* FERC accuses JPMorgan of misleading authorities
* Bank may lose right to sell electricity at market rates
* Part of an enquiry on power market manipulation
By Jeanine Prezioso
NEW YORK, Sept 20 U.S. federal energy regulators
threatened on Thursday to suspend JPMorgan Chase & Co's
right to sell electricity at market rates after accusing the
bank of misleading authorities -- a measure that would
effectively banish it from the power market.
The move by the U.S. Federal Energy Regulatory Commission
(FERC) is the latest salvo in a months-long enquiry into whether
the bank, one of the biggest power traders on Wall Street,
manipulated power prices in the Midwest and California power
In the past year, the regulator has increased its
investigations into power market manipulation allegations
against banks, including Deutsche Bank and Barclays
If JPMorgan's right to sell power at market-based rates is
revoked, it would be forced to sell power at-cost, or at a
significantly lower rate.
The commission said the bank violated regulations under the
Federal Power Act by submitting misleading information and
omitting facts in dealings with the regulator and California's
electricity grid operator on four separate occasions over the
past 11 months.
In response, JPMorgan said it had made an "inadvertent
factual error in papers related to discovery and promptly
informed the commission of this mistake."
"Such an inadvertent error does not justify revoking
JPMorgan's market-based rate authority," said Jennifer
Zuccarelli, a spokeswoman for the bank.
The commission has not yet made a decision on the original
allegations of market misconduct, but has jousted legally with
JPMorgan over disclosing information related to its trading
The two have battled in court over whether the bank must
turn over certain emails.
The bank's unit, J.P. Morgan Ventures Energy Corp, was asked
to show that it did not violate federal regulations within 21
days of the notice being published in the Federal Register.
It must also show why "its authorization to sell electric
energy, capacity and ancillary services at market-based rates
should not be suspended."
In Thursday's order, FERC said JPMorgan had failed to
respond properly to the California Independent System Operator
Corporation (CAISO) when it requested data regarding the bank's
electricity bidding practices.
CAISO told JPMorgan in March 2011 that it was planning to
report the bank to FERC's enforcement arm, alleging it may have
may have bid up electricity prices by some $73 million in
California and the Midwest in 2010 and 2011.
On Monday, the JPMorgan unit filed a separate complaint with
FERC against the California power grid operator, claiming the
operator owed it $3.7 million for the dispatch of some power