The Federal Energy Regulatory Commission staff has recommended that the Commission set requirements for natural gas price publications to use in conducting their price surveys, which the Commission then would review before allowing jurisdictional companies to use the published prices in any rate formulas.

A discussion paper offered by staff at Wednesday’s regular meeting cited admissions by various marketing companies that they gave false information for the price surveys as evidence the products of those surveys were tainted. Staff noted that “the natural gas industry cannot function without accurate, dependable and trustworthy wholesale price information,” and proposed the following survey criteria:

Staff suggested that only after being assured that the criteria were met should the Commission approve the use of a published price in a new pipeline tariff. Besides the challenged Commission-set formula for western power prices, the only current uses of gas price indices approved by the Commission are for pipeline cash-outs, penalties and basis differentials used in negotiated rate transportation contracts.

Commissioner Nora Brownell suggested further investigation was needed. “I haven’t seen any substantive evaluation about the scope of the problem, the history of the problem, the impact of the problem. I think we have a whole lot more work to do before we come to any conclusions, so I would aggressively support getting a better understanding of what the issues really are before we try to provide an answer.” She said that answer “may not necessarily be a government fix,” citing on-going industry activities aimed at improving the credibility of the indices and/or the companies that contribute to them.

Brownell suggested holding a technical conference, possibly co-sponsored with other government agencies that are involved in gas price investigations. Wood agreed that was a good idea, adding that the staff paper was just an initial effort.

The commissioners essentially did not respond to a question from NGI during a press briefing after the meeting regarding what FERC would use as a price reference if the price survey publications did not meet specified guidelines. Nor did Wood answer a question from another reporter about whether FERC has the authority to override protection of press sources granted by the First Amendment to the Constitution.

The Commission cited a loss of confidence in the indices. However, so far the main public complaints about the price index publications, which have recorded wholesale gas prices for nearly 20 years, have been made by Congressmen and Californians, blaming everyone but themselves for the western energy crisis and attempting to get refunds of high prices. The only industry criticism has come from an onslaught of complaints from an organization called the Coalition for Energy Market Integrity and Transparency, which has Apache Corp. Chairman Raymond Plank as a prominent member, along with the American Public Gas Association, which represents a number of municipal gas systems. The group wants stable prices.

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