112 FERC ¶ 61,040 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Pat Wood, III, Chairman; 

 Nora Mead Brownell, Joseph T. Kelliher, 

 and Suedeen G. Kelly. 

Price Discovery in Natural Gas and Electric Markets Docket No. PL03-3-006

Natural Gas Price Formation Docket No. AD03-7-006

ORDER FURTHER CLARIFYING POLICY STATEMENT ON 

NATURAL GAS AND ELECTRIC PRICE INDICES 

(Issued July 6, 2005) 

1. In this order we grant two requests for clarification of our Policy Statement on 

Natural Gas and Electric Price Indices.1

 The Policy Statement identified minimum 

standards for both price index developers and data providers (market participants that 

report transaction data to price index developers). In the latter case the Policy Statement 

spelled out the steps data providers should take to assure that the prices they report 

accurately reflect market activity. The Policy Statement also provided an important “safe 

harbor” for data providers. For data providers that adopt and follow the Commissionestablished standards for trade data reporting, we will presume they are reporting 

transaction data accurately and in good faith, and we will not penalize such parties for 

inadvertent errors in reporting. 

2. We grant the requested clarifications to emphasize the broad nature of these safe 

harbor provisions and to encourage companies both to adopt the appropriate procedures 

to take advantage of the safe harbor assurances and to contribute their transaction 

information to the price formation process. We also remind companies of their obligation 

to notify the Commission when there is a change in their reporting practices. 

1

 104 FERC ¶ 61,121 (2003). 
Docket Nos. PL03-3-006 and AD03-7-006 - 2 - 

Background

3. The Policy Statement is one of many steps we have taken to encourage better 

transparency of price formation in wholesale energy markets. In November 2003, we 

issued orders adopting Market Behavior Rules for wholesale market participants.2

 These 

orders included a behavior rule requiring that, to the extent market participants report 

transactions to entities that develop and publish price indices, they must report such 

transactions in accordance with standards of the Policy Statement. In December 2003, 

we issued a clarification of certain aspects of price reporting under the Policy Statement.3

 

In May 2004, we received a full staff report on the status of price indices and wholesale 

price formation, including the results of two large-scale industry surveys, along with 

recommendations on the use of price indices in jurisdictional tariffs.4

 Finally, in 

November 2004 we issued an order in which we applied minimum criteria to price 

indices used in jurisdictional tariffs and indicated our intent to continue active monitoring 

of developments concerning price formation in wholesale markets. 5

4. We have received two requests for clarification of matters addressed in our prior 

orders. The Committee for Chief Risk Officers (CCRO) submitted a request April 25, 

2005, asking for a clarification that the safe harbor provisions of the Policy Statement 

extend to an energy data hub and its participants. Also, National Fuel Gas Distribution 

Corporation (National Fuel) submitted a request February 18, 2005, asking that the safe 

harbor provisions be extended to data providers that, while not specifically subject to the 

Market Behavior Rules, nonetheless wish to provide transaction data to price index 

developers. On June 10, 2005, Platts filed comments in which Platts asserts that the 

Commission should deny the CCRO request for clarification as premature. Platts takes 

no position on National Fuel’s request. On June 14, 2005, InterContinentalExchange 

 2 Order Amending Market-Based Rate Tariffs and Authorizations, 105 FERC 

¶ 61,218 (2003), reh’g denied, 107 FERC ¶ 61,175 (2004); Order No. 644, Amendment to 

Blanket Sales Certificates, FERC Stats. & Regs. ¶ 31,153 (2003), reh’g denied, 

107 FERC ¶ 61,174 (2004). 

3 Order on Clarification of Policy Statement on Natural Gas and Electric Price 

Indices, 105 FERC ¶ 61,282 (2003). 

4 Report on Natural Gas and Electricity Price Indices, Docket Nos. PL03-3-004 

and AD03-7-004, May 5, 2004. 

