| Pursuant to its authority under Section 23 of the Natural Gas Act to facilitate price transparency in wholesale natural gas marktets, FERC issued a Notice of Inquiry (NOI) on increased quarterly reporting requirements for certain natural gas transactions. FERC opines that the increased reporting would increase confidence in price indices and facilitiate its ability to detect manipulation. "Specifically, the Commission is considering whether requiring all market participants engaged in sales of wholesale physical natural gas in interstate commerce to report quarterly to the Commission every natural gas transaction within the Commission’s NGA jurisdiction that entails physical delivery for the next day (i.e., next day gas) or for the next month (i.e., next month gas) will improve natural gas market transparency.25 In particular, the Commission is considering requiring market participants to report the following data elements for all jurisdictional transactions that entail physical delivery for the next day (i.e., next day gas) or for the next month (i.e., next month gas), in a standardized, electronic format and on a quarterly basis: name, address, and contact information of the trading company, name and location of its holding company, product traded (i.e., next day-delivery natural gas and next month-delivery natural gas), trade execution method (i.e., exchange or off-exchange, and name of exchange or broker) and settlement type (e.g., fixed or index priced), volume (in MMBtu) of natural gas traded, location (hub), price, and date and time of the transaction, name of the counterparty, and the name(s) of the Index publisher(s) to which each transaction was reported." FERC is also considering is considering whether to release the transactional information to the public on a quarterly basis, one month after it is reported to the Commission.
FERC has issued a series of questions for comment in the NOI as follows:
Regarding Data Elements
"1) What specific data elements should the Commission require to be filed? Should the key data elements noted above be required to be included in such submission or are there additional data elements the Commission should require? Explain why or why not. Are there data elements that the Commission should not require to be reported for commercial or burden reasons? If so, explain why.
2) Should the Commission collect this data on a quarterly basis? If not, which other reporting frequency should be considered by the Commission and why (i.e. monthly, semi-annually, annually)?
3) Should the Commission limit the transactional reporting requirements being considered to near-term delivery (i.e., next-day and next-month delivery physical natural gas products) or should the Commission consider reporting requirements for other products as well (i.e., intra-day, balance of month, other non-next day delivery strips, exercised next-month gas options, and/or futures that have delivery obligations beyond prompt month)? Explain why or why not."
Regarding Public Dissemination of Data
"1) Which of the key data elements mentioned above in paragraph 17, if any, should be made public? Explain why the Commission should or should not make certain data elements public.
2) Should the Commission mask, aggregate, or modify the reported data in any manner prior to public dissemination? Explain why the collected data should or should not be masked, aggregated, or modified.
3) If commercial sensitivity is an issue, is there an appropriate time lag for making information available (i.e., one month, two months)? What are the competitive impacts of publicly disseminating the transactional data being considered by the Commission on a lagged basis? Would public disclosure of transactional data negatively affect the competitiveness of market participants? Provide a detailed explanation as to why public disclosure of transactional data would or would not negatively affect the competitiveness of market participants."
Regarding Scope of Transactional Reporting Requirements
"1) Should the Commission consider including all sales “at wholesale and in interstate commerce”30 in the reporting requirement being considered by the Commission, including any such sales removed from the Commission’s NGA section 1(b) jurisdiction by the Wellhead Decontrol Act of 1989? Explain why or why not.
2) How could the Commission minimize any difficulties in determining whether a sale is subject to the Commission’s NGA section 1(b) jurisdiction?
3) What would be the commercial impacts, if any, of limiting the reporting requirement to sales subject to the Commission’s NGA section 1(b) jurisdiction? Would the benefits of increased market transparency from requiring the reporting of jurisdictional sales outweigh any disadvantages of limiting the reporting requirement to such sales?"
Regarding Reporting Burden
"1) What would the burden be on market participants to adapt their existing systems to be able to provide the information in compliance with new reporting requirements for market participants engaged in sales of wholesale physical natural gas in interstate commerce above a de minimis volume to report to the Commission every natural gas trade within the Commission’s NGA jurisdiction that entails physical delivery for the next day (i.e., next day gas) or for the next month (i.e., next month gas)? Estimate the incremental burden of reporting such transactional data on a quarterly basis given that much of the same information is currently gathered for and reported annually through Form No. 552. Estimate the initial reporting burdens (start up time and resources) as well as the ongoing reporting burden that would be necessary for market participants to comply with the reporting requirement being considered, the percentage of those additional costs compared with normal business operation costs, and provide an explanation and support for any estimate. Is there an additional burden for those market participants who do not report to index publishers versus those who do?
2) If the Commission decides to require transaction-specific reporting as it is considering in this Notice of Inquiry, should the Commission discontinue the existing public data reporting requirements through Form No. 552, initiated by Order No. 704, after a full year of individual transaction data are reported to the Commission? What would be the benefits and drawbacks with regard to market transparency of collecting only one or both data sets?
3) Should the Commission establish a threshold up to which market participants with a de minimis market presence would not be subject to the reporting requirements? The Annual Report of Natural Gas Transactions, Form No. 552, collects information from market participants that sold and purchased 2.2 Bcf or more of physical gas in the reporting year. Should the Commission establish a similar threshold for the reporting requirements being considered in this NOI? If so, what is a reasonable threshold and on what basis should it be established (i.e., by total quarterly sales and purchases, prior year’s annual sales and purchases)?"
Comments on the NOI are due 60 days after publication in the Federal Register. The full text of the Notice of Inquiry is available on the NEM Website. | |
Pennsylvania
