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California duped on energy buys again
Key Excerpts from Article on Website of San Francisco Chronicle (SF's leading newspaper)
Posted: August 12th, 2013
http://www.sfchronicle.com/opinion/editorials/article/Califo...
JPMorgan Chase & Co. has agreed to pay federal regulators $410 million to settle allegations that the giant bank manipulated energy markets in California and Michigan. About $285 million of the settlement will go to the U.S. Treasury for civil penalties, and about $124 million will be refunded to California ratepayers. The remainder will be refunded to Michigan ratepayers. If this story sounds familiar, that's because it is. Californians who remember the Enron energy debacle of 2000-01 won't be surprised to learn that JPMorgan's traders have been accused of fraudulent behavior. Once again, the fraud was performed by manipulating the auction system that was developed by a quasi-state agency, the California Independent System Operator, to handle California's electricity needs. The Federal Energy Regulatory Commission found that JPMorgan engaged in 12 manipulative bidding strategies, which wound up forcing ratepayers to pay higher amounts than they should have - all because the bank wanted to find a cheap way to profit off of aging power plants in Southern California. JPMorgan used a variety of bait-and-switch strategies - duping Cal-ISO into paying exorbitant fees for running the plants at a low level, for instance, or manipulating the bidding system so that Cal-ISO was forced to pay rates that were many times higher than market rate. The fact that this kind of manipulation is still happening is upsetting. And while $410 million is a record settlement for the FERC, it's a drop in the bucket to JPMorgan, which reported $6.5 billion in quarterly profits this month.
Note: Remember Enron, which scammed millions and then went bankrupt, wiping out pensions of its many employees? To read CBS reports on how Enron purposely shut down power plants so they could cause and then cash in on the energy crisis, click here.
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