Large gas suppliers' reports to FERC reflect competitive market, NGSA says

Large US natural gas suppliers used diverse transactions in the physical market during 2008, the Natural Gas Supply Association said, citing reports which its member companies submitted to the Federal Energy Regulatory Commission.

“A look at the reports filed by NGSA’s members showed that large natural gas suppliers entered into many types of transactions in the physical markets last year and that the individual companies differed from one another in how they chose to diversify their transactions,” NGSA President R. Skip Horvath said. This diversification is indicative of a well-functioning, competitive natural gas market.”

According to the data in the Form 552 reports, as a whole, NGSA companies used indexed prices for 66% of all their next-day volumes and for 87% of all their next-month volumes, he said. “The number of indexed-price volumes shows the NGSA market participants’ confidence in the price indices and overall market transparency,” Horvath said. Individually, major gas suppliers displayed a range of preferences for the different types of transactions, he added.

NGSA member company Form 552 reports showed that 97% of their fixed-price volumes that were eligible for inclusion in index formation were reported to price publishers, indicating a high level of voluntary participation in price discovery, the association said.

“This high level of reporting, coupled with the fixed-price reporting of other market participants, validates our confidence in the price discovery process and helps to underscore the strength, breadth and diversity of the physical natural gas market. The sheer volume of reports filed and market participants’ robust use of both fixed and indexed-price volumes also confirm that this is a market with numerous participants of all sizes and portfolio types and many kinds of transactions,” Horvath maintained.

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