HOUSTON Nov 21 A federal regulator's order
penalizing JP Morgan Chase & Co's energy trading arm
will not affect the unit's business activity in the Texas
wholesale power market, state and federal agencies said on
Last week, the Federal Energy Regulatory Commission (FERC)
said it would suspend the ability of JP Morgan Ventures Energy
Corp to receive competitive market prices for physical power it
sells for six months starting in April 2013, after it made
factual misrepresentations during an investigation into market
manipulation in California.
The order created uncertainty in the Texas wholesale power
market, according to industry sources, because JP Morgan
operates in Texas and has a significant presence in the West
Texas market which is less liquid than other regions in the
The Electric Reliability Council of Texas (ERCOT), which
oversees the $34 billion wholesale power market for most of the
state, said the ruling would have no direct impact on JP
Morgan's business because ERCOT is not subject to FERC
"The ruling is based on FERC authority that does not apply
in ERCOT, so it has no direct effect on JP Morgan's market
activities here," according to a statement from the grid
"ERCOT expects that all market participants, including JP
Morgan, will comply with all relevant laws, regulations and
market rules, and we have no indication at this time that JP
Morgan is not compliant with its obligations as a market
participant in this region," the statement said.
FERC officials concurred.
The order "does not suspend JP Morgan's ability to make
sales at market-based rates within ERCOT, because sales within
ERCOT are not subject to the commission's jurisdiction under
section 205 of the Federal Power Act.
The FERC order comes amid an investigation of JP Morgan's
bidding activity and its communications with the California
Independent System Operator.
ERCOT said the agency and Texas regulators will continue to
perform market oversight activity and "will address any
compliance issues that arise by any market participant."
JP Morgan's ability to trade derivatives, futures, natural
gas and other commodities will not be impacted by the FERC
JP Morgan did not immediately respond to a request for