FERC's Massey Favors Standards to Assure Reliability of Price Indexes

In an effort to restore price certainty in the markets, FERC at a minimum should implement standards requiring jurisdictional companies to show the agency that the natural gas price indexes referenced in their tariffs and contracts are reliable, said Commissioner William Massey Wednesday.

"I'd like to at least do that," he told NGI during an interview. Some believe the Federal Energy Regulatory Commission should be the "repository" of all the daily reports from energy traders to ensure the accuracy of prices, Massey noted. "I haven't made my mind up about that yet."

There are a "variety of ways to skin this cat," he said, adding that either FERC or the Energy Information Administration could collect the information on trades, or it could be left to the private sector. This issue is the subject of a "good deal of concern at FERC now" due to the role of the indexes in the market.

The price indexes for natural gas, which energy publications compile and publish, "are the foundation for well functioning gas and electricity markets," Massey believes. "We know enough now to believe false [pricing and volume] data was submitted" by gas traders to energy publications to skew index prices in their favor, and the industry must prevent this from recurring, he said.

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