JPMorgan penalty will deter market manipulation, energy officials say

SACRAMENTO -- The strong response by federal regulators to complaints of market manipulation by JPMorgan Chase & Co. should deter other sellers from doing the same thing, said officials at California’s electricity grid operator.

The Federal Energy Regulatory Commission announced on Tuesday that JPMorgan would pay $410 million in penalties to settle allegations it manipulated energy markets in California and the Midwest.

Nancy Saracino, general counsel for the California Independent System Operator, said, “Both the ISO and the FERC were on the beat for this conduct, and it worked extremely well for California ratepayers.”

“We were detecting it, stopping it and punishing conduct that is a huge deterrent to the rest of the market. This is a big deterrent to any future conduct.”

She emphasized that $124 million of the total federal penalty is to be returned to California ratepayers.

“We’ve gotten every penny back and will be sending it back as soon as it hits our account,” she said at a morning teleconference from the ISO’s headquarters in Folsom, Calif., near Sacramento.

California consumer advocates, however, questioned whether JPMorgan had been punished enough. The $410 million “really seems like a very small fine,” said Mark Toney, executive director of the Utility Reform Network, a San Francisco group that monitors energy regulation and legislation. “It almost feels like the cost of doing business” for JPMorgan.

But ISO officials called the fine historic in size and scope. “I wouldn’t dismiss the size of the penalty at all,” said Eric Hildebrandt, the director of market monitoring.

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