American Electric Power Co. (AEP) on Tuesday requested another week to respond to charges by the Commodity Futures Trading Commission (CFTC) that it intentionally reported bogus natural gas trading information to industry publications. AEP’s deadline to respond was Tuesday (Jan. 6).

The CFTC filed a lawsuit against AEP and subsidiary AEP Energy Services Inc. in late September in the U.S. District Court for the Southern District of Ohio, alleging the utility had engaged in a systemic attempt to manipulate the value of gas price indices (see Daily GPI, Oct. 2, 2003). The CFTC is seeking $336 million in penalties.

AEP, based in Columbus, OH, was supposed to respond to the charges by Dec. 1, but it asked for and received permission to extend the deadline. At that time, it cited efforts to complete a settlement with the CFTC. Those settlement talks were not mentioned in a court filing on Tuesday. The latest request, to extend the deadline to Jan. 13, relates to lawyer conflicts, according to AEP.

According to CFTC allegations, from at least November 2000 through October 2002, gas traders at three of AEP’s gas trading desks engaged in widespread misreporting of transaction data in an effort to influence indexes produced by energy trade publications.

The CFTC alleges that about 78% of the 3,600 natural gas trades the three desks reported to Platts’ Inside FERC Gas Market Report were misleading or knowingly inaccurate. The CFTC also alleges that a “substantial number” of the thousands of trades reported to another McGraw-Hill publication, Gas Daily, also were false or incomplete.

AEP in 2002 said it had uncovered and reported instances of false data reporting to the CFTC. It also fired five traders for participating in the alleged activities.

The CFTC lawsuit against AEP was the first civil case filed in federal court under the charges; all of the other civil cases have so far been settled outside of court. The AEP case remains the only one outstanding that was brought by the CFTC.

To date, the CFTC has settled false data reporting cases with nine energy companies, which have brought nearly $130 million in penalties. Those settling out of court include units of Black Hills Corp., CMS Energy Corp., Duke Energy, Dynegy Inc., El Paso Corp., EnCana Corp., Reliant Resources Inc. and Williams Cos.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.