JP Morgan Ventures Energy Corporation (JPMVEC), the power business of JP Morgan, has agreed to pay $410m in penalties and disgorgement to ratepayers for allegations of manipulating power prices in California and the Midwest markets during September 2010 and November 2012.
As part of a stipulation and consent agreement reached with the Federal Energy Regulatory Commission (FERC) yesterday, JPMVEC will pay a civil penalty of $285m to the US Treasury and disgorge $125m in unjust profits.
Of the disgorged profits, $124m will go to ratepayers in the California Independent System Operator (California ISO), which operates the California electricity market. The remaining $1m will go to ratepayers in the Midcontinent Independent System Operator (MISO).
JPMVEC has neither admitted nor denied the violations.
In its investigation, FERC found that JPMVEC was involved in 12 manipulative bidding strategies aimed to make profits from power plants that were running short of money in the marketplace.
FERC investigators further found that JPMVEC received premium rates from the California ISO and MISO by creating artificial conditions to increase the energy prices.
In a statement, the regulator said its “investigators also determined that JPMVEC’s bids displaced other generation and altered day ahead and real-time prices from the prices that would have resulted had the company not submitted the bids.”