As JPMorgan Chase & Co. considers settling claims of manipulating
California's electricity market, officials say a chunk of the settlement could
come back to the state.
California expects to recover at least $63 million from the investment bank if it settles accusations over its trading practices, the California Independent System Operator said Friday.
JPMorgan was reported this week to be in settlement talks with federal officials over its power trades in California and the Midwest.
Stephanie McCorkle, a spokeswoman for the ISO, which oversees the state electrical grid, said California is counting on its share.
"We would hope and expect at least $63 million will be on its way to California," she said. The money would go to ratepayers by way of their utilities.
The figure represents California's claims against JPMorgan, less millions of dollars that the ISO has already recovered by withholding funds after power trades.
The Folsom-based ISO runs California's transmission lines and manages a market that covers roughly 10 percent of the state's daily electricity needs.
For the past year or so, the ISO has been engaged in a series of disputes with JPMorgan over the investment bank's trades and other business practices. The disputes are being refereed by the Federal Energy Regulatory Commission, which has generally sided with California in a series of preliminary rulings.
Among other things, FERC suspended JPMorgan's authority to trade electricity at a profit for allegedly lying to investigators about its California trades. The commission also ordered JPMorgan to stop obstructing the renovation of two Huntington Beach power plants; state officials said the renovations could prove critical in avoiding blackouts in Southern California this summer.
In March, FERC officially warned JPMorgan of a "possible enforcement action" over its trading methods, according to a regulatory filing.
After consistently denying any wrongdoing, JPMorgan appears ready to settle. The total settlement, covering the firm's operations in California and the Midwest, could reportedly surpass $500 million.
The potential deal follows FERC's decision to fine another big bank, Barclays, $453 million over manipulative trades in California and other Western states. Barclays is fighting the fine.
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