82 FR 27809 - Supplemental Notice of Technical Conference

DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission

Federal Register Volume 82, Issue 116 (June 19, 2017)

[Federal Register Volume 82, Number 116 (Monday, June 19, 2017)]
[Notices]
[Pages 27809-27812]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-12671]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission


Supplemental Notice of Technical Conference

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                                                   Docket Nos.
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Developments in Natural Gas Index       AD17-12-000
 Liquidity and Transparency.
Price Discovery in Natural Gas and      PL03-3-000
 Electric Markets.
Natural Gas Price Formation...........  AD03-7-000
ISO New England Inc...................  ER17-795-000
                                        ER17-795-001

[[Page 27810]]

 
Kinetica Energy Express, LLC..........  RP16-1299-000
                                        RP16-1299-001
                                        RP16-1299-002
New York Independent System Operator,   ER17-386-001
 Inc.                                   ER17-386-002
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    As announced in the Notice issued May 10, 2017,\1\ Federal Energy 
Regulatory Commission (Commission) staff will hold a technical 
conference on Thursday June 29, 2017 from 9:00 a.m. to 5:30 p.m. to 
discuss the state of liquidity and transparency in the physical natural 
gas markets. The agenda and list of panel participants for this 
conference are attached. The conference is free of charge and open to 
the public. Commission members may participate in the conference.
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    \1\ Developments in Natural Gas Index Liquidity and 
Transparency, Docket No. AD17-12-000 (May 10, 2017) (Notice of 
Technical Conference) (https://elibrary.ferc.gov/IDMWS/common/opennat.asp?fileID=14586688).
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    If they have not already done so, those who plan to attend the 
technical conference are strongly encouraged to complete the 
registration form located at: https://www.ferc.gov/whats-new/registration/06-29-17-form.asp. The dress code for the conference will 
be business casual.
    The technical conference will be transcribed. Transcripts will be 
available from Ace Reporting Company and may be purchased online at 
www.acefederal.com, or by phone at (202) 347-3700. In addition, there 
will be a free webcast of the conference. The webcast will allow 
persons to listen, but not participate, and will be accessible at 
www.ferc.gov Calendar of Events. The Capitol Connection provides 
technical support for the webcast and offers the option of listening to 
the technical conference via phone-bridge for a fee; visit 
www.CapitolConnection.org or call (703) 993-3100 with any webcast 
questions.
    Commission conferences are accessible under section 508 of the 
Rehabilitation Act of 1973. For accessibility accommodations, please 
send an email to [email protected] or call toll free 1-866-208-
3372 (voice) or 202-208-1659 (TTY), or send a FAX to 202-208-2106 with 
the required accommodations.
    For more information about the technical conference, please 
contact:

Sarah McKinley (Logistics), Federal Energy Regulatory Commission, 888 
First Street NE., Washington, DC 20426, (202) 502-8368, 
[email protected].
Eric Primosch (Technical), Federal Energy Regulatory Commission, 888 
First Street NE., Washington, DC 20426, (202) 502-6483, 
[email protected].
Omar Bustami (Legal), Federal Energy Regulatory Commission, 888 First 
Street NE., Washington, DC 20426, (202) 502-6214, 
[email protected].

    Dated: June 13, 2017
Kimberly D. Bose,
Secretary.

Technical Conference on Developments in Natural Gas Index Liquidity and 
Transparency

