JPMorgan Chase & Co. was ordered by a federal judge to explain why it shouldn't be compelled to turn over e-mails sought by U.S. regulators in a probe of potential energy-market manipulation.

District Judge Colleen Kollar-Kotelly in Washington today gave JPMorgan until the end of the day on July 13 to respond. The Federal Energy Regulatory Commission sued JPMorgan on July 2 to release 25 e-mails in an investigation of possible manipulation of power markets in California and the Midwest by JPMorgan Ventures Energy Corp.

"JPMorgan shall address why it should not be required to produce the 25 at-issue e-mails in unredacted form or to submit them to the court for in camera review," Kollar-Kotelly said in the three-page order. "JPMorgan must present declarations or other competent evidence to support each of the essential elements of any claimed privilege."

FERC opened the probe in August after complaints from California and Midwest grid operators that JPMorgan's bidding practices were abusive, according to the agency's initial court filing.

"We believe we have complied in all respects with the law, as well as FERC rules and applicable tariffs, governing this market," Jennifer Zuccarelli, a JPMorgan spokeswoman, said in an e-mail. "We stress that this investigation is ongoing and that no conclusions have been reached or findings adjudicated."

'Court's Assistance'
She said "we welcome the court's assistance in resolving this dispute over documents."

FERC, which has pledged to combat manipulation of prices, said JPMorgan's bidding techniques in California and the Midwest resulted in at least $73 million in improper payments. It accused the bank of improperly using attorney-client privilege to withhold or redact 53 e-mails subpoenaed in April.

The company has since released 28 of the e-mails.

The regulator is examining efforts by Houston-based JPMorgan Ventures to extract excessive payments or above-market prices from and Midwest Independent Transmission System Operator Inc. and California ISO, Thomas Olson, a lawyer in the FERC investigating division, said in a court document. The probe focuses on winning inflated "make-whole" payments, he said.

The California and Midwest grid operators solicit bids from electricity suppliers each day to meet expected demand. Typically, 90 percent or more power consumed is secured in what is known as the day-ahead market. Any supply shortfalls because of weather or unexpected plant shutdowns are met through bids placed in real-time.

In today's order, the judge said the parties should meet and file a brief on July 10 advising whether they would consent to having the case handled by a magistrate judge with any appeals taken directly to the U.S. Court of Appeals in Washington. She said such an arrangement might result in a quicker decision.

The case is Federal Energy Regulatory Commission v. JPMorgan Ventures Energy Corp., 12-mc-352, U.S. District Court, District of Columbia (Washington).

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