JP Morgan Chase and MISO – abusive practices!

July 7th, 2012

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jpmorgan_miso

“MISO” trademark owned by… JPMorgan Chase!

But seriously folks!  JPMorgan got caught with its hand in the cookie jar again, CAISO and MISO have filed claims of abusive practices at FERC.  Here’s the short version of what they allegedly did (it’s allegedly for now, but just you wait!) — from the second article below:

In the Midwest, the alleged manipulation involved day-ahead margin assurance payments, under which generators are compensated for situations when their real-time dispatch falls below the level set by the day-ahead dispatch schedule. As in California, traders found a flaw where they could force the market to make “inappropriate or excess” payments by placing lowball bids in the day-ahead market – as low as negative $500 per megawatt-hour – and much higher bids in the real-time market, Miso said.

Here’s the Amended CAISO Petition against JPMorgan Chase:

CAISO Petition

Still looking for the MISO Petition and FERC’s legendary Constellation Order.

In the news:

JPMorgan Chase Manipulation Scandal Raises Specter of Enron

JPMorgan probe highlights FERC power trading crackdown

JPMorgan’s Role in Power Market Comes Under Scrutiny

In the STrib:

E-mails sought in U.S. probe of JPMorgan, electricity sales

A federal judge ordered JPMorgan Chase & Co. on Thursday to explain why it shouldn’t be compelled to turn over e-mails sought by U.S. regulators in a probe of potential electricity market manipulation in the Midwest and California.

U.S. District Judge Colleen Kollar-Kotelly in Washington gave JPMorgan until the end of the day on July 13 to respond. The U.S. Federal Energy Regulatory Commission (FERC) sued JPMorgan on Monday to release 25 e-mails in an investigation of possible manipulation of power markets in the Midwest and California by J.P. Morgan Ventures Energy Corp.

FERC is examining efforts by Houston-based J.P. Morgan Ventures to extract excessive payments or above-market prices from Midwest Independent Transmission System Operator (MISO)and California ISO, Thomas Olson, a lawyer in the FERC investigating division, said in a court document. He said the probe focuses on winning inflated “make-whole” payments, which the grid operator pays when a power plant’s output isn’t needed as anticipated.

In court papers, FERC said JPMorgan’s bidding techniques in the Midwest and California resulted in at least $73 million in improper payments. FERC opened the probe in August after complaints from Midwest and California grid operators that JPMorgan’s bidding practices were abusive, according to the agency’s initial court filing.

MISO oversees the electric grid in parts of 11 midwestern states, including Minnesota and Wisconsin, and Manitoba.

“We believe we have complied in all respects with the law, as well as FERC rules and applicable tariffs, governing this market,” Jennifer Zuccarelli, a JPMorgan spokeswoman, said in an e-mail. “We stress that this investigation is ongoing and that no conclusions have been reached or findings adjudicated.”

She said “we welcome the court’s assistance in resolving this dispute over documents.”

JPMorgan’s commodities business owns or has the right to output from several electricity generating facilities. Only one power plant, an unnamed facility in Michigan, is mentioned by FERC in court papers.

It remains unclear whether utilities and power generators in the region were hurt by the bank’s alleged market manipulation. Xcel Energy, based in Minneapolis, said in a statement that it was aware of the investigation “but at this point, we don’t have information about the allegations or if we may be impacted.”

FERC has accused the bank of improperly using attorney-client privilege to withhold or redact 53 e-mails subpoenaed in April. The company has since released 28 of the e-mails.

In a three-page order, the judge said that “JPMorgan shall address why it should not be required to produce the 25 at-issue e-mails in unredacted form or to submit them to the court for in-camera review.”

Grid operators solicit bids from electricity suppliers each day to meet expected demand. Typically, 90 percent or more power consumed is secured in what is known as the day-ahead market. Any supply shortfalls because of weather or unexpected plant shutdowns are met through bids placed in real-time.

Star Tribune staff writer David Shaffer contributed to this report.

Posted by Carol A. Overland
Filed in Energy, Land Use, Nuclear
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