Daily Rules, Proposed Rules, and Notices of the Federal Government
Kamaria Martin (Technical Information), Office of Enforcement, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-8015,
1. In this Notice of Inquiry, the Federal Energy Regulatory Commission (Commission) seeks comments on what changes, if any, should be made to its regulations under the natural gas market transparency provisions of section 23 of the Natural Gas Act (NGA), as adopted in the Energy Policy Act of 2005 (EPAct 2005).
2. The Commission is considering amending its regulations pursuant to the natural gas market transparency provisions added to the NGA by EPAct 2005.
[(a)](3) The Commission may--(A) obtain the information described in paragraph (2) from any market participant; and (B) rely on entities other than the Commission to receive and make public the information, subject to the disclosure rules in subsection (b). * * *
(b)(1) Rules described in subsection (a)(2), if adopted, shall exempt from disclosure information the Commission determines would, if disclosed, be detrimental to the operation of an effective market or jeopardize system security.
[(b)](2) In determining the information to be made available under this section and the time to make the information available, the Commission shall seek to ensure that consumers and competitive markets are protected from the adverse effects of potential collusion or other anticompetitive behaviors that can be facilitated by untimely public disclosure of transaction-specific information." NGA SS 23.
3. This Notice of Inquiry will assist the Commission in determining whether additional changes should be made to its regulations under the natural gas market transparency provisions of section 23 of the NGA, as adopted in the EPAct 2005,
4. EPAct 2005 amended the NGA by adding the natural gas market transparency provisions at section 23.
5. In 2006 after EPAct 2005 added section 23 to the NGA, Commission staff conducted an extensive outreach effort to formulate options for implementing EPAct 2005's transparency provisions for wholesale natural gas and electric markets. As a result, the Commission used its new transparency authority to adopt additional filing and posting requirements for the sale or transportation of physical natural gas in interstate commerce in Order Nos. 704, 720, and 720-A.
6. Specifically, Order No. 704 requires that "any buyer or seller of more than a
7. In Order No. 720, the Commission required, pursuant to NGA section 23, major non-interstate pipelines to post scheduled flow information and information for each receipt and delivery point with a design capacity greater than 15,000 MMBtu per day.
8. In addition to adding the natural gas market transparency provisions to the NGA, EPAct 2005 also added section 4A, which prohibits market manipulation in the natural gas markets and authorized the Commission to prescribe rules "as necessary in the public interest or for the protection of natural gas ratepayers."
9. While Order Nos. 704 and 720 began the Commission's effort to facilitate price transparency in the natural gas markets as directed by Congress in EPAct 2005, the Commission has identified additional areas of the natural gas market in which it believes increased transparency may be necessary for market participants to better understand the market activities that produce the prices that are reported to indices. The additional information that may be necessary to facilitate price transparency may also assist the Commission in detecting, and ultimately deterring, market manipulation in the natural gas markets. As a result, the Commission is now seeking comments on whether it should amend its regulations to further facilitate price transparency in the natural gas markets. In particular, the
10. The Commission recognizes that some data are currently available to assess the validity of price signals to the market and the incentives for natural gas market manipulation. In particular, under Order No. 704, natural gas market participants that buy or sell above 2.2 Bcf annually of wholesale natural gas for next day delivery or next month delivery are required to report annually through Form No. 552 their annual sales and purchase volumes, by product (i.e., gas for next day vs. next month delivery) and by transaction type (e.g., fixed and index priced), and whether the specific transaction was reported to natural gas index price publishers. These data may be reported either by individual company affiliates as their traded volumes or by their parent company as rolled-up aggregate volumes. The data reported through Form No. 552 are publicly available.
