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NGI: Price Reporting on the Upswing

NGI: Price Reporting on the Upswing

Voluntary natural gas price surveys have come a long way from the depths of the market crisis in 2002 as both the volume of trading and the reporting of trades has greatly increased in 2003, Natural Gas Intelligence (NGI) said Wednesday in a report to the Federal Energy Regulatory Commission.

Both the quality and the quantity of price reports has increased markedly, NGI said, estimating that it now receives reports of transactions from about two-thirds of the current large participants in the market.

"The major participants in the natural gas market, particularly large producers and a handful of the very largest utilities, have recognized the importance to their business of a robust price survey, and the potential for that survey to moderate volatility and aid in efficiently allocating resources. Also contributing to the NGI survey are some of the remaining large marketers that still engage in significant trading, and some of the new and growing marketers and smaller trading companies."

NGI did not name its data providers as part of its confidentiality policy. However, among the major companies which responded to FERC's Order 644 this week (RM03-10), the following companies have said they do report to price surveys: American Electric Power (AEP), Anadarko Energy Services, BP Energy, ChevronTexaco, Cinergy, ConocoPhillips, Consolidated Edison (NY), Coral Energy Resources, Dominion's Virginia Power Energy Marketing, Duke Energy affiliates, EnCana Marketing, ExxonMobil Gas & Power, KeySpan subsidiaries, Laclede Energy, Mirant Americas Energy Marketing, National Fuel Gas, New Jersey Natural Gas, Northern Illinois Gas, PSEG Energy Resources & Trade LLC, Questar Energy Trading, Sempra Energy Trading, Tenaska Marketing and Tractebel Energy Marketing.

Key non-reporting companies are Atlanta Gas Light's Sequent Energy, Avista Corp., Calpine, Constellation Power Source, Energy East, Enron's Portland General Electric, PacifiCorp, Entergy-Koch Trading, Michigan Consolidated, NiSource, Oneok Energy Marketing & Trading, Peoples Energy affiliates (North Shore Gas and Peoples Energy Resources), and Western Gas Resources.

Several of the large traders that had dropped out of reporting, including El Paso, Reliant and Williams, have said they plan to resume reporting in the near future.

The newsletter, published by Intelligence Press Inc., said it currently is working on gaining cooperation from about nine key companies, which have told FERC they are not reporting transactions to the price developers who NGI believes can make an important contribution to the surveys. It also is seeking to sign on three important traders which have told FERC they are reporting to price surveyors, but which are not reporting to NGI. And it is soliciting input from smaller producers and LDCs since their input can be valuable at less traded points and to round out market information and verification.

NGI's filing was in response to a Dec. 19, 2003 letter from the Commission regarding FERC's July 24, 2003 Policy Statement on Natural Gas and Electric Price Indices (PL03-3) as it relates to price developers. It includes NGI's code of conduct, a revised price survey methodology and a sample confidentiality contract. The filing is available on the NGI website at http://intelligencepress.com/features/ngi_pl03-3_20040114.pdf .

NGI's revised methodology is a much more detailed document than has been publicly provided in the past. "It is aimed at giving increased transparency to our operations as part of the drive to restore confidence in the voluntary price surveys and encourage companies to contribute to the price surveys," the publisher said.

NGI also said it expects to have a data managing system in place that will provide a paper trail of its processing and allow the performance of a meaningful audit in the second quarter of 2004. The newsletter publisher said a separate internal administrative department will audit the data itself to ensure totals are accurate, and it will contract with an outside auditing firm for a process audit.

FERC's policy statement, and a safe harbor statement forgiving inadvertent errors issued last July by both FERC and the Commodity Futures Trading Commission, were aimed at encouraging participation in the long-standing voluntary price reporting system. If that did not work, FERC said it would move to a mandatory system.

The Commission should withhold a final judgment on the voluntary price reporting system, NGI said, to allow an adequate amount of time for current investigations and the attendant notoriety to subside and for the marketing function to fully recover.

"Achieving a robust market and reporting system is going to take time. We have come a long way from the chaotic nightmare of a market that characterized much of 2002. We made major progress in 2003 and we believe that given the right environment we can make significant achievements in 2004.

"As a supplier of information to the gas industry and its customers for more than 20 years, NGI will continue to cooperate whenever possible to help restore the function, efficiency and confidence in the market and the price reports. We hope to see that same dedication and cooperation from all the companies that participate in the market and whose businesses are profoundly affected by market prices."

The newsletter is sending out another round of letters this month and making calls to companies that currently are not participating in NGI's price survey. Anyone interested in participating in the daily and/or bidweek price survey should contact Dexter Steis (dexter@intelligencepress.com) (703) 318-8848, or Mark Curran (mark@intelligencepress.com) (503) 235-1174.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

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