The Republican-crafted draft energy bill will require the Federal Energy Regulatory Commission to gather data on natural gas and electricity prices, according to Republican aides on Capitol Hill.

Details about the proposal, which is being drafted by Rep. Joe Barton (R-TX), have not been revealed yet. It’s unclear whether energy companies would be required to report prices to FERC on a quarterly or daily basis, said Barton spokeswoman Samantha Jordan. The proposal, when released, will be incorporated in the “Oil and Gas” title of the comprehensive energy bill.

Questioned about the possibility that the energy bill might mandate FERC to be data collectors, Chairman Pat Wood on Wednesday said “our druthers are for [that role] to be given to the current providers of the [price] indices,” as stated in the Commission’s policy statement that was issued in late July. FERC Commissioner Nora Brownell responded that the “role of FERC is ensuring the integrity and transparency of data,” as opposed to “us getting into the data collection business.”

The energy bill proposal is a response to the fraudulent price reporting activities of gas and electric companies. The Commodity Futures Trading Commission (CFTC) has imposed hefty penalties against a number of energy companies for reporting fake information about gas and power trades in an attempt to manipulate prices in published indexes.

Since price-reporting abuses were first uncovered last year, FERC and the gas industry have taken a number of steps to try to clean up price reporting in the industry. FERC has endorsed voluntary standards and also has proposed amendments to blanket sales certificates that would, among other things, require certificate holders to notify the Commission if they report prices to indexes. Companies that report prices are required to do so fully and accurately in compliance with codes of conduct (see Daily GPI, June 26). Companies also must retain transaction records and records of their submissions to index developers for at least three years. Penalties for failing would be disgorgement of unjust profits and possible suspension or revoking of marketing certificates.

The July policy statement directed gas companies to develop a clear code of conduct for employees to follow when reporting data to published price indexes. It also recommended that trade data reporting duties be assigned to a department that is independent of and not responsible for trading.

In addition, FERC told companies that they should report their data on an individual transaction basis and in accordance with confidentiality agreements with index publishers.

The Commission has given the natural gas market a short-term window of opportunity — through the winter — to straighten out the market’s private and confidential price reporting and index-setting system on a voluntary basis or face more the onerous government-mandated price reporting requirements, including those outlined in its proposed blanket certificate amendments . Meanwhile, FERC’s Wood has urged industry to “get back in [price] reporting business so we get more of the volumes that are actually being transacted reported to existing price collectors.”

FERC has begun surveying the price-reporting practices of market participants in order to judge progress. One currently is taking place, with responses from approximately 266 companies due on Oct. 15. A follow-up survey may occur next March.

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