Nov 16 2012
Regulator investigating questionable energy trading schemes on Wall Street
Cantwell’s 2005 legislation being used to investigate, punish energy market manipulation
WASHINGTON, D.C. – U.S. Senator Maria Cantwell (D-WA) today praised stepped-up action by the Federal Energy Regulatory Commission (FERC) to protect consumers from potential energy market manipulation by Wall Street traders. This past month, FERC has proposed fines on Barclays Plc and Deutsche Bank AG. This week, citing illegal activity, FERC revoked J.P. Morgan Ventures Energy Corp.’s right to trade electricity for six months starting in April 2013.
In the aftermath of Enron’s schemes that cost Washington ratepayers billions, Cantwell authored an amendment to the Energy Policy Act of 2005 that strengthened FERC’s authority to investigate and punish energy market manipulation. Today, by committing additional resources and assembling a team of experts capable of understanding the complex energy and financial markets, FERC is using that law to root out fraud, impose civilian fines and disgorge illicit profits from energy manipulators.
“The recent actions by FERC are exactly what Congress intended when we wrote the bipartisan 2005 Energy Policy Act that prohibits market manipulation,” Cantwell said. “FERC is serving as the vigilant cop-on-the-beat we need to protect American consumers and stop potential market manipulation.
“I am pleased that the oversight authority I pushed for after the West Coast electricity crisis is being used to investigate potential energy market manipulation on Wall Street. Washingtonians have not forgotten how Enron schemes like ‘Get Shorty’ and ‘Fat Boy’ caused people to lose their homes, businesses and pensions. By ensuring energy and financial markets are transparent and functioning properly, FERC is helping to prevent such a crisis from happening again.”
As of October 2012, FERC has used its 2005 anti-manipulation authority to conduct 107 investigations resulting in 52 settlements and civil penalties of $294 million and disgorgement of profits totaling $155 million. Under Cantwell’s amendment to the 2005 Energy Bill, FERC was given the power to fine manipulators up to $1 million per day for every violation.
The 2005 Energy Bill also contained Cantwell’s provision that prevented a bankruptcy court from forcing Snohomish Public Utility District (PUD) and its customers to pay millions of dollars in termination fees for electricity that was never delivered. This measure reaffirmed FERC’s authority to decide whether charges related to manipulated power contracts could be deemed invalid.
Cantwell has aggressively fought throughout her career to protect consumers from energy price manipulation. She successfully fought in 2007 to give the Federal Trade Commission oversight of the wholesale petroleum markets. In 2010 under the Dodd-Frank Consumer Protection Act, she worked to give the Commodity Futures Trading Commission oversight in the derivatives markets. From her first days in office Cantwell pushed to expose Enron’s manipulation of deregulated energy markets. On December 2, 2001 Enron filed for Chapter 11 bankruptcy leading to the dismissal of more than 22,000 employees. Cantwell helped uncover numerous ‘smoking gun’ audio tapes and memos that detailed the tricks Enron used to artificially drive up electricity prices.