JPMorgan power trading rights restricted The US energy regulator has banned JPMorgan Chase from trading electricity at market rates for six months, accusing the bank of submitting false information to a continuing investigation into alleged market manipulation. JPMorgan, which has had run-ins with regulators all year including over its outsized lossmaking derivatives trades in London, was hit by an order from the US Federal Energy Regulatory Commission on Wednesday evening related to its activities in California. The regulator has been newly zealous in recent months in levying large fines against market players including Barclays. The order bars JPMorgan from selling electricity at market rates in California for six months from April 1, 2013. However, the bank will still be able to trade electricity at prices determined by counterparties and it can continue to trade other energy products and derivatives. In essence, the order limits the bank's profits while allowing it to continue operating in power markets. Wholesale electricity has attracted heightened regulatory attention since the California energy crisis of 2000-01, when Enron and other traders were accused of rigging supplies and causing blackouts. In the past year, Ferc has alleged that Barclays and Deutsche Bank manipulated electricity markets and has compelled Constellation Energy to pay $245m to settle another case. Last month Ferc proposed a fine of $435m and disgorgement of $34.9m for Barclays for violating the anti-manipulation rule in the power trading market from late 2006 to 2008. The action against JPMorgan relates to a document dispute. The bank had been fined $486,000 in February by the California Independent System Operator Corp, the state operator of the power grid, for failing to submit documents requested as part of an investigation into market manipulation. JPMorgan appealed against the fine to Ferc, arguing that its responses had been "completely voluntary" and it had not been informed that it was obliged to respond. But in a blistering judgment on Wednesday, the 30-page order from Ferc said six times that JPMorgan's position was either "not credible" or "lacks credibility," noting that the bank had been informed that the state operator's inquiry had backing from Ferc. JPMorgan itself withdrew its complaint about the fine in June, saying it had made a "factual error" as its outside lawyer "did not recall" the existence of emails showing that the bank was obliged to meet Caiso's demands for information. But the bank continued to argue that it did not deserve punishment for not responding speedily to Caiso's demands, admitting to "mistakes" but saying it "acted with good faith and with no intent to mislead anyone." The commission said, however, that "the egregious nature of JPMorgan's repeated submission of false and misleading statements . . . requires the severe penalty of suspending JPMorgan's market-based authority." Commissioner Cheryl LaFleur dissented from the ruling, arguing that it set "a new and potentially dangerous precedent" that companies could lose their market-based rate authority "because of a dispute over document production." Ms LaFleur said, however, that "JPMorgan may well face the loss of its market-based rate authority as a consequence of the pending investigation" into alleged market manipulation. JPMorgan said: "As the dissenting commissioner stated, this is a novel use of Ferc's authority over market-based rates and is unsupported by Ferc's own regulations, particularly given that the issue in this proceeding was not JPMorgan's conduct in the market, but rather a dispute over document productions. We are reviewing the opinion and will determine our next steps, prior to the proposed April 2013 effective date.