Regulators Near Settlement With JPMorgan Chase
RENEE MONTAGNE, HOST:
Now this morning, the Federal Energy Regulatory Commission announced a historic settlement with JPMorgan Chase. The government says a subsidiary of the bank manipulated energy markets in California and the Midwest. As a result, the government says JPMorgan made sizable profits that were improper. The company neither admits nor denies the alleged violations but has agreed to pay more than 400 million dollars.
NPR's Wendy Kaufman has more.
WENDY KAUFMAN, BYLINE: Federal regulators say JPMorgan used 12 different manipulative bidding strategies to unfairly inflate the price the company received for electricity from its power plants.
Nancy Saracino is general counsel for the California Independent System Operator which runs California's energy grid. She says in one scheme JPMorgan would offer very cheap prices for its energy during late night hours.
NANCY SARACINO: So our market would say, great, let's use those units to generate electricity. And then after midnight, the price would all of a sudden skyrocket up 1,000 times the price and so our market would say, hey, wait, we no longer want your units, please stop generating, but because these are old power plants that take a long time to slow down and we would be stuck paying them for that time.
KAUFMAN: As a result of today's settlement, $124 million will be returned to California rate payers. Saracino calls it a vindication for them and for market participants who play by the rules. A million dollars will be returned to Midwestern rate payers and the penalty, $285 million will go to the U.S. Treasury.
Wendy Kaufman, NPR News. Transcript provided by NPR, Copyright NPR.