Commission Watch

How far will FERC go to restore market confidence?

 

Despite keen industry interest in FERC's proposed "rules of the road," aka new codes of conduct, it appears the industry will have to wait. FERC recently granted extensions for filings, and the commission will not gather all reply comments until Sept. 18. Filings so far point to differences over the proposals, especially in time frames for reporting bad behavior, appropriate monetary penalties, and defining to whom the rules apply.

References to the codes of conduct can be found in FERC's July 24 policy statement setting forth guidelines for reporting and developing price indexes for natural gas and electric transmission transactions. In the order, FERC touts a price index providing price developers with guidance on how their products can enhance both fixed-price and index-based trading, while increasing market awareness of liquidity conditions (Docket No. PL03-3-000, 104 FERC 61,121). But at the same time, FERC laments the recent decrease in reporting transaction prices, noting the voluntary nature of the July 24 guidelines. In the July 24 order, FERC says "if voluntary reporting does not increase to the point that indices are sufficiently robust to support a healthy market, or if the standards recommended by the commission herein are not widely adopted, the commission will consider further action."

FERC already is moving ahead, as seen in two June 26 orders-its proposed rule to set a code of conduct for unbundled gas sales service and holders of blanket marketing certificates (Docket No. RM03-10-000) and a related proposal seeking comment on adoption of electric market behavior rules (Docket Nos. EL01-118-000 and EL01-118-001).