News 
2007
| Statement: December 20, 2007 | 
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| Docket Nos: RM07-10-000 & RM08-2-000 | |
Chairman Joseph T. Kelliher's statement on transparency provisions of Section 23 of the Natural Gas Act and pipeline posting requirements
"Today, the Commission takes a number of important steps to improve the transparency of
natural gas markets. This is the first use of our broad authority under the Energy Policy Act
to improve the transparency of wholesale natural gas and power sales and transportation
markets.
The final rule we approve today will improve the transparency of physical wholesale natural
gas markets. Specifically, we require certain natural gas market participants to report
information regarding wholesale natural gas transactions to price index publishers and file
annual reports with the Commission regarding physical natural gas transactions in interstate
commerce for the previous year. This information will allow the Commission and market
participants to estimate the size of the wholesale, physical natural gas market. The final
rule will also allow the Commission and market participants to assess the use of index
pricing and fixed price trading, and determine the relative size of major traders.
The Commission also issues a proposed rule that expands the prior proposal to increase
transparency of physical flows of natural gas on the U.S. pipeline network. We take this
step because we determined that greater information about physical flows of natural gas
would improve market transparency. Under this new proposed rule, both interstate and
certain major non-interstate pipelines would be required to post capacity, daily scheduled
flow information and actual flow information. This would improve the quality of information
about physical flows of natural gas across the U.S. pipeline system.
The new proposed rule has a narrower application on major non-interstate pipelines than
the earlier proposal. The new proposal would limit the reporting requirement to major
non-interstate pipelines with significant gas flows that do not fall entirely upstream of a
processing plant or deliver gas almost exclusively to retail consumers.
Under the new proposed rule, interstate pipelines that currently post capacity and scheduled
flow information would also be required to post actual flows. This will provide consistent
information about physical gas flows across the network.
In the final and proposed rule, we determine that the scope of authority under the
transparency provisions of the Energy Policy Act of 2005 is quite broad. We reach this
determination by applying the rules of statutory construction. The words in a statute are
meaningful; they represent conscious decisions by Congress. Here, Congress authorized us
to "facilitate price transparency in markets for the sale or transportation of physical natural
gas in interstate commerce" by providing for the "dissemination of information about the
availability and price of natural gas sold at wholesale and in interstate commerce" from
"market participants". Our authority to require dissemination of information was not limited
to "natural gas companies," but extends to "market participants," a term not defined by the
statute. Similarly, the transparency provisions added to the Federal Power Act are not
limited in application to "public utilities."
This is our first use of our transparency authority, not the last word. We may take further
steps in the future if we identify other opportunities to improve the transparency of
wholesale natural gas and power markets."
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