Weakness In Electricity Trading Exposed; State Agency $73M Short

FOLSOM (CBS/AP) — California officials say a big electricity trader has apparently figured out a way to exploit vulnerabilities in the state’s $8 billion-a-year electricity market, just as Enron Corp. did a decade ago.

The Sacramento Bee reports authorities are investigating a subsidiary of the New York investment bank JPMorgan Chase & Co., which may have grabbed an extra $73 million during 2010 and 2011.

The California Independent System Operator, the Folsom-based agency that runs the state’s power grid and oversees last-minute electricity sales, has recovered $20 million from the company so far.

The Federal Energy Regulatory Commission is investigating on California’s behalf, and the fate of the remaining $53 million claimed by the ISO isn’t clear.

The investigation became public when the commission sued JPMorgan.

The company denies any wrongdoing.

(Copyright 2012 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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