E prime, the natural gas marketing and trading arm of Xcel Energy, said Friday it has fired or accepted the resignations of four traders in Denver for reporting false gas prices to industry newsletters that publish indexes, and has suspended two other employees pending completion of an investigation. Xcel Energy Chairman Wayne H. Brunetti signaled that e prime’s future may be in doubt in light of the traders’ questionable activities.

Xcel said it turned over documents and other evidence of false price reporting to the Commodity Futures Trading Commission (CFTC) in response to a subpoena issued in January. Officials of Xcel Energy, which carried out an internal probe, met with representatives of the CFTC and the U.S. Attorney’s office in Colorado Thursday, the company said.

Xcel has determined that the traders of Denver-based e prime reported inaccurate trading data to one energy publication, and possibly others. “Xcel continues to cooperate in the government’s investigation, but [it] cannot predict its outcome,” the energy company said in a statement. It noted that e prime stopped reporting gas prices and volume data to energy publications in 2002.

The company said it does not believe that the reporting of false trade information had an effect on the company’s accounting treatment of the transactions recorded in its books. The company’s investigation has not revealed that similar fake reporting occurred with electricity trades, it noted.

“We are continuing our thorough investigation of the matter and we are complying fully with the CFTC’s requests for documents and other information,” said Brunetti. “We will not rush to judgement on e prime’s future, but when the investigation is finished we will take appropriate action.” A company spokesman declined to elaborate, saying “I think we’re going to let that speak for itself.”

The Minneapolis, MN-based combination gas and electricity company acquired e prime when New Century Energies merged with Northern States Power Co. in 2000 to form Xcel Energy.

In a related development, American Electric Power (AEP) informed FERC Friday it cleaned house after learning last October that five of its natural gas traders reported false prices to an energy publication.

Columbus, OH-based AEP, an investor-owned public utility holding company, was one of 11 companies that were ordered by the Commission in late April to show they have fixed their internal processes for reporting data to price index publishers, as well as have taken other corrective steps. The other companies were Aquila, Coral Energy Services, CMS Marketing Services & Trading, Dynegy Inc., Duke Energy Trading and Marketing, El Paso Merchant Energy, Mirant Americas Energy Marketing, Reliant Resources, Sempra Energy Trading Corp., and Williams Energy Marketing and Trading.

AEP said it fired the five traders last October who engaged in the reporting of false gas prices, required its other gas traders to certify in writing that they have neither “engaged in misreporting nor been directed to do so by others” or, alternatively, to explain why they could not make such a certification; and changed its procedures for reporting gas trades to require the information to be “verified and reported” by AEP’s chief risk officer.

Following the firing of the five traders, AEP said it hired an outside law firm to investigate the scope of the reporting of false prices and other information to publications. “Its investigation has found no basis for concluding that any current AEP employees intentionally reported inaccurate information to the trade press,” the company told FERC [PA03-1].

Moreover, it reported it has “cooperated fully” with the ongoing investigations of the Department of Justice, Federal Energy Regulatory Commission and the CFTC, providing more than 55,000 pages of documents on the price reporting matter. “With the exception of certain recently received requests, for which AEP and its counsel are currently compiling responses, AEP has responded affirmatively to every request for information or document.”

It noted it also has been an “active participant” on the Committee of Chief Risk Officers, which is “working towards rebuilding confidence in reported price data.”

At the same time, the company said it has reduced its trading activity. AEP announced last October that it intended to limit its exposure to energy trading by downsizing its trading and marketing organization.

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