Williams said Friday it has learned that a few traders in its natural gas trading business have provided inaccurate pricing information on natural gas trades to an energy industry publication that compiles and reports index prices.

The company said the inaccuracies came to light during an independent, internal review of its trading activities, which is being conducted in conjunction with the Commodity Futures Trading Commission’s ongoing industry-wide investigation.

Two other companies, Dynegy and AEP, have previously disclosed that some of their traders had provided false information to the trade publication price surveys. Dynegy said it had fired six employees and will discipline seven others for supplying false prices for gas trades to energy industry newsletters (see Daily GPI, Oct. 21) and AEP said it had fired five employees that were discovered to have supplied false data to the trades (see Daily GPI, Oct. 10).

Williams said it is continuing its internal review to determine the extent of the inaccurate reporting and the impact of the activity on the price index. Further investigation also will provide the company with the information it needs to determine appropriate disciplinary action. It declined to disclose any further details at this time. Williams spokesman Kelly Swan said they hoped to have the investigation completed within a month. “We have filed comments with FERC in support of the price indexes. We still believe they are very indicative of market prices.”

The company no longer provides data about its natural gas trades to industry publications as a result of significantly reduced activity in its marketing and risk management business, the Williams announcement said, pointing out that individuals in this portion of its business were among many energy industry participants who routinely provided data about trades to publications. Williams has informed the CFTC and other governmental authorities about its investigation and will continue to cooperate fully with those entities’ inquiries and investigations.

The publishers of natural gas price surveys (including NGI), have been working with industry trade groups recently to improve the quality of transaction reports they receive from companies. One suggestion has been that the pricing information come from the back office of the trading companies where all transactions are recorded, rather than from traders. Several companies have already begun supplying information from their back offices in a comma delimited format, which can be readily loaded into a database. Also, several companies have begun having their chief risk officer sign their data submissions.

NGI and Platts both have methodologies for compiling the data that exclude outliers, which would affect the range, and could potentially skew the average. Typically,NGI’s excluded outliers fall more than two (2) standard deviations outside the sample mean. Also, since the publications typically receive a large number of quotes, especially for the major points that serve as an anchor and indicator of surrounding points, it would be difficult for any one trader or company to significantly skew the averages.

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