Wood sees need for audited energy pricing
Nov. 20, 2002, 9:35PM
chron.com
Bloomberg Business News
WASHINGTON -- Energy companies may link natural gas and power contracts to audited
price indexes in the wake of disclosures that traders gave false data, Federal Energy
Regulatory Commission Chairman Pat Wood III said Wednesday.
"We want to have the most accurate numbers possible," Wood told reporters after a
commission meeting. "We also want the private sector to do what it does better than the
government."
Regulators want to assure the accuracy of price indexes, brought into question after
Houston-based Dynegy and rivals said traders gave false data to index publishers. Indexes
such as those compiled by McGraw-Hill Cos.' Platts unit are commonly used to set
payments in energy contracts, although they aren't audited.
A watchdog group of gas buyers and sellers urged the federal regulator last month to
demand that any indexes used to calculate commission-approved rates be audited. FERC
staff issued a preliminary report in August that said Enron Corp., the bankrupt energy
trader, may have manipulated published gas-price indexes.
"The indexes are rapidly becoming irrelevant," said Anthon Lentini Jr., a spokesman for
Apache Corp., a Houston-based energy producer. "There's going to have to be some kind of
federal oversight and some teeth behind it to make sure that people don't lie."
Regulators are investigating whether traders fed phony data to trade journals in an effort to
manipulate prices during the California energy crisis of 2000 and 2001. Journals typically
compile the information from surveys of anonymous traders. Wood wouldn't say if FERC
will propose auditing published indexes.
Platts received a subpoena last month from the Commodity Futures Trading Commission
for lists of subscribers and employees who gathered prices, as American Electric Power Co.
said it fired employee who lied to Platts. The Federal Energy Regulatory Commission also
has gathered information from publishers.
Platts has said it believes its indexes accurately reflect the market and can't tell whether
the bogus information distorted indexes. The company said this week that its decision not
to audit Enron data wasn't influenced by the fact that the Houston energy trader, which
filed for bankruptcy in December, was a client.
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