WASHINGTON, D.C.
July 30, 2013
11:43am
?? Engaged in manipulative bidding strategies
?? Wringing money out of old power plants
JP Morgan Ventures Energy Corporation, a unit of the giant New York banking company JP Morgan Chase & Co., has agreed to pay a fine and refund ?unjust? profits totaling $410 million, the federal government says.
That, says the Federal Energy Regulatory Commission, will settle its complaint that the Morgan unit manipulated the California and Michigan electric markets from September 2010 through November 2012.
FERC investigators determined that JP Morgan Ventures Energy Corporation engaged in 12 manipulative bidding strategies designed to make profits from older power plants that were usually out of the money in the marketplace because they were inefficient.
FERC investigators further determined that JPMVEC knew that the California Independent System Operator and the Midcontinent Independent System Operator received no benefit from making inflated payments to the company, thereby defrauding the ISOs by obtaining payments for benefits that the company did not deliver beyond the routine provision of energy.
FERC investigators also determined that JPMVEC?s bids displaced other generation and altered day ahead and real-time prices from the prices that would have resulted had the company not submitted the bids.
Under the agreement, JPMVEC will pay a civil penalty of $285 million to the U.S. Treasury and disgorge $125 million in unjust profits. The first $124 million of the disgorged profits will go to ratepayers in the California Independent System Operator, which operates the California electricity market. The other $1 million will go to ratepayers in the Midcontinent Independent System Operator.
JP Morgan Ventures Energy Corporation admits the facts set forth in the agreement, but neither admits nor denies the violations, says FERC. The company did, however, agree to waive claims for additional payments from the California ISO relating to two of the strategies under investigation.
JP Morgan Ventures Energy Corporation also will conduct a comprehensive assessment by outside counsel of its policies and practices in the power business.
The case stems from multiple referrals to FERC from the California ISO and MISO market monitors in 2011 and 2012 regarding JP Morgan Ventures Energy Corporation?s bidding practices. These practices were the subject of four emergency tariff filings by the California ISO and MISO, each of which was approved by the Commission.
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