* ACER plans to publish power and gas indexes from 2015
* Analysts say could compete with OTC price assessments
* Pricing agencies say their news, analysis adds value
By Susanna Twidale
LONDON, July 11 Europe's power and gas pricing
agencies, already under scrutiny on fears their data is
vulnerable to market manipulation, are also at risk of losing
business once regulators start collecting prices and plan to
publish indexes next year.
Under new European Commission rules, companies will from
next year have to report all trades in the EU's 1 trillion euro
($1.4 trillion) a year wholesale power and gas market to the
Agency for the Cooperation of Energy Regulators (ACER).
This data will then probably be published in the form of
indexes, but ACER does not plan to compete with the business of
energy pricing, ACER director Alberto Pototschnig told Reuters.
"There will still be a business (for agencies) to interpret
what is happening in the markets," he said.
Market participants said, however, that regulator-backed
indexes, if published daily, combined with freely available
market information on exchanges, could provide stiff competition
for pricing firms such as Reed Elsevier's ICIS Heren,
McGraw Hill-owned Platts and Argus Media.
"If everyone has to report and they (ACER) publish the data
promptly and publicly, then it could well become indices that
the market will start to use to structure things like
longer-term contracts," Energy Aspects analyst Trevor Sikorski
Pricing agencies contact traders to ask what deals they have
done or what bids and offers they have seen and then work out
aggregate prices, which are then sold to market participants and
Each uses its own methodology such as setting prices at a
defined cut-off time each trading day, known as a Market on
Close (MOC), or calculating daily average prices or different
types of indexes.
The pricing agencies said the value of their assessments is
not just related to raw data, because they also publish news,
analysis and comment on what is happening in the market.
"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," a
spokeswoman for the company said.
An ICIS spokeswoman said it welcomed tougher regulation and
all the added transparency it brings to energy markets, while a
spokeswoman for Argus said it did not see the ACER plans to
launch price assessments as a threat to its business.
Reuters competes with pricing agencies in providing energy
information and data.
Traders said, however, that indexes published by the
regulators could be seen as more reliable than from the
agencies, because ACER's data would be based on mandatory
reporting by all power and gas trading companies instead of a
relatively small number of calls made by price reporters every
"When you allow an index to be based on a trader's price
submission (to an agency) you are opening the market up to abuse
... The index should be based on an independently collected pile
of trade data," said an energy trader with an independent
trading house who did not want to be identified because he is
not authorized to speak with the press.
Gas and power prices, used by everyone from major energy
traders, utilities, industrial users to government
statisticians, so far are set in two main ways.
The first is through an exchange, where bids and offers for
contracts are displayed and the prices of completed trades are
clearly visible on a bourse's online platform.
The second is to get access to prices from the so-called
Over-the-Counter (OTC) market, which is less transparent because
trades are not centrally published.
Although some broker groups have begun publishing trading
data more publicly, the most established way to access OTC
market information is to buy it from pricing agencies.
The agencies' role in the markets has come under scrutiny in
Britain after a whistleblower, who worked for ICIS Heren,
claimed in 2012 that gas traders were manipulating price
British regulators concluded last November that no evidence
of the alleged market manipulation could be
($1 = 0.7331 Euros)
(Editing by Henning Gloystein and Jane Baird)