On April 21, 2022, the Federal Energy Regulatory Committee (FERC) revised its guidance regarding voluntary reporting of natural gas transaction prices by market participants to price index developers (e.g., NGI, S&P, OPIS, Argus, ICIS and others). Specifically, FERC issued a Revised Policy Statement (RPS) amending the standards for such reporting to price index builders. In doing so, FERC broadly adopted the proposed policies for the first time in late 2020. The RPS comes into effect on December 31, 2022.
Since 2010, there has been a dramatic decline in voluntary reporting to price index developers by market participants of natural gas transaction prices. FERC hopes the changes to the RPS will help encourage more market participants to report their trades to price index developers.
The RPS revises price index policy standards for market participants. It will allow market participants to declare their transactions for the next day or the following month. Previously, for market participants who chose to report, both were mandatory. Additionally, FERC will now allow market participants who provide this data to self-audit twice a year rather than once a year.
The RPS also changes FERC’s price reporting standards to require price index developers to disclose when they use a market valuation other than transactions at the specified index location to calculate the index. prices. In addition, price index developers will be required to seek FERC approval or re-approval every seven years if they meet the standards set forth in the Initial Policy Statement (IPS). Finally, effective six months after the effective date of the RPS, interstate gas pipelines and utilities using price indices in jurisdictional tariffs will no longer be entitled to a rebuttable presumption that those indices provide tariffs. fair and reasonable, unless the benchmark price index developer has obtained FERC approval related to IPS.
© Steptoe & Johnson LLC. All rights reserved.National Law Review, Volume XII, Number 129