FERC voted out a final rule that imposes a major (price and volume) reporting requirement on natural gas transporters and sellers to California until September 2002 in an attempt to bring gas prices there in sync with other major markets around the country.

The reporting requirements, which the Commission proposed in late May, will target all sellers of natural gas along with interstate pipelines and local distribution companies (LDCs) that serve the California market [RM01-9]. FERC plans to collect the data on a quarterly basis (30 days after the end of a quarter) in a “standardized format,” and then aggregate it to assess whether any action is warranted with respect to the gas prices in the state.

The level and detailed nature of the market data that the Commission is seeking from gas market participants “is not insubstantial,” acknowledged Commissioner Pat Wood III. “I wish we had not been in this situation. But until we [get] a real clear understanding for why there’s substantial price differential between the selling hubs in those production areas and the consuming hubs in southern California that we do not see elsewhere in the country, I think we’re going to have to keep pushing and prodding with every regulatory tool in our chest,” he said during FERC’s regular meeting, which was the last before its August break.

“I hope to see really this problem solve itself through either market information, such as is being disclosed here, …or through enhanced investment and construction…or something else.”

The reporting requirement “is probably considered a burden by the interstate pipelines, the LDCs and other sellers of natural gas in California,” Commissioner Linda Breathitt said, but the information garnered “I believe will provide invaluable insight into transactions on the natural gas side.” The requirement will be in effect until Sept. 30, 2002, which she noted coincides with the expiration of the price mitigation that FERC established for power markets in California.

Breathitt believes the new rule “strikes the appropriate balance between our need to monitor high prices of natural gas versus any burden associated with the reporting requirement.”

Chairman Curt Hebert Jr. said FERC was not trying to make things difficult for California market participants, but rather was “just trying to understand and monitor markets” in an appropriate fashion. “I would invite the industry…to try and provide as much information as possible to get to transparency, while we’re trying to understand better [the] markets.”

Under the reporting requirement, the Commission plans to elicit data relating to the volumes and prices of sales to the California market, including transportation rates, the daily operational capacity of pipelines to and in the California market, the actual volumes flowing to and in California, and the gas sales and the transportation requirements of LDCs.

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