Objecting to FERC Chairman Pat Wood's characterization of current natural gas price surveys as "primitive," Platts, in an open letter to the chairman last Tuesday, pointed out that its surveys "are systematic and consistent," using highly sophisticated electronic price collection and processing.
Noting the chairman's repeated promotion in recent months of a data hub, Platts, publisher of indexes in Gas Daily and Inside FERC's Market Report, questioned how a data hub's price collection would be superior. He pointed out the Committee of Chief Risk Officers (CCRO) told the Senate in January that in its data hub experiment the data files being submitted by some of its member companies which are participating in the experiment "are, for the most part, identical to the files being sent by each company to various publishers for price reporting purposes." CCRO has said that half of its 31 members are considering contributing or are contributing to the experiment.
And Platts' collection processes "are far from 'informal' as you have called them." All prices are collected electronically, either by e-mail or by source uploading directly via a secure Web interface, and according to standards set out in FERC's policy statement.
The publisher said it has recently upgraded its custom-designed data management system, reducing the amount of time needed to manage the input of data, and adding more flexibility in accepting the varied formats from companies submitting data. "Platts has continually invested heavily in proprietary systems that enable it to publish daily prices within a few hours of receiving data." NGI also has developed a new system for data management with extensive programming which highlights anomalies for editors' attention and saves time on data input.
Platts pointed out that CCRO's proposal for a data hub would provide anonymous source data to publishers, which would hamper analysis and verification. When all the data-analysis tools and statistical comparisons have been made, it boils down to reliance on the price editors' years of experience and expertise in analyzing market data. A key function in this is the editor's ability to make direct contact with data providers to investigate possible errors. This would not be possible with the CCRO system, since the price quotes would be provided to the publishers without company names.
The letter, signed by Larry Foster, Platts Global Editorial Director, Power, also questioned how a hub would match buys and sells to "scrub" the data. It would not be possible to filter out double counting since reporting is voluntary and counterparties are not required, nor, in most cases, provided. He noted proponents of a data hub have said mandatory reporting and counterparty information would be required for it to be effective.
Going forward Platts "intends to work with the industry to extend the data collection standards in place for the spot physical gas and electricity markets to the forwards markets," and to pursue additional actions toward more openness in spot markets.
"For example, we believe a public list of all price survey participants would be useful, since some companies - such as large financial institutions that are assuming growing importance in the market - are not within FERC's jurisdiction. We also will be discussing the idea of publishing transaction-specific data, perhaps without company names, on a delayed basis, roughly akin to the Commission's quarterly reporting requirement for electricity marketers," Foster said.
"In sum, we at Platts believe in proving our mettle not in theory, but in the marketplace."
The CCRO's petition to FERC for Safe Harbor status had been scheduled for decision, but was pulled from the meeting agenda in early June (see NGI, June 20).
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