A solid majority of close to 100 energy leaders meeting behind closed doors in Houston Monday endorsed the proposition that a competing mixture of financial, journalistic and academic institutions and FERC should collect energy price data, while Commission Chairman Pat Wood, acknowledged that current price indexes appear to function well.

The vote appeared to back up statements from independent market observers that “independent and competitive price reporting services,” rather than a detailed government tracking of prices that borders on price controls, provide the industry with the best measures of the fast-paced market.

“You need at least two, maybe three or maybe four aggressively competitive press organizations” tracking the market, veteran petroleum industry analyst Phillip Verleger told NGI recently. Verleger cited the “clear reporting of prices in the oil industry. With clear reporting you can’t hide mistakes or subsidize one business with another.” Others noted that the publication American Metals Market has been reporting steel and other metals commodity prices since the 1880s and currently competes with the London Exchange in reporting metals prices.

The straw vote Monday, announced at the end of the private meeting of Wood and nearly 100 high-level energy participants at the University of Houston, on what entity should have responsibility for collecting and publishing energy price data was split. About 8.6% voted evenly for “journalistic institutions,” FERC and “academic institutions.” Another 13% thought “financing institutions” should collect the data. Meanwhile, 61% thought a “combination” of institutions should share responsibility for data collection.

Avoiding questions about alleged manipulation of published price data, Wood said the price indexes appear to function well. “It’s what works the best,” he said. He also all but admitted that his agency has more work than it can effectively handle, when asked whether FERC might soon seek quarterly natural gas data. It now collects quarterly power data.

Wood met with the energy company executives, along with Michael Smith, executive director of the Committee of Chief Risk Officers (CCRO), UH business school professors and Craig Pirrong, director of the UH-based Global Energy Management Institute (GEMI) for several hours to discuss various energy trading issues affecting the industry.

The FERC chief said the subjects discussed revolved around the overall health, not just of the merchant industry but the entire energy industry. Infrastructure has to be added for crude oil, oil products, natural gas and power in the next 18 months, said Wood. He also said it was “essential” that credit problems be resolved. The meeting ostensibly was another move forward to improve lender, investor and public confidence in the energy trading industry.

Wood and other forum participants acknowledged a continuing crisis of confidence facing the anemic energy merchant business. But the Federal Energy Regulatory Commission chief admitted he did not yet know the answers. “I am looking for thoughtful solutions,” he said.

Last August, Wood participated in GEMI’s inaugural CEO roundtable discussion, and he unveiled GEMI’s energy risk management certificate program at UH’s Bauer College of Business.

Meanwhile, it probably will be another two weeks before the Committee of Chief Risk Officers (CCRO) releases its standards for energy price submission by companies and price indexing by publications, a CCRO spokesman said on Thursday.

The committee, which represents 33 energy companies, said in December that it expected to release the guidelines in January but the date was pushed back to this Friday (see Daily GPI, Dec. 6). However, after sharing a working draft with the staffs of FERC and the Commodities Futures Trading Commission (CFTC) and some investment banks, there was so much “feedback” that the committee decided to rework some elements of its recommendations, said CCRO spokesman Jim Pierobon.

“The rework process is going to require us to produce a new draft document that will be brought before the full committee for a vote sometime in the next week to 10 days,” said Pierobon. “We basically are working around the business clock to accomplish this. Assuming that the committee affirms the work of this group, which includes about six individuals who are doing the real heavy lifting, then soon after that we will go public and have something with ‘real teeth in it.'”

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