With Florida citygate prices peaking at $14 on the Aug. 4 trading date and staying well above the rest of the market since mid-June, FERC said it is aware of the situation but believes "extenuating circumstances" in the state explain the price run-up.

In recent years prices at Transco's Zone 6-New York pool have usually topped the market, and as recently as late March delivered prices in Florida were around parity or as much as a quarter less than the New York numbers. However, since early May Florida prices have been running above those of New York, with the margin continually reaching a dollar or more since June 3.

The biggest Florida citygate premium over New York pricing reached $8.36 in Aug. 4 trading when Florida numbers averaging $13.66 topped Big Apple quotes of $5.30.

There's no doubt that Florida temperatures have been hot, spurring Florida Gas Transmission (FGT) to keep an Overage Alert Day continuously in effect since July 8 until ending it last Saturday. Citygate numbers fell $4.01 Monday in response.

Gulfstream Natural Gas, the other major pipeline service into Florida besides FGT, had issued Action Alerts due to low linepack in late July and early August; but obviously conditions were changing as it switched to a high-linepack Action Alert Monday and then canceled it Tuesday.

The Federal Energy Regulatory Commission (FERC) said it is well aware of what is going on.

"We monitor markets all of the time. We've noticed that there has been a change [in prices] in Florida and there are extenuating circumstances that we feel have led to the price hike," Tamara Young-Allen, a spokeswoman for FERC, told NGI. "We have not announced any investigations at this point, but we do look at all markets. Florida has had extremely high temperatures, so the gas demand has been raised. There have also been two nuclear plant outages, so the gas pipelines that serve that area have been tasked to provide even more service. They are now constrained. We think these are factors that have influenced the prices there."

Young-Allen noted that the three pipes that serve the state -- FGT, Cypress and Gulfstream -- "are all at full capacity" because the gas is needed for gas-fired power generation in the wake of the outages at the 1,678 MW St. Lucie and the 914 MW Crystal River nuclear power plants.

Young-Allen emphasized that the Commission is monitoring the situation but that no formal investigation has been launched.

A Florida gas buyer welcomed the monitoring by FERC, but said her company not only did not get hurt by the high citygate prices but was able to profit from it. It was a net seller during the peak quotes, taking some gas out of storage and using its transportation capacity to purchase production-area gas and disposing of it into the citygate market.

The buyer noted that delivered prices have plummeted since FGT's Overage Alert Day ended and gotten closer to the market norm, although they still exceeded New York quotes by 64 cents Monday. Citygate prices were still falling by another 30 cents or so Tuesday, she said.

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