5 Order Regarding Future Monitoring of Voluntary Price Formation, Use of Price 

Indices in Jurisdictional Tariffs, and Closing Certain Tariff Dockets, 109 FERC ¶ 61,184 

(2004). 
Docket Nos. PL03-3-006 and AD03-7-006 - 3 - 

(ICE) filed comments stating that, if the requested clarifications are granted, they should 

apply to any entity that collects and distributes transaction data. Also on June 14 

Intelligence Press, Inc. (NGI) filed a letter endorsing Platts’ comments and showing the 

growth in the volume and number of trades reported in its indices over the past two years. 

Additional comments have been filed by Amerex Group and Logical Machines, Inc., in 

support of the CCRO request and by the American Public Gas Association, which 

supports innovation in price discovery. Platts also filed reply comments further 

describing its index production process. 

The Policy Statement and the Safe Harbor

5. The Policy Statement was issued to encourage market participants to improve the 

accuracy, reliability, and transparency of wholesale price formation. While the Policy 

Statement focused on existing industry practice and the use of commercially published 

price indices for price discovery in energy markets, we also said the Policy statement “is 

not intended to interfere with improvements in current price indices or any future 

evolution of the price discovery process that will bring more accurate, reliable, and 

transparent price information to energy markets.”6

 

6. Indeed, the Policy Statement recognized the interest of some parties in developing 

independent “data hubs” to encourage better price transparency and confidence in 

wholesale market price discovery. Various ideas were proposed, but the essential 

concept was that an independent entity could receive transaction data from market 

participants; match, verify, and scrub the data; and provide aggregate data to others for 

use in publishing indices, research, and the like. We noted at the time that “some of these 

proposals may have long-term potential” and we “encourage[d] energy industry 

participants to consider whether some form of a data hub or hubs may improve price 

discovery in the energy industry in the longer term.”7

7. Given the existing structure of voluntary price reporting to price index developers, 

however, the Policy Statement set out standards for market participants who report prices 

to price index developers and, in the Market Behavior Rules issued in November 2003, 

we required that these standards be followed by any sellers holding market-based rate 

authority for electricity sales or making jurisdictional natural gas sales for resale under 

 6

 104 FERC ¶ 61,104 at P 39. 

7 Id. at P 24. 
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blanket certificate authority.8

 If data providers do so, we will presume that transaction 

data submitted to index developers is accurate, timely, and submitted in good faith. We 

will not prosecute and/or penalize parties for inadvertent errors in reporting, nor refer 

such instances to other agencies having jurisdiction. Data providers adhering to these 

guidelines, we noted, should be able to report all relevant trade data with confidence.9

Committee of Chief Risk Officers

8. The CCRO has been active in efforts to improve price discovery. As we noted in 

the Policy Statement, the CCRO white paper on Best Practices for Energy Price Indices,

filed with the Commission in Docket No. AD07-3, addressed many of the points set out 

in the Policy Statement and was part of the industry consensus upon which the Policy 

Statement built.10 The CCRO states that it has continued its involvement by working 

with a coalition of about 30 companies to develop a prototype Energy Data Hub. In its 

request for clarification, the CCRO states that the Energy Data Hub “is an independently 

operated repository for transaction data coming from all types of energy market 

participants.” The Energy Data Hub, CCRO represents, “will engage in data 

authentication and an error discovery and notice process, render the data anonymous, 

aggregate it, eliminate double-counting to the extent possible, and input the data into a 

centralized database.” Request for Clarification at 1. The resulting aggregate data, 

CCRO states, “will be readily accessible to all market participants, including prospective 

energy purchasers, sellers, intermediaries, and market observers such as regulators, rating 

agencies, analysts, accounting firms, and index publishers.” Id.

9. The CCRO states that the Energy Data Hub is in a demonstration phase and that 

the CCRO is encouraging more companies to participate in the project. The CCRO is 

concerned, however, that potential participants may be deterred because of uncertainty 

over whether the safe harbor assurance of the Policy Statement applies to the Energy 

Data Hub. The CCRO requests four clarifications: 

 8

 Market Behavior Rule 4, 105 FERC ¶ 61,218 at P 116; see also 18 CFR 

§§ 284.288(b) and 284.403(b), 

9

 At the same time, we warned market participants that we will prosecute or refer 

to other agencies having jurisdiction instances in which companies do not act in good 

faith. The safe harbor will not protect those who manipulate, misinform, or mislead price 

index developers or other market participants. 104 FERC ¶ 61,121 at P 38. 

