A weakness in California's electricity trading has been exposed — similar to that exploited by Enron

Two men speak outside JP Morgan Chase & Co headquarters in New York, May 14, 2012. A subsidiary of the company allegedly figured out a way to exploit vulnerabilities in California's electricity trading market during 2010 and 2011.
Two men speak outside JP Morgan Chase & Co headquarters in New York, May 14, 2012. A subsidiary of the company allegedly figured out a way to exploit vulnerabilities in California's electricity trading market during 2010 and 2011.
Emmanuel Dunand/AFP/Getty Images

A decade after companies like Enron manipulated California's electricity market, officials say a big electricity trader has apparently figured out a way to exploit vulnerabilities in the state's $8 billion-a-year electricity market once again.

Authorities are investigating a subsidiary of the New York investment bank JPMorgan Chase & Co., which may have grabbed an extra $73 million during several months in 2010 and 2011, the Sacramento Bee reports.

The California Independent System Operator, the Folsom-based agency that runs the state's power grid and oversees last-minute electricity sales, has recovered $20 million from the company so far. Independent System Operator officials say the problem was detect early and stopped, according to the Bee, and that this isn't a rerun of the energy crisis.

The Federal Energy Regulatory Commission is investigating on California's behalf, and the fate of the remaining $53 million claimed by the Independent System Operator isn't clear. According to the Bee, its fate will rest with the Federal Energy Regulatory Commission.

UC Davis economist Jim Bushnell told the Bee that it isn't fair to compare this case to what happened with companies like Enron, because "The orders of magnitude are much smaller than what we saw in 2001."

The investigation became public when the commission sued JPMorgan, though it began over a year ago, according to the Bee.

In court papers earlier this month, the company denied any wrongdoing.