December 21, 2024

DealBook: Deutsche Bank Agrees to Settle Energy Trading Inquiry

The headquarters of Deutsche Bank in Frankfurt, Germany, under construction in 2009.Ralph Orlowski/Getty ImagesThe headquarters of Deutsche Bank in Frankfurt, Germany, under construction in 2009.

Deutsche Bank has agreed to a settlement with the Federal Energy Regulatory Commission over charges that the bank manipulated California’s energy markets in 2010.

The agreement, announced late on Tuesday, includes a $1.5 million fine against Deutsche Bank, which also must surrender around $170,000 in profit related to the energy trading activity.

The energy commission said in a statement that some of Deutsche Bank’s employees had entered into a number of transactions in early 2010 that unfairly benefited the bank.

“Deutsche Bank violated the commission’s anti-manipulation rule by engaging in a scheme in which Deutsche Bank entered into physical transactions to benefit its financial position,” the commission said.

The action is the latest effort to clamp down on market abuses by the commission, which oversees the oil, natural gas and electricity sectors.

The Federal Energy Regulatory Commission is also levying a $470 million penalty against the British bank Barclays related to trading activity, though Barclays is challenging the accusations. The fine would be the largest ever made by the commission.

The agency has also barred JPMorgan Chase’s energy trading unit from participating in a number of American energy markets for six months after some of the firm’s employees provided false information during an investigation into market manipulation.

The commission had originally proposed the fine against Deutsche Bank in September. The statement on Tuesday said Deutsche Bank neither admitted nor denied wrongdoing, adding that the bank failed to reduce the financial penalty during negotiations.

Article source: http://dealbook.nytimes.com/2013/01/23/deutsche-bank-settles-ferc-trading-inquiry/?partner=rss&emc=rss

Corner Office | Bill Kling: Bill Kling of American Public Media, on Valuing Creativity

Q. What were some important early lessons for you?

A. I think we sometimes undervalue the experiences we have as small children. I used to go to my grandfather’s farm, where they didn’t have electricity. But he had this enormous radio, and it sat on the table next to his rocking chair. It was run on batteries, and it had a big antenna that went out to the orchard. I was younger than 7, and I’d sit on his lap. Out in the country with an antenna and a well-powered radio, you could pick up stations from all over the country. 

So he would tune in to St. Louis or New York or New Orleans, and I just thought that was fascinating. It had to have had an influence on my lifelong interest in radio. I think we often undervalue the importance of giving young kids that kind of hands-on experience. It may not lead to their deciding what to do with their lives, but it’s surprising what they will absorb — and maybe their lives will turn out differently.

Q. What about your parents? How did they influence you?

A. They were wonderful. They absolutely left me alone. They left me up in my attic room to take everything apart and blow everything up and try everything I could try. I think I blew probably two dozen fuses as I tried different things. I took radios apart. I wanted to know how they worked, and then I wanted to know how I could make them better. I wanted to repackage them in some cases.

I can remember one point where I pulled a plug out of the wall about half an inch and then put a metal piece of an erector set across the two pins just to see what would happen. But they never said, “Why did you blow that fuse?” They just put in a new fuse. I think letting a kid’s imagination run is really important — though I don’t recommend that particular experiment.

Q. What do you consider the most important leadership lessons you’ve learned?

A. Let me start by answering the question this way: I don’t think that there is one formula for leadership. There are cheerleaders who are really good at motivating people. There are innovative leaders who are really good at conceiving of products or spotting talent and who have a great vision for the company. There are leaders who are strong on personality, leaders who are strong on creativity. Some of the most effective leaders don’t fit a mold. The ones who I think make a real difference tend to be totally different from the standard definition. I think the strongest criterion is creativity or innovation. 

 I couldn’t have stayed, and shouldn’t have stayed, long term in this job if that wasn’t a characteristic of my personality, because the company would have stagnated. I could have been the best leader around, but after 10 years, it probably would have peaked. I can remember a very difficult time of trying to get our FM radio signal to extend from 50 miles to 100 miles. Now new technology allows us to be heard and seen anywhere in the world, streaming live, with full fidelity.

Q. Tell me more about your leadership style.

A. I think every C.E.O. needs an executive team to be balanced to fit their strengths. The key elements, such as strategy, innovation, management, finance, don’t need to be in any single position — but they need to be there in the executive team. It’s terrific if you can walk through the halls and say hello by name to every employee. I can’t. It’s terrific if you can stand up at a staff meeting and do it in a way that people feel really good about your company. I can do that. But you never have all the pieces.

