Proposed Policy Statement Revising FERC’s Policy Statement on Natural Gas and Electric Price Indices News Release

173 FERC ¶ 61,237

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

[Docket No. PL20-3-000]

Actions Regarding the Commission’s Policy on Price Index Formation and Transparency,

and Indices Referenced in Natural Gas and Electric Tariffs

(Issued December 17, 2020)

AGENCY: Federal Energy Regulatory Commission.

ACTION: Proposed revised policy statement on natural gas and electric indices.

SUMMARY: The Commission’s price index policy is set forth in its Policy Statement on

Natural Gas and Electric Price Indices. The Commission proposes several revisions to

that policy to encourage more market participants to report their transactions to price

index developers and to provide greater transparency into the natural gas price formation

process to increase confidence in the accuracy and reliability of wholesale natural gas

prices. First, the Commission proposes to allow data providers (market participants that

report transaction data to price index developers) to report either their non-index based

next-day natural gas transactions, their non-index based next-month natural gas

transactions, or both, to price index developers. In addition, the Commission proposes

to encourage data providers to report to all available Commission approved price index

developers and also allow data providers to self-audit on a biennial basis. The

Commission also proposes to modify the Commission’s standards to remain an approved

natural gas price index developer such that price index developers should: indicate

whether a published index price is assessed in their published indices and obtain

s to report to all available Commission approved price index

developers and also allow data providers to self-audit on a biennial basis. The

Commission also proposes to modify the Commission’s standards to remain an approved

natural gas price index developer such that price index developers should: indicate

whether a published index price is assessed in their published indices and obtain

Docket No. PL20-3-000

ii

recertification in order for their indices to continue to be included in FERC-jurisdictional

tariffs. Finally, the Commission proposes to clarify the review period for assessing the

liquidity of price indices submitted for reference in FERC-jurisdictional tariffs.

DATES: Initial Comments are due [INSERT DATE 90 days after date of publication

in the Federal Register].

ADDRESSES: Comments, identified by docket number, may be filed electronically at

http://www.ferc.gov in acceptable native applications and print-to-PDF, but not in

scanned or picture format. For those unable to file electronically, comments may be filed

by mail addressed to: Federal Energy Regulatory Commission, Secretary of the

Commission, 888 First Street, N.E., Washington, DC 20426. Hand-delivered comments

must be delivered to: Federal Energy Regulatory Commission, 12225 Wilkins Avenue,

Rockville, Maryland 20852. The Comment Procedures Section of this document

contains more detailed filing procedures.

FOR FURTHER INFORMATION CONTACT:

Evan Oxhorn (Legal Information)

Office of the General Counsel

888 First Street, NE

Washington, DC 20426

(202) 502-8183

Evan.Oxhorn@ferc.gov

Eric Primosch (Technical Information)

Office of Energy Policy and Innovation

Federal Energy Regulatory Commission

888 First Street, NE

Washington, DC 20426

ocument

contains more detailed filing procedures.

FOR FURTHER INFORMATION CONTACT:

Evan Oxhorn (Legal Information)

Office of the General Counsel

888 First Street, NE

Washington, DC 20426

(202) 502-8183

Evan.Oxhorn@ferc.gov

Eric Primosch (Technical Information)

Office of Energy Policy and Innovation

Federal Energy Regulatory Commission

888 First Street, NE

Washington, DC 20426

(202) 502-6483

Eric.Primosch@ferc.gov

SUPPLEMENTARY INFORMATION:

173 FERC ¶ 61,237

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: James P. Danly, Chairman;

Neil Chatterjee and Richard Glick.

Actions Regarding the Commission’s Policy on Price

Index Formation and Transparency, and Indices

Referenced in Natural Gas and Electric Tariffs

Docket No. PL20-3-000

PROPOSED REVISED POLICY STATEMENT ON NATURAL GAS PRICE INDICES

(Issued December 17, 2020)

The Commission’s price index policy is set forth in its Policy Statement on

Natural Gas and Electric Price Indices.1 We propose several revisions to that policy to

encourage more market participants to report their transactions to price index developers

and to provide greater transparency into the natural gas price formation process to

increase confidence in the accuracy and reliability of wholesale natural gas prices. First,

we propose to allow data providers (market participants that report transaction data to

price index developers) to report either their non-index based next-day natural gas

transactions, their non-index based next-month natural gas transactions, or both, to price

index developers

e formation process to

increase confidence in the accuracy and reliability of wholesale natural gas prices. First,

we propose to allow data providers (market participants that report transaction data to

price index developers) to report either their non-index based next-day natural gas

transactions, their non-index based next-month natural gas transactions, or both, to price

index developers. In addition, we propose to: (1) encourage data providers to report to

all available Commission approved price index developers and (2) allow data providers to

1 104 FERC ¶ 61,121 (Initial Policy Statement), clarified, Order on Clarification

of Policy Statement on Natural Gas and Electric Price Indices, 105 FERC ¶ 61,282

(2003) (2003 Clarification Order), clarified, Order Further Clarifying Policy Statement

on Natural Gas and Electric Price Indices, 112 FERC ¶ 61,040 (2005) (2005

Clarification Order) (collectively, Policy Statement).

Docket No. PL20-3-000

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self-audit on a biennial basis.2 We also propose to modify the Commission’s standards to

remain an approved natural gas price index developer such that price index developers

should: (1) indicate whether a published index price is assessed in their published indices

and (2) obtain recertification in order for their indices to continue to be included in

FERC-jurisdictional tariffs. Finally, we propose to clarify the review period for assessing

the liquidity of price indices submitted for reference in FERC-jurisdictional tariffs. We

seek comment on these proposed revisions.

I.

Background

A.

The Use of Natural Gas Price Indices in Commission Jurisdictional

Activities

Natural gas price indices play a vital role in the energy industry, as they are used

to price billions of dollars of natural gas and electricity transactions annually in both the

physical and financial markets

nce in FERC-jurisdictional tariffs. We

seek comment on these proposed revisions.

I.

Background

A.

The Use of Natural Gas Price Indices in Commission Jurisdictional

Activities

Natural gas price indices play a vital role in the energy industry, as they are used

to price billions of dollars of natural gas and electricity transactions annually in both the

physical and financial markets. A natural gas price index is a weighted average price

derived from a set of fixed-price natural gas transactions3 within distinct geographical

boundaries that market participants voluntarily report to a price index developer.

2 S&P Global Platts (Platts), Natural Gas Intelligence (NGI), Argus Media, and

Natural Gas Week are examples of price index developers.

