In November 2012, the Federal Energy Regulatory Commission (“FERC”) issued a Notice of Inquiry seeking comment on whether to require all natural gas market participants engaged in wholesale physical sales of natural gas in interstate commerce to report quarterly detailed transaction-specific information regarding every natural gas transaction within FERC’s jurisdiction. The Wellhead Decontrol Act of 1989 and the Natural Gas Policy Act of 1978 removed from FERC’s jurisdiction “first sales” of natural gas. First sales include all sales of natural gas in the chain from producer to ultimate consumer, except those sales by an interstate pipeline, an intrastate pipeline, a local distribution company (“LDC”), or an affiliate thereof, unless the sale is attributable to volumes produced by the pipeline, LDC or affiliate. For every non-first sale that entails next-day or next-month delivery, the seller would have to report the name, address and contact information of the trading company, the name and location of its holding company, the product traded, the method of trade execution, the settlement type, the volume, location, and price, the date and time of the transaction, the name of the counterparty, and the name of the index publisher to which the transaction was reported.
AGA supports market transparency efforts that foster greater confidence in natural gas price formation. Such confidence derives from the belief that prices are the product of legitimate economic forces of supply and demand and not the product of market manipulation. AGA also supports efforts by FERC to obtain meaningful information necessary to assess whether natural gas prices accurately reflect supply and demand fundamentals and to make such information available to market participants. AGA, believes, however, that FERC’s latest proposal will not improve and may actually harm market transparency. Because FERC does not have jurisdiction over the entire wholesale natural gas market (it only has jurisdiction over non-first sales), FERC’s proposal would not capture the entire market, and may only capture sales that are not representative of the broader natural gas market (i.e., sales by pipelines and LDCs). FERC’s proposal would also unfairly impose burdens and enforcement exposure on a limited portion of the natural gas market, particularly LDCs and their affiliates. In addition, the public disclosure of detailed, transaction-specific information would reveal commercially sensitive information potentially harming LDCs and their customers. AGA believes that FERC should not move forward with this proposal.
AGA Contact: Andrew Soto, (202) 824-7215, email@example.com