[Federal Register Volume 87, Number 82 (Thursday, April 28, 2022)]
[Notices]
[Pages 25237-25253]
[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,<PHONE_NUMBER>,
[email protected].
    Eric Primosch (Technical Information), Office of Energy Policy and
Innovation, Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426,<PHONE_NUMBER>, [email protected].

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

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,

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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[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

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

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

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

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

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.

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

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

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

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-

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

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

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: [email protected],
or phone:<PHONE_NUMBER>.

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
[email protected], or the Public Reference Room at (202) 502-
8371, TTY<PHONE_NUMBER>. Email the Public Reference Room at
[email protected].

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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BILLING CODE 6717-01-C

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.
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    \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).
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    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.
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    \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.
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    \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