Docket No. AD17-12-000

June 29, 2017
Agenda
    The purpose of the staff-led Technical Conference on Developments 
in Natural Gas Index Liquidity and Transparency is to solicit feedback 
and develop a record regarding index robustness and to discuss what, if 
anything, the industry and/or the Commission could do to increase 
transparency and support greater robustness in natural gas price 
formation. The technical conference will examine: (1) The current state 
of natural gas index liquidity and voluntary reporting to index 
developers; (2) the use of natural gas indices over time; and (3) 
possible actions that the industry and/or the Commission could take to 
increase transparency and support greater robustness in natural gas 
price formation.
9:00 a.m.-9:15 a.m. Welcome and Opening Remarks
9:15 a.m.-9:45 a.m. Natural Gas Index Presentation (Commission Staff)
    Staff will present an overview of natural gas transactions using 
FERC Form No. 552 data. The presentation will review trends in next-day 
and next-month transactions, the number of companies that report to 
index developers, and the volume of fixed-priced transactions that 
contribute to natural gas indices. Staff will also present an overview 
of natural gas indices referenced in jurisdictional tariffs.
9:45 a.m.-12:00 p.m. Panel 1: Robustness and Liquidity of Natural Gas 
Indices
    Most price indices are supplied as a commercial service by 
publishers of daily, weekly, or monthly newsletters. Price indices play 
a pivotal role in natural gas market price formation, and are commonly 
referenced in physical and financial transactions. This panel will 
examine the robustness and liquidity of natural gas indices, the degree 
of industry reliance on index-based contracts rather than fixed-price 
contracts, the decline in fixed-price reporting to index developers, 
and whether natural gas indices accurately reflect market conditions.
    Panelists are encouraged to respond to the following:
    1. Describe the current trends in natural gas fixed-price and 
physical basis trading that you believe positively or negatively impact 
price formation in the natural gas market, detailing any observable 
shifts in liquidity. Are there differences in market fundamentals, 
procedures, or policies which disproportionately impact either overall 
or regional liquidity?
    2. How have the volume and quality of next-day and next-month 
fixed-price and physical basis transaction reporting changed? In 
addition, describe any changes in other information used to form 
natural gas indices. Are there market, regulatory, or other factors 
that discourage reporting? If so, are there ways to incent reporting?
    3. For indices published by index developers and referenced in FERC 
jurisdictional tariffs, the Commission requires index developers to 
comply with five standards: (1) Code of conduct and confidentiality; 
(2) completeness; (3) data verification, error correction, and 
monitoring; (4) verifiability; and (5) availability and 
accessibility.\2\ How have index developers' methodologies and 
practices changed since these standards were developed? Are the 
standards established in 2003 still relevant and sufficient to allow 
for healthy and robust natural gas price formation in today's 
environment?
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    \2\ Policy Statement on Natural Gas and Electric Price Indices, 
104 FERC ] 61,121, at P 33 (2003).
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    4. Is there a need for additional transparency regarding natural 
gas index price assessments and the level of liquidity underlying each 
natural gas index published by index developers? Should common minimum 
liquidity thresholds be defined? If so, who should define them, and 
what should be the mechanism for accomplishing this? For example, 
should index developers provide information about which indices are 
illiquid? What kind of coordination would be necessary, and what kind 
of information would be shared, and with whom, when a given natural gas 
price index is deemed illiquid?

Panelists

 Mark Callahan, Editorial Director for Platts North America, 
S&P Global
 J.C. Kneale, Vice President--North American Natural Gas, Power 
& NGL Markets InterContinental Exchange

[[Page 27811]]

 Euan Craik, Chief Executive Officer, Argus Media
 Tom Haywood, Editor--Natural Gas Week, Energy Intelligence
 Dexter Steis, Executive Publisher, Natural Gas Intelligence
 Vince Kaminski, Professor in Practice of Energy, Rice 
University
 Orlando Alvarez, President and CEO, BP Energy Company
 Edward Fortunato, Managing Director of Analytics for 
Constellation Energy, Exelon Corporation
12:00 p.m.-1:00 p.m. Break
1:00 p.m.-3:30 p.m. Panel 2: Role of Natural Gas Indices in Price 
Formation
    Natural gas indices are used by industry for a variety of purposes, 
such as settling bilateral contracts of varying terms, basis swap 
futures, index swap futures, swing swap futures, and calendar and basis 
spreads. Natural gas indices also are used in FERC jurisdictional 
interstate natural gas pipeline and wholesale electric transmission 
tariffs for various purposes. For example, indices are used in many 
interstate natural gas pipeline tariffs to settle imbalances or 
determine penalties. In addition, State Commissions use indices as 
benchmarks in reviewing the prudence of natural gas purchases by local 
distribution companies. Finally, some Regional Transmission 
Organizations and Independent System Operators (RTOs/ISOs) rely on 
natural gas indices to develop reference levels for market power 
mitigation. Given the prevalence of indices in the natural gas and 
electric industries, indices must be robust and have the confidence of 
market participants for such markets to function properly and 
efficiently.
    Panelists are encouraged to respond to the following:
    1. Describe current industry uses of physical natural gas price 
indices. Are natural gas price indices sufficiently reflecting the 
locational value of natural gas to permit decision-making by those with 
an interest in the value of natural gas such as: End users, producers, 
marketers, and other buyers and sellers?
    2. Are there improvements that should be made to increase the 
likelihood that natural gas indices will reflect the market value at 
particular locations? For example, could index publishers provide 
increased transparency when there are insufficient transactions to 
formulate an index price? What additional information could signal that 
market activity is sufficiently robust to create accurate prices?
    3. For RTOs/ISOs that rely on natural gas indices to develop 
reference levels for market power mitigation, do you have concerns 
about the robustness or liquidity of the natural gas indices used in 
your tariffs? If so, please explain why.
    4. Recognizing that the use of natural gas indices in FERC 
jurisdictional tariffs is different from their use in commercial 
transactions, the Commission established liquidity thresholds for 
indices referenced in jurisdictional tariffs.\3\ Do these thresholds 
accurately capture minimum liquidity thresholds over an appropriate 
time period? Should the liquidity of indices referenced in FERC 
jurisdictional tariffs be reassessed periodically, and if so, who 
should assess it, and what should be the mechanism for accomplishing 
this? What kind of coordination would be necessary, and what kind of 
information should be shared and with whom, should a given index be 
deemed illiquid?

