LPPC Joins the Coalition for Derivatives End-Users to File Comments to Federal Bank Regulators on their Basel III Re-Proposal on Capital Rules
Recently, LPPC joined the Coalition for Derivatives End-Users to File Comments on a re-proposal of the Basel III capital rules.
LPPC submitted a follow-up letter to federal banking regulators urging targeted changes to proposed Basel III capital reforms that could increase costs for electric customers across the country. LPPC represents 29 of the nation’s largest community-owned public power utilities, serving more than 30 million customers in 23 states and territories. These utilities use financial hedges to manage fuel, wholesale power, and interest rate costs—helping keep electricity bills stable and predictable for residential customers and businesses.
In its comments, LPPC warned that the proposed rules could make these risk-management tools more expensive. Because public power utilities are not-for-profit entities with no shareholders, any increase in hedging costs would ultimately be passed on to customers through higher electric bills.
LPPC specifically urged regulators to:
- Protect efficient hedging for public power utilities which directly benefits customers without compromising the safety and soundness of the banking system.
- Exempt uncleared commercial end-user derivatives from the proposed Credit Valuation Adjustment (CVA) capital requirement.
- Retain the existing exemption for commercial end-users from the SA-CCR 1.4x alpha multiplier.
These changes would preserve access to affordable risk-management tools, support stable electricity rates, and align with longstanding federal policy recognizing that commercial end-user hedging reduces risk rather than creates it.
