The federal government today suspended JPMorgan Chase & Co. from trading for profit in California's electricity market, after the investment bank submitted false information to investigators looking into Morgan's bidding practices.
Morgan's trading arm was suspended for six months starting next April 1, according to the order from the Federal Energy Regulatory Commission.
The company can trade power in California, but not at "market-based rates." In effect, it would have to sell power at cost.
FERC has been investigating Morgan for months over allegations that it earned $73 million in excess profits in California's wholesale electricity market through manipulative trading strategies. The federal agency threatened Morgan with suspension after finding that the firm had supplied false information to investigators.
Morgan said the false information was an accident. It apologized and said the actions didn't justify a suspension.
The firm has also denied any wrongdoing in connection with its trading activities.
Morgan sells electricity into the wholesale market via the California Independent System Operator, the quasi-governmental entity that runs the state's transmission grid. ISO officials triggered the initial investigation by complaining to FERC that Morgan had used improper bidding methods to extract $73 million in excess profits over several months in 2010 and 2011.
Officials with the ISO said they've recovered $20 million so far by withholding funds from settled power trades.
Morgan officials weren't immediately available for comment.
© Copyright The Sacramento Bee. All rights reserved.
• Read more articles by Dale Kasler
What You Should Know About Comments on Sacbee.com
Sacbee.com is happy to provide a forum for reader interaction, discussion, feedback and reaction to our stories. However, we reserve the right to delete inappropriate comments or ban users who can't play nice. (See our full terms of service here.)
Here are some rules of the road:
• Keep your comments civil. Don't insult one another or the subjects of our articles. If you think a comment violates our guidelines click the "Report Abuse" link to notify the moderators. Responding to the comment will only encourage bad behavior.
• Don't use profanities, vulgarities or hate speech. This is a general interest news site. Sometimes, there are children present. Don't say anything in a way you wouldn't want your own child to hear.
• Do not attack other users; focus your comments on issues, not individuals.
• Stay on topic. Only post comments relevant to the article at hand.
• Do not copy and paste outside material into the comment box.
• Don't repeat the same comment over and over. We heard you the first time.
• Do not use the commenting system for advertising. That's spam and it isn't allowed.
• Don't use all capital letters. That's akin to yelling and not appreciated by the audience.
• Don't flag other users' comments just because you don't agree with their point of view. Please only flag comments that violate these guidelines.
You should also know that The Sacramento Bee does not screen comments before they are posted. You are more likely to see inappropriate comments before our staff does, so we ask that you click the "Report Abuse" link to submit those comments for moderator review. You also may notify us via email at feedback@sacbee.com. Note the headline on which the comment is made and tell us the profile name of the user who made the comment. Remember, comment moderation is subjective. You may find some material objectionable that we won't and vice versa.
If you submit a comment, the user name of your account will appear along with it. Users cannot remove their own comments once they have submitted them.
Order Reprint
About Comments
Reader comments on Sacbee.com are the opinions of the writer, not The Sacramento Bee. If you see an objectionable comment, click the "Report Abuse" link below it. We will delete comments containing inappropriate links, obscenities, hate speech, and personal attacks. Flagrant or repeat violators will be banned. See more about comments here.