Municipals on the losing end of a price spike sparked by an erroneous storage report petitioned FERC commissioners Friday to act immediately to require daily storage reports. Joining industrial and chemical customers who issued their protests a day earlier, the American Public Gas Association (APGA) said consumers will pay almost a billion extra dollars for their natural gas in December due to the incorrect report, which was released just prior to Thanksgiving (see Daily GPI, Dec. 3).

“It has been clear for some time to all concerned that the EIA [Energy Information Administration] weekly report drives the market each week in an irrational fashion,” APGA said in calling for “prompt Commission action to take all reasonable steps to reduce the unwarranted price volatility.” Requiring daily reporting as proposed in the Federal Energy Regulatory Commission’s docket AD04-10 “should both reduce the likelihood of significant errors creeping into the weekly report and put a perspective on the weekly report that is currently missing.”

While it “suspects and inadvertent error is the culprit,” APGA strongly urges that the “appropriate parties review the facts associated with the inaccuracy of the November 24th storage report.” The munis also suggested FERC and EIA should prohibit the issuance of the weekly storage report on the same day that a futures contract expires.

The perfect storm on the day before Thanksgiving had EIA issuing a report of a totally unexpected large storage withdrawal of 49 Bcf, which sent the futures market soaring just hours before the expiration of the December contract. The December contract closed at $7.976, up $1.183 on the last day. Then EIA announced in its follow-on weekly report this past Thursday that the Thanksgiving eve withdrawal report should have been 17 Bcf, or 32 Bcf less than the original report. At that point, the January prompt month contract dropped to a closing quote Thursday of $6.811, which traders said was about where the December contract had been expected to end up.

The price spike affected not only monthly contracts tied to the December Nymex closing price, but also the cash price indexes, since physical basis transactions are included in the cash surveys. In issuing the revision, EIA said the erroneous report was due to incorrect reports by one or more of its storage survey participants.

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