British bank Barclays has been accused of manipulating electricity prices in western United States which caused overpriced bills. This prompted a US judge to order a class-action lawsuit against the company.
The US Federal Energy Regulatory Commission fined the British bank $435 million for allegedly manipulating electricity prices in California last 2013. This manipulation happened from the year 2006 up to 2008. As reported by HITC Business, Judge Victor Marrero said the actions made by the bank indicate its willingness to inflate or deflate market prices and constrain the market against their competitors.
According to Law 360, FERC reported that the bank had violated the ban on energy market manipulation. The bank together with its four commodities traders has entered into a scheme to trade a day ahead fixed price electricity. This move aims to boost the company's Intercontinental Exchange which is fixed for floating financial swap positions.
According to the complaint of Merced Irrigation District, the bank's traders had manipulated the prices in order to benefit their position in swap contracts whose values are based on an index being managed by the Intercontinental Exchange. These actions has caused consumers to pay larger bills which totaled to $139.3 million.
Judge Marrero said in his decision that Merced clearly showed that Barclay had the power to distort ordinary forces of supply and demand. He added that the bank willfully maintained that power and held on to uneconomical and physical trading positions, as per Reuters.
Marrero also rejected the bank's arguments that Merced took a long time to file a case considering that incident happened six years ago. They added that in a published article called Friday Burrito, the article showed unusual trading positions and said that Merced should have already been aware of it. But Marrero called the article as speculative with no evidence that Merced has already been mindful of the situation.