3 The term “fixed-price natural gas transactions” refers to fixed-price next-day

delivery, fixed-price next-month delivery, and physical basis transactions (for next-month

delivery). These transaction types are defined in the FERC Form No. 552: Annual

Report of Natural Gas Transactions (FERC Form No. 552) instructions. The FERC Form

No. 552 requires market participants that annually buy or sell more than 2.2 trillion

British Thermal Units (Btu) of physical natural gas to provide aggregated data related to

their fixed-price, physical basis, Nymex plus, and index-based transactions made in the

next-day and next-month (bidweek) markets

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Natural gas price indices serve as a proxy for the locational cost of natural gas in

the daily and monthly markets, as many market participants reference natural gas index

prices in their physical and financial transactions. Interstate natural gas pipelines, public

utilities, Independent System Operators (ISOs), and Regional Transmission

Organizations (RTOs) reference natural gas price indices in their FERC-jurisdictional

tariffs for various terms and conditions of service

n

the daily and monthly markets, as many market participants reference natural gas index

prices in their physical and financial transactions. Interstate natural gas pipelines, public

utilities, Independent System Operators (ISOs), and Regional Transmission

Organizations (RTOs) reference natural gas price indices in their FERC-jurisdictional

tariffs for various terms and conditions of service. State commissions also use natural

gas price indices as benchmarks when reviewing the prudence of natural gas or electricity

purchases. Finally, many natural gas financial derivative contracts that are used in

hedging and speculation settle against natural gas price indices.

Given that natural gas price index developers use physical fixed-price natural gas

transactions to calculate the price of published natural gas price indices, it is important

that transaction reporting is robust and that index development is transparent. The

significant role played by natural gas indices became apparent during the 2000-2001

Western Energy Crisis, when companies intentionally misreported transactions to price

index developers to manipulate natural gas index prices in the Western United States.4

Subsequently, in the Energy Policy Act of 2005 (EPAct 2005), Congress amended the

Natural Gas Act (NGA)5 to give the Commission additional authority with respect to

natural gas price indices. Pursuant to this authority, the Commission established

4 See Initial Policy Statement, 104 FERC ¶ 61,121 at P 8 & n.1.

5 Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 691-692 (2005)

(codified in relevant part at Natural Gas Act of 1938, 15 U.S.C. 717c-1, 717t-1, 717t-2).

atural Gas Act (NGA)5 to give the Commission additional authority with respect to

natural gas price indices. Pursuant to this authority, the Commission established

4 See Initial Policy Statement, 104 FERC ¶ 61,121 at P 8 & n.1.

5 Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 691-692 (2005)

(codified in relevant part at Natural Gas Act of 1938, 15 U.S.C. 717c-1, 717t-1, 717t-2).

Docket No. PL20-3-000

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guidelines to ensure that natural gas price indices that are used in tariffs are robust, free

from manipulation, and reflect market fundamentals.6

Subsequently, market participants increased the reporting of their fixed-priced

natural gas transactions to price index developers, which resulted in greater confidence in

those indices. However, after 2010, the estimated traded volume of fixed-price natural

gas transactions reported to price index developers began to decline significantly.7 FERC

Form No. 552 data show that the estimated volume of fixed-price transactions voluntarily

reported to price index developers declined by approximately 54% from 2010 until

2019.8 At the same time that fixed-price reporting to price index developers decreased,

the traded volume of natural gas transactions that referenced natural gas indices, known

as index gas, increased. For example, FERC Form No. 552 data showed that index gas

increased from 69% of the traded volumes in the U.S. physical natural gas market in

6 Price Discovery in Natural Gas and Elec. Markets, 109 FERC ¶ 61,184 (2004)

(Price Index Order).

7 Two index developers now include fixed-price transactions from the

InterContinental Exchange (ICE) to increase the liquidity of their indices. Staff analysis

of the estimated volumes reported to index developers does not include that supplemental

information from ICE.

8 The Commission must estimate the volumes reported to price index developers

on the FERC Form No. 552 because FERC Form No

Two index developers now include fixed-price transactions from the

InterContinental Exchange (ICE) to increase the liquidity of their indices. Staff analysis

of the estimated volumes reported to index developers does not include that supplemental

information from ICE.

8 The Commission must estimate the volumes reported to price index developers

on the FERC Form No. 552 because FERC Form No. 552 filers can provide aggregated

data for themselves and their affiliates, some of whom may or may not report to index

developers. Commission staff estimates this volume by calculating the average of the

minimum volume reported (filers with affiliates that all indicate that they report to price

index developers) and the maximum possible volume reported (filers with at least one

affiliate that indicates that it reports to price index developers).

Docket No. PL20-3-000

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2010 to 82% in 2019. Figure 1 shows estimated physical natural gas volumes reported to

index developers based on FERC Form No. 552 data.

Commission staff held a technical conference on June 29, 2017, which addressed

natural gas index liquidity and transparency issues and potential actions the Commission

could consider taking to increase both the volume of transactions reported to natural gas

price index developers and the transparency of the physical natural gas price formation

process.9

B.

Standards for Indices used in Jurisdictional Tariffs

The Commission has a statutory obligation to ensure that the rates for energy

transactions within its jurisdiction are just and reasonable. Under the NGA and Federal

Power Act (FPA), the Commission’s jurisdiction extends to sales of electricity and

9 Docket No. AD17-12-000. A staff-led technical conference addressing similar

issues was held in 2003 in Docket No. AD03-7-000.

l Tariffs

The Commission has a statutory obligation to ensure that the rates for energy

transactions within its jurisdiction are just and reasonable. Under the NGA and Federal

Power Act (FPA), the Commission’s jurisdiction extends to sales of electricity and

9 Docket No. AD17-12-000. A staff-led technical conference addressing similar

issues was held in 2003 in Docket No. AD03-7-000.

Docket No. PL20-3-000

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natural gas for resale in interstate commerce, interstate transmission of electricity and

natural gas, and the related pricing mechanisms within jurisdictional tariffs.10 One way

the Commission ensures just and reasonable jurisdictional rates is through the review and

approval of natural gas price indices referenced in Commission approved pipeline and

ISO/RTO tariffs.

An interstate natural gas pipeline, public utility, ISO, or RTO proposing to include

a price index in its FERC-jurisdictional tariff bears the burden of supporting its proposed

index.11 In the Price Index Order,12 the Commission stated that, when a pipeline or

utility proposes to use a new natural gas or electric price index reference in a

jurisdictional tariff or to change an existing natural gas price index reference, the

Commission would apply a presumption that the proposed price index location will result

in just and reasonable rates if the pipeline or ISO/RTO: (1) proposes to use an index

location published by one of the price index developers that the Commission has

previously found to meet the developer criteria established in the Policy Statement, and

an existing natural gas price index reference, the

Commission would apply a presumption that the proposed price index location will result

in just and reasonable rates if the pipeline or ISO/RTO: (1) proposes to use an index

location published by one of the price index developers that the Commission has

previously found to meet the developer criteria established in the Policy Statement, and

(2) demonstrates that the price index location meets one or more of the applicable

10 See, e.g., 15 U.S.C. 717(b)-717(d); Natural Gas Policy Act of 1978, 15 U.S.C.

3431(a)(1)(A)-3431(a)(1)(D); 16 U.S.C. 824(b)-824(f)

11 See, e.g., Northern Natural Gas Co., 104 FERC ¶ 61,182, at P 10 (2003)

(Northern Natural).

12 Price Index Order, 109 FERC ¶ 61,184 at P 68 (citing Northern Natural, 104

FERC ¶ 61,182 at P 10).

