[Federal Register Volume 87, Number 82 (Thursday, April 28, 2022)]
[Notices]
[Pages 25237-25253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-08972]


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DEPARTMENT OF ENERGY

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

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of policy statement.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is 
revising its price index policy set forth in its Policy Statement on 
Natural Gas and Electric Price Indices (Initial Policy Statement) to 
encourage more market participants to report their transactions to 
price index developers, to provide greater transparency into the 
natural gas price formation process, and to increase confidence in the 
accuracy and reliability of wholesale natural gas prices. First, the 
Commission is revising the price index policy to allow market 
participants that report transaction data to price index developers 
(data providers) to report either their non-index based next-day 
transactions, their non-index based next-month transactions, or both, 
to price index developers. In addition, the Commission is revising the 
price index policy to encourage data providers to report transactions 
to as many Commission-approved price index developers as possible, and 
to allow data providers to self-audit on a biennial basis. The 
Commission is also modifying its standards to state that price index 
developers should indicate whether a published index price is 
calculated using market information other than the trades at the 
index's specified location, or a market assessment, in their published 
price indices and data distributions. Moreover, the Commission is 
modifying its standards so that each approved price index developer 
should seek re-approval from the Commission every seven years to 
demonstrate that it fully or substantially meets the standards set 
forth in the Initial Policy Statement. Beginning six months after the 
effective date of this Revised Policy Statement, interstate natural gas 
pipelines and public utilities proposing to use price indices in 
jurisdictional tariffs will no longer be entitled to the rebuttable 
presumption that a price index developer's price indices produce just 
and reasonable rates unless the price index developer has obtained 
approval or re-approval from the Commission within the last seven 
years. Finally, the Commission is modifying the review period for 
assessing the liquidity of natural gas price indices submitted for 
reference in Commission-jurisdictional tariffs to 180 continuous days 
out of the most recent 365 days. This will help to ensure that price 
indices referenced in Commission-jurisdictional tariffs are 
sufficiently liquid.

DATES: This Policy Statement becomes applicable on December 31, 2022.

FOR FURTHER INFORMATION CONTACT: Evan Oxhorn (Legal Information), 
Office of the General Counsel, Federal Energy Regulatory Commission, 
888 First Street NE, Washington, DC 20426, (202) 502-8183, 
<a href="/cdn-cgi/l/email-protection#783d0e191656370010170a16381e1d0a1b561f170e"><span class="__cf_email__" data-cfemail="246152454a0a6b5c4c4b564a64424156470a434b52">[email protected]</span></a>.
    Eric Primosch (Technical Information), Office of Energy Policy and 
Innovation, Federal Energy Regulatory Commission, 888 First Street NE, 
Washington, DC 20426, (202) 502-6483, <a href="/cdn-cgi/l/email-protection#3673445f551866445f5b5945555e765053445518515940"><span class="__cf_email__" data-cfemail="91d4e3f8f2bfc1e3f8fcfee2f2f9d1f7f4e3f2bff6fee7">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 
    1. On December 17, 2020, the Commission issued a proposed revised 
policy statement on natural gas and electric indices,\1\ proposing 
revisions to the price index policy set forth in the Policy Statement 
on Natural Gas and Electric Price Indices \2\ to encourage

[[Page 25238]]

more market participants to report their transactions to price index 
developers \3\ and to provide greater transparency into the natural gas 
price formation process. The Commission indicated that the changes 
would increase confidence in the accuracy and reliability of wholesale 
natural gas prices. In this Revised Policy Statement, we adopt the 
proposals in the Proposed Revised Policy Statement.
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    \1\ Actions Regarding the Comm'n's Pol'y on Price Index 
Formation & Transparency, & Indices Referenced in Nat. Gas & Elec. 
Tariffs, 85 FR 83940 (Dec. 23, 2020) 173 FERC ] 61,237 (2020) 
(Proposed Revised Policy Statement).
    \2\ 104 FERC ] 61,121 (Initial Policy Statement), clarified, 
Order on Clarification of Pol'y Statement on Nat. Gas and Elec. 
Price Indices, 105 FERC ] 61,282 (2003) (2003 Clarification Order), 
clarified, Order Further Clarifying Pol'y Statement on Nat. Gas & 
Elec. Price Indices, 70 FR 41002 (July 15, 2005) 112 FERC ] 61,040 
(2005) (2005 Clarification Order) (collectively, price index 
policy).
    \3\ Price index developers include Argus Media (Argus), Natural 
Gas Intelligence (NGI), Natural Gas Week, and S&P Global Platts 
(Platts).
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    2. First, we revise the price index policy standards for market 
participants that report data to price index developers (data 
providers) to allow them to report either their non-index based next-
day transactions, their non-index based next-month transactions, or 
both, to price index developers. In addition, we encourage data 
providers to report to as many Commission-approved price index 
developers as possible. Further, we allow data providers to self-audit 
on a biennial basis.
    3. We also modify the price index policy standards for price index 
developers to provide that they should indicate when they use a market 
assessment \4\ to calculate an index price. We also modify the 
standards so that each price index developer should seek approval or 
re-approval from the Commission every seven years that it meets or 
continues to meet the standards set forth in the Initial Policy 
Statement. Beginning six months after the effective date of this 
Revised Policy Statement, interstate natural gas pipelines and public 
utilities proposing to use price indices in jurisdictional tariffs will 
no longer be entitled to the rebuttable presumption that a price index 
developer's price indices produce just and reasonable rates unless the 
price index developer has obtained approval or re-approval from the 
Commission within the last seven years. Finally, we clarify the review 
period for assessing the liquidity of natural gas price indices 
submitted for reference in Commission-jurisdictional tariffs.
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    \4\ See Proposed Revised Policy Statement, 173 FERC ] 61,237 at 
P 28. 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.''
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    4. As noted in the Proposed Revised Policy Statement, 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 transactions \5\ within distinct 
geographical boundaries that market participants voluntarily report to 
a price index developer.
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    \5\ 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 (Form No. 552) instructions. The 
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, New York Mercantile Exchange (NYMEX) Trigger 
agreements, NYMEX Plus transactions made in the next-day and next-
month markets, and index-based transactions referencing the next-day 
and next-month markets.
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    5. Natural gas price indices serve as a proxy for the locational 
cost of natural gas in the daily and monthly markets and many market 
participants reference natural gas index prices in their physical and 
financial transactions. Interstate natural gas pipelines, public 
utilities, Regional Transmission Organizations (RTO), and Independent 
System Operators (ISO) reference natural gas price indices in their 
Commission-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.
    6. We find it is important to encourage robust transaction 
reporting to price index developers for transparent and reliable price 
index development. We find the revisions to the price index policy that 
we adopt here will help to encourage more market participants to report 
natural gas transactions to price index developers and increase the 
transparency of the natural gas price formation process.
    7. The Commission's price index policy applies to both natural gas 
and electric price index developers and data providers. The 
Commission's price index policy will continue to apply to natural gas 
data providers and natural gas price index developers, except to the 
extent that this Revised Policy Statement revises the provisions in the 
Commission's price index policy as discussed below. The Commission's 
price index policy will continue to apply to electric data providers 
and electric price index developers as it always has.
    8. We revise the Commission's price index policy and issue this 
Revised Policy Statement, with an effective date of December 31, 2022.

I. Background

A. Initial Policy Statement and Clarification Orders

    9. On July 24, 2003, the Commission issued the Initial Policy 
Statement, in which it set forth the price index policy. Through that 
policy, the Commission ``sought to strengthen confidence'' in the 
natural gas and electricity markets ``by encouraging comprehensive 
reporting of energy transactions to price index developers and by 
encouraging price index developers to provide useful information to the 
industry on the volumes of transactions and number of participants 
trading at various trading hubs.'' \6\
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    \6\ Initial Policy Statement, 104 FERC ] 61,121 at P 11.
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    10. Under the Initial Policy Statement, market participants can 
voluntarily report transactions to price index developers. For those 
market participants that choose to report to price index developers, 
i.e., data providers, the Initial Policy Statement set forth the 
following minimum standards for reporting transactions to price index 
developers:
    (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 price index developers;
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    \7\ Id. P 34.
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    (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 price 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.\7\ The Commission 
designed these standards to create a uniform process of transaction 
reporting that 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 Initial Policy Statement, 
it will benefit from a rebuttable presumption that it has submitted its 
transactions accurately,

[[Page 25239]]

timely, and in good faith (Safe Harbor Policy).\8\
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    \8\ Id. P 37.
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    11. Under the Initial Policy Statement, becoming a Commission-
approved price index developer is also voluntary. In the Initial Policy 
Statement, the Commission set forth minimum standards for publishing 
price indices that, if met, establish a presumption that a price index 
developer's index at a defined location will result in just and 
reasonable charges. These standards for price index developers include: 
(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 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.\9\ The 
Commission intended for these standards to ensure that market 
participants and regulators have confidence that natural gas and 
electric price indices published by price index developers that are 
referenced in Commission-jurisdictional tariffs are based on 
consistent, transparent, and verifiable processes and methodologies 
that help to ensure reliable prices.\10\
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    \9\ Id. P 33.
    \10\ See Initial Policy Statement, 104 FERC ] 61,121.
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    12. On December 12, 2003, the Commission issued its 2003 
Clarification Order.\11\ The 2003 Clarification Order provided 
clarifications to the Commission's price index policy related to the 
standards for data providers in the Initial Policy Statement.
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    \11\ 2003 Clarification Order, 105 FERC ] 61,282.
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    13. On July 5, 2005, the Commission issued its 2005 Clarification 
Order.\12\ The 2005 Clarification Order provided clarifications to 
emphasize the broad nature of the Commission's Safe Harbor Policy to 
encourage companies both to adopt the appropriate procedures to take 
advantage of the Safe Harbor Policy and to contribute their transaction 
information to the price formation process. The 2005 Clarification 
Order also reminded companies of their obligation to notify the 
Commission when there is a change in their reporting practices.\13\
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    \12\ 2005 Clarification Order, 112 FERC ] 61,040.
    \13\ Id. P 21.
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B. Price Index Order

