APGA Comments & Motions

APGA Comments on FERC Actions Regarding the Commission’s Policy on Price Index Formation and Transparency, and Indices Referenced in Natural Gas and Electric Tariffs 

03-23-2021 11:55 AM

Docket No. PL20-3-000. Please click on the PDF link below for the full comments and read our December 2020 press release 'APGA Applauds FERC Action on Natural Gas Pricing Indices' here for more background information: https://www.apga.org/viewdocument/apga-applauds-ferc-action-on-natura 

EXECUTIVE SUMMARY: APGA ENTHUSIASTICALLY SUPPORTS THE COMMISSION’S GOAL AND SUPPORTS THE PROPOSED REVISIONS APGA is very pleased to see the Commission’s Revised PS Proposals. APGA participated at each of the junctures at which the Commission has attempted to encourage better transparency of price formation in wholesale energy markets. Most recently, APGA participated in the 2017 Technical Conference in Docket PL17-2 and is pleased to comment now in favor of the Commission’s new proposals designed to make voluntary price reporting more robust and transparent.

Participants at the Commission’s 2017 Technical Conference proclaimed deep support for the efficacy of the current natural gas marketplace and even pronounced confidence in the price indices themselves. Yet today the Commission’s Revised PS Proposals makes evident that the current system continues to weaken. The decadelong fall off in reporting has not turned around.2 At the same time, as the Commission now observes, index pricing is more popular than ever in contracting—constituting as much as more than 4 of 5 transactions.3

APGA previously commented that this dissonance is somewhat like whistling in the dark. APGA is pleased to support the Commission’s leadership in making sensible reforms that should receive a broad consensus of support. APGA also had requested the codification of the Commission’s Safe Harbor Policy, and supports the pending Notice of Proposed Rulemaking issued concurrently to do just that.

2 See 85 Fed. Reg. at 3941.
3 At the 2017 Technical Conference, Staff calculated that nearly half of the gas sold and purchased on a physical basis is tied to monthly indices. Tr. 16. Now the Commission observes that 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 2010 to 82% in 2019. 85 Fed. Reg. at 83941.

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