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FERC Seeks More Data on Jurisdictional Gas Sales

Many of the responders to an initial notice of inquiry (NOI) on whether to require quarterly reporting of FERC-jurisdictional next-day and next-month transactions contend that the quarterly reporting requirement would not improve natural gas market transparency.

The Federal Energy Regulatory Commission (FERC) said it received 34 sets of comments in response to the NOI, which was issued on Nov. 15, 2012. The NOI proposes for the first time that buyers and sellers report, on a quarterly basis, the prices of individual transactions. Currently, FERC argues that much of the market information available to the Commission is in aggregate form and therefore does not provide full market visibility.

The Commission is considering whether quarterly reporting of every jurisdictional natural gas transaction that entails physical delivery for next day (next-day gas) or the next month (next-month gas) would provide useful information for improving natural gas market transparency. The agency also is weighing whether these reporting requirements should be in addition to, or in lieu of, the existing Form No. 552 reporting requirements.

"Many commenters stated, among other things, that the reporting requirement under consideration in the NOI would not enhance natural gas market transparency because the requirement...would apply only to natural gas sales with the Commission's NGA jurisdiction," which "comprise only a small portion of the total natural gas sales and, therefore, reporting only jurisdictional sales would not enhance natural gas market transparency much or at all," said the FERC notice [RM13-1].

Because of this, "the Commission is seeking additional information about what portion of the total natural gas sales are jurisdictional natural gas sales." FERC's Office of Enforcement intends to send a data request to certain natural gas marketers, asking them for their total annual volume of U.S. natural gas sales in 2012, and their affiliation -- if any -- with any interstate or intrastate pipelines. If affiliated with pipelines, the marketers will also be asked to estimate how much of their 2012 volumes of natural gas sales were in interstate commerce, what volume consisted of sales to end-users, such as industrials or electric generators, and what volume consisted of sales from the company's own or its affiliates' gas production.

Natural gas marketers receiving the data requests will be required to respond to FERC within 15 days, according to the Commission. "The Commission will [then] consider what, if any, further action in this docket is necessary and appropriate to enhance natural gas market transparency."

The NOI for the natural gas industry is based on Section 23 of the Natural Gas Act, which Congress in the Energy Policy Act of 2005 used to direct FERC to "facilitate price transparency." The Commission said it now has identified additional areas of the natural gas market "where increased transparency may be helpful for market participants to better understand the market activities that produce the prices that are reported to indices and to assist the Commission in detecting, and ultimately deterring, market manipulation."

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