UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION REQUEST OF POWEREX CORP. FOR CLARIFICATION OR, IN THE ALTERNATIVE, REHEARING

Transcription

1 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Transparency Provisions of Section 23 of the Natural Gas Act Docket Nos. RM and 001 REQUEST OF POWEREX CORP. FOR CLARIFICATION OR, IN THE ALTERNATIVE, REHEARING Pursuant to Section 313(a) of the Federal Power Act, 16 U.S.C. 825l(a) (2006), and Rule 713 of the Federal Energy Regulatory Commission's Rules of Practice and Procedure, 18 C.F.R (2007), Powerex Corp. ("Powerex") submits its request for clarification or, in the alternative, rehearing of the Commission's Final Rule issued December 26, 2007 in this proceeding. Transparency Provisions of Section 23 of the Natural Gas Act, Order No. 704, 73 Fed. Reg. 1,014 (Jan. 4, 2008), 121 FERC 61,295 (2007) ("Order No. 704" or "Final Rule"). In support, Powerex respectfully states as follows: I. BACKGROUND The Final Rule requires certain natural gas market participants to report annually certain information regarding (i) their reporting of transactions to price index publishers, (ii) their wholesale, physical natural gas transactions, and (iii) their blanket certificate status for the previous calendar year. This information will be submitted to the Commission on a new form, Form No. 552.

2 The Commission indicated that a transaction is "reportable to price index publishers" if it is made at a reportable location where the price index publisher collects information for fixed-price transactions within next-day or next-month delivery obligations in order to create a price index." Order No. 704 at P 15. Because these locations may change over time, Commission Staff will be posting a list for the coming year of current "Reportable Locations" for each price index publisher on the Commission website at Id. According to the Commission, the information contained in the Commission Staff posting "will allow a market participant to determine whether a transaction should be classified on Form No. 552 as a reportable transaction, i.e., one made at a reportable location." Id. II. REQUEST FOR CLARIFICATION A. Inclusion of Canadian Trading Points Powerex requests clarification that the Commission did not intend to include points located wholly within Canada in its listing of reportable locations for transactions to be reported on the Commission's Form No It appears that the Commission Staff's posting inadvertently included locations on the Canadian side of the international border within its listing of reportable transactions along with the U.S. locations. Because natural gas trading activities within Canada are outside of the Commission's jurisdiction, Powerex does not believe it was the intent of the Commission to require market participants submitting Form No. 552 to report on their Canadian activities. For example, the following locations on the Canadian side of the international border should have been excluded from the list of reportable locations: 2

3 2008 Reportable Locations for Platts' (Gas Daily) Daily and Monthly Indices: CENTRAL Upper Midwest Dawn, Ontario Emerson WEST Rockies/Northwest/Canada Kingsgate TCPL Alberta, AECO-C Westcoast, station 2 Northwest, Canadian Border (Sumas) Reportable Locations for Intelligence Press (Natural Gas Intelligence) Daily and Monthly Indices: Midwest Dawn Rocky Mountains (& NW) Kingsgate Northwest Sumas 2 Canada NOVA/AECO C Westcoast, Station Reportable Locations for Energy Intelligence s (Natural Gas Week) Daily and Monthly Indices: Great Plains Emerson Eastern Canada Dawn Pacific Northwest/Western Canada AECO Kingsgate 1 Gas traded at this hub has the option of remaining in Canada (Huntingdon) or being exported to the US ( Sumas ). 2 Id. 3

4 Westcoast Station NW Sumas 3 InterContinental Exchange ("ICE") Indices Published: 4 Product Code: NG Fin, FP for CGPR Natural Gas Financial (Fixed for Float) a specific value in exchange for the monthly Canadian Gas Price Reporter index price at the specified hub Product Code: CAN NG Firm Phys, FP Canadian Natural Gas Physical Fixed Price specified value for Firm gas received/delivered at the specified hub in Canadian dollars per gigajoule Product Code: CAN NG Firm Phys, ID, 2a CPGR Reporter 2a Index for Firm gas received/delivered in Canadian dollars per gigajoule Product Code: CAN NG Firm Phys, ID, 4a CPGR Reporter 4a Index for Firm gas received/delivered in Canadian dollars per gigajoule Product Code: CAN NG Firm Phys, ID, 5a CPGR Reporter 5a Index for Firm gas received/delivered in Canadian dollars per gigajoule Product Code: CAN NG Firm Phys, ID, 7a CPGR Reporter 7a Index for Firm gas received/delivered in Canadian dollars per gigajoule 3 Id. 4 ICE Glossary ABBREV./DESCRIPTION BS: Basis Swap (financially cash-settled at expiration no physical delivery) CAN: Canadian CGPR: Canadian Gas Price Reporter price survey as published by Canadian Enerdata Combo: Combination of two buys or two sells of a Basis Swap and Index Swap FF: Fixed-for-float (fixed price in exchange for a floating index price determined on first-of-month) FP: Fixed Price Fin: Financially cash settled according to International Securities Derivatives Association (ISDA) Firm Phys: Firm Physical Gas (100% performance for deliveries or receipts at the specified location) GDD: Gas Daily average index price as published daily by Platts Gas Daily ICED: InterContinentalExchange s weighted daily average price ICE Lots: 2,500 MMbtus total quantity (equivalent to a quarter NYMEX contract) ID: Index IF: Inside FERC s Gas Market Report for first-of-month prices published by Platts LD1: Last Day settlement price as set by NYMEX on close of the futures contract NG: Natural Gas 4

