After Call for Investigation by Congressman Dan Kildee, JPMorgan Chase to Pay $410 Million in Penalties and Paybacks to Michigan, California Electricity Ratepayers

Press Release

Congressman Dan Kildee (MI-05) today welcomed the announcement that a subsidiary of JPMorgan Chase & Co., JPMorgan Ventures Energy Corp., will pay $410 million in civil penalties and paybacks to ratepayers in Michigan and California after the company allegedly engaged in manipulative energy trading schemes costing ratepayers in both states tens of millions of dollars. Today's settlement with the Federal Energy Regulatory Commission (FERC) comes after Congressman Kildee, a member of the House Financial Services Committee, called for an investigation in May into the nation's largest bank and the alleged trading schemes.

"Today's settlement holds JPMorgan Ventures Energy Corp accountable for their deliberate schemes that cheated Michigan and California ratepayers out of millions of dollars," Congressman Kildee said. "The reckless actions by JPMorgan Chase clearly demonstrate the need for federal oversight in rooting out such manipulation from our financial markets. As a free market economy, we must have a regulatory structure that prevents lending institutions from playing fast and loose with such lucrative schemes at the cost of consumers and ratepayers."

Under the consent agreement, JPMorgan Chase will pay a civil penalty of $285 million to the U.S. Department of Treasury and disgorge $125 million in unjust profits to ratepayers, according to FERC. This includes $124 million to ratepayers in the California Independent System Operator (California ISO) and $1 million in ratepayers in the Midcontinent Independent System Operator (MISO), which includes the Kinder Morgan Power Plant in Jackson, Mich.

In the consent decree, FERC said that JPMorgan Chase engaged in 12 "manipulative bidding strategies" that resulted in tens of millions of dollars in excessive payments from both energy grid operators. "All of these strategies interfered with and distorted well-functioning markets…" the consent decree reads.

In May, Congressman Dan Kildee wrote a letter to the U.S. Department of Justice asking Attorney General Eric Holder to investigate JPMorgan Chase for the fraudulent schemes that resulted in $83 million in overcharges to Michigan and California for energy purchases. His letter came after an article in The New York Times cited an unreleased FERC report alleging that JPMorgan, "under pressure to generate large profits," deliberately used "manipulative schemes" to fraudulently overcharge customers in both states.

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