    14. On November 19, 2004, the Commission issued its Price Discovery 
in Natural Gas and Electric Markets \14\ to address issues concerning 
price indices in natural gas and electricity markets. The Commission 
directed Commission staff to continue to monitor price formation in 
wholesale markets, including price index developer and market 
participant adherence to the previously enumerated standards from the 
Initial Policy Statement.\15\ The Commission reviewed the submissions 
from price index developers and granted approval for their price 
indices to be referenced in Commission-jurisdictional tariffs.\16\ The 
Commission also adopted the criteria for price indices to be referenced 
in Commission-jurisdictional tariffs.\17\
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    \14\ 109 FERC ] 61,184 (2004) (Price Index Order).
    \15\ Id. P 22.
    \16\ Id. at ordering para. (B).
    \17\ Id. at ordering para. (D).
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C. The Use of Natural Gas Price Indices in Commission Jurisdictional 
Activities

    15. Given that natural gas price index developers use physical 
fixed-price natural gas transactions to calculate the price of 
published natural gas indices, it is important that transaction 
reporting is robust and that price index development is transparent. 
The significant role played by natural gas price 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.\18\ 
In the Price Index Order, the Commission established guidelines to 
ensure that natural gas price indices that are used in Commission-
jurisdictional tariffs are robust, free from manipulation, and reflect 
market fundamentals.\19\ Subsequently, in the Energy Policy Act of 2005 
(EPAct 2005), Congress amended the Natural Gas Act to give the 
Commission additional authority with respect to natural gas price 
indices.\20\
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    \18\ Initial Policy Statement, 104 FERC ] 61,121 at P 8 & n.1.
    \19\ Price Index Order, 109 FERC ] 61,184.
    \20\ Energy Policy Act of 2005, Public Law 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).
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    16. After the issuance of the Policy Statement and the Price Index 
Order, market participants increased the reporting of their fixed-
priced natural gas transactions to price index developers, which 
resulted in greater confidence in those price indices. However, after 
2010, the estimated traded volume of fixed-price natural gas 
transactions reported to price index developers began to decline 
significantly.\21\ Form No. 552 data show that the estimated volume of 
fixed-price transactions voluntarily reported to price index developers 
declined by approximately 58% from 2010 until 2020.\22\ Figure 1 shows 
estimated physical natural gas volumes reported to price index 
developers based on Form No. 552 data.
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    \21\ Two price index developers now include fixed-price 
transactions from the InterContinental Exchange (ICE) to increase 
the liquidity of their price indices. Commission staff analysis of 
the estimated volumes reported to price index developers via the 
Form No. 552 does not include supplemental information from ICE.
    \22\ The Commission must estimate the volume of transactions 
reported to price index developers using Form No. 552 submissions 
because Form No. 552 filers can provide aggregated data for 
themselves and their affiliates, some of whom may or may not report 
to price index developers. Commission staff estimates this volume by 
calculating the average of the minimum possible volume reported 
(based on the subset of filers with affiliates that all indicate 
that they report to price index developers) and the maximum possible 
volume reported (based on the larger set of filers with at least one 
affiliate that indicates that it reports to price index developers).

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[[Page 25240]]

[GRAPHIC] [TIFF OMITTED] TN28AP22.000

    17. At the same time that fixed-price reporting to price index 
developers decreased, the traded volume of natural gas transactions 
that referenced natural gas price indices, also known as index gas, 
increased. For example, Form No. 552 data showed that index gas 
increased from 68% of the traded volumes in the U.S. physical natural 
gas market in 2010 to 82% in 2020.

D. Standards for Price Indices Used in Jurisdictional Tariffs

    18. The Commission has a statutory obligation to ensure that 
jurisdictional rates are just and reasonable. Under the Natural Gas Act 
and Federal Power Act, the Commission's jurisdiction extends to sales 
of natural gas and electricity for resale in interstate commerce, 
interstate transmission of natural gas and electricity, and the related 
pricing mechanisms within jurisdictional tariffs.\23\ One way the 
Commission helps to ensure just and reasonable jurisdictional rates is 
through the review and approval of natural gas price indices referenced 
in Commission-approved natural gas pipeline and public utility tariffs.
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    \23\ 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).
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    19. An interstate natural gas pipeline or public utility proposing 
to include a price index in its Commission-jurisdictional tariff bears 
the burden of supporting its proposed price index. In the Price Index 
Order, the Commission stated that, when a natural gas pipeline or 
utility proposes to use a new natural gas or electric price index 
reference in a jurisdictional tariff or to change an existing price 
index reference, the Commission would apply a presumption that the 
proposed price index at a defined location will result in just and 
reasonable rates if the natural gas pipeline or public utility: (1) 
Proposes to use a price index at a defined 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 at a defined location meets one 
or more of the applicable liquidity criteria for the appropriate review 
period.\24\ If parties to the proceeding protest the use of the 
proposed price index at a defined location, they are required to 
support the protest with evidence that the selected location does not 
meet the liquidity 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 at a defined location that does not satisfy 
these two conditions. In such a case, the natural gas pipeline or 
public utility bears the burden of showing that the price index at a 
defined location will result in just and reasonable rates and must 
support its filing accordingly.\25\
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    \24\ Price Index Order, 109 FERC ] 61,184 at P 68 (citing N. 
Nat. Gas Co., 104 FERC ] 61,182, at P 10 (2003)).
    \25\ Id. P 69.
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    20. Under the Commission's market behavior rules,\26\ marketers and 
interstate natural gas 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 index 
developers must submit accurate and factual information and report in a 
manner consistent with the procedures set forth in the Commission's 
price index policy.\27\
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    \26\ The Commission established the natural gas market behavior 
rules in 2003 in Order No. 644. Amendment to Blanket Sales 
Certificates, Order No. 644, 68 FR 66323 (Nov. 26, 2003), 105 FERC ] 
61,217 (2003), reh'g denied, 107 FERC ] 61,174 (2004) (codified at 
18 CFR 284.288, 18 CFR 284.403); Investigation of Terms & Conditions 
of Public Utility Mkt.-Based Rate 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 Pub. Util. Mkt.-Based Rate Authorization Holders, 
Order No. 674, 71 FR 9695 (Mar. 29, 2006), 114 FERC ] 61,163 (2006) 
(codified at 18 CFR 35.41(c)).
    \27\ 18 CFR 35.41; 18 CFR 284.288(a); 18 CFR 284.403(a); Initial 
Policy Statement, 104 FERC ] 61,121 at P 37.
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E. Proposed Revised Policy Statement

    21. Noting the significant downward trend in data providers 
reporting transactions to price index developers and the concurrent 
rise in traded volumes of natural gas transactions that referenced 
natural gas price indices, discussed above, Commission staff held the 
Developments in Natural Gas Index Liquidity and Transparency technical 
conference (2017 technical conference) on June 29, 2017, to address 
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 natural gas price formation process.\28\ 
The 2017 technical conference discussion and the post-technical 
conference comments demonstrated a need to revise the Commission's 
price index policy and

[[Page 25241]]

provided the Commission a better understanding of potential reforms to 
address declining data provider transaction reporting to price index 
developers and the robustness and reliability of price index formation.
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    \28\ See Docket No. AD17-12-000. A Commission staff-led 
technical conference addressing similar issues was held in 2003 in 
Docket No. AD03-7-000.
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    22. On December 17, 2020, the Commission issued the Proposed 
Revised Policy Statement,\29\ which proposed several revisions to the 
Commission's price index 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.
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    \29\ 173 FERC ] 61,237.
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II. Discussion

    23. As part of its mandate to ensure just and reasonable rates in 
the wholesale natural gas and electric 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.\30\ 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.
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    \30\ Initial Policy Statement, 104 FERC ] 61,121 at P 1.
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    24. In order to address the decline in reporting to price index 
developers, the Commission proposed several revisions to the 
Commission's price index policy in its Proposed Revised Policy 
Statement to decrease the reporting burden on data providers and 
potentially increase the number of market participants reporting 
transactions to Commission-approved price index developers. The 
Commission stated that increased price reporting would contribute to 
the robustness of Commission-approved price indices and could lead to 
more accurate and reliable price indices referenced in Commission-
jurisdictional tariffs.\31\
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    \31\ Proposed Revised Policy Statement, 173 FERC ] 61,237 at P 
16.
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    25. In the Proposed Revised Policy Statement, the Commission also 
proposed several revisions to the Commission's price index policy 
applicable to Commission-approved price index developers. Specifically, 
the Commission proposed to modify how Commission-approved price index 
developers form natural gas price indices and to ensure that these 
natural gas price index developers continue to adhere to the 
Commission's policies. The Commission stated that these proposed 
revisions would increase the transparency of the natural gas price 
formation process and maintain industry confidence in the price 
indices.\32\
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    \32\ Id. P 17.
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    26. Finally, the Commission proposed to clarify the timeframe over 
which to assess the liquidity for natural gas 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.\33\
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    \33\ Id.
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    27. The Commission received 14 comments, including reply comments, 
in response to the Proposed Revised Policy Statement. The attached 
Appendix A lists those that submitted comments.\34\
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    \34\ Appendix A will not be published in the Federal Register.
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A. Reporting Transactions to Price Index Developers

1. Commission Proposal
    28. In the Initial Policy Statement, the Commission set forth 
standards for data providers reporting transactions to price index 
developers. For the ``Data Reported'' standard, the Commission stated 
that natural gas or electric data providers should report ``each 
bilateral, arm's length transaction between non-affiliated companies in 
the physical (cash) markets.'' \35\ The Commission also defined the 
term for transactions reported to price index developers as ``next day 
or next month.'' \36\ The Commission later clarified that transactions 
reported to price index developers should be ``non-index'' based 
transactions for the next-day and next-month markets.\37\ Regarding 
natural gas price indices, the Commission later acknowledged that 
physical basis transactions occurring during bidweek ``are a 
significant aspect of wholesale natural gas markets and utilize or 
could contribute to the formation of price indices.'' \38\ Thus, the 
Commission requires natural gas data providers who elect to report 
their transactions to price index developers to report both their next-
day fixed-price natural gas transactions and next-month fixed-price and 
physical basis natural gas transactions to price index developers.\39\
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    \35\ Initial Policy Statement, 104 FERC ] 61,121 at P 34.
    \36\ Id.
    \37\ 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.'').
    \38\ Transparency Provisions of Section 23 of the Nat. Gas Act, 
Order No. 704, 73 FR 1014 (Jan. 4, 2008), 121 FERC ] 61,295 (2007), 
order on reh'g and clarification, Order No. 704-A, 73 FR 55726 
(Sept. 26, 2008), 124 FERC ] 61,269, at P 89, reh'g denied, Order 
No. 704-B, 125 FERC ] 61,302 (2008).
    \39\ The Form No. 552 collects information on these types of 
transactions acknowledging their role in next-day and next-month 
price index formation.
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    29. In the Proposed Revised Policy Statement, the Commission 
proposed to allow data providers to report either all non-index based 
next-day transactions, all non-index based next-month transactions, or 
both non-index based next-day and non-index based next-month 
transactions. Under this revision, 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.\40\ The Commission explained that these revisions would reduce the 
reporting burden for data providers who primarily transact in the next-
month market because those data providers can now report their next-
month transactions without being required to take on the daily burden 
of reporting their next-day transactions.
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    \40\ Proposed Revised Policy Statement, 173 FERC ] 61,237 at P 
21.
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2. Comments
    30. The majority of commenters express support for the proposed 
revision, with several commenters suggesting that the proposed revision 
will enhance price indices by reducing the burden of reporting and 
encouraging more robust participation.\41\
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    \41\ American Public Gas Association (APGA) Comments at 12; 
Argus Comments at 3; Edison Electric Institute (EEI) Comments at 4; 
Energy Intelligence Comments at 1; EQT Comments at 5; Electric Power 
Supply Association (EPSA) Comments at 2-3; Interstate Municipal Gas 
Agency (IMGA) Comments at 4; NGI Comments at 3-4; Natural Gas Supply 
Association (NGSA) Comments at 4-5; Platts Comments at 4.
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    31. NGSA states that the proposed revision will foster more robust 
levels of participation in reporting to price index developers, 
particularly for bidweek \42\ transactions.\43\
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    \42\ 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 takes place the following the 
month.
    \43\ NGSA Comments at 4.
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    32. EEI states the proposed revision would significantly reduce the 
daily

