EU Plans to Publish Energy Indexes From Trade Data

Regulators plan to publish indexes based on power and gas market data to be collected under stricter European energy market transparency rules.

The Agency for the Cooperation of Energy Regulators will publish the information in aggregated form as indexes, ACER Director Alberto Pototschnig said yesterday in an interview in Ljubljana, Slovenia, at the group’s head office. He declined to provide further details.

ACER will next year begin to collect information about transactions in Europe’s 900 billion-euro ($1.2 trillion) power and gas markets as it boosts scrutiny in the wake of the financial crisis. Data based on transactions is already published by price reporting agencies including McGraw Hill Financial Inc.’s Platts, Reed Elsevier Plc’s ICIS and Argus Media Ltd. Buyers and sellers use their numbers as reference in long-term energy contracts.

“We aren’t trying to compete with them, we are trying to make the market more transparent,” Pototschnig said. “There will still be a business to interpret what is happening in the markets. We will enter the same pond but there will still be water for the price reporting agencies.”

Price reporting agencies collate data from traders on a daily basis to get prices for delivery from the next day to several years ahead. They gather data on completed deals as well as bids and offers and produce prices based on individual methodologies.

Innovation Needed

“If ACER is collecting all this data, it is good to put it to use,” Aviv Handler, a managing director at consulting firm ETR Advisory, said today in an interview at the group’s annual conference in Ljubljana. “Over time the quality of ACER’s data will increase and the market will work out what to do with it, some of that may be using it for benchmarks. The price reporting agencies will have to innovate and come up with something else to offer.”

Platts, which dates back to 1909, also offers price assessments and news for markets from crude oil to petrochemicals, according to its website.

“Platts’ role as an independent price reporting organization is not only to provide the market with numerical assessments of value, but also to explain why the price is the price,” the company said today in an e-mailed statement. “We bring that transparency through our market commentaries that accompany our price assessments, through our news coverage and through our analytical skills in interpreting market data.”

Seana Lanigan, a spokeswoman for Argus in London, declined to comment when reached today by e-mail.

Adding Transparency

“ICIS welcomes the Remit regulation and all the added transparency it brings to the European energy markets,” the company said today in an e-mailed statement.

Price reporting agencies will have to add more value to what they provide, Pototschnig said.

“There will still be a business to interpret what is happening in the markets” as ACER won’t be providing commentary on the markets, he said.

Brokers in the region’s over-the-counter markets are also publishing indexes based on gas trades. Marex Spectron, ICAP Plc and Tullett Prebon Plc started the Tankard indexes in February last year, based on transactions on their platforms. The three brokers handled more than 450 billion euros worth of physically-settled natural gas forwards in 2012, according to Tankard’s website. Candice Adam, a spokeswoman for Tankard, declined to comment today when reached by phone.

Trade Group

It’s important for investor protection that the market have an understanding of the underlying data that price reporting agencies use to set indexes, Verena Ross, executive director at the European Securities and Markets Authority, said today at the ACER conference.

The European Federation of Energy Traders “is strongly in favor of information transparency, but we will have to wait to see the details of ACER’s proposal before we comment further,” Colin Lyle, chairman of the group’s gas committee, said today by phone.

Bloomberg LP, the parent of Bloomberg News, competes with Platts and other companies in providing energy markets news and information.

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