ERC Launches Plan To Make Gas Markets Transparent, Monitor Price Information
On December 20, 2007, the Federal Energy Regulatory Commission approved a final rule in docket no. RM07-10-000 to require certain natural gas market participants to file an annual report reflecting wholesale, physical natural gas transactions. In a related action, the Commission issued a notice of proposed rulemaking in docket no. RM08-2-000 that would require interstate and certain major, non-interstate pipelines to post daily information on capacity, actual flows and scheduled flows. Both actions are taken under the Commission’s authority under the Energy Policy Act of 2005 to facilitate transparency of price and availability of supply in natural gas markets.
The final rule in docket no. RM07-10-000 requires an annual report (Form No. 552) from any buyer or seller of more than 2.2 million MMBtus of physical natural gas in a calendar year. The report will require aggregate volumes of the relevant transactions, reflecting: the total volumes of sales and purchases; the volumes of transactions that were priced at fixed prices (next day and next month delivery) and that are reportable to index publishers; and the volume of transactions that were priced by reference to a price index (next day and next month deliveries). The market participant must also indicate whether it sells gas under a blanket sales certificate and whether it reports transactions to a price index publisher. Annual informational reports are also required for de minimis sellers (less than 2.2 million MMBtus) who sold gas pursuant to blanket certificate authority under 18 CFR Part 284, Subparts J or L, but they are not required to report transaction specific information. Significantly, this rule broadens the Commission’s jurisdiction over non-jurisdictional sellers of natural gas, including sales made in intrastate commerce. This is consistent with the Commission’s previously espoused view that the Energy Policy Act if 2005 authorizes the Commission to collect information concerning gas markets from “any market participant,” not merely those that are subject to the Natural Gas Act. Form No. 552 must be filed by May 1st of each year, starting in 2009 for gas delivered in the prior calendar year.
In docket no. RM08-2-000, the Commissions seeks comment on a proposal to require both interstate and certain “major,” non-interstate pipelines to post on a daily basis capacity, scheduled flow information and actual flow information for mainline and major receipt and delivery points. Currently, interstate pipelines post daily capacities and scheduled flows, but are not required to post actual flow information. Non-interstate pipelines are not currently required to post any information regarding capacity, scheduled flows or actual flows.
The proposed rule considers “major” non-interstate pipelines to be those with annual throughput exceeding 10 million MMBtus, measured in average receipts or deliveries for the prior three years. The proposal provides two exemptions from the daily posting requirement:
1. Pipelines located entirely upstream of a processing plant;
2. Pipelines that delivered more than 95 percent of the natural gas they flowed directly to end-users.
It is unclear whether the applicability of these exemptions will be determined by considering discrete assets or the entirety of a pipeline company’s assets. The proposed rule requires posted information for “major” receipts points and delivery points, as well as mainline segments. The Commission seeks input from stakeholders as to how it should define “major” receipt and delivery points.