Tag: firstenergy

Five years after Gov. Mike DeWine signed House Bill 6 into law, Ohio citizens and ratepayers are still paying the price.

Ohio lawmakers still haven’t taken steps to repeal the rest of the nuclear and coal bailout bill, which is the focus of what prosecutors say was a roughly $60 million bribery scheme by utility FirstEnergy and its affiliates. Cases continue to wind through the courts, and two men implicated in the scandal have apparently taken their own lives.

“It’s been really painful, and we’re still living with the consequences of House Bill 6,” said Catherine Turcer, executive director of Common Cause Ohio.

Shepherded by former Ohio House Speaker Larry Householder, the bill swept through the legislature in 2019, passing just 3 and a half months after its first introduction and despite massive opposition from consumer advocates, environmental groups, renewable energy interests and others.

The law called for more than $1 billion in subsidies for two nuclear plants for which FirstEnergy had been seeking bailouts since 2014. Additional provisions included subsidies for two 1950s-era coal plants known as the OVEC plants, along with gutting of the state’s renewable energy and energy efficiency standards. A referendum effort that would have let voters reject the law under Ohio’s constitution was ultimately thwarted amid claims of misleading ads, harassment of signature collectors and other problems.

One year after the bill passed, federal agents arrested Householder and others on charges under the Racketeer Influenced and Corrupt Organizations Act, known as RICO. The complaint outlined a $60 million criminal enterprise scheme funded by dark money, most of which came from FirstEnergy or its affiliates — roughly four times as much as the Energy News Network and Eye on Ohio had been able to track before the arrests.

Sam Randazzo resigned his position as chair of the Public Utilities Commission of Ohio months later, following an FBI raid on his home in November 2020. In July 2021, FirstEnergy entered into a deferred prosecution agreement with the Department of Justice, admitting it had bribed Householder and Randazzo.

Neil Clark, a lobbyist indicted in the scandal, apparently committed suicide in Florida in March 2021. Randazzo did the same in a Columbus warehouse he owned in April of this year, as he faced indictments on both federal and state criminal charges, along with loss of his license to practice law.

Calls for a full repeal of HB 6 came immediately after the 2020 arrests, but languished for months. Months after the next election, lawmakers finally repealed the law’s nuclear subsidies and a provision for guaranteed utility revenue, but left the rest of the law intact.

Bills to repeal the coal plant subsidies still have not gotten a full vote, and the state’s clean energy standards remain gutted. And full information about the corruption scandal has yet to come out, including answers to questions about Gov. Mike DeWine’s and Lt. Gov. Jon Husted’s involvement.

“The legislature hasn’t done anything to create greater transparency, to address dark money, to ensure we aren’t ripped off,” Turcer said.

“There’s this interesting intersection of dark money and gerrymandering and general decision-making and accountability at the statehouse,” Turcer continued.

Dark money refers to political spending that can’t be readily traced, and gerrymandering is the drawing of voting districts to advantage one political party over another. Together, both can undermine democracy and have delayed progress on climate change.

Still subsidizing coal

“The fact that we’re still bailing out the coal plants is just insane to me,” said Neil Waggoner, Midwest campaign manager for the Sierra Club’s Beyond Coal program. The Kyger Creek plant is in Cheshire, Ohio, and the Clifty Creek plant is in Madison, Indiana. Both plants consistently lose money.

“Those coal subsidies are costing consumers $500,000 per day,” said Ohio Consumers’ Counsel Maureen Willis. Her office estimates Ohioans have paid more than $330 million since January 2020. RunnerStone, a consultant for the Ohio Manufacturers’ Association Energy Group, projects the HB 6 coal subsidies could reach $1 billion by 2030.

The utilities that own the plants defend their continued operation.

“Customers in Ohio receive electricity from OVEC for what it costs to produce it and the funds are used to pay down debt with no proceeds going to shareholders,” said Scott Blake, a spokesperson for American Electric Power, which owns the largest share of OVEC, with other utilities inside and outside ofn Ohio owning shares. More than 500 employees work to make sure the plants operate as efficiently as possible, he added.