10 Docket No. AD03-7, filed April 21, 2003. See 104 FERC ¶ 61,121 at PP 16-21. 
Docket Nos. PL03-3-006 and AD03-7-006 - 5 - 

 

3⁄4 that the safe harbor applies to data providers supplying transaction information to 

the Energy Data Hub, so long as they follow the Policy Statement standards for 

price reporting;11

3⁄4 that the safe harbor applies to the Energy Data Hub itself when it provides data to 

price index developers and others, so long as the Energy Data Hub follows the 

Policy Statement standards applicable to price index developers;12

3⁄4 that the safe harbor applies to data providers during the demonstration phase of the 

Energy Data Hub project; and 

3⁄4 that the Commission will not use the Energy Data Hub as a target for investigations 

into transaction data of participating companies. 

10. We grant the first three requested clarifications. While the Policy Statement 

concentrated as a practical matter on the existing voluntary system of price reporting to 

price index developers, we also made clear that other innovations that bring price 

transparency and better confidence in the accuracy and reliability of wholesale prices are 

welcome. We set out the conditions under which data providers would get “safe harbor 

protection for good faith reporting of transactions data to entities that develop price 

indices.”13 We did not intend the Policy Statement to be narrowly construed to 

discourage or prevent the evolution of new structures; to the contrary, as noted, we 

encouraged industry participants to see “whether some form of a data hub or hubs may 

improve price discovery” in the future.14 

11. We emphasize here, however, that we are not endorsing any particular entity or 

approach, but continue to encourage industry participants to find optimal solutions and 

approaches to better wholesale price formation. Therefore, we clarify that the safe harbor 

provisions of the Policy Statement apply to any entity that follows the standards in the 

Policy Statement and reports energy transaction data to another entity, whether it be a 

price index developer or a data hub of some sort, or another structure not yet proposed. 

11 Id. at P 34. The five standards cover code of conduct; source of data; data 

information reported; error resolution; and data retention and review. 

12 Id. at P 33. The five standards cover code of conduct and confidentiality; 

completeness; data verification, error correction and monitoring; verifiability; and 

accessibility. 

13 104 FERC ¶ 61,121 at P 5. 

14 Id. at P 24. 
Docket Nos. PL03-3-006 and AD03-7-006 - 6 - 

 

Second, we extend a safe harbor assurance to a data hub or other innovative entity that is 

acting as a data provider when it provides aggregate data to others, if it adopts the 

applicable Policy Statement standards. Third, we also clarify that the safe harbor 

protection applies to data providers during any testing or demonstration phase of a new 

industry structure for gathering and disseminating wholesale price data, again assuming 

the data provider follows the Policy Statement standards. 

12. These clarifications are in the context of the industry’s current voluntary approach 

to price formation. As we noted in the Policy Statement, if the industry response to our 

initiatives on wholesale price formation does not sufficiently increase confidence in 

wholesale price formation, we are prepared to consider some form of mandatory price 

reporting.15 We found in our November 2004 order that there has been notable progress, 

and we encouraged all interested parties to conform fully to the standards of the Policy 

Statement.16 We are continuing to monitor the wholesale price formation process, and 

encourage industry to find innovative ways to improve the accuracy, reliability, and 

transparency of wholesale prices on a voluntary basis. 

13. CCRO’s fourth requested clarification is that it “not be used as a target for 

investigations by the Commission into transactions data by the participating companies.” 

Request for Clarification at 3. We do not intend to use the Energy Data Hub or any other 

data hub or new industry structure as a “target,” but any such entity may receive 

investigatory requests from the Commission. In our November 2004 order we discussed 

at length our expectation that entities in possession of energy transaction data would be 

responsive to appropriate requests for access to such data.17 We made clear that such 

requests would be “in the context of a targeted investigation of possible false price 

reporting or market manipulation or other inquiry within the scope of our statutory 

responsibilities.”18 Any data hub or other new industry structure that collects confidential 

trade data will be treated in the same manner as existing price index developers, and is 

subject to our expectation of cooperation in the event of an appropriate demand for access 

to particular data. This puts an energy data hub or any new structure on an equal footing 

with existing price index developers in this respect, consistent with our intent not to favor 

one industry structure over another. 

