Dallas-based Energy Transfer Partners LP (ETP) Tuesday asked FERC to issue a subpoena requiring Platts, publisher of Inside FERC’s Gas Market Report and Gas Daily, to turn over data and information related to its published natural gas price indices, which it claims go to the “core” of FERC’s allegations that the company engaged in manipulation of gas prices.

ETP requested that the Federal Energy Regulatory Commission issue the subpoena within 15 days, and that Platts, which is owned by The McGraw-Hill Companies Inc., be required to produce the data and documents no later than 30 days after issuance of the subpoena. It further asked FERC to seek enforcement of the subpoena in a federal district court, if necessary.

In late August a federal judge in Washington, DC, ordered McGraw-Hill to turn over information to the Commodity Futures Trading Commission in connection with its parallel complaint against ETP and three of its subsidiaries for attempted manipulation of physical natural gas prices at the Houston Ship Channel (HSC) delivery hub in September and November 2005 (see Daily GPI, Aug. 30).

ETP, in requesting the subpoena from FERC, is seeking, among other things, the following types of data and information for certain specific locations for relevant periods between 2000 and 2005:

“The data ETP seeks from McGraw-Hill is necessary in order to discover what data was actually used to compile the relevant indices, who provided such data, what calculations or formulas were used to develop the indices, and what if any data was excluded,” ETP said.

In a show cause order issued in July, FERC accused ETP of artificially lowering the price for prompt-month gas at the HSC to the benefit of its physical and financial positions. By lowering the price, ETP depressed the Inside FERC’s Gas Market Report HSC index on which the pricing of many physical natural gas contracts and financial derivatives are based, the Commission charged (see Daily GPI, July 27).

“Requiring McGraw-Hill to produce the documents identified in the [requested] subpoena will assist ETP in further analyzing and refuting the basis for the Commission’s allegations, at least in part,” ETP said. “Given the significant reliance that the Commission places on the Platts index, this data and information is clearly relevant to the Commission’s inquiry in this proceeding.

“ETP is entitled to discovery of this material because it provides an important basis for testing core elements of the Commission’s theory. For instance, in calculating unjust profits, the Commission apparently relies on the unsupported assumption that ETP trades account for 100% of the Inside FERC HSC index. But without knowing all the trades Platts relied on in developing the relevant indices, it is impossible to know the actual effect of ETP’s trading activity on those indices,” the company said.

Moreover, the subpoena is needed to “illuminate the highly subjective methodology Platts uses to develop the price indices it publishes,” ETP said. “Platts does not always consider all reported transactions and prices in its market price calculations. Instead, it makes subjective judgment calls concerning which reported transactions and prices will be included in its calculations, and which will be excluded from the calculations altogether as ‘outliers.’

“The Commission does not actually possess (to the best of our knowledge and belief) much, if any, of the underlying data or information that would show what data Platts relied on in developing the indices in question, and how those indices were developed. If the Commission has seen or does possess any such data, it has neither shared it with ETP nor cited in the show cause order,” the company said.

“We do not believe that the Commission’s case [against ETP] could withstand summary judgment in a federal district court without evidence supporting its allegations regarding the Inside FERC HSC index. Indeed, it is difficult to see how the Commission can claim that ETP’s alleged manipulation ‘affected the Platts Inside FERC HSC index’…if the Commission has not determined what data Platts actually relied on in developing that index.”

FERC, which began investigating ETP in October 2005, is seeking more than $167 million in total penalties and disgorgement of unjust profits from the Texas-based owner of intrastate/interstate pipeline assets and a natural gas trading affiliate.

The case against ETP, which came to the Commission’s attention through its enforcement hotline, involves the alleged manipulation of wholesale natural gas markets at the HSC and Waha, TX, trading hubs on various dates from December 2003 through December 2005.

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