Banks ask FERC to exclude hedging from holding limit


Substation Relay Protection Training

Our customized live online or in‑person group training can be delivered to your staff at your location.

  • Live Online
  • 12 hours Instructor-led
  • Group Training Available
Regular Price:
$699
Coupon Price:
$599
Reserve Your Seat Today
Two large U.S. banks that want to trade U.S. wholesale power asked the U.S. Federal Energy Regulatory Commission (FERC) recently to exclude some hedging activities from an agency utility stockholding limit.

In June, FERC raised the utility-ownership limit on Bank of America Corp. and Swiss-based UBS AG to 5 percent from 1 percent as a condition for approving the companies to trade wholesale power.

In a joint filing Tuesday, the two banks asked FERC to exempt from the 5 percent calculation utility stocks and bonds held for hedging purposes, as long as the holdings are consistent with existing bank regulatory rules.

"The hedge designed to be most consistent with a bank's safety and soundness ... could involve more than 5 percent of an issuer's voting securities," the banks said.

Bank of America, the nation's third-largest bank, and UBS had complained that the original 1 percent limits would make it nearly impossible for them to enter U.S. power trading.

UBS last year bought bankrupt Enron Corp.'s online energy trading platform.

Amid a wave of slumping stock prices and credit downgrades at many U.S. merchant power trading firms, some large banks are seeking to fill a void left by merchants' retreat from speculative trading.

Trading desks operated by banks have access to more capital, and can post the large amounts of collateral demanded by power trading counterparties.

Investment banks Morgan Stanley and Goldman Sachs are already active in the U.S. wholesale electricity trading market. FERC has also approved German-based Deutsche Bank's entry to the market.

Related News

Old meters giving away free electricity to thousands of N.B. households

NB Power Smart Meters will replace aging analog meters, boosting billing accuracy, reducing leakage, and…
View more

Sycamore Energy taking Manitoba Hydro to court, alleging it 'badly mismanaged' Solar Energy Program

Sycamore Energy Manitoba Hydro Lawsuit centers on alleged mismanagement of the solar rebate incentive program,…
View more

IEA praises Modi govt for taking electricity to every village; calls India 'star performer'

India Village Electrification hailed by the IEA in World Energy Outlook 2018 showcases rapid energy…
View more

Why subsidies for electric cars are a bad idea for Canada

EV Subsidies in Canada influence greenhouse-gas emissions based on electricity grid mix; in Ontario and…
View more

Starved of electricity, Lebanon picks Dubai's ENOC to swap Iraqi fuel

Lebanon-ENOC Fuel Swap secures Iraqi high sulphur fuel oil, Grade B fuel oil, and gasoil…
View more

Financial update from N.L energy corp. reflects pandemic's impact

Nalcor Energy Pandemic Loss underscores Muskrat Falls delays, hydroelectric risks, oil price shocks, and COVID-19…
View more

Sign Up for Electricity Forum’s Newsletter

Stay informed with our FREE Newsletter — get the latest news, breakthrough technologies, and expert insights, delivered straight to your inbox.

Electricity Today T&D Magazine Subscribe for FREE

Stay informed with the latest T&D policies and technologies.
  • Timely insights from industry experts
  • Practical solutions T&D engineers
  • Free access to every issue

Download the 2026 Electrical Training Catalog

Explore 50+ live, expert-led electrical training courses –

  • Interactive
  • Flexible
  • CEU-cerified