May 10, 2013 / 9:27 PM / in 4 years

UPDATE 1-JPMorgan reduces presence in California power market

3 Min Read

By Scott DiSavino

May 10 (Reuters) - JPMorgan Chase & Co has sold the rights to market electricity from three power plants in California, reducing the bank's presence in a state where it is being probed for allegations of manipulating prices.

Federal energy regulators may take enforcement action against JPMorgan, the bank said in a regulatory filing this week. The bank has denied the allegations that it manipulated power prices in California and Michigan, and vows to fight.

A spokeswoman at JPMorgan said the company declined to comment on the sale of the power marketing rights to Southern California Edison, a regional power company.

California utility regulators on Thursday approved the plan to transfer so-called tolling agreements of the three power plants, which can produce enough power for about 3 million homes, to Southern California Edison (SCE) from Oct. 1, 2013 to May 31, 2018.

SCE, a unit of Edison International, serves about 4.9 million customers in southern and central California.

Tolling agreements usually allow companies like JPMorgan to purchase gas and sell the power produced from the facilities.

The three plants are owned and operated by units of U.S. power company AES Corp.

The sale included tolling agreements for 3,690 megawatts (MW) at Units 1-6 at the Alamitos plant (1,950 MW), Units 1 and 2 at Huntington Beach (430 MW) and Units 5-8 at Redondo Beach (1,310 MW).

JPMorgan, which does not list the power plants it operates in the United States, declined to comment on whether they will own other tolling agreements at power plants in California after this sale.

The California Public Utilities Commission and SCE did not disclose the cost of the contracts.

San Onofre Outage

The shutdown of a nuclear power plant in California has also put JPMorgan into a dispute with California over a key component of the state's plan to keep the lights on this summer.

The two reactors at SCE's 2,150-MW San Onofre nuclear power plant shut in January 2012 due to problems with their new steam generators.

To help maintain the reliability of the power grid should both reactors remain shut over the summer, the California Independent System Operator (ISO) entered into an agreement with AES to convert Huntington Beach Units 3 and 4 into so-called synchronous condensers.

Synchronous condensers provide voltage support to help move power around the grid.

The California ISO operates the power grid in most of California and part of Nevada.

The agreement with AES however was contingent upon the consent of JPMorgan, which has a tolling agreement for Huntington Beach 3 and 4.

JPMorgan has claimed consent rights with respect to Huntington Beach 3 and 4 even though the U.S. Federal Energy Regulatory Commission (FERC) in January said the bank does not have the contractual right to prevent AES from building the synchronous condenser units.

JPMorgan sought review of the FERC order in February but agreed to transfer its alleged consent rights with respect to Huntington Beach 3 and 4 to SCE as part of the sale approved on Thursday.

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