JPMorgan May Be Evading Power-Trading Ban

Pointing The Finger

A JPMorgan Chase unit suspended from market-based power trading in California may be evading the ban through swap agreements with EDF Group and Cargill subsidiaries, the state’s grid operator said.

Bloomberg reports that EDF Trading North America LLC signed a swap agreement with J.P. Morgan Ventures Energy Corp.’s BE CA LLC unit for energy from units at three power plants in California for the six months that the JPMorgan subsidiary is banned from trading, the California Independent System Operator Corp. said in a filing to federal regulators Friday.

Cargill Power Markets has also acquired control of units at two plants through a swap contract, the filing shows.

'The units covered by the EDF and Cargill contracts together comprise the total capacity previously controlled by JPMVEC and BE CA LLC in California', Cal ISO said in the filing with the Federal Energy Regulatory Commission.

'There is precedent for firms using swap contracts to secure a portion of the profit stream from a unit, while masking the identity of a party that has some level of control over the bidding'.

JPMorgan was warned by FERC in March that its personnel and two subsidiaries may face claims stemming from a probe into bidding practices.

FERC revoked J.P. Morgan Ventures’ right to trade power at market-based rates in California for six months starting in April, saying the firm provided misleading information to the ISO.

Hit the link below to access the complete Bloomberg article:

JPMorgan May Evade Power-Trading Ban With Swaps, ISO Says

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image: © Lisamarie Babik

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