[[Page 25242]]

price reporting requirement burden on data providers, which may lead to 
increased reporting by ``smaller and mid-sized companies.'' \44\ 
Similarly, EQT supports the proposed revision because market 
participants who primarily conduct monthly transactions would not have 
to bear the cost and time burden of reporting occasional daily trades, 
and EQT suggests the proposal will increase the number of data 
providers and thereby the accuracy of published price indices.\45\
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    \44\ EEI Comments at 4-5.
    \45\ EQT Energy LLC (EQT) Comments at 5.
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    33. APGA and Platts state that allowing data providers to report 
next-day and/or next-month transactions would make market participants 
more willing to report transactions in markets where they most actively 
trade, potentially benefitting monthly price indices.\46\ NGI states 
that the proposed revision will help market participants, mainly 
smaller local distribution companies, utilities, and end-users, that 
transact most of their volumes in the next-month (i.e., bidweek) market 
versus the next-day market.\47\ NGI further states that such data 
providers could contribute bidweek volumes to a price index developer 
without the ``onerous and resource-consuming price reporting function'' 
in the next-day market for their infrequent daily deals.\48\
---------------------------------------------------------------------------

    \46\ APGA Comments at 12; Platts Comments at 4.
    \47\ NGI Comments at 3-4.
    \48\ Id. at 4.
---------------------------------------------------------------------------

    34. Similarly, Argus states that it has been informed by market 
participants that they often do not transact in both next-day and next-
month markets, or that market participants do minimal trading in one 
market while consistently transacting in the other market. Argus 
explains that these market participants ``lack the willingness to add 
manpower and systems'' to report to price index developers when they 
transact so few transactions.\49\
---------------------------------------------------------------------------

    \49\ Argus Comments at 4.
---------------------------------------------------------------------------

    35. American Forest & Paper Association and Process Gas Consumers 
Group (AFPA/PGC) believe the proposed revision will only result in a 
modest increase to the total amount of reported trades and finds that 
the proposed revision ``does nothing to specifically encourage 
voluntary reporting by marketers.'' AFGA/PGC further state that the 
Commission should ``strongly encourage'' reporting by all natural gas 
marketers to increase the volume of transactions reported to price 
index developers.\50\
---------------------------------------------------------------------------

    \50\ AFPC/PGC Comments at 4-5.
---------------------------------------------------------------------------

3. Commission Determination
    36. We adopt the proposal in the Proposed Revised Policy Statement 
to allow data providers to elect to report either all non-index based 
next-day transactions, all non-index based next-month transactions, or 
both non-index based next-day and non-index based next-month 
transactions to price index developers. Under this modification to the 
price index policy, we require that for whichever set of transactions a 
data provider chooses to report (next-day, next-month, or both), that 
data provider must submit data on each bilateral, arm's length 
transaction within that set. We think that this revision will reduce 
the reporting burden for data providers because it will give them the 
ability to report data for the market (either next-day or next-month) 
that they primarily transact in. We expect that this revision may lead 
to additional reporting of next-month transactions as data providers 
who predominantly transact in the next-month market may choose to begin 
reporting their next-month transactions to price index developers now 
that they no longer have to take on the daily burden of reporting their 
next-day transactions as well.
    37. The majority of commenters express support for the proposal to 
allow data providers to elect to report either all non-index based 
next-day transactions, all non-index based next-month transactions, or 
both non-index based next-day and non-index based next-month 
transactions to price index developers.\51\ We agree with these 
commenters that adopting the proposal in the Proposed Revised Policy 
Statement would lower the reporting burden for data providers. As a 
result, it may also foster more robust participation in reporting to 
price index developers, increasing the accuracy of natural gas 
indices.\52\ As noted by AFPA/PGC,\53\ any increase in reporting to 
price index developers may be modest; nonetheless, we expect that any 
such increase will enhance the overall accuracy and robustness of the 
price indices they develop. Furthermore, we continue to think that, as 
stated in the Proposed Revised Policy Statement, adopting the proposal 
will increase reporting in the next-month market, where reporting to 
price index developers is most needed.\54\ Further, to that end and as 
suggested by AFPA/PGC,\55\ we strongly encourage all market 
participants (including marketers) to report their transactions to 
price index developers as additional data providers will lead to more 
robust price indices.
---------------------------------------------------------------------------

    \51\ APGA Comments at 12; Argus Comments at 4; EEI Comments at 
4; Energy Intelligence Comments at 1; EPSA Comments at 2-3; EQT 
Comments at 5; IMGA Comment at 4; NGI Comments at 3-4; NGSA Comments 
at 4-5; Platts Comments at 4.
    \52\ EQT Comments at 5; NGSA Comments at 4.
    \53\ AFPA/PGC Comments at 4-5.
    \54\ See Proposed Revised Policy Statement, 173 FERC ] 61,237 at 
P 20.
    \55\ AFPA/PGC Comments at 4-5.
---------------------------------------------------------------------------

    38. We note that the adoption of the proposal in the Proposed 
Revised Policy Statement to allow data providers to elect to report 
either all non-index based next-day transactions, all non-index based 
next-month transactions, or both non-index based next-day and non-index 
based next-month transactions to price index developers, necessitates a 
minor adjustment to the Form No. 552 to reflect a reporting company's 
\56\ ability to identify the reporting of non-index based next-day 
transactions, non-index based next-month transactions, or both types of 
transactions in its Form No. 552. We revise the Form No. 552 to allow 
filers to identify if they report their next-day and/or their next-
month fixed-price and physical basis transactions to price index 
developers. Appendix B explains this revision to the Form No. 552.\57\
---------------------------------------------------------------------------

    \56\ A reporting company is the legal entity whose information 
is being submitted to the Commission via a Form No. 552 filing. 
Reporting companies may or may not be data providers reporting 
transactional data to price index developers.
    \57\ Appendix B will not be published in the Federal Register.
---------------------------------------------------------------------------

    39. Finally, we note that as of Fall 2021, several price index 
developers changed their bidweek price index determination period from 
the last five business days of every month to a three-business day 
period, generally concluding on the expiration date of the prompt-month 
NYMEX natural gas futures contract. Thus, physical natural gas 
transactions generally occurring during the last two business days of 
the month, which generally have less liquidity than the prior three 
business days and are subject to post-expiration price volatility, no 
longer contribute to the formation of several monthly price indices. 
Several price index developers made this change to align the price 
determination period during bidweek with higher volume trading days and 
to avoid price volatility from additional trading days. We find that 
this new timeframe for bidweek transactions still complies with the 
Commission's price index policy.\58\
---------------------------------------------------------------------------

    \58\ See Order No. 704, 121 FERC ] 61,295 at P 41. The 
Commission defined a next-month natural gas contract reported on its 
Form No. 552 as a transaction executed during the last five business 
days of one month for uniform delivery over the next month. This 
timeframe was commonly known as bidweek.

---------------------------------------------------------------------------

[[Page 25243]]

B. Encouraging Comprehensive Reporting

1. Commission Proposal
    40. In the Proposed Revised Policy Statement, the Commission 
proposed to encourage all data providers to report their transaction 
data to as many Commission-approved price index developers as 
possible.\59\ The Commission's proposal sought to address the incorrect 
view that the Commission's price index policy had limited data 
providers to reporting to only one price index developer.
---------------------------------------------------------------------------

    \59\ Proposed Revised Policy Statement, 173 FERC ] 61,237 at P 
22.
---------------------------------------------------------------------------

2. Comments
    41. Several commenters agree that reporting to multiple price index 
developers could lead to more robust price indices.\60\ More 
specifically, APGA agrees with the Commission and finds that it would 
be helpful if all data providers reported to as many Commission-
approved price index developers as possible.\61\ Argus notes that if 
more market participants voluntarily report their transactions to 
multiple price index developers the price indices would be more robust; 
further, Argus volunteers to work with market participants to lighten 
and remove the burdens associated with reporting to multiple price 
index developers.\62\
---------------------------------------------------------------------------

    \60\ APGA Comments at 12; Argus Comments at 4; Energy 
Intelligence Comments at 1; EPSA Comments at 2-3.
    \61\ APGA Comments at 12.
    \62\ Argus Comments at 4.
---------------------------------------------------------------------------

    42. Energy Intelligence notes that any additional burden on data 
providers is marginal and would be outweighed by the benefit of having 
multiple independent price index developers available to the 
marketplace.\63\
---------------------------------------------------------------------------

    \63\ Energy Intelligence Comments at 1.
---------------------------------------------------------------------------

    43. However, NGI and NGSA express concern about encouraging data 
providers to report to multiple price index developers.\64\ NGSA 
stresses the importance of allowing data providers the flexibility to 
choose which price index developers they report to, further noting that 
a data provider's reporting decision should be based on what works best 
for each company.\65\ NGI cautions the Commission against strengthening 
the language related to reporting to multiple price index developers, 
because doing so could reduce the number of data providers reporting to 
price index developers, with the benefits of reporting outweighed by 
the additional resources needed to report to additional Commission-
approved price index developers.\66\
---------------------------------------------------------------------------

