NEW YORK (Reuters) - A U.S. judge ordered Barclays Plc (>> Barclays PLC) to face a proposed class-action lawsuit in which a California water utility accused the British bank of illegally manipulating electricity prices in the western United States, causing purchasers to overpay.

U.S. District Judge Victor Marrero in Manhattan on Monday said the Merced Irrigation District can pursue two claims that Barclays violated federal antitrust law, and one claim that the bank violated a California unfair competition law.

In July 2013, Barclays was fined $435 million by the U.S. Federal Energy Regulatory Commission for allegedly manipulating electricity prices in California and other western U.S. states from November 2006 to December 2008.

Merced alleged similar violations, and Marrero said the allegations "plainly suggest Barclays's conduct was intended to artificially inflate or deflate market prices and constrain the market for other buyers and sellers of electricity."

The judge dismissed two other claims raised by Merced.

A Barclays spokesman was not immediately available for comment. Lawyers for Merced did not immediately respond to requests for comment.

Merced claimed that Barclays' traders rigged prices to benefit the bank's positions in swap contracts whose value was based on an index overseen by Intercontinental Exchange Inc (>> Intercontinental Exchange Inc).

It said this caused purchasers at four electricity trading hubs to pay inflated prices, costing at least $139.3 million.

In his 50-page decision, Marrero said Merced sufficiently alleged that Barclays had power to "distort ordinary forces of supply and demand," and wilfully maintained that power by holding "uneconomical physical trading positions."

The judge also rejected Barclays' argument that Merced took too long to sue, having filed its June 2015 lawsuit more than six years after the suspect trades took place.

Barclays argued that a July 2007 article in the trade publication "Friday Burrito" that spotlighted unusual trading positions had put Merced on notice of alleged manipulation.

The judge called the article "speculative," and found no evidence that Merced had been aware of it.

The case is Merced Irrigation District v Barclays Bank Plc, U.S. District Court, Southern District of New York, No. 15-04878.

(Reporting by Jonathan Stempel in New York; Editing by Alan Crosby)

By Jonathan Stempel

Stocks treated in this article : Barclays PLC, Intercontinental Exchange Inc