A municipal natural gas distributor group Friday expressed "strong disagreement" with the Treasury Department's claim that a House-approved bill authorizing greater Commodity Futures Trading Commission (CFTC) oversight of the natural gas market is unwarranted.
The bill (HR 4473), which was passed by the House by unanimous consent earlier this month, authorizes appropriations for the CFTC through fiscal 2010, and expands the authority of the CFTC to "detect and deter" manipulation and attempted manipulation in gas markets, increases the reporting and record-keeping burden for people who operate on exchanges and raises the penalties for civil and criminal violations in most cases to $1 million per violation. It also raises the maximum prison sentence for violations to 10 years (see Daily GPI, Dec. 15).
Both the Treasury Department and Federal Reserve Chairman Alan Greenspan sent separate letters to Capitol Hill prior to the House vote, voicing their opposition to the natural gas-related provisions in the House legislation.
The Senate bill, which has been voted out by the Senate Agriculture Committee, authorizes appropriations for the CFTC through fiscal year 2010, but -- contrary to the House version -- it does not seeking to bolster the agency's oversight of gas markets.
The House bill is a "good first step," but the American Public Gas Association (APGA) believes it should go even further, said APGA President Bert Kalisch in a letter Friday to Randal K. Quarles, undersecretary for domestic finance at Treasury.
"For example, we support including the over-the-counter market within the transparency provisions of the legislation. In addition, we strongly support other market changes, such as the manner in which the monthly settlement price is developed, which we believe will help limit unwarranted market volatility," he said.
"We believe that the CFTC should be given additional authority to oversee and carefully monitor markets. Given the abuses in energy markets we have seen over the past several years, strong market oversight is more important than ever to protect consumers and ensure that markets are functioning appropriately," Kalisch told Quarles.
"I strongly disagree with arguments that natural gas markets will react negatively to additional oversight and transparency."
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