11. However, the information that is currently available does not provide full market visibility or price transparency. Much of the data that is currently available is aggregated and does not provide transaction-specific details. For example, the transactional details of off-exchange transactions of physical natural gas are unavailable. Similarly, the data available through Form No. 552 reporting do not include information on price, date, location, or counterparty. The buyers and sellers who report through Form No. 552 are only required to report those monthly transactions that are conducted during bid week for next calendar month delivery. And, while buyers and sellers report whether a transaction was reported to an index publisher, they do not identify the index publisher to whom the transaction was reported. Moreover, the publicly available information on scheduled natural gas pipeline flows is also only available in an aggregated format.
12. The Commission is considering amending its regulations to provide greater natural gas market transparency and to assist the Commission in detecting potential 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.
13. As the Commission is considering whether it should amend its regulations pursuant to NGA section 23, it is also considering whether it should disseminate any transactional data that it would collect publicly to comply with section 23's requirement that any rules issued pursuant to section 23 provide for timely public dissemination of information about the availability and prices of natural gas.
14. The Commission believes such regular reporting of every natural gas transaction within the Commission's NGA jurisdiction that entails physical delivery for the next day or for the next month would facilitate price transparency in the natural gas market by enabling buyers and sellers of natural gas to better understand the trading and prices that contribute to the daily and monthly indices. Market participants lack a complete understanding of the actions that produce the prices that are reported to the indices. Increased confidence in these indices requires greater transparency to assure prices are a result of fundamental supply and demand forces and not the result of manipulation or other abusive market conduct.
15. Furthermore, obtaining such information would significantly increase the information available to the Commission concerning transactions in the natural gas markets thereby enhancing its ability to identify the potential for manipulation in the natural gas markets, to examine more efficiently the manipulative behavior, and to assess the effects of manipulation.
16. The Commission invites all comments on the best approaches to enhance the Commission's surveillance of natural gas markets and transparency. In particular, the Commission requests
17. Data received through exchanges and collected through other Commission reports neither provide full market visibility necessary for surveillance purposes nor facilitate price transparency, because much of it is only available in an aggregate format without transaction-specific details. Thus, the Commission is considering requiring market participants to report key data elements for all jurisdictional sales of wholesale physical natural gas in interstate commerce 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. Such key elements could include 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. With this context, the Commission requests comments on the following questions:
(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.
18. In order to satisfy section 23's requirement that the information obtained through rules issued pursuant to section 23 be publicly disseminated on a timely basis,
(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.
19. As noted above, the Commission is considering limiting the scope of the reporting requirement to only natural gas sales within the Commission's NGA section 1(b) jurisdiction that entail physical delivery for the next day or next month. Under section 1(b) of the NGA, the Commission has jurisdiction to regulate the transportation and sale for resale of natural gas in interstate commerce and any natural gas company engaged in such transportation or sale.
(1) Should the Commission consider including all sales "at wholesale and in interstate commerce"
(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?
20. The Commission recognizes that there would be some burden to market participants in instituting this requirement to report transactional data as discussed in this Notice of Inquiry. As such, the Commission is considering several conditions to the reporting requirements that would help to
(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
(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
21. The Commission invites interested persons to submit comments on the matters and issues proposed in this notice to be adopted, including any related matters or alternative proposals that commenters may wish to discuss. Comments are due January 22, 2013. Comments must refer to Docket No. RM13-1-000, and must include the commenter's name, the organization they represent, if applicable, and their address in their comments.
22. The Commission encourages comments to be filed electronically via the eFiling link on the Commission's Web site at
23. Commenters that are not able to file comments electronically must mail or hand deliver an original and copy of their comments to: Federal Energy Regulatory Commission, Secretary of the Commission, 888 First Street NE., Washington, DC 20426.
24. All comments will be placed in the Commission's public files and may be viewed, printed, or downloaded remotely as described in the Document Availability section below. Commenters on this proposal are not required to serve copies of their comments on other commenters.
25. In addition to publishing the full text of this document in the
26. From FERC's Home Page on the Internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field.
27. User assistance is available for eLibrary and the FERC's Web site during normal business hours from FERC Online Support at 202-502-6652 (toll free at 1-866-208-3676) or email at
By direction of the Commission.