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indices, the Commission began an exhaustive analysis of these and related issues in the form of multiple staff white papers, two technical conferences, and a follow up staff workshop.
6. At the conclusion of these efforts, the Commission issued its Policy Statement to explain what the Commission expects of natural gas and electric price indices and under what conditions the Commission will give industry participants safe harbor protection for good faith reporting of transaction data to entities that develop price indices.7 In particular, the Commission created a rebuttable presumption that companies and individuals that report trade data to price index developers in accordance with the standards adopted here are doing so in good faith, and will not be
investigated or subjected to administrative penalties for inadvertent mistakes made in the course of reporting energy transaction information.8 Thus, the Commission adopted the Safe Harbor Policy for the explicit purpose of encouraging more industry participants to contribute to the formation of price indices.9 Consistent with the Policy Statement, the Commission has not investigated or imposed penalties on any companies for inadvertent reporting errors.
7. After the Policy Statement was issued, the natural gas volumes market participants reported to price index developers increased, which resulted in greater confidence in those indices.
However, after 2010, the estimated traded volume of fixed-price natural gas transactions reported to price index
developers began to decline significantly.10 FERC Form No. 552 data show that the estimated volume of fixed-price transactions voluntarily reported to price index developers declined by approximately 54% from 2010 until 2019.11 At the same time that fixed-price reporting to price index developers decreased, the traded volume of natural gas transactions that referenced natural gas indices, known as index gas, increased. For example, FERC
Form No. 552 data showed that index gas increased from 69% of the traded volumes in the U.S. physical natural gas market in 2010 to 82% in 2019. Figure 1 shows the estimated physical natural gas volumes reported to index developers based on FERC Form No.
552 data.

8. Commission staff held a technical conference on June 29, 2017, which addressed index liquidity and transparency issues and potential actions the Commission could consider taking in order to increase both the volume of transactions reported to natural gas price index developers and the transparency of the physical natural gas price formation process.12 In post technical conference comments, a number of commenters suggested that
placing the Safe Harbor Policy into the Commissions regulations would help to provide regulatory certainty which in turn would lead to an increase in the number of data providers that would report their transactions to price index developers.13

9. The Commission proposes to revise three sections of its regulations, 18 CFR
35.41c, 284.288a, and 284.403a.

Although each of the three sections applies to different jurisdictional entities, they set forth almost identical requirements. Section 35.41c applies to persons with or seeking authorization to engage in sales for resale of electric energy, capacity or ancillary services at market-based rates under section 205 of the Federal Power Act. Section 284.288a applies to interstate pipelines that offer transportation service under subparts B or G of part 284. Section
11 The Commission must estimate the volumes reported to price index developers on the FERC
Form No. 552 because FERC Form No. 552 filers can provide aggregated data for themselves and their affiliates, some of whom may or may not report to index developers. Staff estimates this volume by calculating the average of the minimum volume reported i.e., the total volume from filers with affiliates that all indicate that they report to price index developers and the maximum possible
volume reported i.e., the total volume from filers with at least one affiliate that indicates that it reports to price index developers.
12 Docket No. AD1712000. A staff-led technical conference addressing similar issues was held in 2003 in Docket No. AD037000.
13 AGA, Comments, Docket No. AD1712000, at 7 filed July 31, 2017; Tenaska Comments, Docket No. AD1712000, at 5 filed July 31, 2017.

7 Initial
Policy Statement, 104 FERC 61,121 at P

5.
8 Id.
9 Id.
10 Two index developers now include fixed-price transactions from the InterContinental Exchange ICE to increase the liquidity of their indices. Staff analysis of the estimated volumes reported to index developers does not include that supplemental information from ICE.

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Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Proposed Rules