As part of a package of proposed legislation that is expected to emerge by the end of the month, California’s leading legislator examining wholesale energy market participants indicated on Tuesday that legislation will be introduced related to published natural gas prices in trade publications that compile indexes used by regulators and market participants. The new law could preclude state regulators from using the price indexes for setting electricity rates.

“We need to disconnect the [California Public Utilities Commission] standard from gas price indexes until there is some legal assurance they are accurate,” said state Sen. Joseph Dunn, chairman of the Senate’s Select Committee to Investigate Price Manipulation in the Wholesale Energy Market, as quoted in a Dow Jones Newswire report. The details of the proposed legislation are still being worked on.

Dunn’s investigative committee last year heard from a former gas index manager that gas traders allegedly misreported prices to a national trade publication’s natural gas price report. This caused the state lawmakers concern because witnesses from the CPUC testified that they rely on several published gas price indexes in determining the reasonableness of retail rates.

On a broader basis, Dunn has indicated he will be proposing several new laws under the rubric of “California De-ISO” because some of the legislation would roll back the state’s reliance on the central electric transmission grid operator in its energy system. His proposed legislation also will attempt to reregulate the power industry (see Power Market Today, Jan. 22).

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