NGI The Weekly Gas Market Report
The Commodity Futures Trading Commission (CFTC) last weekapproved a New York Mercantile Exchange (NYMEX) application totrade electricity futures and options based on delivery at thePennsylvania-New Jersey-Maryland (PJM) western hub. And slated forapproval today is the proposed and competing Chicago Board of Trade(CBOT) PJM western hub electricity futures contract.
The NYMEX and CBOT applied to offer the contracts in November.NYMEX said its contract is a complement to its other two sets ofeastern electricity futures and options – one based on deliveryinto the Cinergy transmission system and the other based ondelivery into the Entergy transmission system – which have beenaveraging a combined volume of close to 1,000 contracts a day.
NYMEX President R. Patrick Thompson said, “We are lookingforward to introducing these contracts in the next few months andexpect to announce a launch date shortly.” Terms and conditions ofthe NYMEX contract will parallel those in the other easternelectricity contracts, including delivery rate, contract unit, anddelivery period. Prices and fluctuations prices will be quoted indollars and cents per MWh. The minimum price fluctuation will be$.01 per MWh. The maximum daily price fluctuation will be $6.00 perMWh above or below the preceding day’s settlement price (the basicmaximum fluctuation). Expanded limits will apply when the contractsettles at the maximum limit.
The CBOT PJM contract is to be traded along with the CBOT’s TVAand ComEd contracts, creating a power complex to provide riskmanagement to the southeastern, midwestern and northeastern UnitedStates, CBOT said. Terms of the NYMEX and CBOT contracts are nearlyidentical except CBOT’s trading unit is more than double NYMEX’s at1,680 MWh per contract.
Joe Fisher, Houston
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