JP Morgan penalized for manipulating California electricity prices
July 30, 2013
Energy regulators ordered JP Morgan to pay $410m in penalties for allegedly manipulating electricity prices in California and the mid-west on Tuesday. [Guardian]
JP Morgan has agreed to pay the penalties, though the bank disputes it used improper bidding strategies to squeeze excessive payments from the agencies that run the power grids in California and the Midwest.
The Federal Energy Regulatory Commission’s penalty includes $285 million for the federal government and $125 million for ratepayers.
The commission reported that JP Morgan traders offered to sell electricity at artificially low prices to so that electric companies would put their plants on standby mode. JP Morgan would earn special fees for putting the power plants on standby mode.
Later, the traders would offer to sell electricity to the plants at higher than market energy prices for last-minute energy need, the commission said.