximity of the end of each comment period the CFTC has not yet taken final action with respect to either order. To avoid subjecting these transactions to the full brunt of the CEA when certain of the Dodd-Frank provisions took effect on October 12, the CFTC's enforcement divisions issued a letter in respect of each proposed order on October 11 in which  they indicated that they are taking a "no-action" position with respect to any transaction that would fall within the scope of the proposed order until the earlier of March 31, 2012 and the date on which the CFTC takes final action on the proposed order. Until such time such transactions are not subject to the CEA.

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