A mistake by Dominion Resources Inc. led to an erroneous Nov. 24 report on U.S. natural gas supplies that inflated consumer fuel costs by as much as $1 billion, regulators said.
A Dominion clerk accidentally sent to the U.S. Energy Department the company's storage levels for the wrong week, said Ted Gerarden, an investigator for the Federal Energy Regulatory Commission, or FERC. The error made it appear that gas supplies were dwindling faster than expected, sending futures prices soaring, Gerarden said in a conference call yesterday.
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New York gas futures jumped 17 percent in response to the report. Wholesale gas prices also soared, FERC said, increasing fuel costs by $200 million to $1 billion. FERC's preliminary findings come as the Energy Department faces criticism over its handling of the report.
Dominion, one of the largest U.S. operators of gas-storage reservoirs, said it added safeguards to prevent a repeat of the mistake. For instance, a management-level employee will submit the supply data, and a separate manager will verify the information with the Energy Department, the Richmond- based company said in a prepared statement.
FERC said it is continuing an investigation of the error. The commission will look at trading activities by Dominion and other companies in the hours before and after the report was released. The U.S. Commodity Futures Trading Commission, which regulates futures markets, also is investigating.
Dominion said it didn't benefit from the incorrect report.
Owners of gas-storage facilities are required to report their supply levels on a weekly basis to the Energy Department's Energy Information Administration. The administration compiles the data and publishes a survey that doesn't give specific company names.
The weekly reports are the primary tool used by utilities and speculators to gauge supply and demand in the $120 billion-a-year U.S. gas market. Futures and spot-market prices are often influenced when the figures are released each Thursday.