Kudos to the Federal Energy Regulatory Commission (FERC) for holding a conference on natural gas price indices this summer (Docket AD17-12). This shed light on how most of the natural gas purchased for residential consumers in the U.S. is priced on a flawed basis. APGA member Donnie Sharp from Huntsville Utilities told the FERC staff that many price index locations are no longer reliable and fewer and fewer trades are observable. FERC data revealed that 78 percent of the total physical gas market in 2016 settled off next day or month indices. Yet the number of transactions on which indices are based is absurdly low. In short, wholesale gas transactions have never been so reliant on index pricing at the same time the there has never been fewer quantities that go into creating a price index.
Click to read the full article: Whistling in the Dark: Shortcomings of Natural Gas Indices Persist