A joint study to be released today reveals that the price datareported by the gas industry’s three major publications – NaturalGas Intelligence, Inside Ferc and Gas Daily – is both consistentand reliable.

The study, which was sponsored by the American Gas Association(AGA) and the Interstate Natural Gas Association of America(INGAA), tracks monthly and daily prices dating back to 1992. It isscheduled to be released at the technical conference addressingFERC’s proposed auctioning of short-term capacity.

“Results of the statistical analysis show that for monthly data,the average reported price for each service has been within aboutone-tenth of one cent per MMBtu, or 0.1% of average reported gasprices. For daily data, the average reported prices for eachreporting service have been within $0.0036 per MMBtu, or about 0.2%of average reported gas prices,” according to Energy andEnvironmental Analysis, which conducted the review.

To the extent differences in published prices existed, theseoften occurred during “limited, discrete time periods, usuallyduring peak winter months when prices were fluctuating rapidly,”the study noted. It cited January-February 1996 andJanuary-February 1997 as two examples.

The AGA-INGAA report also found that capacity release, which issubject to price caps, sold substantially below the regulated ratefor primary firm capacity in 17 pipeline corridors. “In six of the17 corridors, the average value of capacity release was less than50% of the maximum rate. In 16 of the 17 corridors, the averagevalue of capacity release was less than 75% of the maximum rate,”it said.

“This study provides us with good news and bad news,” INGAAPresident Jerald V. Halvorsen noted. “The good news is thatpublished natural gas prices are transparent and reliable. The badnews is that too often prices for capacity-release transactions aresignificantly below the bundled sales price. Short-termtransactions should be reflecting the market value of natural gastransportation.”

The study further compared the basis differentials along 10transportation corridors to prices paid for capacity releases alongthose same corridors during similar periods. “The result: in sevenof 10 transportation corridors evaluated, the average value ofshort-term transportation as measured by basis differentialsexceeded the reported value of capacity release…” It concludedthat capacity-release transactions cannot reflect the market valueof capacity during periods of peak demand due to federal regulationrequiring price caps.

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