    \64\ NGI Comments at 4-5; NGSA Comments at 5.
    \65\ NGSA Comments at 5.
    \66\ NGI Comments at 4.
---------------------------------------------------------------------------

    44. NGI also proposes that the Commission should consider expanding 
the questions included in the Schedule of Reporting Companies and Price 
Index Reporting section of the Form No. 552 to require reporting 
companies to explain why they choose not to voluntarily report 
transactions to price index developers, if they indicate that they do 
not price report on Form No. 552.\67\
---------------------------------------------------------------------------

    \67\ Id. at 4-5.
---------------------------------------------------------------------------

3. Commission Determination
    45. We adopt the proposal in the Proposed Revised Policy Statement 
to encourage all data providers to report their transaction data to as 
many Commission-approved price index developers as possible. To 
clarify, there is no requirement that a data provider limit its 
reporting to only one price index developer. To reiterate, a data 
provider may report transactions to more than one price index 
developer.\68\
---------------------------------------------------------------------------

    \68\ 2003 Clarification Order, 105 FERC ] 61,282 at P 12 (``A 
participant, of course, may report transactions to more than one 
index developer.'')
---------------------------------------------------------------------------

    46. We find that, as stated in the Proposed Revised Policy 
Statement, the burden of reporting to multiple price index developers 
has fallen since issuance of the Initial Policy Statement.\69\ For 
example, data providers can now submit transactional data to multiple 
price index developers via one joint email. Further, we find that 
reporting transaction data to multiple price index developers will help 
to increase the robustness of price formation for all price index 
developers. Energy Intelligence notes that the additional reporting 
burden to report to multiple price index developers is marginal, and 
the benefits of reporting to multiple price index developers outweigh 
the reporting burden.\70\ Similarly, APGA and Argus highlight similar 
benefits from urging data providers to report to multiple price index 
developers.\71\ We agree with commenters that adopting this proposal 
will provide clarity to data providers that there is no requirement 
that a data provider limit its reporting to only one price index 
developer. We also find that reporting to multiple price index 
developers could lead to more robust price formation.
---------------------------------------------------------------------------

    \69\ See Proposed Revised Policy Statement, 173 FERC ] 61,237 at 
PP 22-23.
    \70\ Energy Intelligence Comments at 1.
    \71\ APGA Comments at 12; Argus Comments at 4.
---------------------------------------------------------------------------

    47. NGI requests that the Commission expand the information 
requested on the Form No. 552 to require reporting companies to explain 
why they did not voluntarily report transaction data to price index 
developers, if they indicate on their respective annual Form No. 552 
submission that they do not price report to price index developers.\72\ 
We decline NGI's request. NGI acknowledges that data providers are not 
required to, but can voluntarily, report transaction data to price 
index developers. We see no reason to impose a requirement that would 
increase the burden on data providers and potentially discourage 
voluntary reporting, and we decline to adopt this proposal.
---------------------------------------------------------------------------

    \72\ NGI Comments at 4-5.
---------------------------------------------------------------------------

C. Reducing the Self-Audit Burden

1. Commission Proposal
    48. Under the current price index policy, a data provider should 
perform a self-audit annually. In the Proposed Revised Policy 
Statement, the Commission proposed to allow data providers to 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.\73\
---------------------------------------------------------------------------

    \73\ Proposed Revised Policy Statement, 173 FERC ] 61,237 at P 
24.
---------------------------------------------------------------------------

    49. More specifically, the Commission proposed 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 data provider so that the audit be 
undertaken on a biennial basis. As stated in the Initial Policy 
Statement, the results of the audit should continue to 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.\74\
---------------------------------------------------------------------------

    \74\ Initial Policy Statement, 104 FERC ] 61,121 at P 34.
---------------------------------------------------------------------------

    50. Further, the Commission stated that it continued to find it 
acceptable for auditors internal to the data providers to perform the 
self-audits, in order to avoid raising barriers to voluntary reporting. 
More specifically, the Commission stated that the internal audits could 
be performed by a data provider's internal auditor so long as internal 
audit personnel are independent from the trading and reporting 
departments and personnel, and the audit follows internal audit 
standards, such as those prescribed by the Institute of Internal

[[Page 25244]]

Auditors or other similarly generally accepted auditing standards.\75\
---------------------------------------------------------------------------

    \75\ Proposed Revised Policy Statement, 173 FERC ] 61,237 at P 
26.
---------------------------------------------------------------------------

2. Comments
    51. Commenters who support the proposal generally agree that it 
would reduce the reporting burden on data providers.\76\ Specifically, 
Argus, EEI, Energy Intelligence, and NGSA believe the proposal would 
reduce regulatory burden and increase price reporting, with NGSA noting 
enhanced market liquidity as an indirect benefit.\77\
---------------------------------------------------------------------------

    \76\ APGA Comments at 12; Argus Comments at 5; EEI Comments at 
5; Energy Intelligence Comments at 1-2; EPSA Comments at 2-3; EQT 
Comments at 4-5; IMGA Comments at 4; NGI Comments at 5-6; NGSA 
Comments at 5-6.
    \77\ Argus Comments at 5; EEI Comments at 5; Energy Intelligence 
Comments at 1-2; NGSA Comments at 5-6.
---------------------------------------------------------------------------

    52. EQT supports the Commission's proposal to retain the ability of 
data providers to use internal auditors to perform self-audits as long 
as the internal audit personnel are independent from the trading and 
reporting department and follow generally accepted auditing standards, 
noting that this proposal would reduce the cost and time burden for 
data providers.\78\
---------------------------------------------------------------------------

    \78\ EQT Comments at 4-5.
---------------------------------------------------------------------------

    53. NGSA also recommends changes to the Commission's Office of 
Enforcement's audit process. Specifically, NGSA recommends that the 
Office of Enforcement adopt enhancements to its audit process, 
including taking a more targeted approach tailoring the scope of audits 
to a specific set of issues, ensuring data providers understand the 
audit scope, and committing to a reasonable, set timeframe for audits. 
NGSA further recommends that the Office of Enforcement refrain from 
changing or expanding the audit scope without good cause, and 
communicate any changes in the audit scope, completion date, or status 
immediately.\79\
---------------------------------------------------------------------------

    \79\ NGSA Comments at 6-8.
---------------------------------------------------------------------------

3. Commission Determination
    54. We adopt the proposal in the Proposed Revised Policy Statement 
to allow data providers to perform a self-audit on a biennial basis. In 
other words, every two years, a data provider would perform an audit 
covering the previous two years, if choosing this option.
    55. Consistent with the existing requirements of the Commission's 
price index policy, 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.
    56. EEI, Argus, and NGSA state that the proposed audit changes 
would reduce regulatory burden and increase price reporting. We agree; 
adopting this proposal will ease the burden for data providers, which 
may lead to additional data providers reporting transaction data to 
price index developers.
    57. Further, we continue to find it acceptable for internal 
auditors to perform the self-audits, in order to avoid raising barriers 
to voluntary reporting. More specifically, audits can continue to be 
performed by a data provider's internal auditor as long as internal 
audit personnel are independent from the trading and reporting 
departments and personnel, and the audit follows internal audit 
standards, such as those prescribed by the Institute of Internal 
Auditors or other similarly generally accepted auditing standards. We 
find that adequately documented and effective audits by an independent 
internal or external audit function can serve as an appropriate 
compliance control. Moreover, we believe the self-audits will ensure 
that price reporting by market participants is accurate and will 
support industry confidence in price indices.
    58. NGSA recommended several enhancements to the Office of 
Enforcement's audit process, as summarized above.\80\ We emphasize that 
many of NGSA's recommendations are already an inherent part of the 
Office of Enforcement's audit process. We decline to adopt NGSA's 
recommendations in this proceeding because they focus on changes to the 
Office of Enforcement's audit process, which is unrelated to the 
Commission's proposal to reduce the self-audit burden on data 
providers.
---------------------------------------------------------------------------

    \80\ NGSA Comments at 6-9.
---------------------------------------------------------------------------

D. Increasing Confidence in Price Indices

1. Commission Proposal
    59. In the Proposed Revised Policy Statement, the Commission 
proposed 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.\81\ 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.'' \82\
---------------------------------------------------------------------------

    \81\ Proposed Revised Policy Statement, 173 FERC ] 61,237 at P 
27.
    \82\ Id. P 28.
---------------------------------------------------------------------------

    60. Further, the Commission proposed that price index developers 
indicate in their publications and data distributions when they use a 
market assessment to calculate a published index price. Specifically, 
the Commission proposed that price index developers clearly define in 
their code of conduct a method to determine if a price assessment is 
made in its data distributions.\83\
---------------------------------------------------------------------------

    \83\ Id. P 30.
---------------------------------------------------------------------------

2. Comments
    61. The majority of commenters expressed support for the proposal, 
with some commenters noting that the market assessment clarification 
would add transparency to the market.\84\ Further, Argus, Energy 
Intelligence, NGI, and Platts assert that they each currently comply 
with the proposal regarding market assessment identification.\85\ APGA 
similarly notes that it believes that most price index developers have 
already adopted the proposed revision.\86\
---------------------------------------------------------------------------

    \84\ American Gas Association (AGA) Comments at 3-5; APGA 
Comments at 13; Argus Comments at 5; California Independent System 
Operator Corporation (CAISO) Comments at 4-5; Energy Intelligence 
Comments at 2; EQT Comments at 8; IMGA Comments at 4; NGI Comments 
at 6; Platts Comments at 4.
    \85\ Argus Comments at 5; Energy Intelligence Comments at 2; NGI 
Comments at 6; Platts Comments at 4.
    \86\ APGA Comments at 13.
---------------------------------------------------------------------------

    62. AGA states that the proposal should assist market participants 
in identifying market assessments by distinguishing price indices 
calculated from the weighted averages of reported trades from price 
indices calculated by market assessments. AGA believes this proposal 
will increase transparency and provide the market with more information 
about liquidity of certain locations and should promote ``confidence in 
price indices.'' \87\ AGA also notes that AGA members have not voiced 
concerns regarding a loss of confidence in natural gas markets or 
concerns that natural gas price indices do not sufficiently reflect 
locational value of natural gas to permit decision making.\88\ APGA 
notes its concerns with the ``proliferation'' of market assessments, 
highlighting that several smaller APGA members have experienced an 
increase in the number of market assessments at the price index hubs 
where they purchase natural gas.

