Cinergy Corp. reported Thursday that it has put one of its natural gas traders on administrative leave because of a Commodity Futures Trading Commission (CFTC) investigation into the company’s price reporting practices to energy trade publications from May 2000 through January 2001.

“Cinergy intends to fully cooperate with the CFTC in connection with its investigation,” the company said in a statement. A company spokesman would not disclose the name of the trader or details of the investigation.

Cinergy is among several energy trading companies whose price reporting has come under CFTC scrutiny. El Paso and Dynegy already have paid fines to settle charges of false price reporting.

In December, Dynegy Marketing and Trade and affiliate West Coast Power LLC agreed pay a fine of $5 million to resolve charges that they colluded to manipulate natural gas prices for more than two years (January 2000 through June 2002) by submitting bogus trading information to energy newsletters that publish gas price indices. The FBI arrested Dynegy trader Michelle Valencia in January on four counts of wire fraud and three counts of false reporting (see NGI, Feb. 3). Her trial is scheduled for Sept. 8. Prosecutors allege she reported 43 false natural gas trades three times between November 2000 and February 2001 to an industry trade publication.

In March, El Paso Corp.’s trading unit agreed to pay $20 million as part of a settlement with the CFTC of charges that it submitted false information about natural gas trades in an attempt to manipulate prices (see Daily GPI, March 27). El Paso Merchant Energy trader Todd Geiger was arrested in early December 2002 and charged with one count of wire fraud and one count of knowingly transmitting false information to an energy trade publication, both felonies (see NGI, Dec. 9). Several other energy trading companies, including American Electric Power, e prime and others, have fired employees after similar CFTC investigations.

While the investigation is bad news for Cinergy’s energy trading and merchant power business, the division has been performing extremely well and was credited for most of the company’s 88% increase in second quarter net income on Thursday. Strong results from merchant energy helped offset the impact of mild spring weather and a weak economy, which hampered sales at Cinergy’s utility division. The company reported earnings of $84.7 million, or 47 cents a share, compared with $45 million, or 26 cents a share, last year. Wall Street analysts had expected the company to earn 45 cents per share, according to Thomson Financial’s First Call.

The Energy Merchant segment’s second quarter earnings were $0.36 per share compared with $0.13 per share during the same quarter in 2002. Earnings from Regulated Operations were $0.14 per share compared with $0.17 per share.

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