FERC turned up the heat last week on the whole subject of price reporting as Chairman Pat Wood urged companies to get on the bandwagon before it’s too late and staff issued another request for comments to see if people believe the price surveys are improving.

On Wednesday Wood told reporters that the federal agency is on schedule to issue its latest survey of natural gas and power companies before the end of this month to determine if there has been progress made on the reporting of prices to the trade press. Meanwhile, NGI reported a sharp increase in the number of fixed-price transactions reported in the recent March bidweek period and a 41% increase in reported transactions over the last five months (see related story).

The follow up survey has to “go out by the end of March and it will go out before that time,” Wood said at press briefing following the Commission’s regular agenda meeting.

“I was actually meeting with Bill Hederman and his staff yesterday afternoon on that issue and I’ll probably see a final survey that looks a whole lot crisper and better than the one we sent out in October,” the FERC chairman went on to say. Hederman heads up FERC’s Office of Market Oversight and Investigations.

“I think that one will get a lot of data and it’s again one of those opportunities — and I’ll use it right now — to just say I think it’s real helpful for people that if they’re thinking about reporting their fixed price trade price surveys that they hurry up and do so before they get the questionnaire from us.” FERC would “really like to see a real high participation rate there,” Wood said.

Hederman in October 2003 said that the agency had received a healthy response to the first survey sent out to 300 natural gas and electric wholesale suppliers. FERC has been collecting information about the companies’ price reporting practices and trying to determine whether they are complying with the standards that were designed by the agency to thwart future abuses.

Then on Friday the FERC staff offered the industry and price developers another opportunity to comment on the current state of natural gas and electricity price formation and to say whether there has been any increase in confidence in natural gas and electric price indices.

The staff request for comments (PL03-3, AD03-7) issued Friday noted that its request was more general than the detailed survey of buyers and sellers that is due to be issued soon.

For instance, staff’s notice asks price reporting entities whether the policy statement safe harbor for good faith reporting has influenced their decision on reporting of price transaction data, and whether they have more confidence in price indices today than before issuance of the policy statement.

Companies also are asked whether they have adopted standards for reporting set out in the policy statement. And they are asked to comment on their view of the operations of the price developers or survey publishers.

In that regard FERC wants to know whether “changes by price index developers materially improved the transparency of information contained in price indices,” and whether “price index developers provide enough information about the level of trading activity at locations for which index prices are provided.”

Regarding the clarity of the published information, market participants are asked whether the price developers make clear when information is simply “market price indications” rather than indexes prepared using their stated methodology.

They also are asked to detail any specific concerns they might have regarding the quality of price indices.

Price developers or the publishers of indexes are asked to update their previous filings regarding codes of conduct, confidentiality, methodologies, volume and transaction indicators, procedures for data verification, error correction and monitoring, audit procedures, and accessibility to the Commission in the event of suspected bad faith reporting or potential manipulation.

The publishers also are asked to discuss any increases in reporting entities and fixed price transactions reported since their last response to the Commission in January. (NGI’s initial response was filed in PL03-3 Jan. 14. A copy is available on the NGI website at https://intelligencepress.com/features/ngi_pl03-3_20040114.pdf).

When it issued it policy statement late and safe harbor, FERC said it would hold off further action for an interim period, through the winter, and after that would reassess the situation. The Commission has threatened to impose mandatory price reporting if it does not believe the voluntary system is working.

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