Energy Traders Reviewing Price Index Raw Data

Mirant Corp. and rival U.S. energy traders are reviewing the accuracy of prices used to set energy contracts after Dynegy Inc. and American Electric Power Co. disclosed they provided bogus data to trade journals.

Mirant, the largest natural-gas trader in North America, said it’s verifying gas and electricity prices that it provided trade journals. Duke Energy Corp., the No. 2 gas trader, and Reliant Resources Inc. said they are checking gas-price reports.

Regulators are probing whether companies fed trade journals phony data to manipulate energy prices. Last week the government subpoenaed Platts, a McGraw-Hill Cos. division, as part of the inquiry. Journals typically compile the information from surveys of anonymous traders to calculate price indexes. The lists are a basis for some contracts in the energy industry, in which companies rarely make prices public.

“Most contracts, directly or indirectly, are tied to one of these indexes,” said Arthur Corbin, president of the Municipal Gas Authority of Georgia, which buys natural gas for 580 cities.

American Electric last week fired five energy traders the company said had given phony Gulf Coast gas prices to Platts. Dynegy reported Sept. 26 that its traders also gave trade publications false prices.

“We’re looking into it,” said Richard Wheatley, a spokesman for Reliant Resources, a cross-town rival to Dynegy in Houston. “We’ve no reason to believe any of the data our employees have given out in the past in this regard was inaccurate.”

The Commodity Futures Trading Commission subpoenaed Platts for lists of subscribers and employees who gathered prices. It also asked for “any information that indicates any person’s knowledge of false, inaccurate or otherwise incorrect pricing and volume information.” The subpoena was dated Sept. 9, when American Electric disclosed its false reporting.

Officials at the commission weren’t available for comment. Jim Keener, a Platts spokesman, said the company intends to comply “as fully as we can as a journalistic entity.”

Regulators are looking at whether false prices helped drive up the cost of electricity and natural gas during California’s 2001-02 energy crisis.