15 Id. at PP 42-47. 

16 109 FERC ¶ 61,184 at PP 19-22. 

17 Id. at PP 50-54. 

18 Id. at P 53; see also Policy Statement, 104 FERC ¶ 61,121 at P 33. 
Docket Nos. PL03-3-006 and AD03-7-006 - 7 - 

 

14. Platts, supported by NGI, argues that the CCRO data hub has not progressed to the 

point where it is equivalent to a price index developer and, therefore, that we should deny 

CCRO’s request as premature. The CCRO acknowledges that it is in a development and 

testing phase, and seeks the requested clarifications to encourage more participation in 

the experiment. The basic clarification provided here is that data providers—market 

participants who contribute data on their wholesale transactions—receive the safe harbor 

assurance if they contribute the data to an energy data hub or other new industry 

structure, so long as they are following the five Policy Statement standards for price 

reporting. As to the energy data hub or other structure itself, if it progresses to the point 

where it has fully adopted the Policy Statement standards for handling transaction and 

price data, and is acting as a data provider by providing authenticated aggregate data to 

others, a safe harbor assurance will be extended to it.19

15. Platts also states that it and other price index developers have received 

Commission recognition that they have met the Policy Statement standards for price 

index developers, and that it would be unfair “to accord the same treatment to the data 

hub experiment” which, Platts asserts, has not met all of the Policy Statement standards. 

Platts Comments at 1. Platts, ICE, and NGI have submitted information in this docket 

demonstrating that they are in substantial compliance with the Policy Statement standards 

and, as a result, we have indicated that their indices may be used in jurisdictional tariffs.20 

We offer no such designation to the CCRO here. When the CCRO data hub moves from 

the current experimental and testing phase to actual operations, however, the hub may 

request review by the Commission of the consistency of its practices with the Policy 

Statement standards. We also note that if the CCRO data hub were to produce a data 

product that a pipeline or utility wants to use in a jurisdictional tariff, the filing company 

would have to show that the CCRO data hub meets the Policy Statement standards.21

16. ICE does not take a position on whether the requested clarifications should be 

granted, but urges the Commission not to confer a “unique and preferential standing to an 

individual commercial initiative.” Instead, ICE states that, if granted, the provisions 

19 In this context safe harbor means that if the energy data hub or other structure is 

reporting authenticated aggregate data to price index developers or other users, we will 

not take action against the hub or other structure for inadvertent errors if it has in place 

the protocols and protections of the Policy Statement standards necessary to prevent the 

dissemination of incorrect, incomplete, or misleading price information. 

20 109 FERC ¶ 61,184 PP 24, 28, 39. 

21 Id. PP 68-69, 73. 
Docket Nos. PL03-3-006 and AD03-7-006 - 8 - 

should “apply equally to any entity that collects transaction data for distribution while 

complying with the requirements for index publishers in the Policy Statement.” ICE 

comments at 1. As we have stated, the clarifications granted here apply to any data hub 

or other innovative entity that has adopted the applicable Policy Statement standards. 

This is consistent with our intent not to favor one industry structure or entity over 

another. 

National Fuel Gas Distribution Corporation

17. National Fuel states that in January 2003 it notified the Commission pursuant to 

Order No. 644 that it was a blanket marketing certificate holder and was reporting 

transactions to price index developers in accordance with the standards of the Policy 

Statement. National Fuel now says that is has ceased off-system sales in order to 

maintain non-Energy Affiliate status under the Order No. 2004 Standards of Conduct.22 

While this change reduced National Fuel’s number of reportable transactions, National 

Fuel states that it wishes to continue to report trade data to price index developers. 

However, uncertainty over whether the safe harbor applies to a data provider that is not 

subject to the Market Behavior Rules caused National Fuel to suspend reporting its 

transactions. National Fuel requests clarification that the safe harbor provisions apply 

even if National Fuel is not specifically subject to the requirements of Order No. 644. 

