US Energy Groups Sign Business Standards Pact

SAN FRANCISCO -- Two US energy industry groups said they have signed an agreement to work together to clean up and standardize business practices in the scandle-plagued power sector.

In a statement the NERC, a non-profit whose members supply nearly all the power in North America, and an energy industry standards board hastily assembled in January said they signed a "memorandum of understanding (MOU)" to open communication between the two groups in their standards-setting processes.

As part of the agreement, NERC (the North American Electric Reliability Council) and the North American Energy Standards Board (NAESB) agreed to review each other's annual work plans.

The pact comes after a year of shrinking liquidity amid revelations that traders at several companies routinely skewed power and natural gas price data to trade publications that use the data to compile widely watched price indices.

The indices, as industry benchmarks, are used in turn to value contracts between energy suppliers, utilities, and industrial buyers.

New Jersey-based NERC said that under the MOU the two groups will also establish a joint committee to vet all standards proposals they receive. The committee will hold its first meeting in early January.

Earlier this month, the Committee of Chief Risk Officers (CCRO), representing 31 energy companies, held a closed-door meeting in Houston to discuss ways of ridding the market of sham trades and phony prices at the heart of several federal investigations and shareholder lawsuits.

Some of the main goals of the CCRO are to determine how best to submit price data to trade publications and the methodology used to compute indices.

The NAESB is designed after the Gas Industry Standards Board established in 1994 and includes members from the power and gas industries.

Source: Reuters