RESOLUTION
Calling Upon State Regulatory Authorities to Participate in the Investigations of False Reporting to Publishers of Natural Gas Price Indices and Asking Federal Authorities to Provide State Authorities With More Information on the Federal Investigations of False Reporting
WHEREAS, Published natural gas price indices are widely used in Local Distribution Company (LDC)tariffs for the calculation of balancing cash-outs and penalties,
WHEREAS, Published gas price indices are also widely used in purchased gas cost adjustment and performance based ratemaking proceedings for LDC’s,
WHEREAS, Published gas price indices are extensively used in LDC contracts with natural gas suppliers,
WHEREAS, Widespread use of published natural gas price indices in gas contracts and in state regulatory proceedings makes it imperative that the indices are accurate and are not subject to manipulation,
WHEREAS, The Commodities Futures Trading Commission (CFTC) and the FERC have instigated investigations and engaged in enforcement actions concerning problems with published price indices and instances in which companies have provided false data to publishers of the price indices,
WHEREAS, Neither the CFTC nor the FERC has revealed the geographic hubs affected by the false reporting,
WHEREAS, Disclosure of the geographic hubs involved in the CFTC and FERC investigations and enforcement actions will provide state regulatory authorities and other natural gas market participants with valuable information regarding the scope of the impact of the false data reporting,
WHEREAS, In Resolution Number 2003-1, NASUCA urged the FERC to investigate the accuracy of published price indices and potential remedies to ensure accurate price indices,
WHEREAS, Any regulatory response taken by the FERC could have a significant impact upon the gas purchase contracts of LDC’s and the ratemaking procedures used by state regulatory authorities,
WHEREAS, State regulatory authorities can assist the efforts of Federal regulatory authorities by making efforts to determine whether entities subject to state jurisdiction are involved in false reporting of gas prices,
THEREFORE BE IT RESOLVED, that NASUCA encourages state regulatory authorities and LDC’s to monitor the FERC’s investigation of the natural gas price indices, standards and auditing procedures and to participate in the FERC’s development of potential responses to ensure the accuracy of price indices,
BE IT FURTHER RESOLVED, that NASUCA encourages the CFTC and the FERC to provide more information to State Commissions, Consumer Advocate Offices and other appropriate state and federal agencies regarding the geographic hubs involved in their investigations and enforcement actions of companies engaged in false reporting of natural gas prices,
BE IT FURTHER RESOLVED, that NASUCA calls upon state regulatory authorities to make efforts to determine whether entities subject to their jurisdiction are engaged in false reporting of gas prices,
BE IT FURTHER RESOLVED, that NASUCA calls upon state regulatory authorities to establish protocols for referral of suspected false reporting to appropriate state or federal authorities if entities subject to state regulatory jurisdiction are found to have engaged in false reporting of natural gas prices,
BE IT FURTHER RESOLVED, that NASUCA encourages state regulatory authorities to make efforts to determine whether entities subject to their jurisdiction are taking prudent measures to assure that any indices they rely on in natural gas supply contracts are accurate.
BE IT FURTHER RESOLVED, that NASUCA authorizes the Executive Committee to develop positions and take further actions consistent with the contents of this resolution. The Executive Committee shall inform the membership of such positions and actions prior to proceeding with them, if at all possible. In any event, the Executive Committee will advise the membership of any actions taken consistent with the recommendations contained herein.
Approved by NASUCA:
March 6, 2003
Submitted by:
NASUCA Gas Committee