Most natural gas distributors and intrastate gas pipelines said they would be opposed to any FERC requirement calling for owners and operators of gas storage facilities to electronically post their storage inventory levels from the prior day. They contend that the public disclosure of their storage data on a daily basis would leave them and their customers vulnerable to higher prices.

One of the few exceptions was the American Public Gas Association (APGA), which represents municipal gas distributors. It said it believes that having “accurate storage (and line pack) data available on a daily basis will take the speculative wind” out of the Energy Information Administration’s (EIA) weekly storage report, which is released every Thursday.

“This is the most constructive suggestion that it [APGA] has heard to date for short-circuiting the misuse of the weekly storage report and dampening unwarranted price volatility. There is no better way to take the steam out of the speculation surrounding the weekly report than to have uniform daily reporting that gives all market players a current sense as to the status of storage injections and withdrawals, with the weekly report serving to verify and quantify more accurately what all market players will already know in general terms,” the APGA told FERC [AD04-10].

Most municipal gas distributors, and local distribution companies (LDCs), buy their gas based on monthly index prices, the APGA noted. The “unwarranted” price volatility that accompanies the release of the EIA storage report “wreaks havoc with the monthly indices, and has (along with other factors, such as misreporting and non-reporting of bilateral spot trades) undermined the confidence of the industry in such indices.”

APGA said it believes the emphasis put on the weekly storage reports “serves only the financial interests of commodity traders, which unabashedly use them to hype the market.”

In early August, the Federal Energy Regulatory Commission asked industry to comment on a proposal to require interstate pipelines and other 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.

The Commission suggested changes in storage reporting after it approved separate settlements with subsidiaries of Dominion Resources Inc., Nicor Inc. and NiSource Inc., which required them 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.

Louisville Gas and Electric (LGE) told FERC that its proposal “would cause LDCs to incur increased costs to develop and maintain otherwise unnecessary web sites,” and more importantly, the “disclosure of an LDC’s confidential storage position could erode the LDC’s negotiating position for gas supplies, resulting in increased costs to the LDC’s retail customers.”

FERC currently does not require LDCs, such as Louisville that are authorized to provide interstate storage services under a certificate of limited jurisdiction, to post system information or to maintain an Internet web site for such postings, the Louisville, KY-based utility said. But Commission’s proposal would expand the regulations to apply to holders of limited jurisdiction certificates — mainly LDCs like Louisville, it noted.

Given that Louisville has never provided any off-system storage services, “the proposed reporting would do nothing more than disclose information regarding the LDC’s own storage position.” This disclosure “could enable gas suppliers to detect patterns of Louisville’s operations and inventory levels and as a consequence could expose Louisville and its retail customers to unwarranted market and competitive pressures,” LGE said.

For example, “if a potential supplier knows that Louisville’s current storage inventory level is below its historical average for the time of year, it might submit higher priced proposal than would otherwise be the case.”

LGE noted that its storage data is closely guarded within the company, and is not disclosed to outside parties — with the exception of the EIA. “Within the company, only employees in Louisville’s storage operations and LDC gas supply functions, and other limited areas (such as corporate accounting and internal audit), have access to daily storage inventory information,” the utility said. In addition, the storage information is password-protected on the company’s computer systems to avoid inadvertent disclosure or unauthorized access, it noted.

The KeySpan Delivery Companies said they did not “object in principle” to the posting of storage information on a day-after basis, “so long as the posting is done in a manner that does not reveal individual customer information.” Such a disclosure “could affect the customer’s ability to obtain gas supply at the lowest possible prices,” it told FERC.

KeySpan also asked the Commission to clarify in any proposed rulemaking that storage posting requirements will not be imposed on LDCs that have peak-shaving facilities that are solely used to serve their distribution customers. KeySpan noted that it has 13 such facilities in New York, Massachusetts and New Hampshire, and to “post daily information for these facilities would be considerably burdensome.”

KeySpan Energy Delivery New York (KEDNY) owns a liquefied natural gas (LNG) storage facility in Brooklyn, NY, which is capable of storing up to 1.6 Bcf of LNG. KeySpan said it does not sell storage service in its LNG facility or use the LNG facility to make off-system sales. The LNG facility is used solely to meet the peak-day needs of KEDNY’s distribution customers, it noted.

“Given the fact that none of the KeySpan Delivery Companies sell LNG storage service or bundled LNG in interstate commerce, there is no reason to require KeySpan and other similarly situated LDCs that have storage capability used solely to serve local winter requirements to be made subject to any contemplated storage posting requirements.”

Peoples Gas Light and Coke Co. and North Shore Gas objected to the posting of an LDC’s storage data. “There would be clear and significant competitive harm from making LDC storage data public, and that harm outweighs any contribution to market transparency. Moreover, that harm is ultimately borne by the LDC’s customers. An LDC posting its specific storage position on a daily or weekly basis would give other market participants valuable information about the LDC, particularly about trends and patterns in its use of storage.”

Furthermore, there “would be significant costs — one-time and ongoing — associated with a posting requirement,” the two Chicago, IL-based utilities said.

Oneok Inc. of Tulsa, OK, chimed in, saying it didn’t believe that the posting of daily storage injection and withdrawal activity would produce efficiencies. “To the contrary, the imposition of additional reporting requirements upon storage inventory may serve to increase costs without increasing the ability to accurately forecast the natural gas supply/demand balance or prices of the future.”

Cranberry Pipeline asked FERC to exempt intrastate pipelines that operate minor storage facilities from any posting requirements. “Owners and operators of small storage facilities simply do not have the market power to materially impact the gas market. Cranberry’s storage facilities together total less than 4 Bcf of working gas capacity. This capacity is dwarfed by the much larger storage field capabilities of the interstate pipelines to whom Cranberry interconnects,” such as Columbia Gas Transmission, Dominion Transmission Inc. and Tennessee Gas Pipeline.

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