A FERC rule that would require only interstate pipeline storage operators to electronically post their daily storage inventory levels is “unlikely” to make the gas market more transparent, said a major pipeline group.

“Without storage data from the non-jurisdictional intrastate [pipeline], LDC and independent storage operators, which control almost half the national inventory, there would be a substantial defect in the data base,” said the Interstate Natural Gas Association of America (INGAA). Interstate pipes operate only about 60% of the storage capacity in the U.S., according to the Energy Information Administration (EIA).

The Federal Energy Regulatory Commission “acknowledged…that there are substantial questions as to whether it has jurisdiction to require the other major storage operators to post storage inventory information,” the pipe group said. “If the Commission is unable to require other [non-jurisdictional] storage operators to post their storage inventories, INGAA questions whether the transparency the Commission is seeking will be enhanced by data from only a little over one-half of storage operations.”

The group believes the posting of daily storage data could harm the market. “Daily storage data, unlike longer term data, is vulnerable to significant and unrepresentative day-to-day fluctuations. Therefore, from the perspective of the natural gas market, the daily reporting of such data could lead to even greater market volatility, to the detriment of gas users,” INGAA told FERC in comments filed Friday [AD04-10].

And while the Commission “correctly states that electronic metering [would permit] posting of daily storage data, not all storage operators have such capability, and the cost of installing such equipment would likely outweigh any benefits.”

If FERC chooses to issue new storage posting requirements for the industry, “it should follow as closely as possible the EIA’s current reporting requirements for those storage operators chosen by EIA to provide aggregate weekly inventory data,” INGAA said.

The Commission last month called on industry to comment on whether the agency should institute a generic rulemaking to consider requiring owners and operators of storage to post their previous day’s net aggregate actual injection or withdrawal data, actual available working gas and actual storage inventory. FERC has scheduled a technical conference for Sept. 28 to explore the issue.

FERC suggested the enhanced storage reporting requirement after it approved separate settlements ordering subsidiaries of Dominion Resources Inc., Nicor Inc. and NiSource Inc. to pay a total of $8.1 million in civil penalties and customer refunds to resolve charges that they provided preferential access to market-sensitive storage information in violation of the agency’s standards of conduct.

Williston Basin Interstate Pipeline, one of the premiere storage providers in the U.S., said it recognized the Commission’s concerns, but it didn’t believe the agency’s proposal was the answer.

While “it is true that the unauthorized release of such [storage] information could be used to game natural gas markets and be detrimental to industry participants who do not have the same access to such information…Williston Basin does not believe additional reporting addresses the issue of unauthorized releases nor will such reporting enhance market efficiency,” it said.

The Commission’s proposal is “overly proscriptive because even if the new reporting requirements [had been] in place when the non-public information was shared, those who received the information could have still gamed the markets as long as they received the information before it was publicly released (even if this advance warning [was] as little as a few minutes). This is so because while the markets change on a minute-by-minute basis, the Commission’s reporting proposal, even with its increased frequency, still has a one-day lag period. Obviously, speeding up reporting is not the answer,” Williston Basin told FERC.

“A better route to take is ensuring that the [storage] information stays confidential until it is finally released, whether daily or monthly. The Commission already has several regulations currently in place to prevent the release of non-public information…The Commission should simply enforce its existing regulations,” the pipeline said.

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