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Oct 2 (Reuters) - A U.S. federal court on Friday said itwould review the U.S. Federal Energy Regulatory Commission's(FERC) proposed $435 million civil penalty against Barclays Plc for alleged power market manipulation from 2006 to2008.
The U.S. District Court for the Eastern District ofCalifornia said it will determine if FERC's proposed assessmentshall be affirmed, vacated or modified.
Barclays has argued it did nothing wrong and has questionedthe size of the penalty, which is the most sought by FERC sincethe Energy Policy Act of 2005 expanded the regulator's penaltyauthority.
In addition, the court decided to separate its determinationof disgorgement from its review of the civil penalty. Inaddition to the civil penalty, FERC also said Barclays shoulddisgorge $34.9 million plus interest of alleged ill-gottengains.
Following is a timeline of FERC's Barclays case and theevents leading up to it:
1995-2000: States begin deregulating power markets to givecustomers a choice of supplier. The program was expected toreduce electricity costs.2000-2001: A power crisis hits California and other Western U.S.states, costing customers up to $45 billion as well as losteconomic activity due partly to power and gas marketmanipulation.December 2001: Enron enters bankruptcy amid an accountingscandal and accusations of power and gas market manipulation.2001-2003: Numerous energy marketers, such as the former Enron,Mirant, El Paso and Dynegy, exit U.S. power and gas markets dueto credit concerns and allegations of market manipulation.August 2003: Blackout leaves 55 million people in the dark ineight U.S. Northeastern and Midwestern states and Ontario inCanada.
June 2004: FERC authorizes Barclays to sell power atmarket-based prices.
July 2005: In response to the Western energy crisis and theNortheastern blackout, Congress passes Energy Policy Act of2005, ratcheting up penalties FERC can impose for marketmanipulation and reliability violations to $1 million per dayper violation from the prior cap of $10,000 a day.
October 2005: FERC and the U.S. Commodity Futures TradingCommission (CFTC) agree to work together on market manipulationcases.November 2006: FERC alleges Barclays and four of its tradersmanipulated the electric market in and around California fromNovember 2006 to December 2008.
Specifically, FERC says Barclays engaged in loss-generatingtrading of next-day physical power on theIntercontinentalExchange at four Western hubs, Mid-Columbia,Palo Verde, South Path 15 and North Path 15, to benefit Barclaysfinancial swap positions in those markets.
July 2010: CFTC Director of Enforcement sent letter to FERC'sDirector of Enforcement that FERC was best situated to handlethe Barclays case.
October 2012: FERC issues order to Barclays to show cause why itshould not be found to have violated the Federal Power Act andpay a civil penalty of $435 million and disgorge $34.9 millionplus interest. FERC also issues an order to four Barclaystraders to show cause why they should not be assessed penaltiestotaling $18 million.
July 2013: At Barclays' request, FERC issues an order assessingthe civil penalty against the bank and its traders, andinstitutes an action in federal district court to affirm thepenalty. Barclays had the option to choose a hearing before aFERC administrative law judge or seek review by a U.S. districtcourt if the FERC commissioners found a violation.
October 2013: FERC files case against Barclays and itstraders in U.S. District Court for the Eastern District ofCalifornia, requesting a jury trial.
December 2013: Barclays files motion to dismiss the FERC case. Among other contentions, Barclays argued FERC had no standing topursue the case after the U.S. Court of Appeals in March 2013dismissed FERC's case against natural gas trader Brian Hunter,finding that the CFTC has exclusive jurisdiction over futuresmarkets.
February 2014: FERC files motion opposed to Barclays' motion todismiss.
February 2015: Court hears oral argument on Barclays' motion todismiss.
May 2015: Court dismisses Barclays' motion to dismiss.
Oct 2015: Court orders FERC to file a record of how it assessedcivil penalties and to file a motion for an order affirming thecivil penalties assessed by FERC. (Reporting by Scott DiSavino; Editing by Bill Rigby)