Docket No. PL20-3-000

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liquidity criteria for the appropriate review period.13 If parties to the proceeding protest

the use of the proposed price index location, they are required to support the protest with

evidence that the selected location does not meet the criteria or show good reason why

the location will not result in just and reasonable rates and should not be used. An

interstate natural gas pipeline or public utility may also file to reference a price index

location that falls outside of these two parameters. In such a case, the pipeline or utility

bears the burden of showing that the price index location will result in just and reasonable

rates and must support its filing accordingly.14

Under the Policy Statement, reporting by market participants to price index

developers is voluntary

r public utility may also file to reference a price index

location that falls outside of these two parameters. In such a case, the pipeline or utility

bears the burden of showing that the price index location will result in just and reasonable

rates and must support its filing accordingly.14

Under the Policy Statement, reporting by market participants to price index

developers is voluntary. For those market participants that choose to report to price index

developers, in the Policy Statement, the Commission set forth the following minimum

reporting standards for data providers: (1) code of conduct – adopting and making public

a code of conduct that employees will follow when buying and selling natural gas or

reporting data to index developers; (2) source of data – having trade data reported by a

department of the company that is independent from and not responsible for natural gas

trading; (3) data reported – reporting each bilateral transaction between non-affiliated

companies which details the price, volume, whether it was a purchase or a sale, the

delivery/receipt location, and whether it was a next-day or next-month transaction;

(4) error resolution process – cooperating with the error resolution process adopted by the

13 Id. P 68.

14 Id. P 69.

Docket No. PL20-3-000

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index developer in a timely manner; and (5) data retention and review –establishing

minimum time periods for retaining all relevant data related to reported trades.15 These

standards are designed to create a uniform process of reporting which provides price

index developers assurance that the data they receive from data providers is accurate and

truthful

69.

Docket No. PL20-3-000

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index developer in a timely manner; and (5) data retention and review –establishing

minimum time periods for retaining all relevant data related to reported trades.15 These

standards are designed to create a uniform process of reporting which provides price

index developers assurance that the data they receive from data providers is accurate and

truthful. If the data provider can demonstrate that it has adopted and followed the

standards for reporting set forth in the Commission’s Policy Statement, it will benefit

from a rebuttable presumption that it has submitted its transactions accurately, timely,

and in good faith (Safe Harbor Policy).16

Under the Policy Statement, becoming a Commission-approved price index

developer is also voluntary. Prior to the Policy Statement, the Commission evaluated on

a case-by-case basis whether a price index developer’s price index was appropriate for

inclusion in a FERC-jurisdictional tariff. In the Policy Statement, the Commission set

forth minimum standards that, if met, establish a presumption that a price index

developer’s index location will result in just and reasonable charges. These standards for

index developers include the following elements: (1) a code of conduct and

confidentiality –publicly disclosing how it will obtain, treat, and maintain price data,

including how it calculates its indices while also entering into confidentiality agreements

with its data providers; (2) completeness – publishing all available trade information for

each hub including: total volume, the number of transactions, the high/low range of

15 Initial Policy Statement, 104 FERC ¶ 61,121 at P 34.

16 Id. P 37.

sing how it will obtain, treat, and maintain price data,

including how it calculates its indices while also entering into confidentiality agreements

with its data providers; (2) completeness – publishing all available trade information for

each hub including: total volume, the number of transactions, the high/low range of

15 Initial Policy Statement, 104 FERC ¶ 61,121 at P 34.

16 Id. P 37.

Docket No. PL20-3-000

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prices, and the weighted average price; (3) data verification, error correction, and

monitoring – verifying its data by matching purchases with sales and contacting data

providers over any discrepancies as well as publishing a notice of the corrected price if a

reported price is significantly erroneous; (4) verifiability – participating in an

independent audit or verification of its processes annually and making the results of that

audit public; and (5) accessibility – providing all interested customers reasonable access

to the data in a timely fashion and providing the Commission access to the data to

conduct an investigation.17 The purpose of these standards is to ensure that market

participants and regulators have confidence that natural gas price indices published by

price index developers that are referenced in FERC-jurisdictional tariffs are based on

consistent, transparent and verifiable processes and methodologies that help to ensure

reliable prices.

Under the Commission’s market behavior rules,18 marketers and interstate

pipelines making jurisdictional sales of natural gas and jurisdictional sellers of electric

energy that have or are seeking market-based rate authority that elect to report to price

17 Id. P 33.

18 The natural gas market behavior rules were codified in 2003 in Order No. 644.

Amendment to Blanket Sales Certificates, Order No. 644, 105 FERC ¶ 61,217 (2003),

reh’g denied, 107 FERC ¶ 61,174 (2004) (codified at 18 CFR 284.288, 18 CFR 284.403);

Order Amending Market-Based Rate Tariffs and Authorizations, 105 FERC ¶ 61,218

t-based rate authority that elect to report to price

17 Id. P 33.

18 The natural gas market behavior rules were codified in 2003 in Order No. 644.

Amendment to Blanket Sales Certificates, Order No. 644, 105 FERC ¶ 61,217 (2003),

reh’g denied, 107 FERC ¶ 61,174 (2004) (codified at 18 CFR 284.288, 18 CFR 284.403);

Order Amending Market-Based Rate Tariffs and Authorizations, 105 FERC ¶ 61,218

(2003), order on reh’g and clarification, 107 FERC ¶ 61,175 (2004). The electric market

behavior rules were codified later in 2006. Conditions for Public Utility Market-Based

Rate Authorization Holders, Order No. 674, 114 FERC ¶ 61,163 (2006) (codified at 18

CFR 35.41(c)).

Docket No. PL20-3-000

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index developers must submit accurate and factual information and report in a manner

consistent with the procedures set forth in the Policy Statement.19

II.

Discussion

As part of its mandate to ensure just and reasonable rates in the wholesale electric

and natural gas markets, the Commission reviews its existing policies and regulations

from time to time. The Commission’s policies and regulations related to natural gas and

electric price indices date to the early 2000s and were adopted in response to a lack of

confidence in price indices. Since then, the physical trading of natural gas, the reporting

of those transactions, and the development of price indices by price index developers has

changed.

Natural gas price indices are calculated by the voluntary reporting of fixed-price

transactions to price index developers; however, in recent years, such reporting has

declined. FERC Form No. 552 data show that the estimated volume of fixed-price

transactions voluntarily reported to price index developers declined by approximately

54% from 2010 until 2019. In addition, FERC Form No

.

Natural gas price indices are calculated by the voluntary reporting of fixed-price

transactions to price index developers; however, in recent years, such reporting has

declined. FERC Form No. 552 data show that the estimated volume of fixed-price

transactions voluntarily reported to price index developers declined by approximately

54% from 2010 until 2019. In addition, FERC Form No. 552 data show that an

increasing amount of physical natural gas transactions are being priced off of indices

while the prices of those indices were being calculated based on a decreasing amount of

volume of fixed-price transactions estimated to be reported to price index developers.

19 18 CFR 35.41; 18 CFR 284.288(a); 18 CFR 284.403(a); Initial Policy

Statement, 104 FERC ¶ 61,121 at P 37. These standards are also the subject of a Notice

of Proposed Rulemaking that is being issued concurrently with the instant order, in which

the Commission proposes to codify the Safe Harbor Policy at 18 CFR 35.41(c),

284.288(a), and 284.403(a) (2020), 173 FERC ¶ 61,238 (2020).

Docket No. PL20-3-000

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For example, FERC Form No. 552 data show that in 2019, index gas represented

82% of the traded volumes in the U.S. physical natural gas market compared to 2010

when index gas represented 69% of such transactions.

