FERC Affirms Gas Market Transparency Rule
09/22/2008On September 18, 2008, the Federal Energy Regulatory Commission (FERC) issued Order No. 704-A, affirming and clarifying Order No. 704, which established annual reporting requirements for natural gas wholesale market participants to be provided in FERC Form No. 552. In Order No. 704, FERC required natural gas market participants that buy or sell 2,200,000 MMbtus or more (measured in the course of a year) of natural gas at wholesale to annually submit to FERC certain volume and other information regarding their wholesale, physical natural gas transactions for the previous calendar year.
In its order on rehearing and clarification, FERC clarified that natural gas market participants must report all bilateral, non-affiliate, arm’s-length wholesale, physical Next-Day or Next-Month natural gas transactions as defined in Form No. 552 (Reportable Transactions) that (1) use or refer to a price index, or (2) contribute to or could contribute to a price index (i.e., all Reportable Transactions at all trading locations, regardless of whether the location currently is designated by an index developer as a reporting location and regardless of whether the transactions actually were reported). A reporting entity also is required to indicate whether it (1) operates under a blanket sales certificate, (2) reports price or other transaction data to an index publisher, and (3) complies with the FERC’s Policy Statement on Electric and Natural Gas Price Indices (Policy Statement). Order No. 704-A also clarifies that bundled retail transactions are not to be reported in FERC Form No. 552.
Any market participant that buys less than 2,200,000 MMBtus and sells less than 2,200,000 MMBtus is not required to report, unless that market participant has a blanket certificate, in which case it must file a Form 552 indicating whether it reports to price index publishers and complies with FERC’s Policy Statement; however, it is not required to report aggregate volumes or transaction data.
The first report under FERC’s new Form No.552 is due on May 1, 2009 (for transactions in 2008). Market participants will be given a one-year safe harbor with respect to transactions reported for 2008 provided that the information is submitted timely and in good faith.
