JPMorgan Chase & Co., in danger of getting kicked out of California's lucrative electricity market, says it's sorry.
The big bank apologized to federal regulators this week for submitting inaccurate information in response to an investigation into its trading practices in California.
The apology came a month after the Federal Energy Regulatory Commission threatened to drastically curtail Morgan's power-trading privileges in California for submitting "misleading information" to investigators.
FERC and the California Independent System Operator, which runs the state's transmission grid, are pursuing allegations that Morgan earned $73 million in excess profit through manipulative trading strategies that conjured up memories of the California energy crisis.
Morgan has denied doing anything wrong in its trading activities, and has demanded that the ISO return $20 million that it took from the company by withholding funds from settled power trades.
But in a 69-page filing with the FERC, Morgan acknowledged submitting false information to the investigators.
Morgan "regrets the mistakes that were made and assures the Commission that (Morgan) and every individual acting on its behalf in this matter apologizes to the Commission," the company wrote. It said the submission was the result of "unintentional, good-faith mistakes, misunderstandings and miscommunications."
The company added that the mistakes have been cleared up and don't justify revoking the company's trading rights in California.
Morgan wouldn't get kicked out of the California market altogether. But it could be denied the right to sell electricity in the state at market-based rates. In effect, it would have to sell power at cost.
In a filing of its own with the federal agency this week, the ISO showed little sympathy for Morgan's plight. "The appropriate sanction could well be suspension of market-based rate authority or some similar sanction to protect the integrity of the ISO's markets," it wrote.
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