As a result of these changes, on June 29, 2017, Commission staff held a technical

conference that addressed index liquidity and transparency and potential actions the

Commission could consider taking in order to increase both the volume of transactions

reported to natural gas price index developers and the transparency of the physical natural

gas price formation process. Among other things, Commission staff sought industry

input on the existing policies for natural gas price index developers and the use of price

indices in jurisdictional tariffs set forth in the Policy Statement and the Price Index

Order

ase both the volume of transactions

reported to natural gas price index developers and the transparency of the physical natural

gas price formation process. Among other things, Commission staff sought industry

input on the existing policies for natural gas price index developers and the use of price

indices in jurisdictional tariffs set forth in the Policy Statement and the Price Index

Order.

Post-technical conference comments suggested policy changes would encourage

more parties to engage in price reporting and result in more reliable, robust, and

transparent index formation.20 Commenters suggested several revisions to the

Commission’s Policy Statement. These proposed revisions included: (1) changes to the

Commission’s Safe Harbor Policy (including placing the Safe Harbor Policy into the

20 American Gas Ass’n (AGA), Comments, Docket No. AD17-12-000, at 3;

American Public Gas Ass’n, Comments, Docket No. AD17-12-000, at 3; Edison Electric

Institute, Comments, Docket No. AD17-12-000, at 8; Energy Intelligence Group, Inc.,

Comments, Docket No. AD17-12-000, at 1; NGI, Comments, Docket No. AD17-12-000,

at 8; Natural Gas Supply Ass’n, Comments, Docket No. AD17-12-000, at 12; Platts

Comments, Docket No. AD17-12-000, at 2; Process Gas Consumers Group, Comments,

Docket No. AD17-12-000, at 9; Tenaska Marketing Ventures, Comments, Docket No.

AD17-12-000, at 4 (all filed July 31, 2017); and Rice Energy Marketing LLC,

Comments, Docket No. AD17-12-000, at 4 (filed Aug. 1, 2017).

et No. AD17-12-000,

at 8; Natural Gas Supply Ass’n, Comments, Docket No. AD17-12-000, at 12; Platts

Comments, Docket No. AD17-12-000, at 2; Process Gas Consumers Group, Comments,

Docket No. AD17-12-000, at 9; Tenaska Marketing Ventures, Comments, Docket No.

AD17-12-000, at 4 (all filed July 31, 2017); and Rice Energy Marketing LLC,

Comments, Docket No. AD17-12-000, at 4 (filed Aug. 1, 2017).

Docket No. PL20-3-000

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Commission’s regulations); (2) allowing market participants to report just their next-day

or their next-month transactions; (3) encouraging data providers to report to all available

price index developers; and (4) changes to the data provider price index data audit

structure.

With information gained at the technical conference, we propose several revisions

to the Commission’s natural gas price index policy applicable to natural gas data

providers. These changes are intended to reduce the reporting burden and, thereby,

increase reporting to natural gas price index developers. Increased price reporting would

contribute to the robustness of the price indices which would lead to more accurate and

reliable index prices referenced in jurisdictional tariffs.

We also propose revisions to the Policy Statement applicable to natural gas price

index developers. These revisions are intended to reflect changes in how such developers

form natural gas price indices and to ensure that natural gas price index developers

continue to adhere to the Commission’s policies. These revisions will increase the

transparency of the natural gas price formation process and maintain industry confidence

in the price indices. Finally, we propose to clarify the timeframe over which to assess the

liquidity for natural gas and electric price indices referenced in natural gas and electric

tariffs. This revision would ensure that natural gas price indices referenced in

Commission jurisdictional tariffs are liquid at the time of attestation

price formation process and maintain industry confidence

in the price indices. Finally, we propose to clarify the timeframe over which to assess the

liquidity for natural gas and electric price indices referenced in natural gas and electric

tariffs. This revision would ensure that natural gas price indices referenced in

Commission jurisdictional tariffs are liquid at the time of attestation. We seek comment

on these proposed revisions, which we now describe in detail.

Docket No. PL20-3-000

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A.

Reporting Transactions to Price Index Developers

Under the Commission’s Policy Statement, a natural gas or electric data provider

should report “each bilateral, arm’s length transaction between non-affiliated companies

in the physical (cash) markets.” 21 These transactions are non-index based transactions

and include both a data provider’s next-day and next-month transactions.22 The

Commission later acknowledged that physical basis transactions during bidweek23 “are a

significant aspect of wholesale natural gas markets and utilize or could contribute to the

formation of price indices.”24

21 See Initial Policy Statement, 104 FERC ¶ 61,121 at P 34 (“[A] data provider

should report each bilateral, arm’s length transaction between non-affiliated companies in

the physical (cash) markets at all trading locations.”) (emphasis added). As a part of

outreach with market participants over the past couple of years, Commission staff have

directed market participants to report both their next-day and next-month transactions, or

to not report at all

[A] data provider

should report each bilateral, arm’s length transaction between non-affiliated companies in

the physical (cash) markets at all trading locations.”) (emphasis added). As a part of

outreach with market participants over the past couple of years, Commission staff have

directed market participants to report both their next-day and next-month transactions, or

to not report at all.

22 See 2003 Clarification Order, 105 FERC ¶ 61,282 at P 12 & n.4 (“As noted in

Policy Statement ¶ 34.3, reportable transactions are non-index based ‘bilateral, arm’s-

length transaction between non-affiliated companies in the physical (cash) markets at all

trading locations.’ Note, however, that if a participant reports trades to an index

developer that publishes only a limited or regional index, the market participant must

report trades in other areas not covered by the limited or regional index to another index

developer.”).

23 Bidweek is a time frame occurring during the last five business days of every

month at which most next-month contracts are traded. Delivery of these contracts take

place the following the month.

24 Transparency Provisions of Section 23 of the Natural Gas Act, Order No. 704,

121 FERC ¶ 61,295 (2007), order on reh’g and clarification, Order 704-A, 124 FERC ¶

61,269, at P 89, reh’g denied, Order No. 704-B, 125 FERC ¶ 61,302 (2008).

Docket No. PL20-3-000

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Under the current policy, a data provider should report both its next-day fixed-

price natural gas transactions as well as its next-month bidweek fixed-price and physical

basis natural gas transactions to price index developers. However, allowing a data

provider to report only next-day transactions or only next-month transactions may ease

the reporting burden on data providers and result in increased reporting

policy, a data provider should report both its next-day fixed-

price natural gas transactions as well as its next-month bidweek fixed-price and physical

basis natural gas transactions to price index developers. However, allowing a data

provider to report only next-day transactions or only next-month transactions may ease

the reporting burden on data providers and result in increased reporting. At the 2017

technical conference, several commenters and panelists stated that market participants

would be more likely to report their next-month transactions to price index developers if

they were given the option to report only their next-month transactions rather than both

their next-day and next-month transactions.25 Many cited the significant burden of

reporting next-day transactions, especially for those market participants that primarily

transact in next-month markets. Panelists also noted that trading and reported volumes in

the next-month market showed a continued decline relative to the next-day market.

Panelists added that this was a concern among data providers who trade in the next-

month markets due to perceived increased compliance scrutiny with higher market

concentrations from trading in these comparatively less-liquid markets.

