$105 million — that’s how much Barclays Bank and several former energy traders will pay after being accused by federal regulators of improperly manipulating electric prices in California during 2006 and 2008.

Although less than the $487.9 million originally sought, the legal settlement is still one of the largest ever for such a case. It also exceeds by far anything ever seen in Texas.

According to the allegations, Barclays and several of its former energy traders improperly schemed to lose money in certain transactions in order to make money in others.  As a consequence, California energy market participants reportedly lost nearly $140 million, according to reports.

The agency pursuing the case — the Federal Energy Regulatory Commission — originally approved more than $400 million in fines, but agreed to the smaller amount after a protracted legal fight. Under the deal announced this month, Barclays will pay a $70 million civil penalty and disgorge another $35 million in profits.

“The commission concludes that the agreement is a fair and equitable resolution of the matters concerned and is in the public interest, as it reflects the nature and seriousness of the conduct,” FERC stated in a Nov. 7 regulatory filing.

FERC oversees energy markets throughout the United States but has limited authority over the Texas energy market, which is overseen by the Texas Public Utility Commission.  However, under the Energy Policy Act of 2005 FERC has much broader authority than the PUC to assess penalties in market manipulation cases.

The most ever paid in a U.S. market manipulation case involving FERC came in 2013, when JP Morgan agreed to pay $410 million to settle allegations of improper activities in California and the Midwest from 2010 through 2012.  The largest settlement in Texas came in 2008, when Luminant agreed to pay $15 million to settle allegations stemming from alleged gaming activities in 2005.

The Texas Coalition for Affordable Power has called for increasing the PUC’s authority in such cases. In 2011 TCAP successfully advocated for legislation that gives the agency the authority to order companies to disgorge inappropriate profits from gaming activities.

 

 

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