5 Product Code: CAN NG Firm Phys, ID, GDD index publication for Firm gas received/delivered at the specified hub in Canadian dollars per gigajoule Accordingly, Powerex seeks confirmation that it was not the Commission's intent to include Canadian transactions as reportable transactions for purposes of submitting Form No B. Clarification Related to Product-Specific Price Reporting In its Notice of Proposed Rulemaking ("NOPR") in this proceeding, the Commission responded to queries from "several data providers... as to whether they may report certain classes of products traded, but not others." Transparency Provisions of Section 23 of the Natural Gas Act, 72 Fed. Reg. 20,791 (Apr. 26, 2007), III FERC Stats. & Regs. 32,614 at P 55 (2007). The Commission clarified that "a data provider remains eligible or the safe harbor provisions if it reports certain products but not others, provided that it provides all of the same type of transactions and that it notifies the Commission which products it will report in its annual filing or other notification", and also stated that it intended to "reiterate this clarification in the preamble of any Final Rule issued in these proceedings." Id. Powerex notes that Order No. 704 does not appear to include the clarification as the Commission intended, and requests that the Commission include the NOPR's clarification within its order on rehearing. III. REQUEST FOR REHEARING To the extent the Commission does not grant the requested clarification regarding the inclusion of Canadian transactions, Powerex seeks rehearing of this issue. 5

6 A. Statement of Issues and Specification of Errors The Commission erred in requiring certain natural gas market participants to report to the Commission in Form No. 552 information regarding non-jurisdictional transactions that place wholly within Canada. An agency must show that it has engaged in reasoned decision-making by articulating a satisfactory explanation for its action that includes a rational connection between the facts found and the choices made. Motor Vehicles Mfrs. Ass n. v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 43, 48, 57 (1983) ("Motor Vehicle Mfrs."). See also Greater Boston Television Corp. v. FCC, 444 F.2d 841, 851 (D.C. Cir. 1970), cert. denied, 403 U.S. 923 (1971) ("Greater Boston"); Associated Gas Distributors v. FERC, 824 F.2d 981, 1016 (D.C. Cir. 1987), cert. denied, 485 U.S (1988) ("AGD"); ANR Pipeline Co., v. FERC, 771 F2d 507, 516 (D.C. Cir. 1985) ("ANR"); Electricity Consumers Resource Council v. FERC, 747 F.2d 1511, 1513 (D.C. Cir. 1984) ("Electricity Consumers"). B. Argument The Final Rule's inclusion of locations wholly within Canada and financial trades reported to Canadian index publishers as reportable transactions with no justification was arbitrary and not reasoned decision-making. Motor Vehicle Mfrs., supra. See also Greater Boston, supra; AGD, supra; ANR, supra at 516; Electricity Consumers, supra. There was never any mention of including Canadian transactions as reportable transactions in the NOPR and to the best of Powerex's knowledge, no commenter argued that such transactions should be reportable. There is no explanation why the Commission Staff's posting of reportable transactions includes locations on the Canadian side of the international border. Canadian transactions do 6

7 not fall within the Commission's jurisdiction under the Natural Gas Act, and regulation and oversight of such transactions is not supported by Commission or court precedent. IV. CONCLUSION WHEREFORE, Powerex requests that the Commission grant clarification and/or rehearing as described above. Respectfully submitted /s/ Deanna E. King Tracey L. Bradley Deanna E. King Energy Regulatory Consultant Paul W. Fox Bracewell & Giuliani LLP Bracewell & Giuliani LLP 2000 K Street, N.W., Suite Congress Avenue, Suite 2300 Washington, D.C Austin, TX Phone: (202) Phone: (512) Fax: (202) Fax: (512) tracey.bradley@bgllp.com deanna.king@bgllp.com paul.fox@bgllp.com Tracy C. Davis Bracewell & Giuliani LLP 2000 K Street, N.W., Suite 500 Washington, D.C Phone: (202) Fax: (202) tracy.davis@bgllp.com Counsel for Powerex Corp. January 25, 2008 #DC