A 30-member stakeholder coalition of energy companies, industrial customers, publishers, exchanges and industry trade associations last week cited new data showing increased reporting to index publishers as “evidence of increased transparency in the nation’s natural gas markets.”

The Market Price Reporting Action Committee (MPRAC) also pointed to index enhancements recommended last year by the Federal Energy Regulatory Commission (FERC) as sparking a resurgence in market price reporting. Coalition member Bob Anderson, executive director of the Committee of Chief Risk Officers (CCRO), credited a year-long drive by FERC with helping to increase reporting of transaction data.

Representing industrial consumers, Alex Strawn, chairman of the Process Gas Consumers Group, (PGC), whose members consume 500 Bcf of gas a year, said his group has “confidence in the natural gas price indices published today and continue to use these indices when we structure our natural gas purchases. We believe that the natural gas indices are robust, functional, and improving, and definitely meet the needs of industrial users today.”

Two main publishers of natural gas price indices, Platts and Natural Gas Intelligence (NGI), both reported continuing increases in volumes, transactions and the number of companies reporting based on data from March bidweek, which reflects transactions in the monthly baseload market that accounts for a large part of wholesale natural gas transactions.

Simultaneously, the 10X / IntercontinentalExchange (ICE) trading system set a monthly record for the amount of bidweek gas trading on its system. And, according to the New York Mercantile Exchange, its reliance on natural gas basis contracts — which utilize published index prices in the reference price for final settlement — has grown more than four-fold from November 2002 to February 2004.

“Particularly effective was FERC’s requirement in January that companies go on the public record with whether they were — or were not — reporting. Since then, we’ve seen that more and more companies have been getting on board,” said Anderson, whose group is hosting the Action Committee. MPRAC is working to help FERC measure participation in voluntary price indices to provide the Commission with insight on the extent, depth and quality of current price reporting.

Strawn, an executive with Procter & Gamble, also cited FERC’s work on the price reporting issue. “We support FERC’s recent policy statement setting forth new requirements for those who price report and the publication of the price indices, and believe that it has had a positive impact on price reporting and transparency,” said Strawn. “PGC is encouraged by the recent announcements that many large players will once again be reporting their transactions to index providers and continues to value having a choice in indices.”

FERC, meanwhile launched its own survey later in the week to further assess index participation as well as the size and shape of the market (see related story).

Already the initial data sets from the publishers are very encouraging, said Joe Blount, president of Unocal Midstream & Trade and 2004 chairman of the Natural Gas Council (NGC), comprising the major natural gas trade associations.

Specifically, participation in the monthly surveys has quadrupled since the market’s low point in November 2002. The number of transactions submitted to Platts has gone up 256% during that time period, while volumes have more than doubled to 12.4 Bcf/d. NGI has been on a similar track and reported March 2004 volumes of 12.1 Bcf/d, compared to volumes in November 2002 of 3.9 Bcf/d for NGI (4.9 Bcf/d for Platts).

“Beyond these numbers, the NGC members are also increasingly encouraged by the fact that their price reporting now happens in a controlled and auditable environment,” Blount said. “Industry heard FERC’s message that this is a problem we need to solve. We took that message to heart and we are delivering. There are challenges that remain, but the solution has been set in motion and rapid progress will continue.”

According to Platts, at least a half dozen additional companies have started reporting gas prices within the past month, bringing the total number of companies reporting natural gas transactions to nearly 60. Of the 17 largest natural gas marketers, all but two are either reporting prices or have said they intend to resume shortly.

According to NGI data, the total number of transactions reported during the monthly bid weeks has increased 41% during the last five months. Total gas volumes reported during the same period jumped 36%. Although progress has sometimes been bumpy, February transactions increased to nearly 1,800, while volumes rose to just under 12 Bcf/d. In March, the market confirmed the February increase.

“While it is not possible to know precisely at this point how much of this increased volume is a result of higher trading volumes, and how much is a result of increased reporting of transactions to the index publishers, this latest data should go a long way toward demonstrating the quality of ongoing market price quotes. It is becoming increasingly clear that the indices are more about the fundamentals of energy supply and demand than a lack of competition or choice,” Blount said.

In addition to CCRO, PGC and the NGC, the Action Committee includes 30 companies and all the major trade organizations dealing with natural gas and electric power. The Action Committee coalition, set up in early February (see NGI, Feb. 9) to advance the process of reporting of natural gas and electric power transaction data, said it would be continuing its efforts.

Included in the coalition are the American Gas Association, Electric Power Supply Association, Edison Electric Institute, Independent Petroleum Association of America, Interstate Natural Gas Association of America and the Natural Gas Supply Association.

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