NYMEX To Split Unit Size Of Western Electricity Futures Contracts

The New York Mercantile Exchange has received Commodity Futures Trading Commission approval to reduce the delivery rate of its California Oregon Border (COB) and Palo Verde electricity futures contracts from 2 megawatts (Mw) to 1 Mw and the contract unit from 864 megawatt hours (Mwh) to 432 Mwh, a change which the Exchange will implement on Monday, December 6. At the start of business on December 6, each outstanding COB and Palo Verde electricity futures and options contract will be converted into two contracts, reflecting the new rules. The delivery unit will be determined by the number of on-peak days during the delivery month, multiplied by 16 Mwh per day. For example: If there are 27 on-peak days in the delivery month, the delivery unit is 432 Mwh; If there are 26 on-peak days in the delivery month, the delivery unit is 416 Mwh; If there are 25 on-peak days in the delivery month, the delivery unit is 400 Mwh; If there are 24 on-peak days in the delivery month, the delivery unit is 384 Mwh . Exchange President R. Patrick Thompson said, "This change was made at the recommendation of the Exchange's western electricity advisory committee in order to provide traders and market participants with increased flexibility."