18. We grant the requested clarification. The purpose of the safe harbor is to 

encourage market participants to report without fear of enforcement action for 

inadvertent errors. Indeed, the safe harbor originated with industry requests for 

regulatory certainty and Commission assurance that good faith reporting will not subject 

a company to the risk of sanctions.23 So long as a data provider has adopted and is 

following the standards of the Policy Statement for reporting entities, we will apply the 

safe harbor policy, even if the company is not specifically subject to the Market Behavior 

Rules. 

 22 Standards of Conduct for Transmission Providers, Order No. 2004, FERC Stats. 

& Regs., Regulations Preambles ¶ 31,155 (2003), order on reh’g, Order No. 2004-A, III 

FERC Stats. & Regs. ¶ 31,161 (2004), 107 FERC ¶ 61,032 (2004), order on reh’g, Order 

No. 2004-B, III FERC Stats. & Regs. ¶ 31,166 (2004), 108 FERC ¶ 61,118 (2004), order 

on reh’g, Order No. 2004-C, 109 FERC ¶ 61,325 (2004), order on reh’g, Order No. 

2004-D, 110 FERC ¶ 61,320 (2005). 

23 104 FERC ¶ 61,121 at PP 30-31. 
Docket Nos. PL03-3-006 and AD03-7-006 - 9 - 

Requirement to Notify the Commission of Changes in Price Reporting Status

19. In Behavior Rule 4 and its counterpart in Order No. 644, we required that all 

sellers subject to the rule notify the Commission within 15 days of the effective date of 

the rule whether the seller reports its transactions in accordance with the Policy 

Statement. Additionally, we required that sellers update their notifications within 15 days 

of any change in their reporting status.24 We directed market-based rate sellers to file 

their notifications in Docket No. EL01-118 and the docket in which they received 

market-based rate authority; we directed blanket certificate holders to file their 

notifications in Docket No. RM03-10.25

20. We received initial notifications by or on behalf of 756 market participants in 

December 2003 and January 2004. Since then, we have received only 26 notifications in 

Docket No. EL01-118 of subsequent changes in reporting status from market-based rate 

sellers and 24 notifications in Docket No. RM03-10 from blanket certificate holders. In 

several cases a company filed the same notification in both dockets; in other cases the 

same company filed more than one notification in a docket. During this period, however, 

price index developers have reported increases in both the number of transactions being 

reported and in the number of market participants reporting trade data to them.26 It is 

possible that some market participants have overlooked the requirement to notify the 

Commission of changes in their reporting status. 

21. Accordingly, we hereby remind all market-based rate sellers subject to the Market 

Behavior Rules, and all blanket certificate holders subject to Order No. 644, of their 

obligation to file notifications of changes in reporting status within 15 days of the date of 

such changes. We also waive the 15 day requirement for any market participants that 

have changed their reporting status but failed to notify us of that fact. Such market 

participants may file notifications of any changes since their initial notification no later 

than August 1, 2005. 

 24 105 FERC ¶ 61,218 at P 116; see also 18 CFR §§ 284.288(b) and 284.403(b). 

25 Order Clarifying Prior Notice, 105 FERC ¶ 61,277 at P 11 (2003). 

26 NGI comments at 2. NGI notes that the volume of natural gas bidweek trades 

reported to it has increased from 7.9 Bcf to 21.2 Bcf in June 2005, and that the number of 

trades as increased from 1,357 to 3,069. Id. at 2. See also 109 FERC ¶ 61,184 at PP 5-7; 

Comments of Platts, Docket Nos. PL03-3, et al., June 14, 2004. 
Docket Nos. PL03-3-006 and AD03-7-006 - 10 - 

The Commission orders: 

 (A) The Policy Statement on Natural Gas and Electric Price Indices is clarified 

as discussed in the body of this order. 

 (B) The requirement to file notifications of changes in reporting status within 

15 days of the date of the change is waived until August 1, 2005, for any market-based 

rate sellers or blanket certificate holders who file notifications for any changes in status 

that have occurred since their initial notification. 

By the Commission. 

( S E A L ) 

 Linda Mitry, 

 Deputy Secretary.