Published October 18, 2012
NEW YORK – JPMorgan Chase & Co apologized to the U.S. energy regulator on Thursday for providing misleading information about California electricity markets, saying it was inadvertent.
The bank also urged the U.S. Federal Energy Regulatory Commission not to follow through on a threat to suspend its market-based rate authority, which would force it to sell power at a significantly lower rate and probably would drive it out of the market.
The regulator has said the bank broke the law by submitting misleading information to the commission and the California grid operator.
The commission's latest probe comes on the heels of a separate lawsuit, in which it has accused JPMorgan of bidding up electricity prices in California and the U.S. Midwest.
JPMorgan said any omission of facts was inadvertent and contended that it should not be penalized with revocation of its ability to profitably trade in electricity markets.
"...we respectfully submit that suspension of (J.P. Morgan Ventures Energy Corp's) market-based rate authority is not an appropriate or proportionate response," the bank said.
It attached four affidavits in the response, two from lawyers and two from bank employees, that verify it had considered all statements accurate at the time it had submitted them, it says.
FERC had issued the "show cause" order on September 20 to the JPMorgan unit, giving it 21 days to show why it should not be found to have violated the Federal Power Act.
FERC spokesman Craig Cano said the agency will consider the response but did not provide a timeline for its decision.
A JPMorgan spokeswoman did not immediately return a request for comment.
In the 69-page response released by FERC on Thursday, the bank said it "regrets and apologizes for its failure to address the FERC communications in certain submissions."
This order is also the latest in FERC's investigation into banks it believes to be manipulating electricity markets.
Last month, FERC asked Deutsche Bank Energy Trading LLC to prove that it did not manipulate California Energy markets or face a $1.5 million penalty.
In April, FERC alleged that Barclays Plc bid up California power prices between November 2006 and December 2008.
In March, the agency won a record $245 million fine from Constellation Energy over charges of power market manipulation.
(Reporting By Jeanine Prezioso)