25 Energy Intelligence Group, Inc., Comments, Docket No. AD17-12-000, at 2;

Tenaska Marketing Ventures, Comments, Docket No. AD17-12-000, at 5; Process Gas

Consumers Group, Comments, Docket No. AD17-12-000, at 9; Platts Comments, Docket

No. AD17-12-000, at 2; Edison Electric Institute, Comments, Docket No. AD17-12-000,

at 8; NGI, Comments, Docket No. AD17-12-000, at 8; American Public Gas Ass’n,

Comments, Docket No. AD17-12-000, at 10; Natural Gas Supply Ass’n, Comments,

Docket No. AD17-12-000, at 12-13 (all comments were filed July 31, 2017); and Rice

Energy Marketing LLC, Comments, Docket No. AD17-12-000, at 4 (filed Aug. 1, 2017).

2-000, at 2; Edison Electric Institute, Comments, Docket No. AD17-12-000,

at 8; NGI, Comments, Docket No. AD17-12-000, at 8; American Public Gas Ass’n,

Comments, Docket No. AD17-12-000, at 10; Natural Gas Supply Ass’n, Comments,

Docket No. AD17-12-000, at 12-13 (all comments were filed July 31, 2017); and Rice

Energy Marketing LLC, Comments, Docket No. AD17-12-000, at 4 (filed Aug. 1, 2017).

Docket No. PL20-3-000

- 15 -

Accordingly, to reduce the burden on data providers and encourage more

reporting, we propose to allow data providers to report either their next-day transactions

or their next-month transactions to price index developers. Data providers may also

report both sets of transactions. This policy revision could benefit reporting in the next-

month market, where reporting to price index developers is most needed, according to the

FERC Form No. 552 data. For instance, the data show that in 2019, the estimated

reported fixed-price and physical basis volume in the next-month market was smaller

than the estimated reported volume in the next-day market.26 But, nonetheless, the

volume of index gas in the next-month market was larger than the volume of index gas in

the next-day market.27 Further, the estimated voluntarily reported volume for the next-

month market for 2019 remain 55% below 2010 levels.28

Thus, in order to ease the burden associated with next-month price reporting, we

propose to modify the Policy Statement to allow market participants to elect to report

26 Next-month fixed-price and physical basis values were approximately

88% of the next-day fixed-price values.

27 Next-month index gas values were approximately 117% of the next-day index

gas values.

28 As mentioned earlier, two price index developers now include transactions from

ICE to increase the level of fixed-price volumes used to calculate their next-day and next-

month indices. Trading on ICE in the next-day market is more robust than trading in the

next-month market

t-day fixed-price values.

27 Next-month index gas values were approximately 117% of the next-day index

gas values.

28 As mentioned earlier, two price index developers now include transactions from

ICE to increase the level of fixed-price volumes used to calculate their next-day and next-

month indices. Trading on ICE in the next-day market is more robust than trading in the

next-month market. For example, the inclusion of ICE transactions in Platts’ indices

resulted in a 126% increase in Platts’ next-day index volumes but Platts’ next-month

indices only resulted in a 76% increase. Thus, although Platts next-day and next-month

index volumes increased with the inclusion of ICE’s transactions in its indices, the

benefit to its indices was greater in the next-day market than the next-month market.

Docket No. PL20-3-000

- 16 -

either all non-index based next-day transactions, all non-index based bidweek next-month

transactions, or both non-index based next-day and non-index based bidweek next-month

transactions. Under this proposal, whichever set of transactions a data provider chooses

to report (next-day, next-month, or both) it should submit data on each bilateral, arm’s

length transaction within that set.

B.

Encouraging Comprehensive Reporting

Under the Commission’s price index policy, “[g]enerally, a market participant

need not report to more than one index developer, so long as the relevant data for all

reportable transactions are given to that developer.”29 Some market participants have

interpreted this language to mean that data providers should not report to more than one

price index developer.30 This interpretation is not correct. We reiterate that “a

participant, of course, may report transactions to more than one index developer.”31 We

strongly encourage data providers to report to as many Commission approved price index

developers as possible

arket participants have

interpreted this language to mean that data providers should not report to more than one

price index developer.30 This interpretation is not correct. We reiterate that “a

participant, of course, may report transactions to more than one index developer.”31 We

strongly encourage data providers to report to as many Commission approved price index

developers as possible.

Although there may be some burden for reporting to additional price index

developers, we understand that the burden of reporting to multiple price index developers

29 2003 Clarification Order, 105 FERC ¶ 61,282 at P 12.

30 See, e.g., Energy Intelligence Group, Inc., Comments, Docket No. AD17-12-

000, at 1-2 (July 31, 2017).

31 2003 Clarification Order, 105 FERC ¶ 61,282 at P 12.

Docket No. PL20-3-000

- 17 -

has declined since the issuance of the Policy Statement.32 If more market participants

voluntarily report their transactions to multiple price index developers, it will likely result

in more robust price formation for all price index developers. Thus, we urge all data

providers to report their transaction data to as many Commission approved price index

developers as possible.

C.

Reducing the Self-Audit Burden

In the Policy Statement, the Commission stated that data providers should perform

a self-audit of their reporting process every year either by an independent third-party

auditor or an internal auditor. In an effort to encourage price reporting, we propose to

allow data providers to now perform a self-audit on a biennial basis. In other words,

every other year a data provider would perform an audit covering the previous two years,

if choosing this option

rs should perform

a self-audit of their reporting process every year either by an independent third-party

auditor or an internal auditor. In an effort to encourage price reporting, we propose to

allow data providers to now perform a self-audit on a biennial basis. In other words,

every other year a data provider would perform an audit covering the previous two years,

if choosing this option. This revision would ease the burden on data providers,

potentially increasing the number of market participants who voluntarily report.33

More specifically, we propose to revise the timing of the standard that a data

provider have an independent auditor review the implementation of, and adherence to, the

data gathering and submission process adopted by the company so that the audit be

32 For example, data providers can now send one email with price reporting data to

multiple index developers.

33 The previous data retention period of three years described in the Initial Policy

Statement was superseded by changes to our regulations and is now five years, and the

biennial audit period does not change the data retention requirements set forth in the

regulations at 18 C.F.R. 284.288 and 18 C.F.R. 284.403.

Docket No. PL20-3-000

- 18 -

undertaken on a biennial basis. As stated in the Policy Statement, the results of the audit

should be made available to any price index developer to which the data provider submits

trade data, and the data provider should permit the price index developer to recommend

changes to improve the accuracy and timeliness of data reporting.34

To the extent that the terms and costs for such an external audit may be overly

burdensome, we continue to find that it is acceptable for internal auditors to perform the

self-audits, in order to avoid raising barriers to voluntary reporting

e data, and the data provider should permit the price index developer to recommend

changes to improve the accuracy and timeliness of data reporting.34

To the extent that the terms and costs for such an external audit may be overly

burdensome, we continue to find that it is acceptable for internal auditors to perform the

self-audits, in order to avoid raising barriers to voluntary reporting. While there are

advantages to having an independent third-party audit, the independent audit can be

performed by a company’s internal auditor, so long as the internal audit personnel are

independent from the trading and reporting departments and personnel, and the audit

follows internal auditing standards, such as those prescribed by the Institute of Internal

Auditors or other similar generally accepted auditing standards.35 Adequately

documented and effective audits by an independent internal or external audit function can

serve as an appropriate compliance control. Relying on these self-audits will ensure that

price reporting by market participants is accurate and reliable to maintain industry

confidence in indices.

