JPMorgan agrees to pay $410m to settle power probe

JPMorgan Chase has agreed to pay $410 million to settle charges from the Federal Energy Regulatory Commission (FERC) that it manipulated energy markets in the Midwest and California.

JPMorgan will pay $285 million to the US Treasury in a civil penalty.

The company will also disgorge (give up) $125 million of “unjust profits”.

$124m of the $125m will go to electricity consumers in California. The other $1m will go to electricity consumers in the Midwest.

The FERC alleged that JPMorgan Ventures Energy Corporation’s bidding and offering of electricity from certain power plants triggered an increase in the prices of electricity.

JPMorgan neither admits nor denies any wrongdoing

This is the second largest fine in FERC history. JP Morgan says it is paying the settlement “without admitting or denying any violations, disgorgement, penalties and interest.”

In a press release, JPMorgan wrote “J.P. Morgan Ventures Energy is pleased to have reached an agreement with FERC to put this matter behind it.”

According to JPMorgan spokesman, Brian Marchiony, the settlement will have no impact on the company’s earning because it had already set aside funds for the case.

JPMorgan engaged in 12 manipulative bidding strategies

The FERC accused the JPMorgan Ventures Energy Corporation being:

“..engaged in 12 manipulative bidding strategies designed to make profits from power plants that were usually out of the money in the marketplace. In each of them, the company made bids designed to create artificial conditions that forced the ISOs to pay JPMVEC outside the market at premium rates.”

According to FERC, JPMorgan started most of the strategies after an investigation had started.

The company was alleged to have created “artificial conditions” to drive up the price of energy.

As part of the settlement, JPMorgan will have to submit annual reports to FERC for three consecutive years. The company will have to explain in detail what its activities are in the power industry in the USA.

According to the BBC, the JPMorgan Ventures Energy Corporation has already sold the rights to buy gas and sell the power from its plants in California.