Since 1999, however, Ohio law has generally let consumers choose their electricity supplier. “And recent testimony by Duke executive [Amy] Spiller confirms the coal plants will continue to operate even if the subsidy ends,” Willis said.

The question comes down to whether the companies that made bad business decisions to keep noncompetitive plants running should pay their expenses, “as opposed to the public eating the cost,” Waggoner said.

Higher bills

HB 6 not only added subsidies to consumers’ electric bills. It also axed clean energy standards whose net savings for Ohioans had been about $9 per month.

“The elimination of the energy efficiency programs never made sense because they helped customers reduce their electricity usage,” said Rob Kelter, an attorney with the Environmental Law & Policy Center. “They lowered their bills. And they reduced pollution.”

Yet a legislative analysis claimed cutting those programs to pass HB 6 could save Ohioans’ money, a position that was further buttressed by testimony from then-PUCO chair Randazzo. Those arguments left out customers’ savings from avoiding wasted energy and lower overall capacity costs, Kelter said.

A bill to allow some permissive energy efficiency programs finally passed in the Ohio House last month, but passage in the state Senate isn’t guaranteed.

Regulatory scrutiny

Randazzo not only played a key role in shaping HB 6 and getting it passed. He also shaped the PUCO’s piecemeal response after Householder and others were arrested. That approach has continued, even after criminal charges were brought against Randazzo in federal and state court.

“Even after the revelations of what former PUCO Chair Sam Randazzo did for FirstEnergy in the halls of the PUCO, the agency itself has not had to answer to the public,” Willis said. “Case decisions issued while the former Chair led the agency have not been examined.”

“Why has there not been a management audit at the commission?” asked Ashley Brown, a former PUCO commissioner who subsequently headed the Harvard Electricity Policy Group. “Something clearly went wrong. We know that the chairman was bribed. We know that the other people went along.”

Agency spokesperson Brittany Waugaman noted the PUCO has four ongoing investigations in cases relating to FirstEnergy, but did not respond to questions about whether regulators plan to conduct an internal review of its own operations or otherwise review decisions in which Randazzo had participated.

Moreover, “the PUCO too often has made it difficult to get to answers for consumers,” Willis said. “Adverse discovery rulings, unrealistic case schedules, and limited audits, are a few of the problems for consumers.”

Who else?

The federal Department of Justice asked for three delays in discovery for the state regulatory cases, but after the initial 2020 arrests Randazzo was the only additional individual to face federal criminal charges, and he is now deceased. Meanwhile, Ohioans remained on the hook for charges. So in Brown’s view, the delays made sure consumers continued to be victimized by the crime.

The state did file criminal charges earlier this year against former FirstEnergy executives Chuck Jones and Mike Dowling, along with Randazzo and companies he controlled, as well as Householder. Company lawyers previously identified Jones and Dowling as having paid the bribes behind HB 6. But it remains unclear whether they or others will ever face federal criminal charges, said Dave Anderson, policy and communications manager for the Energy and Policy Institute.

Anderson and others also have questions about the involvement of American Electric Power, which paid $900,000 to dark money groups that supported HB 6.

Blake, the AEP spokesperson, said “management does not believe that AEP was involved in any wrongful conduct in connection with the passage of HB 6.”

Anderson rejects that notion.

“While AEP has not been charged with any crime in connection with HB 6, disturbing new details about the financial relationship between Householder and the utility emerged during the convicted former Ohio House Speaker’s trial last year,” Anderson responded. And the company also has acknowledged it may face civil penalties from a SEC investigation, he added.

“I don’t how AEP defines wrongdoing, but common sense should tell AEP’s customers and regulators that something stinks here,” Anderson said. “AEP owes ratepayers answers, and unfortunately the PUCO has completely failed to investigate AEP’s role in the HB 6 scandal.”

Some bright spots

As consumers continue to face consequences from HB 6, so do Householder and lobbyist Matt Borges, Turcer said. Both are in federal prison while they appeal their criminal convictions in federal court from last year.

