[Federal Register Volume 67, Number 25 (Wednesday, February 6, 2002)]
[Notices]
[Pages 5585-5586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-2818]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RM01-9-000]


Reporting of Natural Gas Sales to the California Market

January 30, 2002.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of decision not to seek an extension of reporting 
period.

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SUMMARY: On July 25, 2001, the Federal Energy Regulatory Commission 
(Commission) issued an order imposing certain reporting requirements on 
natural gas sellers and transporters serving the California market for 
the period ending January 31, 2002 (see 66 FR 40245, August 2, 2001). 
The Commission, by this notice, will not seek an extension of the 
reporting period provided for in the July 25, 2001 order.

DATES: The reporting period will terminate with the report covering 
activities ending January 31, 2002.

FOR FURTHER INFORMATION CONTACT: Jacob Silverman, Office of the General 
Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 208-2078.

SUPPLEMENTARY INFORMATION: On July 25, 2001, the Commission issued an 
order (July 25 order) imposing a reporting requirement on natural gas 
sellers and transporters serving the California market for the six-
month period August 2001, through January 2002.\1\ The order stated 
that the Commission believed the reporting period should cover the same 
period as the Commission's mitigation plan regarding wholesale 
electricity prices in California and the West, and therefore the 
Commission intended to seek an extension of the reporting requirement, 
and approval by Office of Management and Budget (OMB), through 
September 30, 2002, to coincide with the termination date of the 
mitigation order.\2\ However, in light of changed circumstances since 
the July 25th order, the Commission has decided that it will not seek 
an extension of the reporting requirement. This action is in the public 
interest because the price disparity that was the reason for imposing 
the reporting requirement no longer exists, and the continued 
submissions may not lead to a further understanding of the California 
gas market.
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    \1\ 96 FERC para. 61,119, reh'g denied, 97 FERC para. 61,029 
(2001).
    \2\ See San Diego Gas & Electric Company, et al., 95 FERC para. 
61,418 (2001).
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    The July 25 order stated that the information was needed by the 
Commission to help it understand why the disparity between the price of 
natural gas in California and the prices in the remainder of the 
country had occurred, and was continuing, by gaining a better 
understanding of how the California market operates. The July 25 order 
explained that due to the emergency nature of the California price 
disparity, the Commission sought emergency processing by OMB for the 
collection of information under 5 CFR Sec. 1320.13 (2001). Under that 
procedure the OMB approval is limited to 180 days. Accordingly, the 
order provided for the information to be submitted monthly for the six-
month period covering August 1, 2001, through January 31, 2002, with 
the reports due 30 days after the end of each month. The first report 
was due October 1, 2001, and the last will be due March 1, 2002.\3\
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    \3\ On September 17, 2001, OMB granted the Commission's request 
and approved the information collection through January 31, 2002, 
and assigned it OMB No. 1902-0187.
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    The purpose of the reporting requirement was to investigate why 
there was a substantial disparity between spot natural gas prices in 
California and the rest of the nation by gaining a better understanding 
of how the California market operates. A preliminary analysis of the 
data furnished to date indicates that the data for the six month period 
ending January 31, 2002, will provide information about the California 
market, as well as some guidance on how to improve data collection and 
processing should another emergency reoccur. However, the crisis which 
led the Commission to impose the reporting requirement no longer 
exists. In May 2001, when the Commission first proposed to impose a 
reporting requirement, 95 FERC para. 61,262, the spot price of natural 
gas in the California market, as that order noted, ranged between 
$11.79 \4\ and $18.80, while the price range in all other markets was 
between $4 and $7. However, natural gas prices are now, and have been 
for a number of months, far lower than they were last spring in

[[Page 5586]]

