Duke Energy told federal regulators last Thursday that it participated in 28 round-trip trades over the IntercontinentalExchange (ICE) trading platform, or five more than it previously disclosed in early July in an initial report. All of the sham energy transactions apparently were designed to boost trading volumes, according to the company.

In its final report to the Securities and Exchange Commission (SEC), the Charlotte, NC-based energy company also admitted to 61 more round-trip transactions that were carried out by one trader for no “legitimate business purpose” and against corporate policy. Duke Energy did not reveal the trader’s name.

Revenues from the bogus trades were posted during 2001 and the first half of 2002, the company said. Reported revenues, with offsetting expenses, for the round-trip trades were approximately $217 million out of total revenues of $75.6 billion for electricity and natural gas trading and marketing transactions for the period, Duke Energy noted.

The company told federal regulators it reviewed approximately 750,000 trades between Jan. 1, 1999 and June 30, 2002. As a result of the review, Duke Energy said it has fired two employees and put in place additional risk management procedures to strengthen the oversight and controls of its trading operations. Duke Energy said it also has warned employees that engaging in round-trip transactions that “lack a legitimate business purpose is against company policy.”

It further reported the trading and marketing operations of Duke Energy North America, Duke Energy Merchants and the company’s Canadian trading business will be consolidated into one organization. Nancy DeSchane, currently senior vice president of western natural gas and power trading, will head up the group as president and CEO. The new group will be called Duke Energy Services Trading and Marketing.

In addition to the SEC investigation, Duke Energy is the target of probes being carried out by the Department of Justice, Federal Energy Regulatory Commission and Commodity Futures Trading Commission into bogus trading activities.

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