National Fuel Gas Distribution Corp. in Buffalo, NY, responding to FERC’s request for comments on reporting of natural gas and power prices to index developers, said it would like to see some of the information the Commission has collected in its two surveys of industry sales/purchasing and reporting practices (PL03-3).

National Fuel said information “regarding the characteristics (e.g., industry segment) of the reporting parties would increase the usefulness of the information index developers are providing so that industry participants can make more informed conclusions about the depth and breadth of gas reporting. This is important since, ultimately, it is the industry participants who decide whether to use price indices in their contracts.”

National Fuel also said that “additional clarification from the Commission simplifying the reporting procedures may help encourage more entities to engage in voluntary reporting and, as a result, increase the reliability of price indices.”

National Fuel’s comments were one of a series from various companies and organizations, some of which appeared in Tuesday’s newsletter (see Daily GPI, March 30).

Atlanta-based AGL Resources, whose subsidiary Sequent Energy Trading buys and sells gas, said that not only does the company have “a high degree of confidence in the quality of the current price indices,” it always has had confidence in the indices.

“The company [AGLR] never believed that the price indices reports were not reflective of the depth of the market because the market has continuously consummated transactions in the normal course of business throughout the entire period under review in reliance on such indices,” AGL said.

AGL’s Sequent does not currently report prices to index developers, but it does a large amount of trading on the IntercontinentalExchange, so its trading contributes to price discovery through ICE.

Goldman Sachs, with its affiliate trading arm, J. Aron & Company, like a number of others, is looking for more additional information from the price reporting process.

“In particular, we believe that disclosure of counterparty identity is important to trade verification and elimination of double counting, at least for so long as index publishers are dependent on data providers unilaterally submitting transaction data. We are hopeful that with increased confidence in the index reporting process and in index publishers’ methodologies, the industry will increasingly embrace disclosure of counterparty identity,” Goldman Sachs stated.

The company also would like to see daily reports on activity each day of the bidweek period. “The ability to watch and contribute to index price discovery all day or throughout bidweek would significantly enhance the ability to manage index exposure.”

Goldman Sachs noted improvements in price index transparency “in response to industry pressure and guidance from the Commission.” It said the index developers (1) have publicly disclosed detailed descriptions of index methodology; (2) where practical, have moved away from publisher assessments; and (3) include more liquidity information in the form of graduated tiers for the different pricing locations.

The company noted, however, that the “information provided still falls short of the Policy Statement’s mandate to provide for both the day-ahead and month-ahead markets, total volume, number of transactions and number of transacting entities. Publishers have contended that they receive insufficient data to feel comfortable to make this information available. While we believe that the index publishers should make available whatever information they have, we also believe that the Commission and the industry can and should continue to work with the index publishers to resolve this issue.

“Like most participants in the natural gas market, we believe that there are certain locations at which a greater level of activity is desirable. That said, we do receive sufficient data to make meaningful individual decisions, by location, whether a particular market offers sufficient liquidity for us to be willing to trade it on either a fixed-price or index basis. In fact, even if 100% of market participants report all of their fixed-price transactions, disclosure of data by index publishers will not change the reality of how much or how little trading goes on at a given location,” Goldman Sachs said.

Meanwhile, Questar Energy said that for certain index pricing points, it believes there is still a lack of 100% reporting and unless everyone reports all of their fixed-price trades, any indices will continue to be questionable.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.