California, as well as in the rest of the country. Currently, as 
reported in Platts Gas Daily, the spot price of natural gas at the 
California border is less than $3.00, which is generally in line with 
the spot price elsewhere in the country and, in fact, lower than the 
price at some city gates in the East. Similarly, the monthly California 
Regional Average contract index price reported in Platts Gas Daily 
Price Guide was $2.44,\5\ while the National Average price was 
$2.34.\6\
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    \4\ All prices are per MMBtu.
    \5\ Platt's Gas Daily Price Guide defines the contract index 
price as the weighted average cost of gas based on volume and prices 
for baseload deals done within the last five working days of the 
month.
    \6\ In September the California Regional Average was $2.58, 
while the National Average was $2.31. In November, the California 
Regional Average was $2.93, and the National Average was $3.08.
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    While the July 25 order stated the Commission intended to seek 
approval from OMB to extend the reporting requirement, market 
conditions, as shown above, have subsequently changed dramatically. As 
a result, the reason for imposing a special reporting requirement for 
sales of natural gas to the California market--that the California 
market is suffering unique difficulties--has largely disappeared. 
Furthermore, since the price of natural gas in California for the past 
few months has remained fairly stable and has not shown any significant 
disparity from the price of gas in the rest of the country, the 
continued collection and analysis of data relating to the California 
market is unlikely to add incrementally to what is being learned from 
the initial six months of data. Thus, at this time there is no reason 
to extend a special reporting requirement with respect to gas sales in 
only California, when there is no similar reporting requirement in 
other parts of the country.
    The Commission is currently undertaking a comprehensive review of 
the information it should collect in order to monitor energy markets 
throughout the country. Since the crisis in California has now ceased, 
the Commission concludes that any further reporting requirement 
covering the California gas market is best developed as part of this 
comprehensive review of reporting requirements of all energy markets.
    On December 11, 2001, Indicated Shippers,\7\ who are certain major 
producers and marketers subject to the California reporting 
requirement, filed a petition requesting that the Commission not extend 
the reporting requirement beyond the current expiration date.\8\ The 
basis of the petition was similar to the discussion above that the 
current market conditions in the California gas market do not justify 
extending the reporting requirement for gas sales in that market.\9\ 
The California Electricity Oversight Board filed a protest to the 
petition asserting that current market conditions were irrelevant 
because ``there is no principled reason to assume that current market 
stability inherently eliminates future abuse of California's natural 
gas market.''\10\
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    \7\ Indicated Shippers consists of Aera Energy LLC, Amoco 
Production Company, BP Energy, Burlington Resources Oil & Gas 
Company, Conoco Inc., Coral Energy Resources LP, Occidental Energy 
Marketing Inc., and Texaco Natural Gas Inc.
    \8\ Indicated Shippers also asserted that compliance required 
each company to expend approximately 15 hours per month, and this 
burden should not be imposed when the reason for the reporting 
requirement no longer existed.
    \9\ Dynegy Marketing and Trade filed comments in support of the 
petition.
    \10\ Protest at 3.
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    The Commission has concluded that the reason for imposing a special 
reporting requirement for sales of gas in the California market no 
longer exists. While there is no guarantee that the disparity in the 
prices could not again occur, at this time there is no basis to assume 
that it will. We are well into the winter season, and the California 
gas market has not exhibited any conditions that now warrant imposing 
the reporting requirement there, as compared to any other market. Thus, 
the concern by the California Electricity Oversight Board that the 
price disparity could reoccur, is not a sufficient reason to extend the 
reporting requirement. However, should the price disparity reoccur, the 
Commission will be in a better position to determine what action it 
should take as a result of the submissions to date.
    The Commission concludes that extending a reporting requirement 
that is limited to the California market would not further the 
Commission's goal of achieving more transparency of the national energy 
market. The Commission's decision not to extend the reporting 
requirement at this time does not represent any lessening of the 
Commission's intent to closely monitor that market, but reflects the 
Commission's conclusion that since the crisis that led to the 
imposition of the reporting requirement has ceased, the resources that 
would have to be devoted to the extension, would be better utilized in 
other areas, particularly the more comprehensive ongoing review of data 
collection by the Commission, discussed above.
    Accordingly, the Commission will not seek an extension of the 
existing reporting period.

    By direction of the Commission. Chairman Wood and Commissioner 
Brownell concurred with a separate statement attached.
Magalie R. Salas,
Secretary.

Federal Energy Regulatory Commission

[Docket No. RM01-9-000]

Reporting of Natural Gas Sales to the California Market

Issued January 30, 2002.
    WOOD, Chairman, and BROWNELL, Commissioner, concurring:
    We write separately to add that the data collected thus far has 
provided the Commission with valuable information on how the 
California natural gas market operates, such as, the proportion of 
sales in California under long and short-term contracts, the extent 
to which the prices in gas sales contracts are fixed, the extent of 
utilization of interstate transportation capacity to California, the 
nature of the purchasers under the sales contracts (e.g., marketers, 
LDCs, or end users), and also the approximate proportion of sales in 
the California market that are subject to the Commission's 
jurisdiction. This information will provide a reference point that 
will enable the Commission to effectively craft a more focused 
reporting requirement should it appear that a price disparity may 
again resurface in the California market and such a reporting 
requirement is needed. More importantly, it provides us useful 
information for our current effort to comprehensively revise all of 
our reporting requirements to reflect the present state of the 
energy markets.

Pat Wood, III,
Chairman.

Nora Mead Brownell,
Commissioner.

[FR Doc. 02-2818 Filed 2-5-02; 8:45 am]
BILLING CODE 6717-01-P