FERC Chairman Pat Wood said he plans to reserve judgment on whether confidence has been restored in published price indexes until industry surveys are returned and an agency staff report based on the survey responses is completed.

FERC “Commissioners and I look forward to the April 30 staff report for further indications of the progress made in restoring confidence in price indices and voluntary price formation, as well as on the adequacy of indices referenced in [individual] tariffs,” he responded in a March 15 letter to Sen. Jeff Bingaman of New Mexico, the ranking Democrat on the Senate Energy and Natural Resources Committee.

But if “the information being gathered by the Commission’s staff does not show progress…toward accurate, reliable and transparent price signals in energy markets, further steps may be needed,” Wood wrote. Although he did not spell it out in the letter, the chairman in the past has vowed to mandate that companies report their transactions to index developers if not enough energy companies do it voluntarily.

“The industry is well aware of the Commission’s keen interest in this issue and of my determination to do everything in the Commission’s power to restore confidence in natural gas and electricity price formation.”

Bingaman requested that Wood provide an update on whether the Commission’s July 2003 policy statement has bolstered confidence in and improved the transparency of the natural gas and electricity price indexes, which had been the target of attempted manipulation by energy companies in past years.

“While the current level of reported transactions [to price index publishers] still remains below that of a few years ago, news of increased levels of reporting is encouraging,” Wood told Bingaman.

In particular, he pointed to a March 10 announcement of the 30-member Market Price Reporting Action Committee, which cited new data showing increased reporting to index publishers as “evidence of increased transparency in the nation’s natural gas markets.” (see Daily GPI, March 11)

He noted that “a number of associations and companies previously active in developing industry consensus have formed [the] Market Price Reporting Action Committee to keep this issue prominent with market participants.”

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