In what appear to be test cases, the Federal Energy Regulatory Commission has singled out two published natural gas price indexes that were cited by interstate gas pipelines in new tariff filings to be monitored to determine whether they are in compliance with the agency’s new mandated standards for price reporting and reflect sufficient liquidity at referenced pipeline locations.

In separate orders involving Northern Natural Gas Co. and Transcontinental Gas Pipe Line Corp., the Commission directed staff to file reports within 180 days on whether the indexes referenced by the pipelines in their tariffs comply with the policy-statement standards for price reporting, and have “adequate liquidity at the referenced locations to be reliable.”

The selected price indexes are published by Natural Gas Week (NGW), a gas newsletter owned by Energy Intelligence; and Gas Daily, a Platt’s energy publication.

If the proposed indexes should fall short of FERC’s standards, the Commission said it would not require either Transco or Northern Natural to make any refunds to shippers. “Any changes the Commission requires will be prospective only,” the two orders said [RP03-533, RP03-540].

The policy statement on price discovery, which FERC voted out in late July, outlines standards that mirror the best practices developed by the industry and presented to the Commission during a technical conference as a consensus. The agency’s new policy, among other things, requires index publishers to provide complete data for each pricing location, including total volume, number of transactions, number of transaction parties, range of prices, and the volume-weighted average price. For now, the Commission is not requiring companies to submit counterparty information on their gas trades in an effort to achieve broad participation in the voluntary price reporting process.

In monitoring the indexes, the Commission has ordered staff to focus on the level of market participants reporting prices; increases (or decreases) in the level of reporting by market participants; the quality of the reporting by energy companies; the quality of the indexes; and to communicate with index publishers to obtain FERC data access when needed. The policy statement requires all pipelines, including Transco and Northern Natural, to reference in new tariff filings only those indexes that satisfy FERC’s standards.

In Transco’s tariff filing, the pipeline proposed an alternative method to determine the reference spot price for the cash-out of imbalances in its Zone 6 transportation area. Specifically, it asked for the go-ahead to use an alternate pricing point (the Dominion South Point price index) to price imbalance cash-outs for any week in which there is no reported price for its current Zone 6 pricing point (the Dominion North Point price index). The Dominion South Point price would be based on the index published by NGW.

FERC granted Transco’s request, effective June 1, subject to further action by the agency.

Separately, Northern Natural asked for permission to change the price discovery points used to calculate its Monthly Index Price (MIP). It noted Gas Daily stopped reporting in June the price information for the price discovery points that it had been using. FERC accepted the pipeline’s tariff proposal, effective July 10, subject to further action by the Commission.

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