Published May 10, 2013
U.S. federal energy regulators on Friday granted a rehearing request for a unit of JPMorgan Chase & Co Inc on how the bank will comply with a six-month ban on physical power trading at market-based rates.
The decision Friday follows the U.S. Federal Energy Regulatory Commission's (FERC) decision on Thursday to give itself more time to decide the bank's rehearing request.
As part of its decision on Friday, FERC said the bank should submit another compliance filing that caps its offers to supply energy and other services at cost in markets outside of California.
FERC however rejected the bank's proposal to add 10 percent to its offers.
The regulator said by supplying power and other services at cost, JPMorgan should avoid losing money on its sales, while also preventing the bank's units from displacing more cost effective resources, which was a concern for the operators of the PJM and Midcontinent power grids.
PJM operates the power grid serving more than 60 million in 13 Mid-Atlantic and Midwest states and the District of Columbia.
Midcontinent Independent System Operator (MISO) operates the power grid in 11 Midwest states.
FERC sanctioned the U.S. bank's energy trading unit on November 14 for failing to disclose information during an investigation of potential power market manipulation in California and Michigan.
That six month trading ban started on April 1.
FERC has not accused the bank of market manipulation but JPMorgan this week notified its shareholders in a regulatory filing that the agency may take action against the bank.
JPMorgan has denied that it manipulated the power markets, and vows to fight.
Separately, JPMorgan sold the rights to market electricity from three power plants in California, reducing its presence in the state.
(Reporting by Scott DiSavino and David Sheppard in New York and Andrew Hay)