JPMorgan Accused of Manipulating Power Market [allgov]


Raising the specter of Enron’s intrusion into the California energy market a decade ago, theFederal Energy Regulatory Commission (FERC) is investigating allegations that JPMorgan Chase & Co. manipulated the state’s market in 2010-2011 for millions of dollars in windfall profits.

Papers filed in federal court said the bank’s bidding practices may have inflated electricity costs by more than $57 million, but that just covers a six-month period. Some estimates put the cost to utility users as high as $200 million. Those numbers got the attention of theCalifornia Independent System Operator (CalISO)—a non-profit controlled by the state that oversees 80% of the state’s electrical transmissions—although they pale in comparison to the multi-billion-dollar scandal over credit derivatives currently roiling the bank.
Enron’s gaming of the newly-deregulated energy market in 2000 cost taxpayers $1.4 billion.
JPMorgan says it has done nothing illegal and is cooperating with the investigation, but FERC sued the bank on July 2 for refusing to turn over 25 emails it requested. The bank maintains that the documents contain privileged legal advice and are not about the bidding practices under investigation.
FERC has conducted 11 investigations of alleged manipulation of energy markets since January 2011, one of which resulted in a $245 million settlement with Constellation Energy Group Inc. The agency issued a preliminary finding last December that Deutsche Bank AG had manipulated the California market.

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