With the House Agricultural Committee set to address reauthorization of the Commodity Futures Trading Commission (CFTC) before the August recess, a group of industrial energy consumers has called on the panel to include in the process a proposal reinstating the strong market oversight authority that the CFTC had prior to the enactment of the Commodity Futures Modernization Act of 2000 (CFMA).
In a letter to Agriculture Committee leaders Reps. Robert Goodlatte (R-VA) and Collin Peterson (D-MN), the Industrial Energy Consumers of America (IECA) urged committee lawmakers to incorporate the "Commodities Exchange Improvements Act of 2005" in its reauthorization, a bill that was introduced by Reps. Sam Graves (R-MO) and John Barrow (D-GA) in April.
The measure, HR 1638, "[would close] the market oversight gap that was created as a result of CFMA," which stripped out consumer protections, said IECA Executive Director Paul N. Cicio.
The bill also would set "reasonable" limits for the trading of natural gas, he noted. Since 2000, the New York Mercantile Exchange has "significantly increased" the limit for when it will stop trading of natural gas, Cicio said, adding that this has created more volatility in the market.
"We find it interesting that [the] CFTC does not support the proposed Commodities Exchange Improvement Act of 2005. The CFTC is on record saying this legislation is not needed," he said. Cicio believes that had "proper market government oversight...been in place," the Enron scandal and the manipulation of natural gas prices would not have occurred.
"IECA supports this legislation and appreciates the fact that it does not interfere with the ability of market participants to buy or sell energy products any differently than before. What it does do is restore CFTC market oversight [that] it had prior to...2000," he noted.
"The natural gas market has changed enormously since the passage of the CFMA. The size of the market has exploded, and the number and complexity of energy products have increased along with the number and type of players. The changes in this bill will help bring our market oversight up to date with the character of the market."
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