British energy company BP have denied allegations from the Federal Energy Regulatory Commission that they manipulated the Texas natural gas markets in 2008.
The FERC regulates the US power market and large energy transmission systems and BP say that the regulator does not have jurisdiction over trading that occurs within the state lines, according to the Wall Street Journal. Employees at the regulator are looking to receive $48 million from BP who were fined for the supposed defilements that brought the energy company $250,000 in profit, but final decisions should be made this week.
Post financial crisis and after the collapse of Enron Corporation in 2001, it has led to several Wall Street banks abandoning or significantly reducing commodity trading because of the oversight of the physical and financial markets. In order to combat this, new regulations have been put in place to increase transparency, as said in the Wall Street Journal.
Both BP and the FERC have declined to comment on this, but a University of Houston finance professor, Craig Pirrong, expressed that the regulator may have been too belligerent. “FERC has been very aggressive in using its anti-manipulation powers. Other big players in the physical-trading business in particular are watching this carefully,” Pirrong said.
BP has had many run-ins with US regulators as in 2007, the energy company settled charges for purposely increasing the price of propane and agreed to pay $303 million. Alongside this, earlier this month, BP had to pay $18.7 billion to settle federal claims from the Deepwater Horizon oil spill in 2010.
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