Best Practices for Energy Price Indices © Copyright 2003, CCRO. All rights reserved. 18 VI. CONCLUSION AND NEXT STEPS This white paper proposes key attributes for both index developers and data suppliers to improve the quality and reliability of energy market indices. It further recommends best practices for price data gathering and submission as well as index construction and methodology. There are several instances where the CCRO recommends that the index developers and data providers work together to appropriately implement a specific best practice. Existing contractual agreements between market participants generally do not allow for the release of confidential information, in particular counterparty name and buy/sell indicator. The CCRO therefore recommends that data providers amend existing contracts in order to allow the release of such information to index developers for the sole purpose of index construction. In addition, certain master agreements, such as EEI and WSPP, currently prevent the release of transaction-level information. The CCRO recommends that the organizations responsible for creating and maintaining these agreements modify them to allow the release of transaction-level information for the purposes of index construction. Similarly, the CCRO recommends that index developers ascertain and demonstrate the necessary data protection (described above) at all levels, in particular at a technological and organizational level, and to execute corresponding contractual agreements with data providers. However, the granularity and sensitivity of the information may require the participation of an independent third party to maintain the confidentiality of certain data. It is recognized that there is a trend in energy trading markets toward an increasing number of physical transactions being conducted on exchanges and/or cleared through clearinghouses. The transaction information stored by these entities may meet the requirements for index construction and for confidentiality by energy market participates. These organizations may become important data sources for many energy indices. As they directly observe significant and growing portions of many markets, such organizations may be able to eliminate double-counting. They may be able to reduce human error and to render data anonymous before providing it to index developers. The regulatory environment for energy market index reporting continues to evolve, and current and future initiatives could affect the recommendations set forth in this white paper. If revisions are enacted, the recommendations may need to be revised accordingly. The CCRO will continue to work with index developers, government organizations, and other interested parties to participate in the development of future recommendations. These best practices are offered as a resource. Their use is voluntary, and no company has agreed to or is required to use them. In addition, individual companies may modify them as appropriate, and the best practices do not relieve any company from the need to comply with legal and professional requirements.