Jan 14 U.S. federal energy regulators on Monday
extended the amount of time available to decide if they will
grant a rehearing in the proceeding against JPMorgan that would
temporarily suspend the bank's energy desk from trading in a
segment of the power market.
In November, the U.S. Federal Energy Regulatory Commission
(FERC) temporarily banned JPMorgan Chase & Co's J.P.
Morgan Ventures Energy Corp energy trading arm from trading
power at market-based rates for six months, starting in April,
for failing to disclose information in a market manipulation
FERC has not accused the U.S. bank of market manipulation.
JPMorgan has said it would fight the sanction.
Market-based rate authority allows a company to trade power
at whatever price the market will bear.
Mary O'Driscoll, a spokeswoman at FERC, told Reuters
JPMorgan asked for a rehearing and this order gives the
commission more time to decide on that request. She said the
order does not impose any date on the commission to make a
Officials at JPMorgan were not immediately available for
The FERC sanction does not affect the bank's ability to
trade derivatives, futures, natural gas and other commodities.
As other banks have reduced their power trading over the
past few years since the Great Recession began in 2007, JPMorgan
continued to trade large amounts of physical power, according to
data submitted to FERC.
In U.S. power markets, JPMorgan's physical electricity sales
reached $3 billion in 2008, $2.9 billion in 2009, $2.8 billion
in 2010 and almost $3 billion in 2011. In the first three
quarters of 2012, the bank sold about $1.4 billion of physical
power, according to a Reuters analysis of the FERC power sales
JPMorgan stuck with power trading while other banks reduced
their exposure to the market.
There are many reasons for the decline. Power prices have
fallen to 10-year lows across most of the United States thanks
to an abundance of cheap natural gas. See
With decades worth of cheap fuel ahead, fewer utilities have
been looking to hedge their output; tough new capital
requirements and regulations banning proprietary deals have cut
into commodity trading; and some European banks, facing a
persistent debt crisis back home, have fled dollar-intensive
But many bankers and analysts see a more alarming cause for
the pull-back by banks: the risk that a more aggressive FERC may
target them for anything suggestive of nefarious trading.
Some in the power industry feel FERC's sanction against
JPMorgan could drive the bank to reduce its exposure to the