Ex-JPMorgan Traders Lost Millions on Bad Bets in Power Market
GreenHat Energy wagered on an electricity traffic jam that never happened. Now utilities, manufacturers, and residential customers are left to deal with the losses.
Two energy traders, veterans of JPMorgan Chase & Co., saw an opening. Starting in 2015, Andrew Kittell and John Bartholomew plunked down millions of dollars in bets in an obscure corner of the energy market. Their strategy depended on certain parts of America’s largest electric grid being congested, driving up power prices. But the wagers fizzled. Their portfolio, valued by some at more than $150 million, soon cratered.
After failing to pay up for losing positions in June, their firm, GreenHat Energy LLC, was declared in default. And now everyone from utilities to manufacturers and residential customers are left holding the bag to make up the tens of millions of dollars in losses. Beyond that, the trading collapse shows how complex and opaque some parts of America’s energy markets have become. That’s made them vulnerable to potential gaming by Wall Street players.