California electricity officials accused JPMorgan Chase & Co. today of blocking a power-plant conversion project that the state says could be crucial to keeping the lights on next summer in Southern California.
In a filing with federal regulators, the California Independent System Operator says the Wall Street giant is preventing power generator operator AES Corp. from making critical changes to a pair of plants in Huntington Beach. The ISO, which runs the California power grid, wants the federal agency to step in so the project can get done in time for next summer's air conditioning season.
The ISO and the federal agency, the Federal Energy Regulatory Commission, are already pursuing separate allegations that Morgan used improper trading methods to wring an extra $73 million in profits out of California's wholesale power market. FERC on Wednesday took the rare step of suspending Morgan's electricity trading privileges for six months for submitting false information in connection with the California investigation.
Now comes a new but apparently unrelated allegation.
It stems from the prolonged shutdown of Southern California Edison's San Onofre nuclear plant. The region was able to preserve reliable electricity last summer because AES pulled two Huntington Beach generating plants out of mothballs.
That option is no longer available. The plants have been retired permanently. But they can be converted into "synchronous condensers," which means they would rev up the region's transmission lines and move electricity around Southern California more efficiently. "This solution is the only viable means that the ISO has been able to identify...to meet reliability needs," the ISO said in its petition to FERC.
But the state says AES won't make the conversion because it's afraid of getting sued by Morgan.
Morgan holds a contract to market the power generated at two other Huntington Beach plants, also run by AES. Because of that contract, it holds veto power over any changes AES makes to the two plants that would undergo the conversion.
"JPMorgan has declined to provide consent so far," the ISO said.
The ISO's complaint doesn't link Morgan's refusal to the other dispute about the investment bank's bidding practices.
Officials with Morgan weren't immediately available for comment.