34 Initial Policy Statement, 104 FERC ¶ 61,121 at P 34.

35 See the Institute of Internal Auditors’ (IIA), International Standards for the

Professional Practice of Internal Auditing (the Standards) (Oct. 2016),

https://na.theiia.org/standards-guidance/Public%20Documents/IPPF-Standards-2017.pdf.

by market participants is accurate and reliable to maintain industry

confidence in indices.

34 Initial Policy Statement, 104 FERC ¶ 61,121 at P 34.

35 See the Institute of Internal Auditors’ (IIA), International Standards for the

Professional Practice of Internal Auditing (the Standards) (Oct. 2016),

https://na.theiia.org/standards-guidance/Public%20Documents/IPPF-Standards-2017.pdf.

Docket No. PL20-3-000

- 19 -

D.

Increasing Confidence in Price Indices

Under the price index policy, for the Commission to approve a price index for use

in a jurisdictional tariff, the price index developer should adopt and make public a written

code of conduct and confidentiality. Specifically, a price index developer’s code of

conduct “should inform customers how the price information was developed, including

index calculation method, relevant formulas and algorithms, treatment of aberrant data,

and use of judgments, assessments, or similar subjective adjustments.”36 We propose to

clarify that, with respect to assessments, a price index developer’s code of conduct should

inform customers how it makes assessments in its publications and in its data

distributions. Price index assessment transparency would give market participants better

information about the liquidity of certain hub locations.

A price index developer is considered to use a “market assessment” when it uses

market information, other than the trades at the index’s specified location, to determine

the value of the index price. Some price index developers use market assessments to

produce index prices when an insufficient amount of volume or number of reported deals

are available at a given location. In its post-technical conference comments, the AGA

recommended that price index developers should clearly indicate when they engage in

36 Id. P 33.

s specified location, to determine

the value of the index price. Some price index developers use market assessments to

produce index prices when an insufficient amount of volume or number of reported deals

are available at a given location. In its post-technical conference comments, the AGA

recommended that price index developers should clearly indicate when they engage in

36 Id. P 33.

Docket No. PL20-3-000

- 20 -

market assessments rather than calculating price indices based on weighted averages of

reported trades.37

We believe that this clarification is timely because the number of market

assessments appears to have recently increased. Platts, for instance, published 356 index

prices at various hubs in 2019 without publishing a corresponding number of deals for

those prices.38 This represents a significant increase from 2018, when Platts published

246 index prices without a corresponding number of deals.

We agree with AGA that a price index developer should distinguish assessed

index prices from index prices calculated from weighted averages of reported trades. We

propose that price index developers indicate in their publications and data distributions

when they use a market assessment to calculate a published index price in order for that

price index developer to maintain its status as a Commission approved price index

developer. Specifically, we propose that price index developers clearly define in their

methodology guide a method to determine if a price assessment is made in its data

distributions.39 This revision would give market participants a mechanism for identifying

37 AGA, Comments, Docket No. AD17-12-000, at 3 (filed July 31, 2017).

38 Staff calculated this figure by counting the number of index prices published

without a corresponding number of deals.

39 Price index developers publicly post a document which describes how their

indices are calculated. This is commonly referred to as a methodology guide

arket participants a mechanism for identifying

37 AGA, Comments, Docket No. AD17-12-000, at 3 (filed July 31, 2017).

38 Staff calculated this figure by counting the number of index prices published

without a corresponding number of deals.

39 Price index developers publicly post a document which describes how their

indices are calculated. This is commonly referred to as a methodology guide. See, e.g.,

Platts, Methodology and Specifications Guide (March 2020),

https://www.spglobal.com/platts/plattscontent/_assets/_files/en/our-

methodology/methodology-specifications/na_gas_methodology.pdf.

Docket No. PL20-3-000

- 21 -

assessments. The additional clarity provided by indicating assessed prices should

increase the transparency of price index development and, more generally, natural gas

price formation and provide the market with more information about the liquidity of

certain locations. In turn, such transparency should increase industry’s confidence in

price indices.

E.

Ensuring Price Index Developers’ Continued Adherence to the Price

Index Policy

In the Policy Statement, the Commission developed five standards for price index

developers to show that their internal processes were sufficient to become a Commission

approved price index developer and, thus, have their price indices referenced in

jurisdictional tariffs. As detailed above, those five standards include: (1) a code of

conduct and confidentiality; (2) completeness; (3) data verification, error correction, and

monitoring; (4) verifiability; and (5) accessibility. After the Policy Statement was issued,

10 price index developers made filings with the Commission asserting that they complied

with these standards

ferenced in

jurisdictional tariffs. As detailed above, those five standards include: (1) a code of

conduct and confidentiality; (2) completeness; (3) data verification, error correction, and

monitoring; (4) verifiability; and (5) accessibility. After the Policy Statement was issued,

10 price index developers made filings with the Commission asserting that they complied

with these standards. In the Price Index Order, the Commission approved those price

index developers as satisfying all or substantially all of the standards.40 Since then, the

Commission also granted approval to three additional price index developers.41

40 Price Index Order, 109 FERC ¶ 61,184 at P 24 (Argus Media, Inc., Bloomberg

L.P., Btu/Data Transmission Network, Dow Jones and Company, Energy Intelligence

Group, Inc., Intelligence Press, Inc. (NGI), ICE, Io Energy LLC, Platts, Powerdex, Inc.).

41 Many of the original indices have ceased publication or been acquired and

rebranded and not reapproved. As such, only five pre-approved price index developers

remain: Energy Intelligence Group, Inc. (Natural Gas Week), Intelligence Press/NGI,

Platts, Powerdex, and Argus Media. Although, it was not pre-approved, SNL Energy

Docket No. PL20-3-000

- 22 -

Under the current Policy Statement, once approved, there is no verification process

to ensure that price index developers continue to meet these standards. As a result, for

most of the currently approved price index developers, the Commission has not

reexamined their compliance with the price index developer standards in 16 years,

despite the myriad changes in natural gas markets that have occurred during that time.42

To ensure that price index developers continue to meet these standards, we

propose to revise the price index policy. A Commission approved price index developer

should now seek re-approval from the Commission every seven years that it continues to

meet the standards

x developer standards in 16 years,

despite the myriad changes in natural gas markets that have occurred during that time.42

To ensure that price index developers continue to meet these standards, we

propose to revise the price index policy. A Commission approved price index developer

should now seek re-approval from the Commission every seven years that it continues to

meet the standards. We propose that, beginning six months after the adoption of this

proposal, interstate natural gas pipelines and public utilities proposing the use of the

indices in jurisdictional tariffs will no longer be entitled to the rebuttable presumption

that a price index developer’s indices produce just and reasonable rates unless the price

index developer has obtained re-approval from the Commission within the last seven

years that it continues to meet the criteria in the Policy Statement.43

continues to publish indices after purchasing IO Energy and BTU/Data Transmission

Network in 2004 and 2009, respectively.