[[Page 25245]]

APGA welcomes the proposed policy changes.\89\
---------------------------------------------------------------------------

    \87\ AGA Comments at 5.
    \88\ Id.
    \89\ APGA Comments at 9, 13.
---------------------------------------------------------------------------

    63. EQT notes that, subsequent to the guidelines established in 
Price Index Order, no process has been established to allow the 
Commission to reconfirm the liquidity of price index developers' 
indices once they have been included in natural gas pipeline 
tariffs.\90\ EQT explains that the use of price indices in natural gas 
pipeline tariffs to settle imbalances or determine penalties is 
different from their use in commercial transactions; EQT stresses the 
importance of the integrity of price indices, since the use of set 
price indices as a reference point in Commission-jurisdictional tariffs 
does not present shippers with an option to choose their preferred 
price index and, therefore, has day-to-day financial impacts on 
``essentially captive parties.'' \91\ Finally, EQT states that they do 
not believe that market assessments should be permitted to substitute 
for the relatively small minimum trading liquidity requirements adopted 
in the Price Index Order, and the Commission should so clarify in a 
revised policy statement.\92\
---------------------------------------------------------------------------

    \90\ EQT Comments at 5-6 (citing Price Index Order, 109 FERC ] 
61,184 at P 42).
    \91\ Id. at 6.
    \92\ Id. at 8.
---------------------------------------------------------------------------

    64. CAISO requests that the Commission require price index 
developers to report the daily volume traded, number of transactions, 
and number of counterparties, even on days when price index developers 
use market assessments. CAISO asserts that, without the above data 
points, RTOs/ISOs may be unable to assess liquidity based on the 
Commission's proposal for at least 180 continuous days out of the most 
recent 365 days. Alternatively, CAISO asks the Commission for 
additional clarity on how RTOs/ISOs should evaluate price index 
liquidity when price index developers use market assessments.\93\ CAISO 
also requests that the Commission specify the extent to which price 
index developers must report criteria-related data when they rely on 
market assessments rather than weighted averages.\94\
---------------------------------------------------------------------------

    \93\ CAISO Comments at 4-5.
    \94\ Id. at 2.
---------------------------------------------------------------------------

    65. Argus requests that the Commission study whether the increase 
in market assessments, coupled with the requirement that price index 
developers publish when they use a market assessment, affects market 
participant contracting practices. Argus elaborates that market 
participants may include an alternative pricing methodology to replace 
a particular hub in their contracts, explaining that if the hub is 
subject to market assessments, it could indicate to market participants 
that it is a less liquid hub.\95\
---------------------------------------------------------------------------

    \95\ Argus Comments at 6.
---------------------------------------------------------------------------

3. Commission Determination
    66. Consistent with the proposal in the Proposed Revised Policy 
Statement, we clarify that, with respect to assessments, a Commission-
approved price index developer should indicate in its publications and 
data distributions when it uses a market assessment to calculate a 
published index price. Further, under the revised standards for price 
index developers, each price index developer's code of conduct should 
inform customers how it uses market assessments in calculating price 
indices by specifying the types of data it may use in producing a 
market assessment. Price index developers should also clearly explain 
in their code of conduct how to determine if a price assessment is made 
in its publications and its data distributions.
    67. We find that, as noted in the Proposed Revised Policy 
Statement, adopting these proposals will enhance price index assessment 
transparency and give market participants better information about the 
liquidity of certain hub locations.\96\ We agree with AGA that these 
modifications to the Commission's price index policy will increase 
transparency of price index development, and more generally, natural 
gas price formation. We find that these modifications may, in turn, 
increase the industry's confidence in price indices. Finally, we agree 
with AGA and APGA that these modifications will give market 
participants a mechanism to identify market assessments.\97\ We find 
that explicitly requiring price index developers to indicate when and 
how they use a market assessment will provide more clarity to market 
participants and increase price index assessment transparency.
---------------------------------------------------------------------------

    \96\ Proposed Revised Policy Statement, 173 FERC ] 61,237 at P 
30.
    \97\ AGA Comments at 5; APGA Comments at 13.
---------------------------------------------------------------------------

    68. In their comments, both EQT and CAISO request that the 
Commission clarify how market assessments might be used when 
determining price index liquidity. EQT specifically states that they do 
not believe market assessments should be permitted as a substitute for 
the current liquidity requirements, as those requirements are already 
relatively small. A market assessment is only used when a price index 
developer cannot determine a value for the index price using the trades 
at the index's specified location, indicating low liquidity for the 
specified index. Therefore, price index developers should clearly 
identify assessments in their publications and data distribution and to 
explain how to identify price indices that have been assessed in their 
code of conduct.\98\ When measuring the average liquidity of a price 
index proposed for reference in a Commission-jurisdictional tariff, the 
Commission will consider any days the price index is assessed to have 
zero volume, zero transactions, and/or zero counterparties. The 
Commission's price index liquidity requirements \99\ for price indices 
proposed for reference in Commission-jurisdictional tariffs still apply 
to price indices that use market assessments. However, we note that use 
of market assessments may affect the measured liquidity at any given 
price index when it is proposed for reference in a Commission-
jurisdictional tariff because the Commission considers any days the 
price index is assessed to have zero volume, zero transactions, and/or 
zero counterparties.
---------------------------------------------------------------------------

    \98\ For example, some price index developers designate a market 
assessment by indicating a price index having zero volume, zero 
transactions, and zero counterparties.
    \99\ Price Index Order, 109 FERC ] 61,184 at P 66.
---------------------------------------------------------------------------

    69. CAISO also requests that the Commission specify the extent to 
which price index developers must report criteria-related data (i.e., 
daily volume traded, number of transactions, and number of 
counterparties), even on days when price index developers publish 
market assessments in lieu of price indices.\100\ We understand that 
price index developers calculate market assessments when there is 
little or no liquidity at a hub on any given day. If a Commission-
approved price index developer finds that the transaction data reported 
at a hub is insufficient to form a price, a price index developer may 
choose to use other information to determine the price at the hub. As 
long as a price index developer clearly states its methodology to 
identify market assessments, we find that an index developer need not 
report transaction data (i.e., daily volume traded, number of 
transactions, and number of counterparties) for that hub. We decline to 
require such reporting given that Commission-approved price index 
developers may use few (if any) of the reported transactions in 
developing the assessment, thus limiting the value of such reporting.
---------------------------------------------------------------------------

    \100\ CAISO Comments at 4-5.
---------------------------------------------------------------------------

    70. Additionally, Argus requests that the Commission study whether 
the

[[Page 25246]]

increase in market assessments, coupled with the requirement that price 
index developers publish when they use a market assessment, affects 
market participant ``contracting practices.'' \101\ Though we 
acknowledge that market participants may undertake alternative pricing 
methodologies in future contracting practices, Argus has not explained 
the benefit of studying the impact of market assessments on market 
participant contracting practices. Accordingly, we decline to undertake 
such a study.
---------------------------------------------------------------------------

    \101\ Argus Comments at 6.
---------------------------------------------------------------------------

E. Ensuring Price Index Developers' Continued Adherence to the Price 
Index Policy

1. Commission Proposal
    71. In the Initial Policy Statement, the Commission set forth five 
standards for price index developers to demonstrate that their internal 
processes were sufficient to qualify as a Commission-approved price 
index developer and, thus, have their price indices referenced in 
Commission-jurisdictional tariffs.\102\ 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 Commission issued 
the Policy Statement, 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.\103\ Since 
then, the Commission has granted approval to three additional price 
index developers.\104\
---------------------------------------------------------------------------

    \102\ Initial Policy Statement, 104 FERC ] 61,121 at P 33.
    \103\ Price Index Order, 109 FERC ] 61,184 at P 24 (approving 
indices published by Argus, Bloomberg L.P., Btu/Data Transmission 
Network, Dow Jones and Company, Energy Intelligence, ICE, Io Energy 
LLC, NGI, Platts, and Powerdex, Inc. (Powerdex)).
    \104\ Many of the original indices have ceased publication or 
been acquired and rebranded and not reapproved. As such, only five 
approved price index developers remain: Argus, Energy Intelligence 
(Natural Gas Week), NGI, Platts, and Powerdex. Although it was not 
pre-approved, SNL Energy continues to publish indices after 
purchasing IO Energy LLC and BTU/Data Transmission Network in 2004 
and 2009, respectively.
---------------------------------------------------------------------------

    72. In the Proposed Revised Policy Statement, the Commission 
proposed that a Commission-approved price index developer should seek 
re-approval from the Commission every seven years that it continues to 
meet the five standards for price index developers. More specifically, 
the Commission proposed that, beginning six months after the effective 
date of this proposal, interstate natural gas pipelines and public 
utilities proposing to use price indices in jurisdictional tariffs will 
no longer be entitled to the rebuttable presumption that a price index 
developer's price 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 set 
forth in the Initial Policy Statement.
2. Comments
    73. Price index developers generally support the Commission's 
proposal for price index developers to obtain re-approval every seven 
years as a way to ensure their continued adherence to the Commission's 
price index policy.\105\
---------------------------------------------------------------------------

    \105\ Argus Comments at 6; Energy Intelligence Comments at 2; 
NGI Comments at 6; Platts Comments at 3.
---------------------------------------------------------------------------

    74. Platts notes that the Commission has not described the re-
approval requirements or re-approval process.\106\ As a result, Platts 
proposes that price index developers demonstrate adherence to the 
International Organization of Securities Commissions (IOSCO) Principles 
for Oil Price Reporting Agencies for re-approval, as the IOSCO 
principles call for a third-party review on an annual basis and would 
add integrity to the re-approval process.\107\
---------------------------------------------------------------------------

    \106\ Platts Comments at 3-4.
    \107\ Id.
---------------------------------------------------------------------------

    75. EQT also seeks further clarification on whether or how the use 
of market assessments would factor into the ``every seven-year'' 
determination as to whether a price index developer continues to meet 
the Commission's threshold liquidity standard.\108\
---------------------------------------------------------------------------

    \108\ EQT Comments at 6.
---------------------------------------------------------------------------

3. Commission Determination
    76. We adopt the proposal in the Proposed Revised Policy Statement 
for each Commission-approved price index developer to seek re-approval 
from the Commission every seven years that it continues to fully or 
substantially meet the five standards for publishing price indices. 
Beginning six months after the effective date of this revision, 
interstate natural gas pipelines and public utilities proposing to use 
price indices in jurisdictional tariffs will no longer be entitled to 
the rebuttable presumption that a price index developer's price indices 
produce just and reasonable rates unless the price index developer has 
obtained approval or re-approval from the Commission within the last 
seven years.\109\
---------------------------------------------------------------------------