    \3\ Price Discovery in Natural Gas and Electric Markets, 109 
FERC ] 61,184 at P60 (2004).
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Panelists

 Paul Greenwood, Vice President-Americas, Africa, and Asia 
Pacific New Markets for ExxonMobil, Natural Gas Supply Association 
Representative
 Pallas LeeVanSchaik, External Market Monitor, Potomac 
Economics
 Guillermo Bautista Alderete, Director--Market Analysis and 
Forecasting, California ISO
 Christopher Hamlen, Regulatory Counsel, ISO-NE
 George Wayne, Director of Account Services for the Western 
Pipelines, Kinder Morgan
 Edward Fortunato, Managing Director of Analytics for 
Constellation Energy, Exelon Corporation
 Corey Grindal, Senior Vice President--Gas Supply, Cheniere 
Energy
 David Louw, Division Director--Risk Management and Compliance, 
Macquarie Energy
 Donnie Sharp, Senior Natural Gas Supply Coordinator for 
Huntsville Utilities, American Public Gas Association Representative
 Lee Bennett, Manager, Pricing and Business Analysis for 
Transcanada, on behalf of Interstate Natural Gas Association of America 
Representative
 Susan Bergles, Assistant General Counsel, American Gas 
Association
3:30 p.m.-3:45 p.m. Break
3:45 p.m.-5:25 p.m. Panel 3: Options To Increase Transparency and 
Liquidity of Natural Gas Indices
    Should action be taken to foster more meaningful, reliable, and 
transparent price information in natural gas markets? What changes may 
be necessary to incent voluntary price reporting and improve the 
accuracy, reliability, and transparency of natural gas price indices? 
Discuss the degree to which the level of voluntary reporting and other 
developments within the commercial service model of natural gas index 
development impact the robustness of natural gas indices.
    Panelists are encouraged to respond to the following:
    1. Is there a need to develop industry wide liquidity thresholds? 
While the Commission maintains certain liquidity thresholds for indices 
referenced in jurisdictional tariffs, should standards be developed 
that would apply to other uses of natural gas indices? If so, how can 
such standards be developed and by whom? Can this be addressed through 
voluntary consensus or through other regulatory processes? Are there 
legal, commercial, or technical impediments to doing so?
    2. Should the Commission take steps to provide greater natural gas 
price transparency and market information, promote index developer 
competition, and enhance confidence in natural gas price formation 
through increased transparency and accessibility of natural gas index 
information? For example, should the Commission consider exercising its 
authority under section 23(a)(1) through (3) of the Natural Gas Act to 
require market participants to report price forming transactions to 
index developers?
    3. Is index data sufficiently available and transparent? Does the 
commercial service model negatively or positively impact price 
formation? What actions, policies, or trends have impacted price 
discovery? Is there additional information market participants need to 
ensure robust natural gas price formation? Who should provide that 
information? How would that information be shared?

Panelists

 Greg Leonard, Vice President, Cornerstone Research
 Orlando Alvarez, President and CEO, BP Energy Company
 Mark Callahan, Editorial Director for Platts North America, 
S&P Global
 J.C. Kneale, Vice President--North American Natural Gas, Power 
& NGL Markets InterContinental Exchange

[[Page 27812]]

 Vince Kaminski, Professor in Practice of Energy, Rice 
University
 Curtis Moffatt, Deputy General Counsel and Vice President, 
Kinder Morgan
 Joe Bowring, President, Monitoring Analytics
 Corey Grindal, Senior Vice President--Gas Supply, Cheniere 
Energy
 Tom Haywood, Editor--Natural Gas Week, Energy Intelligence
 Drew Fossum, Senior Vice President and General Counsel, 
Tenaska Inc.
 Joan Dreskin, Vice President and General Counsel, Interstate 
Natural Gas Association of America
5:25 p.m.-5:30 p.m. Closing Remarks
[FR Doc. 2017-12671 Filed 6-16-17; 8:45 am]
 BILLING CODE 6717-01-P