Voluntary price reporting reforms undertaken by the energy companies and industry publishers in recent months have renewed confidence in the system, a member of the Commodity Future Trading Commission (CFTC) said in Houston Thursday. However, Commissioner Sharon Brown-Hruska warned that Congress still could pass legislation requiring government regulation of price reporting.
Speaking with reporters following a private energy forum with about 40 business leaders at the University of Houston, CFTC’s Brown-Hruska said that the commission’s investigation in false price reporting is “98%” completed. To date, she noted that the investigation had resulted in 20 actions against energy companies and $215 million in civil fines.
“Liquidity is starting to come back…integrity is coming back” to the energy price reporting system, Brown-Hruska said. The CFTC, which has acted in cooperation with the Federal Energy Regulatory Commission, “felt we had to act, and we have do so with great vigor.”
Craig Pirrong, who directs the energy markets division of the UH Global Energy Management Institute (GEMI), said that there are “serious” issues remaining for energy price reporting. He said GEMI still supported the creation of an independent agency to gather price information, but that idea has not gained strong support from the CFTC or the energy industry.
Brown-Hruska, however, supports industry initiatives, “such as that proposed by the Committee of Chief Risk Officers, which establishes guidelines for reporting prices. I believe that such industry initiatives can be very effective in stemming the price reporting problems in a less costly fashion than by interposing a regulator into a job that the market can perform itself.”
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