    \109\ Consistent with prior practice, price index developers 
would file for both initial Commission approval and re-approval in 
the PL03-3-000 docket.
---------------------------------------------------------------------------

    77. Under the Commission's price index policy, after the Commission 
approves a price index developer, the Commission has no further 
verification process to ensure that price index developers continue to 
adhere to the five standards for publishing price indices. 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 18 years, despite the myriad changes in natural 
gas markets that have occurred during that time.\110\ Having price 
index developers seek re-approval from the Commission every seven years 
will aid the Commission in ensuring that Commission-jurisdictional 
tariffs and rates that reference price indices remain just and 
reasonable.
---------------------------------------------------------------------------

    \110\ For instance: Multiple price index developers now receive 
transactions from ICE; at some hub locations, index-based ``daily 
basis'' transactions are now being used to create next-day indices; 
and market assessments are being used to price historically liquid 
hub locations where liquidity declined.
---------------------------------------------------------------------------

    78. In responses to comments from Platts asserting that the 
Commission has not yet described the re-approval process, we clarify 
that we have not changed the guidelines for the Commission's approval 
process for a price index developer's methodology.\111\ As such, price 
index developers seeking Commission approval, or re-approval, should 
continue to follow the guidelines stated in the Commission's Initial 
Policy Statement.\112\
---------------------------------------------------------------------------

    \111\ Platts Comments at 3.
    \112\ Initial Policy Statement, 104 FERC ] 61,121, clarified, 
2003 Clarification Order, 105 FERC ] 61,282, clarified, 2005 
Clarification Order, 112 FERC ] 61,040.
---------------------------------------------------------------------------

    79. EQT seeks clarity on whether the use of market assessments 
would factor into the Commission's approval of a price index 
developer.\113\ We find that the use of market assessments will not 
affect Commission approval of a price index developer as long as the 
price index developer's code of conduct adequately describes the 
methodology for use of market assessments as required by this Revised 
Policy Statement.
---------------------------------------------------------------------------

    \113\ EQT Comments at 8.
---------------------------------------------------------------------------

F. Modifying Liquidity Standards for Price Index References

1. Commission Proposal
    80. In the Price Index Order, the Commission adopted a set of 
criteria

[[Page 25247]]

delineating a price index developer's minimum reported level of 
activity at a particular trading location in order for that price index 
trading at that location to be referenced in a Commission-
jurisdictional tariff--effectively known as liquidity standards.\114\
---------------------------------------------------------------------------

    \114\ Price Index Order, 109 FERC ] 61,184 at P 66.
---------------------------------------------------------------------------

    81. The Commission found that interstate natural gas pipelines and 
utilities, when proposing new natural gas and electric price indices to 
be used in Commission-jurisdictional tariffs, should confirm that the 
proposed price index at defined 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.\115\ The Commission did not 
specify any timeframe during which the applicant should show that the 
proposed price index at a defined location meets the liquidity 
threshold. As a result, interstate natural gas pipelines and RTOs/ISOs 
have used different 90-day or six month-periods to submit data on price 
indices at defined locations in order to assess liquidity.\116\
---------------------------------------------------------------------------

    \115\ Id. P 65.
    \116\ E.g., in Docket No. RP20-59-000, filed on October 10, 
2019, Dominion Energy Transmission Inc. submitted transactions for a 
price index at a defined location for the period from June 4, 2019 
to August 30, 2019. In Docket No. RP19-1395-000, filed on July 24, 
2019, Southern Natural Gas Company, L.L.C. submitted transactions 
for a price index at a defined location from April 1, 2019 to July 
16, 2019. Both of these filings were accepted given that the natural 
gas pipelines provided 90 days of data, but the latter filing 
included a review period closer to the date of filing.
---------------------------------------------------------------------------

    82. In the Proposed Revised Policy Statement, the Commission 
proposed to modify the review period over which a natural gas price 
index at a defined location should meet the minimum level of activity 
for natural gas price indices referenced in Commission-jurisdictional 
tariffs to at least 180 continuous days out of the most recent 365 days 
from the filing date of any such proposal.\117\ The proposed 
modification of liquidity standards was intended to provide clarity to 
market participants that propose natural gas price index references in 
their Commission-jurisdictional tariff filings.
---------------------------------------------------------------------------

    \117\ Proposed Revised Policy Statement, 173 FERC ] 61,237 at P 
38.
---------------------------------------------------------------------------

    83. Specifically, the Commission proposed to revise the liquidity 
criteria established in the Price Index Order as follows (revised 
language shown in italics). The Commission also proposed to remove the 
term ``daily'' from the daily, weekly, and monthly liquidity 
requirements to provide clarity concerning the conditions that should 
be met for those types of price indices.
    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 Btu (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.
    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:
    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.
2. Comments
    84. Commenters generally supported the Commission's proposed 
revisions to the review period over which price indices at defined 
locations should meet the minimum level of activity. For instance, EQT 
notes that the proposed revisions would enhance the accuracy of the 
price indices referenced in Commission-jurisdictional tariffs, pricing 
of physical transactions, and settlement of financial hedges.\118\
---------------------------------------------------------------------------

    \118\ EQT Comments at 6.
---------------------------------------------------------------------------

    85. CAISO raises several clarifying questions regarding applying 
the revised liquidity criteria. CAISO asks for clarification regarding 
how to address a scenario where a price index becomes insufficiently 
liquid based on the Commission's criteria, and requests that the 
Commission clarify that RTOs/ISOs are still obligated to comply with 
their tariffs, even where a price index becomes insufficiently liquid. 
CAISO also requests that the Commission clarify how often CAISO must 
evaluate its referenced price indices for liquidity (e.g., daily, 
annually, some other metric). Additionally, CAISO asks that the 
Commission clarify the meaning of ``on average'' in its proposed 
liquidity criteria and whether the term is applied to the liquidity 
criteria independent of its application to each criterion. Lastly, 
CAISO requests the Commission clarify whether CAISO must comply with 
the proposed liquidity criteria every time it uses an index price, or 
whether it may seek relief from applying those criteria where liquidity 
and the use of the index price is less critical, further requesting 
that the Commission identify cases where price indices must satisfy the 
liquidity criteria and other cases where price indices need not satisfy 
the liquidity criteria.\119\
---------------------------------------------------------------------------

    \119\ CAISO Comments at 3-4.
---------------------------------------------------------------------------

    86. EQT questions why the Commission did not consider a similar 
increase to the remaining liquidity criteria language laid out in the 
Price Index Order. As a less burdensome alternative, EQT recommends 
that the Commission consider requiring price index developers, upon re-
approval, to meet at least two of the three liquidity metrics at each 
price location.\120\
---------------------------------------------------------------------------

    \120\ EQT Comments at 6-7.
---------------------------------------------------------------------------

    87. NGSA asks the Commission to apply the proposed liquidity 
criteria on a prospective basis, applying the criteria to future tariff 
filings that propose new or updated price index locations and allowing 
previously approved price index locations to remain in effect. NGSA 
explains that applying the new criteria to previously approved price 
index locations could inadvertently disrupt contractual arrangements 
based on natural gas pipeline tariffs previously approved by the 
Commission.\121\
---------------------------------------------------------------------------

    \121\ NGSA Comments at 8-9.
---------------------------------------------------------------------------

    88. Argus opposes the proposed changes and states that new 
liquidity criteria will likely have unintended and negative 
consequences and urges the Commission to leave the existing liquidity 
criteria intact or solicit alternative proposals. Argus cautions the 
Commission against increasing current liquidity criteria by expanding 
the time period to 180 days, contending the proposed timeframe may not 
be predictive of a subsequent period for which a tariff may apply. 
Argus also states that expanding the review period for price index 
locations may inadvertently reduce the number of price indices that 
qualify for use in Commission-jurisdictional tariffs, resulting in only 
a core group of very liquid hubs meeting the proposed liquidity 
standards.\122\
---------------------------------------------------------------------------

    \122\ Argus Comments at 7-8.
---------------------------------------------------------------------------

    89. If the Commission adopts the 180-day proposal, Argus recommends 
that the Commission revisit and reconsider the specific information to 
accompany market assessments for locations possibly rendered less 
liquid by the 180-day change. Argus asserts that

[[Page 25248]]

customers and market participants that do business at less-liquid 
locations may wish to have more detail about assessment methodologies 
on each instance of publication. Argus also states that it is prepared 
to provide such relevant data.\123\
---------------------------------------------------------------------------

    \123\ Id. at 8.
---------------------------------------------------------------------------

    90. Furthermore, Argus recommends that the Commission reconsider 
applying the liquidity standards to daily electric price indices. Argus 
elaborates that daily electric price indices are most predominantly 
used in the Western Electricity Coordinating Council, where power is 
traded in standard packages of 25 MWh for each peak or off-peak hour, 
smaller than the standard package for the remainder of the country. 
Argus states that in order to meet the 2,000 MWh per day volume 
criteria of the liquidity standards, an index would need either five 
trades during each of the 16 peak hours or 10 trades during each of the 
eight off-peak hours. Argus adds that it does not believe the 
Commission wants to inject a lack of clarity and encourages further 
discussion of the application of the liquidity standards to 
electricity.\124\
---------------------------------------------------------------------------

    \124\ Id. at 7, 9.
---------------------------------------------------------------------------

3. Commission Determination
    91. In the Proposed Revised Policy Statement, the Commission stated 
generally that the proposed modifications would apply solely to natural 
gas price indices.\125\ We recognize, however, that the proposed 
modifications to the liquidity standards would have, by their terms, 
applied to both natural gas and electric price indices (by referencing 
both MMBtu and MWh). Consistent with the Commission's earlier general 
statement, we adopt the proposed liquidity standards only for natural 
gas price indices. As noted below, Commission staff will continue to 
review potential reforms related to electric price index standards, 
including for the liquidity standards.
---------------------------------------------------------------------------

    \125\ Proposed Revised Policy Statement, 173 FERC ] 61,237 at P 
40.
---------------------------------------------------------------------------

