CFTC Approves Mid-Columbia Electricity Futures Contracts

The Commodity Futures Trading Commission (CFTC) yesterday approved a New York Mercantile Exchange application to trade electricity futures based on delivery in the Mid-Columbia River region. In addition to delivery terms, the contract will differ from the Exchange's other electricity contracts in unit size, which will be 432 megawatt hours (Mwh) of firm electricity, delivered at a rate of one megawatt per hour. Like the Exchange's current electricity contracts, which have contract unit sizes of 864 Mwh for the western electricity futures contracts and 736 Mwh for the eastern electricity contracts, the size of the actual delivery will vary according the number of on-peak days during the delivery month. The Exchange has applied to the CFTC for permission to split the unit size of its California/Oregon border and Palo Verde contracts to 432 Mwh as well. Exchange President R. Patrick Thompson said that the Exchange plans to introduce the new contracts in 2000 and added, "We are delighted that we will soon be able to add a tool based on this active market center to our electricity risk management and price discovery product mix. We continue to work with the industry to introduce products and services that meet the needs of this rapidly evolving marketplace." Other terms and conditions will parallel those in the Exchange's existing electricity contracts, including: Delivery Period- 16 on-peak hours: hour ending 0700 (6 AM) Pacific time to hour ending 2200 (10 PM) Pacific time on each business day of the delivery month ; Termination of Trading- Trading in the delivery month shall cease on the fourth business day prior to the first day of the delivery month; Prices and Fluctuations- Prices shall be quoted in dollars and cents per Mwh. The minimum price fluctuation will be $.01 per Mwh. The maximum daily price fluctuation will be $10.00 per Mwh above or below the preceding day's settlement price (the basic maximum fluctuation). Expanded limits will apply in increments of $20, and then $30, when the contract trades at the maximum limit.