Gov. Jerry Brown and a chorus of state officials are asking the U.S. government to force investment bank JPMorgan Chase & Co. to step aside and allow a badly needed power-plant renovation in Southern California.
JPMorgan's trading subsidiary was accused two weeks ago by the California Independent System Operator, which runs the state's transmission grid, of stonewalling the overhaul of a pair of plants in Huntington Beach. The ISO's complaint is being investigated by the Federal Energy Regulatory Commission.
Now top state officials are urging FERC to act, including Brown, several lawmakers and the heads of the Public Utilities Commission and the California Energy Commission. JPMorgan's stance "should be soundly rejected," Brown wrote in a letter to FERC on Wednesday.
The controversy centers on two Huntington Beach plants owned by independent generator AES Corp. of Arlington, Va. State officials say AES needs to convert the plants to "synchronous condensers," which improve the flow of electricity on the grid.
JPMorgan holds a contract to market the electricity produced at two neighboring plants, also owned by AES. Because of that contract, it can veto the conversion of the two plants AES plans to overhaul. So far, JPMorgan hasn't consented to the makeover.
Without the conversion, state officials say Southern California could run short of power because of the continued shutdown of Southern California Edison's nuclear plant at San Onofre.
"This outcome places California citizens at unacceptable risk," wrote Michael Peevey, president of the PUC, in a letter to the federal agency. "FERC should act decisively and not allow commercial interests to frustrate efforts to plan for the reliable operation of California's electricity grid."
It's unclear if the dispute is connected to the ISO's accusation that JPMorgan's traders extracted $73 million in excessive profits from California's wholesale power market through questionable bidding practices. JPMorgan has denied any wrongdoing.
In response to the Huntington Beach allegations, the company has said it wants "to work cooperatively to help find an economic and efficient way to make generation available in California."