US FERC dismisses JP Morgan complaint against California ISO
Dec 5 (Reuters) - U.S. federal energy regulators on Wednesday dismissed a complaint by the energy trading arm of JPMorgan Chase & Co against California's power grid operator for energy generated in the second quarter of 2012. J.P. Morgan Ventures Energy Corp, the JPMorgan unit, filed the complaint with the U.S. Federal Energy Regulatory Commission (FERC) against the California Independent System Operator (California ISO), on Sept. 14, 2012, alleging the state's grid operator violated its tariff by underpaying JP Morgan about $3.7 million. This dispute is a side issue to FERC's recent decision to temporarily suspend JP Morgan's market based rate authority to trade physical power for six months starting April 2013, which regulators imposed due to the bank's alleged factual misrepresentations during an investigation into market manipulation in the California ISO. JP Morgan said in the dismissed complaint that it generated energy pursuant to the California ISO's exceptional dispatch instructions. The instructions enable the California ISO to commit resources that are not cleared through normal market procedures in order to maintain reliable grid operations under unusual circumstances, like the loss of excessive amounts of generation or transmission facilities. In most cases of exceptional dispatch, the California ISO pays the generator a premium for the power produced. JP Morgan alleged in its complaint that it did not receive the required premium. JP Morgan and its subsidiary BE CA LLC control through tolling agreements 10 generating units in the California ISO market. JP Morgan alleged that between April 2012 and June 2012, the California ISO exceptionally dispatched its units 18 times. Tolling agreements are like rental agreements - the bank rents the plants from their owners and operates the facilities.