Testimony by the managing price editor for Natural Gas Intelligence (NGI) Friday left open to question the prosecutor’s claim that two former natural gas traders succeeded in manipulating natural gas price indexes in 2000 and 2001 by submitting false information to publishers.

Price Editor Mark Curran took the stand in the long-running trial Friday, agreeing that trade data from the traders’ companies, Dynegy and El Paso, does appear in some of the Excel spreadsheets he used to calculate NGI monthly indexes. However, it is impossible to determine definitely whether the data was actually used in the final calculations since some of the spreadsheets that have survived that period were not the final version. Also, in some cases, the spreadsheets he used to calculate monthly index prices were overwritten every month as a new price report was prepared.

While guidelines now call for at least a three-year archiving of records, there were no such rules during the time period in question, and the records that have been retrieved are not regularly dated or labeled.

In calculating the prices Curran testified that prices and volumes submitted to NGI that stood out significantly from other data were thrown out unless they could be verified as being accurate. While they might appear on the initial spreadsheet, they could be dropped in subsequent calculations.

In his attempts to determine the veracity of suspicious trade reports, Curran testified that he would examine prices and volumes reported by others for the same or related trading points as well as evaluate the market at large for the likelihood of such trades. “I don’t recall a specific instance of confirmation of lying,” Curran said of the period 2000-2001. He testified that he would not knowingly publish a price report derived from false trade data. Curran also said he was unaware of traders colluding to submit false trade data to publishers.

Earlier in the trial, which enters its third week Tuesday, U.S. attorneys introduced evidence that purports to show Michelle Valencia, a former Dynegy Inc. trader, and Greg Singleton, a former trader and vice president with El Paso Merchant Energy, submitted fake trades and false data in attempts to manipulate price indexes published by Inside FERC Gas Market Report, and NGI (see Daily GPI, July 20). Friday, prosecutors attempted to show that the same data had been incorporated into the index calculations and influenced prices published by NGI.

Previously, Price Editor Kelly Doolan for Inside FERC had testified that it was possible his indexes were influenced by data that is now in dispute, but that also was in doubt. Doolan testified that he had the editorial discretion to reject any suspicious trade data and did so (see Daily GPI, July 20).

During the trial the specter of Enron has loomed large. As part of their defense, lawyers for Valencia and Singleton say that any attempted manipulation of price indexes by their clients that did take place was merely an attempt to offset the effect of market manipulation by Enron through its Enron OnLine electronic trading platform. Throughout the trial the defense has asserted that any false reporting of trade data by Valencia and Singleton was done at the behest of their managers at Dynegy and El Paso, respectively. They also say that at the time the reporting occurred neither knew that it was illegal.

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