In its first analytical report to the full commission, FERC’s Office of Market Oversight and Investigations (OMOI) warned that one of the most significant concerns currently facing the industry and regulators is the “continuing potential for manipulation” of the gas market. OMOI Acting Director Lisa L. Carter said there are 67 open investigations and the number is increasing.

In its 2003 Natural Gas Market Assessment, the OMOI outlined for the commissioners five current categories of natural gas price manipulation that are being investigated:

Companies active in the natural gas marketplace must take action, she said. Carter noted that some industry companies have responded to reports of and concerns about manipulation by establishing internal controls, conducting audits and reporting inappropriate or suspicious behavior to authorities. Collective industry efforts on ethics also are taking place, she added, mentioning actions by the Committee of Chief Risk Officers and the Electric Power Supply Association.

Meanwhile, she said the Commission has been holding internal energy market briefings, developed market metrics for gas and electricity and is operating a toll-free enforcement hotline. FERC also has increased coordination with other regulatory bodies. Nevertheless, continued vigilance is necessary in light of the possibility of continuing manipulation.

Carter also warned the Commission of several other serious problems facing the natural gas market: deteriorating financial conditions, credit exposure, shaken confidence in price discovery methods, and the continuing need for efficient investment in infrastructure.

“The North American natural gas marketplace has shown itself to be remarkably robust through the many trials of recent years,” the report says. “Nevertheless, wholesale natural gas markets face challenges as 2003 gets underway.” To overcome these challenges, the report recommends that both industry participants and regulators “seek out and aggressively promote solutions to assure efficient, cost-effective and reliable natural gas service to all U.S. customers.”

Commission Chairman Pat Wood called the problems “manageable.” He also noted that FERC is solely responsible for solving only one of them: market manipulation. The staff presentation is available on the FERC web site at https://www.ferc.gov/market-oversight/a-3.pdf.

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