Energy Law

FERC Rules to Promote Transparency in Natural Gas Markets

By Jennifer Rinker

On December 21 the FERC adopted a Final Rule that establishes an annual reporting requirement designed, as Chairman Kelliher said, "to boost our efforts to carry out Congress? mandate [in the Energy Policy Act of 2005] to protect consumers by protecting the integrity of the markets for physical [natural] gas."

The final rule directs buyers and sellers of more than 2.2 million MMBtus of physical natural gas annually to file information pertaining to the size of physical natural gas markets, the relative importance of indexed and fixed price transactions, and the identity of major traders.   Specifically, Form No. 552 filings will report on the total volume of sales and purchases, the volumes of transactions that were priced at fixed prices, and the volumes of transactions that were reportable to price index publishers.  In addition, affected buyers and sellers must indicate whether sales of natural gas are transacted under a blanket sales certificate.  Form No. 552 must be filed by May 1 of each year, starting in 2009 for transactions delivered in the previous year.

Simultaneously, FERC issued a Notice of Proposed Rulemaking (NOPR) in which it proposes "to require both interstate and certain major non-interstate natural gas pipelines to post capacity, daily scheduled flow information and daily actual flow information" in order to achieve price transparency in natural gas sale and transportation markets.  Chairman Kelliher stated, however, that "the new proposed rule has a narrower application on major non-interstate pipelines [because it would] limit the reporting requirement to major non-interstate pipelines with significant gas flows that do not fall entirely upstream of a processing plant or deliver gas almost exclusively to retail consumers."  Commissioner Spitzer invited comments as to "whether the posting requirements for both interstate and non-major interstate pipelines should be similar" and "how the posting requirements should apply to storage facilities."   Comments on the NOPR are due in mid March.

Full post as published by Energy Legal Blog on December 27, 2007 (boomark / email).