42 For example, some price index developers now receive transactions from ICE,

at some hub locations basis transactions are now being used to create next-day indices,

and declines in reporting have resulted in hubs that were historically liquid to require

routine price assessments.

43 Consistent with prior practice, price index developers would file for both initial

Commission approval and re-approval in the PL03-3-000 docket.

elopers now receive transactions from ICE,

at some hub locations basis transactions are now being used to create next-day indices,

and declines in reporting have resulted in hubs that were historically liquid to require

routine price assessments.

43 Consistent with prior practice, price index developers would file for both initial

Commission approval and re-approval in the PL03-3-000 docket.

Docket No. PL20-3-000

- 23 -

We believe that these proposed changes will confirm that price index developers

continue to meet the Commission’s standards, which will help to ensure that rates which

reference price indices remain just and reasonable.

F.

Clarifying Liquidity Standards for Price Index References

In the Price Index Order, the Commission adopted a set of criteria delineating the

minimum level of activity at a particular trading location in order for that price index

trading location to be referenced in a FERC-jurisdictional tariff – effectively known as

liquidity standards.44 We propose to clarify these liquidity standards.

The Price Index Order states that interstate natural gas pipelines and ISOs/RTOs,

when proposing new natural gas and electric price indices to be used in jurisdictional

tariffs, should confirm that the proposed price index location(s) have met the minimum

liquidity standards over a 90-day period for daily or weekly indices, and a six-month

period for monthly indices.45 The Price Index Order did not specify a specific timeframe

during which the applicant should show that the proposed price index location meets the

liquidity threshold. As a result, interstate natural gas pipelines and ISOs/RTOs have used

different 90-day or six month-periods to submit price index location data in order to

assess liquidity.46

44 Price Index Order, 109 FERC ¶ 61,184 at P 66.

45 Id. P 65.

46 E.g., in Docket No. RP20-59-000, filed on October 10, 2019, Dominion Energy

Transmission Inc

price index location meets the

liquidity threshold. As a result, interstate natural gas pipelines and ISOs/RTOs have used

different 90-day or six month-periods to submit price index location data in order to

assess liquidity.46

44 Price Index Order, 109 FERC ¶ 61,184 at P 66.

45 Id. P 65.

46 E.g., in Docket No. RP20-59-000, filed on October 10, 2019, Dominion Energy

Transmission Inc. submitted transactions for an index location for the period from June 4,

2019 to August 30, 2019. In Docket No. RP19-1395-000, filed on July 24, 2019,

Docket No. PL20-3-000

- 24 -

Shifts in regional production and market demand areas have resulted in changes in

the liquidity of natural gas price index hubs across the U.S. In light of the dynamic and

seasonal nature of natural gas trading, some price indices may not provide a reasonable

representation of natural gas costs consistently enough to be included within a tariff at the

time of attestation. We believe additional clarity would be helpful to ensure applicants’

approach to assessing liquidity is reflective of the most recent market activity.47 While

we continue to find the current minimum levels of activity for each price index location

to be appropriate market activity thresholds, we propose to modify the review period over

which the price index location should meet the minimum level of activity for all indices

referenced in FERC-jurisdictional tariffs to at least 180 continuous days out of the most

recent 365 days from the filing date of any such proposal. We believe that expanding the

review period will ensure that natural gas price index references in FERC-jurisdictional

tariffs are sufficiently liquid which will ultimately benefit customers who are subject to

the tariff provisions.

Accordingly, we propose to revise the criteria established in the Price Index Order

as follows (revised language shown in italics). We also propose removing the term

Southern Natural Gas Company, L.L.C

will ensure that natural gas price index references in FERC-jurisdictional

tariffs are sufficiently liquid which will ultimately benefit customers who are subject to

the tariff provisions.

Accordingly, we propose to revise the criteria established in the Price Index Order

as follows (revised language shown in italics). We also propose removing the term

Southern Natural Gas Company, L.L.C. submitted transactions for an index location on

April 1, 2019 to July 16, 2019. Both of these filings were accepted given that the

pipelines provided 90 days of data, but the latter filing included a more timely review

period closer to the date of filing.

47 As explained previously, the voluntary reporting of fixed-price transactions to

price index developers has declined in recent years. This has resulted in fluctuating

liquidity for certain natural gas price index locations.

Docket No. PL20-3-000

- 25 -

“daily” from the daily, weekly, and monthly liquidity requirements to provide clarity to

the conditions that should be met for those types of price indices.48

Daily or hourly indices should meet at least one of the following conditions, on

average, for all non-holiday weekdays for at least 180 continuous days out of the

most recent 365 days:

1. Average volume traded of at least 25,000 million Btus (MMBtu) per day

for natural gas or 2,000 Megawatt hours (MWh) per day for power; or

2. Average number of transactions of five or more per day; or

3. Average number of counterparties of five or more per day.

Weekly indices should meet at least one of the following conditions on average for

all weeks for at least 180 continuous days out of the most recent 365 days:

1. Average volume traded of at least 25,000 MMBtu per day for gas or 2,000

MWh per day for power; or

2. Average number of transactions of eight or more per week; or

3. Average number of counterparties of eight or more per week

day.

Weekly indices should meet at least one of the following conditions on average for

all weeks for at least 180 continuous days out of the most recent 365 days:

1. Average volume traded of at least 25,000 MMBtu per day for gas or 2,000

MWh per day for power; or

2. Average number of transactions of eight or more per week; or

3. Average number of counterparties of eight or more per week.

Monthly indices should meet at least one of the following conditions on average

for at least 180 continuous days out of the most recent 365 days:

48 The Price Index Order used the term “daily” as the metric for determining the

average volume, average number of transactions, and average number of counterparties

required for indices to be sufficiently liquid for use in jurisdictional tariffs. In this

Revised Policy Statement, we remove the term “daily” from the Commission’s index

liquidity measurements. We do not believe that this revision changes the original intent

of the criteria as indices will continue to meet the same minimum liquidity conditions

necessary as before but now for 180 continuous days out of the most recent 365 days.

Docket No. PL20-3-000

- 26 -

1. Average volume traded of 25,000 MMBtu per day for gas or 2,000 MWh

per day for power; or

2. Average number of transactions of ten or more per month; or

3. Average number of counterparties of ten or more per month.

Aside from the changes to the minimum criteria specifically discussed above, all

other criteria for reflecting adequate liquidity at referenced points adopted in the Policy

Statement would remain unchanged.

G.

Additional Policy Changes to Electric Indices and Electric Price Index

Developers

The modifications in this proposed Revised Policy Statement would apply solely to

natural gas price indices and natural gas price index developers. However, we recognize

that the Policy Statement applied to both the electric and natural gas industries

ted in the Policy

Statement would remain unchanged.

G.

Additional Policy Changes to Electric Indices and Electric Price Index

Developers

The modifications in this proposed Revised Policy Statement would apply solely to

natural gas price indices and natural gas price index developers. However, we recognize

that the Policy Statement applied to both the electric and natural gas industries. For that

reason, Commission staff will conduct outreach to explore the need for, and scope of, any

potential policy updates for the electric industry.

III.