    92. Accordingly, we adopt the revised liquidity standards for 
natural gas price indices as follows: (revised language shown in 
italics):
    Daily natural gas price 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 Btu (MMBtu) per 
day; 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 natural gas price 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:
    4. Average volume traded of at least 25,000 MMBtu per day; or
    5. Average number of transactions of eight or more per week; or
    6. Average number of counterparties of eight or more per week.
    Monthly natural gas price 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:
    4. Average volume traded of 25,000 MMBtu per day; or
    5. Average number of transactions of ten or more per month; or
    6. Average number of counterparties of ten or more per month.
    93. We clarify that a natural gas price index must meet at least 
one particular criterion for 180 continuous days and that alternating 
between multiple criteria in the 180-day time period is not sufficient 
to meet the index liquidity standard. The liquidity standards for 
electric price indices remain unchanged.
    94. These revisions to the liquidity standards for natural gas 
indices are based on changes in natural gas markets. We find that 
shifts in regional production and market demand areas have resulted in 
changes in the liquidity of natural gas price index hubs across the 
United States. For example, although the Houston Ship Channel natural 
gas trading hub in South Texas historically was considered to be liquid 
with nearly 100 deals/day in 2008, liquidity has since fallen 
significantly. In 2021, the hub averaged 6 deals/day and on certain 
days did not have any transactions. In light of the dynamic and 
seasonal nature of natural gas trading, some natural gas price indices 
may not provide a reasonable representation of natural gas costs 
consistently enough to be included within Commission-jurisdictional 
tariffs. Further, we find that additional clarity would help to ensure 
applicants' approach to assessing liquidity is reflective of the most 
recent market activity. Additionally, we conclude that expanding the 
review period will ensure that natural gas price indices referenced in 
Commission-jurisdictional tariffs are sufficiently liquid, ultimately 
benefiting customers who are subject to the tariff provisions.
    95. In response to EQT's concerns, we reiterate that applicants 
must present data that demonstrate a price index at a defined location 
meets a single liquidity criterion for 180 continuous days. EQT 
suggests that the Commission should have strengthened each of the three 
criteria or required a price index to meet at least two of the three 
criteria at each price location.\126\ Consistent with the Price Index 
Order, we find that a price index is sufficiently liquid if it meets 
one of the three criteria based on transaction volumes, number of 
transactions, or number of counterparties. We do not adopt EQT's 
recommendation to require price indices to meet multiple criteria as we 
find that such additional requirement would unnecessarily limit 
flexibility. We find that the modifications to the review period 
outlined in the Proposed Revised Policy Statement provide clarity and 
ensure that natural gas price indices referenced in Commission-
jurisdictional tariffs are sufficiently liquid.
---------------------------------------------------------------------------

    \126\ EQT Comments at 6-7.
---------------------------------------------------------------------------

    96. In response to the concerns of NGSA and CAISO, we reiterate 
that the liquidity standards apply to price indices when proposed in a 
tariff. We clarify that Commission-regulated entities will not be 
required to evaluate the price indices currently referenced in their 
tariffs to ascertain whether they meet the new criteria set forth 
above. Nonetheless, we encourage entities to periodically reevaluate 
their tariffs to ensure that referenced price indices have maintained 
adequate liquidity. If an entity wishes to revise a price index 
referenced in its Commission-jurisdictional tariff, it must file a 
proposed tariff revision with the Commission and provide supporting 
information that the new price index meets the established liquidity 
criteria. Other than the revisions adopted here, the underlying 
criteria remain unchanged from the Price Index Order. Also, consistent 
with the Price Index Order, the changes made herein will be applied on 
a prospective basis from the effective date of this Revised Policy 
Statement.
    97. We disagree with Argus \127\ that adopting the proposed 
liquidity standards would create a significant burden for 
jurisdictional entities with unintended and negative consequences. 
Rather, the changes to the liquidity standards encourage use of 
sufficiently liquid natural gas price indices and ensure that proposed 
tariff changes are held to consistent standards. Consistent with the 
Price Index Order, applicants still have flexibility to submit any 
price index for use in a Commission-

[[Page 25249]]

jurisdictional tariff, as long as they provide relevant data 
demonstrating liquidity based on one of the defined criteria (i.e., 
transaction volumes, number of transactions, or number of 
counterparties). While Argus is correct in stating that a particular 
180-day period may not be predictive of a future time period, we do not 
find this a convincing argument against the changes proposed to the 
liquidity standards for natural gas price indices. Using a specified 
time period to measure liquidity establishes a baseline and ensures 
consistent treatment for price indices. Argus also suggests that the 
Commission's adoption of the proposed changes should be conditioned on 
the reevaluation of other factors and the solicitation of alternatives; 
however, we are not persuaded that such a broader inquiry is warranted 
at this time given the limited changes to the liquidity standards.
---------------------------------------------------------------------------

    \127\ We do not address Argus's arguments against the 
application of the proposed revisions to the liquidity standards to 
electric price indices, Argus Comments at 9, because we are not 
applying those proposed revisions to electric price indices.
---------------------------------------------------------------------------

G. Additional Policy Changes to Electric Indices and Electric Price 
Index Developers

    98. The modifications in the Proposed Revised Policy Statement 
apply solely to natural gas price indices and natural gas price index 
developers.\128\ The Commission stated that staff would conduct 
outreach to explore the need for, and scope of, any potential policy 
updates for the electric industry.\129\ We decline to update our policy 
for electric price indices in response to the comments submitted by 
Argus, EPSA and Platts.\130\ Nonetheless, we continue to consider the 
need for, and scope of, any potential modifications to the price index 
policy for the electric industry.
---------------------------------------------------------------------------

    \128\ Proposed Revised Policy Statement, 173 FERC ] 61,237 at P 
40.
    \129\ Id.
    \130\ Argus Comments at 9-10; EPSA Comments at 3; Platts Reply 
Comments at 2-3.
---------------------------------------------------------------------------

H. Other Issues Raised By Commenters

1. Comments
    99. Several commenters raised issues that were not specific to 
proposals in the Proposed Revised Policy Statement.
    100. APGA expresses concerns regarding Operational Flow Order 
penalties during extreme events such as the February 2021 winter storm. 
APGA argues that the Commission should further examine this issue in 
the Commission's review of the market events that occurred as a result 
of that February 2021 winter storm.\131\ APGA also recommends the 
Commission include periodic reports on price index liquidity trends in 
its State of the Markets report. APGA specifically requests the 
Commission provide more transparency on the types of entities that are 
price reporting.\132\
---------------------------------------------------------------------------

    \131\ APGA Comments at 8-9.
    \132\ Id. at 11.
---------------------------------------------------------------------------

    101. Platts believes that price reporting and the underlying 
methodology should evolve and incorporate changing markets and trading 
dynamics. Platts urges the Commission to explore ``other ways'' to 
include ``all relevant trade information into indices, such as 
including daily basis trades.'' \133\ Platts cites the increase in 
liquidity at the Florida city-gates due to their inclusion of ``daily 
basis trades'' at the hub \134\ but did not further elaborate in its 
comments on how to include additional trade information into price 
indices.
---------------------------------------------------------------------------

    \133\ Platts Comments at 4.
    \134\ Id.
---------------------------------------------------------------------------

    102. AFPA/PGC argue the proposals in the Proposed Revised Policy 
Statement do not address the shrinking number of price indices that 
exist today. AFPA/PGC further state that the ability of one or two 
price index developers to exert market power over the price of their 
subscriptions undermines the Commission's efforts to increase reporting 
to price index developers because market participants cannot afford 
price index developer subscriptions. Accordingly, AFPA/PGC suggest that 
the Commission include subscription cost in the accessibility standard 
for price indices, stating that this revision is appropriate given the 
goal of the Commission's fifth standard, the accessibility standard, to 
ensure that all interested customers have reasonable access to 
published price indices on a timely basis.\135\
---------------------------------------------------------------------------

    \135\ See AFPA/PGC Comments at 7.
---------------------------------------------------------------------------

    103. AFPA/PGC suggests the Commission should consider whether the 
number of remaining price index developers is sufficient to ensure that 
price index developers, as a whole, meet the accessibility 
standard.\136\ Further, AFPA/PGC request the Commission consider 
establishing a minimum threshold number of price index developers 
needed for adequate competition, triggering an investigation of the 
competition in the price index developer market.\137\
---------------------------------------------------------------------------

    \136\ AFPA/PGC Comments at 7.
    \137\ Id. at 6-7.
---------------------------------------------------------------------------

    104. AFPA/PGC also suggest that the Commission should consider 
investigating the creation of a non-profit or government-maintained 
source of trade data, further noting that the agency that oversees the 
trade data could ``establish a fee to recover the cost of providing 
this service that would likely be more feasible for market participants 
than attempting to maintain subscriptions to the for-profit indices.'' 
\138\
---------------------------------------------------------------------------

    \138\ Id. at 5-6.
---------------------------------------------------------------------------

2. Commission Determination
    105. The Proposed Revised Policy Statement did not propose reforms 
related to these issues. Therefore, we decline to address them here.

I. Safe Harbor Policy for Data Providers to Price Index Developers 
Notice of Proposed Rulemaking

    106. Concurrent with issuing the Proposed Revised Policy Statement, 
the Commission also issued the Safe Harbor Policy for Data Providers to 
Price Index Developers Notice of Proposed Rulemaking.\139\ The 
Commission proposed to amend the Commission's regulations to codify the 
Safe Harbor Policy established in the Commission's Policy Statement. 
Although the Commission is not acting on the notice of proposed 
rulemaking at this time, the Safe Harbor Policy in the Commission's 
Initial Policy Statement remains in effect.
---------------------------------------------------------------------------

    \139\ 173 FERC ] 61,238 (2020).
---------------------------------------------------------------------------

III. Information Collection Statement

    107. 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 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.
    108. 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

[[Page 25250]]

by sufficient detail to understand how the estimates are generated.
    109. This revised policy statement will affect the existing data 
collection: FERC-549, NGPA Title III Transactions and NGA Blanket 
Certificate Transactions and FERC-552, Annual Report of Natural Gas 
Transactions.
    110. Estimates of the PRA-related burden and cost \140\ follow. The 
following table summarizes the estimated increases and decreases in 
burden due to the proposed policy changes above.
---------------------------------------------------------------------------

    \140\ 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) 2021 average cost of $180,703/year 
(for wages plus benefits, for one full-time employee), $87.00/hour 
is used.
    \141\ The 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.
    \142\ Commission staff assumes respondents with 2020 estimated 
volumes of next-month and physical basis transactions reported to 
price index developers that exceeded two thirds of their total 
estimated volumes reported to price index developers will no longer 
report their next-day transactions to price index developers.
    \143\ We are allowing 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.
    \144\ The 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.
    \145\ Total Form No. 552 filers and their affiliates.

