In today’s news, numerous news outlets are reporting that J.P. Morgan is preparing to fork over $400-500 MILLION dollars for overcharging California customers for energy purchases. Here’s the kicker-in-the-teether…….this is for legal violations from 2000. Yes, after more than a dozen years or more, the truth is finally coming out. And how did it come out? A FERC press release! Not that this is a surprise to us; we predicted back in 20o1.
The charges just got released today that Morgan was exploiting a regulatory nightmare some 12 years ago. The federal regulatory agency finally unveiled charges and deal with JPMorgan Chase , accusing the bank of charging California and Midwest electricity grids more than 80 times prevailing power prices through “manipulative bidding strategies. Just to add salt to the wound, the same regulatory agency announced some $470 million in fines for similar abuses against Barclays Bank last month. Combine the Barclays and J.P. Morgan fines and you are looking at some $1 billion in fines against companies for their transgressions over 12 years ago.
According to the Washington Post, the FERC said that one of Morgan’s subsidiaries engaged in eight manipulative techniques to take advantage of power market rules to “obtain payments at above-market rates” between September 2010 and June 2011. Reportedly, the schemes were tied to the complicated rules for electricity markets, where regional grid operators buy power according to an hourly and daily bidding system. In certain markets, wind power generators bid minus $29 per megawatt hour — actually paying the regional grid — because if they remained idle, they would lose $30 per megawatt hour worth of federal production tax credits.
In June, FERC also ordered JPMorgan to reimburse $52 million to California’s system. The agency also suspended JPMorgan from trading in U.S. electricity markets for six months for giving false information during an investigation of California power markets.
When you combine the Morgan and Barclays actions, you are looking at just about $1 billion in overcharges that will finally be returned to California some 12-13 years after the fact. Just in case you were wondering how long the wheels of justice turn, you may be interested to know that it took 4,383 days or 105,192 hours for the regulators to finally bring the bad guys to justice. Talk about the gratingly grind of justice’s wheels! From our perspective, the companies were counting upon the glacially slow wheels when they chose to contest the obvious.