Information Collection Statement

The Paperwork Reduction Act (PRA) requires each federal agency to seek and

obtain the Office of Management and Budget’s (OMB) approval before undertaking a

collection of information (including reporting, record keeping, and public disclosure

requirements) directed to ten or more persons or contained in a rule of general

applicability. OMB regulations require approval of certain information collection

requirements (including deletion, revision, or implementation of new requirements).

Upon approval of a collection of information, OMB will assign an OMB control number

Docket No. PL20-3-000

- 27 -

and an expiration date. Respondents subject to the filing requirements will not be

penalized for failing to respond to the collection of information unless the collection of

information displays a valid OMB control number.

The Commission solicits comments from the public on the Commission’s need for

this information, whether the information will have practical utility, the accuracy of the

burden estimates, ways to enhance the quality, utility and clarity of the information

collected or retained, and any suggested methods for minimizing respondents’ burden,

including the use of automated information techniques. Specifically, the Commission

asks that any revised burden or cost estimates submitted by commenters be supported by

sufficient detail to understand how the estimates are generated

imates, ways to enhance the quality, utility and clarity of the information

collected or retained, and any suggested methods for minimizing respondents’ burden,

including the use of automated information techniques. Specifically, the Commission

asks that any revised burden or cost estimates submitted by commenters be supported by

sufficient detail to understand how the estimates are generated.

This proposed revised policy statement will affect the existing data collection:

FERC-549, NGPA Title III Transactions and NGA Blanket Certificate Transactions.

Estimates of the PRA-related burden and cost49 follow. The following table summarizes

the estimated increases and decreases in burden due to the proposed policy changes

above.

49 The Commission staff estimates that industry is similarly situated in terms of

hourly cost (for wages plus benefits). Based on the Commission’s Fiscal Year (FY) 2020

average cost of $172,329/year (for wages plus benefits, for one full-time employee),

$83.00/hour is used.

Docket No. PL20-3-000

- 28 -

Modifications Due to the Proposed Revised Policy Statement in Docket No. PL20-3

No. of

Respondents

(1)

Annual No.

of

Responses

Per

Respondent

(2)

Total No.

of

Responses

(1)*(2)=(3)

Average

Burden

(Hrs.) &

Cost ($) Per

Response

(4)

Total

Annual

Burden Hrs.

& Total

Annual Cost

($)

(3)*(4)=(5)

Proposed Burden Reductions50

Data

Providers-

perform

biennial self-

audit (not

annual)

125

.5

62.5

80 hrs.;

$6,640

5,000 hrs.;

$415,000

Data

Providers—

provide

month-ahead

(not day-

ahead on a

daily

basis)51

9

24952

2,241

4 hrs.; $332

8,964 hrs.;

$744,012

Proposed

Reductions

13,964 hrs.;

$1,159,012

Proposed Burden Increases to FERC-549

Price Index

Developers

—re-certify

every 7 yrs

ta

Providers-

perform

biennial self-

audit (not

annual)

125

.5

62.5

80 hrs.;

$6,640

5,000 hrs.;

$415,000

Data

Providers—

provide

month-ahead

(not day-

ahead on a

daily

basis)51

9

24952

2,241

4 hrs.; $332

8,964 hrs.;

$744,012

Proposed

Reductions

13,964 hrs.;

$1,159,012

Proposed Burden Increases to FERC-549

Price Index

Developers

—re-certify

every 7 yrs.

6

0.14

0.84

320 hrs.;

$26,560

268.8 hrs.;

$22310.40

Price Index

Developers

—code of

conduct &

confident.;

& inform

customers

6

1

6

80 hrs.;

$6,640

480 hrs.;

$39,840

50 The proposed burden reductions are provided for information and comment. To

be conservative, the Commission may not remove the hours from its information

collection estimates in the OMB-approved inventory.

51 Staff assumes respondents with 2019 estimated volumes of next-month and

Docket No. PL20-3-000

- 29 -

Price Index

Developers

—identify

assessed

index price

vs.

calculated

6

1

6

80 hrs.;

$6,640

480 hrs.;

$39,840

Proposed

Increases to

FERC-549

1,228.8 hrs.;

$101,990.40

Net Total

Proposed

Reduction

12,735.2

hrs.;

$1,4057,021.

6

The Commission seeks comments on the burden and cost related to complying with the

proposed revised policy statement.

Title: FERC-549, NGPA Title III Transactions and NGA Blanket Certificate

Transactions.

OMB Control No.: 1902-0086.

Respondents: Natural Gas Data Providers (Market Participants That Report Transaction

Data to Price Index Developers) and Price Index Developers.

Frequency of Responses: As discussed.

physical basis transactions reported to index developers that exceeded two thirds of their

total estimated volumes reported to index developers will no longer report their next-day

transactions to index developers.

52 We are proposing to allow companies to report just monthly, instead of monthly

and daily. The figure (249 annual responses per respondent) relates to reporting on all

non-holiday trading days.

sactions reported to index developers that exceeded two thirds of their

total estimated volumes reported to index developers will no longer report their next-day

transactions to index developers.

52 We are proposing to allow companies to report just monthly, instead of monthly

and daily. The figure (249 annual responses per respondent) relates to reporting on all

non-holiday trading days.

Docket No. PL20-3-000

- 30 -

Necessity of the Information:

The collection of this information helps to provide accuracy and transparency to the

formation of natural gas price indices.

Internal Review: These requirements conform to the Commission’s goal for efficient

information collection, communication, and management. The Commission has assured

itself, by means of its internal review, that there is specific, objective support for the

burden estimates associated with the information requirements.

Interested persons may obtain information on the reporting requirements by contacting

the following: Federal Energy Regulatory Commission, 888 First Street, NE,

Washington, DC 20426, Attn: Ellen Brown, Office of the Executive Director, e-mail:

DataClearance@ferc.gov, or phone: (202) 502-8663.

IV.

Comment Procedures

We invite comments on this proposed Revised Policy Statement within [INSERT

DATE 90 days after date of publication in the Federal Register].

V.

Document Availability

The Commission provides all interested persons an opportunity to view and/or

print the contents of this document via the Internet through the Commission’s Home Page

(http://www.ferc.gov). At this time, the Commission has suspended access to the

Commission’s Public Reference Room, due to the proclamation declaring a National

Emergency concerning the Novel Coronavirus Disease (COVID-19), issued by the

President on March 13, 2020.

persons an opportunity to view and/or

print the contents of this document via the Internet through the Commission’s Home Page

(http://www.ferc.gov). At this time, the Commission has suspended access to the

Commission’s Public Reference Room, due to the proclamation declaring a National

Emergency concerning the Novel Coronavirus Disease (COVID-19), issued by the

President on March 13, 2020.

Docket No. PL20-3-000

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From the Commission’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.

User assistance is available for eLibrary and the Commission’s website during

normal business hours from the Commission’s Online Support at (202) 502-6652 (toll

free at 1-866-208-3676) or email at ferconlinesupport@ferc.gov, or the Public Reference

Room at (202) 502-8371, TTY (202) 502-8659. E-mail the Public Reference Room at

public.referenceroom@ferc.gov.

By the Commission. Commissioner Clements is not participating.

( S E A L )

Kimberly D. Bose,

Secretary.