                                     Modifications Due to the Revised Policy Statement in Docket No. Public Law 20-3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Annual number                   Average burden (hrs.)
                                         Number of     of responses    Total number       & cost ($) per        Total annual burden hrs. & total annual
                                        respondents   per respondent   of responses          response                          cost ($)
                                                 (1)             (2)     (1) * (2) =  (4)...................  (3) * (4) = (5)
                                                                                 (3)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Burden Reductions \141\ to FERC-549
--------------------------------------------------------------------------------------------------------------------------------------------------------
Data Providers-perform biennial self-            125              .5            62.5  80 hrs.; $6,960.......  5,000 hrs.; $435,000.
 audit (not annual).
Data Providers--provide month-ahead               11       \143\ 249           2,739  4 hrs.; $348..........  10,956 hrs.; $953,712.
 (not day- ahead on a daily basis)
 \142\.
    Reductions to FERC-549..........  ..............  ..............  ..............  ......................  15,956 hrs.; $1,388,172.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Burden Increases to FERC-549
--------------------------------------------------------------------------------------------------------------------------------------------------------
Price Index Developers--re-certify                 6            0.14            0.84  320 hrs.; $27,840.....  268.8 hrs.; $23,385.6.
 every 7 yrs.
Price Index Developers--code of                    6               1               6  80 hrs.; $6,960.......  480 hrs.; $41,760.
 conduct & confident.; & inform
 customers.
Price Index Developers--identify                   6               1               6  80 hrs.; $6,960.......  480 hrs.; $41,760.
 assessed index price vs. calculated.
                                     -------------------------------------------------------------------------------------------------------------------
    Increases to FERC-549...........  ..............  ..............  ..............  ......................  1,228.80 hrs.; $106,905.60.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Total Reduction.................  ..............  ..............  ..............  ......................  14,727.2 hrs.; $1,281,266.40.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                              Form No. 552 Modifications Due to the Revised Policy Statement in Docket No. Public Law 20-3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Annual number                   Average burden (hrs.)
                                         Number of     of responses    Total number       & cost ($) per        Total annual burden hrs. & total annual
                                        respondents   per respondent   of responses          response                          cost ($)
                                                 (1)             (2)     (1) * (2) =  (4)...................  (3) * (4) = (5)
                                                                                 (3)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Burden Increases \144\ to FERC-552
--------------------------------------------------------------------------------------------------------------------------------------------------------
Form No. 552 filers--indicate if         \145\ 1,163               1           1,163  .25 hrs.; $21.75......  290.75 hrs.; $25,295.25.
 they report their next-day and/or
 next-month transactions.
                                     -------------------------------------------------------------------------------------------------------------------
    Increases to FERC-552...........  ..............  ..............  ..............  ......................  290.75 hrs.; $25,295.25.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Total Increase..................  ..............  ..............  ..............  ......................  290.75 hrs.; $25,295.25.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    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.
    Title: FERC-552, Annual Report of Natural Gas Transactions.
    OMB Control No.: 1902-0242.
    Respondents: Wholesale natural gas market participants (Market 
Participants That Report Transaction Data to Price

[[Page 25251]]

Index Developers) and Price Index Developers.
    Frequency of Responses: As discussed.
    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, email: <a href="/cdn-cgi/l/email-protection#d591b4a1b496b9b0b4a7b4bbb6b095b3b0a7b6fbb2baa3"><span class="__cf_email__" data-cfemail="3e7a5f4a5f7d525b5f4c5f505d5b7e585b4c5d10595148">[email protected]</span></a>, 
or phone: (202) 502-8663.

IV. Document Availability

    111. In addition to publishing the full text of this document in 
the Federal Register, 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 President's March 13, 2020 
proclamation declaring a National Emergency concerning the Novel 
Coronavirus Disease (COVID-19).
    112. 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.
    113. User assistance is available for eLibrary and the Commission's 
website during normal business hours from FERC Online Support at (202) 
502-6652 (toll free at 1-866-208-3676) or email at 
<a href="/cdn-cgi/l/email-protection#90f6f5e2f3fffefcf9fef5e3e5e0e0ffe2e4d0f6f5e2f3bef7ffe6"><span class="__cf_email__" data-cfemail="c0a6a5b2a3afaeaca9aea5b3b5b0b0afb2b480a6a5b2a3eea7afb6">[email protected]</span></a>, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
<a href="/cdn-cgi/l/email-protection#8ffffaede3e6eca1fdeae9eafdeae1eceafde0e0e2cfe9eafdeca1e8e0f9"><span class="__cf_email__" data-cfemail="3b4b4e5957525815495e5d5e495e55585e495454567b5d5e4958155c544d">[email protected]</span></a>.

V. Effective Date

    114. This Policy Statement will become effective on December 31, 
2022.
    By the Commission. Commissioner Danly is concurring with a separate 
statement attached.

    Issued: April 21, 2022.
Debbie-Anne A. Reese,
Deputy Secretary.

Appendix A: Commenters

(1) American Public Gas Association (APGA)
(2) EQT Energy LLC (EQT)
(3) S&P Global Platts (Platts)
(4) Electric Power Supply Association (EPSA)
(5) Energy Intelligence Group (Energy Intelligence)
(6) American Gas Association (AGA)
(7) Natural Gas Supply Association (NGSA)
(8) Natural Gas Intelligence Press Inc (NGI)
(9) Argus Media Inc. (Argus)
(10) California Independent System Operator Corporation (CAISO)
(11) American Forest & Paper Association and Process Gas Consumers 
Group (AFPA/PGC)
(12) Edison Electric Institute (EEI)
(13) Interstate Municipal Gas Agency (IMGA)

Appendix B: Proposed Changes to Form No. 552

    To reduce the burden on natural gas data providers who choose to 
report their fixed-price transactions to natural gas price index 
developers, the Revised Policy Statement modifies the Commission's 
price index policy to allow data providers to now report their next-
day or the next-month transactions, or both, to price index 
developers.
    As a result of this policy change, a minor modification needs to 
be made to FERC Form No. 552, Annual Report of Natural Gas 
Transactions (Form No. 552) to ensure that the Commission accurately 
collects information from market participants who report their 
natural gas transactions to price index developers. On May 1 of each 
year, filers submit the Form No. 552 which collects aggregated 
physical natural gas transactional information from market 
participants that buy or sell more than 2.2 TBtus during the 
previous calendar year. Page 3 of Form No. 552 requires market 
participants to identify whether they report their transactions to 
price index developers. To account for the change in policy, the 
Commission modifies Form No. 552 to allow filers to identify if they 
report their next-day and/or their next-month fixed-price and 
physical basis transactions to price index developers. The revision 
to page 3 of Form No. 552 is set forth below in highlight and 
requires filers and their affiliates to now identify if they report 
their next-day (identified below as ``Daily'') and/or their next-
month fixed-price and physical basis transactions (identified below 
as ``Monthly'') to price index developers.
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United States of America

Federal Energy Regulatory Commission

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

(Issued April 21, 2022)

DANLY, Commissioner, concurring:

    1. I concur with today's order \1\ adopting the revisions that 
the Commission proposed in December 2020 to its Policy Statement on 
Natural Gas and Electric Price Indices.\2\ As part of its charge to 
ensure just and reasonable rates,\3\ the Commission should take 
actions that enhance the liquidity and transparency of the price 
indices that are used in jurisdictional tariffs.
---------------------------------------------------------------------------

    \1\ Actions Regarding the Commission's Policy on Price Index 
Formation & Transparency, & Indices Referenced in Nat, Gas & Elec. 
Tariffs, 179 FERC ] 61,036 (2022) (Order).
    \2\ Actions Regarding the Commission's Policy on Price Index 
Formation & Transparency, & Indices Referenced in Nat. Gas and Elec. 
Tariffs, 173 FERC ] 61,237 (2020).
    \3\ See 15 U.S.C. 717c(a); id. Sec.  717t-2; see also NAACP v. 
FPC, 425 U.S. 662, 669 (1976) (``[I]t is clear that the principal 
purpose of [the Natural Gas Act] was to encourage the orderly 
development of plentiful supplies of . . . natural gas at reasonable 
prices.'') (citations omitted).
---------------------------------------------------------------------------

    2. I write separately to suggest that the Commission might have 
acted otherwise on its parallel proposal to codify its Safe Harbor 
Policy for Data Providers to Price Index Developers in Docket No. 
RM20-7-000 (Proposed Rule).\4\ Doubtless, there are good reasons for 
the Commission to decline to act at this time.\5\ However, the 
Commission offers none.
---------------------------------------------------------------------------

    \4\ 173 FERC ] 61,238 (2020).
    \5\ See Order, 179 FERC ] 61,036 at P 106.
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    3. Initially, the Commission had found that ``[b]ased on 
industry comments during and after the technical conference, we 
believe that incorporation of the Safe Harbor Policy into the 
Commission's regulations will provide greater certainty to market 
participants and will lead to increased voluntary reporting to price 
index developers.'' \6\ All but one entity \7\ commenting on the 
Proposed Rule agreed.\8\ Though entitled to decline to take action, 
it would have been preferable for the Commission to have cited 
specific evidence and to have explained why it is now deterred from 
acting within our jurisdiction on a proposal that it had initially 
believed would improve the indices.
---------------------------------------------------------------------------

    \6\ Safe Harbor Policy for Data Providers to Price Index 
Developers, 173 FERC ] 61,238 at P 12 (citations omitted).
    \7\ See Public Citizen, Inc., Comments, Docket No. RM20-7-000 
(filed June 1, 2021).
    \8\ See, e.g., Argus Media, Inc., Comments, Docket No. RM20-7-
000, at 3 (filed June 1, 2021) (``Market participants consistently 
have voiced concerns to Argus that federal authorities including the 
Commission may pursue enforcement actions because of inadvertent 
errors in reporting transactions to price index developers despite 
the existence of the Safe Harbor Policy. Inadvertent errors could 
still lead to costly and disruptive enforcement investigations and 
audits. This is made even more risky for the data provider as there 
are not any `damage caps' for investigative costs or potential 
liability.''); Energy Intelligence, Comments, Docket No. PL20-3-000, 
at 2 (filed Mar. 23, 2021) (``Energy Intelligence views the 
Commission's parallel proposal (in Docket No. RM20-7-000) to codify 
into its regulations the `Safe Harbor Policy for Data Providers' . . 
. as an essential component of the effort to encourage more market 
participants to report their transactions to price index developers. 
On numerous occasions, potential data providers have expressed a 
reluctance to report transactions due to perceived risks associated 
with inadvertently reporting something in error.'').
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    For these reasons, I respectfully concur.

James P. Danly,
Commissioner.

[FR Doc. 2022-08972 Filed 4-27-22; 8:45 am]
BILLING CODE 6717-01-P


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