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 Thursday, 19 December, 2002, 20:19 GMT
US energy firms fined $5m
Dynegy logo
Dynegy said the reports did not move prices
Dynegy's marketing and trade unit and West Coast Power have been jointly fined $5m (3.1m) to settle charges of attempting to manipulate gas prices.

The fine was imposed by the Commodity Futures Trading Commission (CFTC) which said it found that the two companies gave false trading information on natural gas to certain reporting firms.

The CFTC settlement order found that "Dynegy knowingly submitted false information to the reporting firms in an attempt to skew (gas price) indexes for Dynegy's financial benefit".

In a statement Dynegy said it had agreed to pay the fine without admitting or denying the CFTC's charges.

'Fictitious trades'

The CFTC settlement order found that from January 2000 to June 2002 false gas trading information, including price and volume information, was given to some reporting firms.

It added that "in an effort to ensure that its reported information would be used by the reporting firms, Dynegy caused West Coast to submit information misrepresenting that West Coast was a counterparty to fictitious trades".

West Coast Power is a joint venture between Dynegy and the power company Xcel Energy's subsidiary NRG Energy.

Following an internal investigation into the matter, Dynegy fired seven employers and disciplined seven others.

"In addition, the company has instituted measures that will ensure that the office of the chief risk officer verifies all price information," Dynegy said.

"Dynegy is not aware of any evidence that any of the faulty reporting materially affected any of the price indices."

Dynegy also noted that the CFTC had made no charges regarding so-called round-trip trades, which were also under investigation.

Round-trip trades are done by two energy firms who essentially trade the same amount of energy at the same price in an effort to drive up trading volumes.

Tough times

Over the past year, Dynegy has seen its share price slump and has faced severe financial difficulties.

Last month, it became the latest in a string of companies to receive a subpoena in the investigation into California's energy trading business.

The investigation is examining the trading practises of energy companies during the energy crisis of late 2000 to 2001, when wholesale electricity prices soared.


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