The trader, whom company spokesman Depland would not identify, has been placed on administrative leave pending resolution of the commission's case against the company. The trader worked in Houston, where BP's North American natural-gas and power trading desk has 250 of its 425 employees, Depland said.
The Financial Accounting Standards Board, which sets US accounting rules, allowed companies to begin using mark-to-market accounting for energy trades in a 1998, under a rule that was passed amid heavy lobbying by Enron.
Under the method, companies were required to use market prices on a daily basis to evaluate a trading contract's worth.
Gains in the values were booked as profits, and decreases were booked as losses. The accounting board eliminated the rule last October, on concern companies were valuing their contracts using internal models, which had been criticized as subjective and prone to manipulation.
The BP trader tried to boost profits by creating artificial market prices that could then be used to value other trades under the mark-to-market accounting method, the commission's report said.
On one occasion, in April 2000, according to the report, the BP trader ``contacted the Reliant trader and asked him to do him a favor,'' the commission report said.
The BP trader suggested he would post an offer to sell electricity over an electronic energy-trading platform operated by Bloomberg LP, the parent of Bloomberg News, the report said. The power would be delivered to an electrical switchyard near the Palo Verde nuclear plant in Tonopah, Arizona.
The Reliant trader would buy the power at the posted price, and the BP trader would then buy it back at the same price, off the exchange, ``to negate the deal,'' the report said.
"The BP trader goes on to explain that he is trying to move the market price to US$43.10, but no one will buy it at that price," the report said. ``He needs the Reliant trader to `lift his offer' in order to increase the price.'' Bloomberg's electronic platform is an anonymous bulletin board-style system for trading over-the-counter electricity, spokeswoman Chris Taylor said. The company was not aware of any improper trades, she said.
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