A mentor of mine taught me that every perspective is additive, because every person sitting in a room is looking at things differently. Each of them has a different perspective. They come from a different way of thinking and different experiences. And their collective perspective gives you a better outcome. So you have to value the perspectives and try to organize those perspectives in some useful way that lets you go forward. Anybody who tells you that they can do it all themselves needs an ego adjustment.

Q. Have you received any feedback over the decades about your management or leadership style that caused you to make adjustments?

Article source: http://feeds.nytimes.com/click.phdo?i=a91af0dc9ee33cfa5fb4d7b2ba0df8cd

U.S., Seeking to Reshape Electric Grid, Adopts a Power Line Rule

The rule, which has been in the works for several years, is intended to push the organizations that manage the grid into cooperating with one another, so that developers can build power lines across several states and multiple electrical jurisdictions.

Such cross-jurisdictional transmission lines are becoming more important as states seek to reach their goals of integrating large amounts of wind and solar power, generally available in remote deserts and mountaintops, into the energy mix.

While generators of power, including renewable energy advocates, generally praised the rule, others were wary and said it could impose big costs on people who get no benefits.

But it has long been clear to grid experts that the existing transmission lines will not allow for a free market in electricity in which generators can compete across vast distances to supply customers, or for meeting state renewable energy goals. Existing rules make it very difficult for a company seeking to build new transmission lines to establish how it will recoup its costs.

The new rule, passed unanimously on Thursday by the Federal Energy Regulatory Commission, does not specify what the formula should be for allocating costs, or precisely how new lines should be planned. But it does lay out general guidelines, including the notion that the costs should be borne by those who benefit.

The commission also issued an implicit threat: if grid organizations do not enable the construction of badly needed new transmission lines, federal regulators will do it for them.

Jon Wellinghoff, the chairman of the commission, cited a prediction that until 2019, 60 percent of new generating capacity will be wind and sun, often distant from population centers.

“Strengthening and expanding the system for reliable integration of these resources will require significant investment in transmission,” he said. “The existing transmission system was not built to accommodate this shifting generation fleet.”

One supporter, Nina Plaushin, vice president for federal affairs of ITC Holdings Corp., a Michigan-based transmission company, said: “What we have seen in some regions in the past are attempts to assign costs for new transmission to a small set of beneficiaries, because it’s politically palatable. If you rob from Peter to pay Paul, you usually get Paul’s support.”

Now, she said, if a transmission line has broad impact, costs are likely to be assigned more broadly.

Sue D. Sheridan, a consultant who argued against the rule, says that assessing who benefits from a new line is difficult.

A long line might benefit power sellers and buyers — essentially the people where the power is generated and where it is consumed — but not the people in between. But under the new rule, Ms. Sheridan said, the people in the middle might get billed some portion of the cost anyway because they were in the area traversed.

That, she said, would “skew market choices,” and with new power plants being built where subsidized lines could be built.

The new rule addresses two of the main impediments to new power line construction: planning and cost allocation.

The third obstacle — getting permits to build — is unaffected. Most land-use decisions remain a state and local function, although as some members of the commission pointed out, sometimes the party that is slowest to grant the needed permits is a federal agency, like the Interior Department.

Most of the power lines now in service were built by monolithic utilities that owned power plants, transmission and distribution. Price allocation was not a big issue because state public service commissions decided what ratepayers would pay.

But in more than half the country, those functions have been separated, with different companies owning the generating stations and handling transmission to customers. Often, especially in periods of high demand, the generators cannot conclude contracts with distant buyers because the transmission lines are too congested; in that case, power prices can rise sharply in the congested area.

Building new power lines can also allow new competitors into a local market, a prospect that can make local producers unhappy if it erodes the price premiums they can command in congested markets.

Anxiety over who will pay for and who will benefit from new power lines extends into Congress.

In February, reacting to the rule while it was still a proposal, a bipartisan group of senators led by Bob Corker, Republican of Tennessee, introduced legislation that they said would prevent non-beneficiaries from being billed for power transmission projects. The bill has not made it out of the Senate Energy Committee.

Article source: http://feeds.nytimes.com/click.phdo?i=eebe49046d78ffa0879c68e5986f9a88