Federal regulators for the electric grid and commodities and futures markets are partnering to strengthen a crackdown on energy market manipulation, building on increasingly aggressive measures to fight abuse in the electricity sector.
The Federal Energy Regulatory Commission and the Commodity Futures Trading Commission signed a pair of agreements Thursday -- one to coordinate action and information regarding abuse, fraud and manipulation in the power market, the other to hash out areas of "overlapping jurisdiction."
“As FERC’s role in overseeing the competitive energy markets has grown since the passage of the Energy Policy Act of 2005, our need to coordinate with the CFTC is increasingly important," said Cheryl LaFleur, the acting FERC chairman.
The agreement, which was called for in the Dodd-Frank Wall Street Reform and Consumer Protection Act and is three years behind schedule, comes as FERC has taken a more active role in penalizing banks for alleged manipulation in the past year.
In July, the regulator and JPMorgan Chase reached a record $410 million settlement for alleged manipulation. It's also levied $488 million of fines and fees against Barclays -- the regulator sued the British bank, which has denied foul play, in October for failing to pay up.
The uptick in enforcement is a result of FERC finishing its process of building a team and compiling the necessary information in the years since the 2005 Energy Policy Act, which gave it the authority to take punitive action against manipulators.
FERC was given that responsibility as a response to the Enron scandal of the early 2000s. The ill-fated firm encouraged California electricity generators to curtail production shortly after the state deregulated its power market, creating a supply shortage — and blackout — that Enron plugged by offering power at premium rates.