FirstEnergy might have to allow some credits or pay penalties as a result of the four pending PUCO cases, Anderson noted. That would be in addition to a $230 million penalty paid to the federal government and class action settlements in a few court cases.

Quarterly reporting requirements under the deferred prosecution agreement of donations to nonprofit groups also may have reined in some of FirstEnergy’s political influence in Ohio, Anderson said. FirstEnergy spokesperson Jennifer Young said the company plans to continue reporting donations, even after the deferred prosecution agreement’s term ends.

Young also highlighted other company reforms including enhanced controls, separation of functions for its top ethics and legal officers and better transparency to stakeholders.

“Today, FirstEnergy is a different, stronger company with a sound strategy, a highly effective compliance program and a companywide culture of ethics, integrity and accountability,” Young said.

Yet the company’s claims about transparency have fallen short, Willis said. “Lawyered-up FirstEnergy… continues to block efforts to publicly disclose their internal investigation reports produced in the wake of the HB 6 scandal.”

Energy policy

Ohio’s energy policy continues to feel impacts from HB 6 as well.

“It does make me wonder where we would be with renewable energy if HB 6 had been completely repealed, or if there hadn’t been this orchestrated campaign, not just to bail out nuclear plants or subsidize coal plants, but also to diminish our commitment to renewable energy and our funding for renewable energy,” Turcer said. Yet now, “the air we breathe is actually dirtier.”

HB 6 “cast such a long shadow over energy policy in Ohio,” said Tom Bullock, executive director for the Citizens Utility Board of Ohio. The energy industry is going through the greatest change in a century, with technological innovations in how energy is produced and stored, as well as new business models, he noted.

“We need to be thoughtful, so that we can grow industry and keep prices affordable and convert to clean and smart and distributed energy,” Bullock said. Otherwise, “We’ll be the last in the Midwest to get there if the way we make energy policy decisions is based on the wish list from traditional energy interests.”

This article first appeared on Energy News Network and is republished here under a Creative Commons license.

A surge in FirstEnergy political spending ahead of the utility’s push to secure a legislative bailout for its nuclear power plants included a $1 million dark money contribution to support the campaign of Ohio Gov. Mike DeWine’s eventual running mate.

The previously unreported gift linked to Lt. Gov. Jon Husted’s 2017 primary bid was revealed as part of a raft of documents obtained under Ohio’s public records law by a coalition of news organizations, including Floodlight, Energy News Network, and the Ohio Capital Journal.

Among the documents are company emails describing behind-the-scenes efforts by Husted to persuade DeWine to support House Bill 6, the utility-backed legislation at the heart of the state’s ongoing $60 million public bribery scandal.

Neither Husted nor DeWine, whose campaign also benefited from a previously reported $1 million in dark money from the utility, has been implicated in the scheme in which eight people, including the state’s former House Speaker Larry Householder, have been indicted.

Two of those charged in the multi-million-dollar scandal surrounding the passage of HB 6 may have taken their own lives, including Sam Randazzo, the former chairman of the Public Utilities Commission of Ohio, who was found dead earlier this week of an apparent suicide.

‘Confidential’ email details campaign gift

One of the documents from the Office of the Ohio Consumers’ Counsel Office is a spreadsheet attached to a January 2020 message labeled “confidential.” It shows $1 million went from FirstEnergy to the conservative group Freedom Frontier in 2017, with “Husted campaign” noted as the reason.

That group backed Husted during his 2017 primary campaign for governor. The group then supported DeWine after Husted dropped out of the race to become his running mate.

Husted is considered among possible front runners for the Republican nomination for governor in 2026. A January report by the Jon Husted for Ohio campaign committee shows it got roughly $1.7 million last year.

Husted was also dubbed the “‘Golden Boy’ for FirstEnergy” by lobbyist Neil Clark, a co-defendant with Householder and others in the federal government’s criminal corruption case. Clark died by suicide in 2021.

In several of the recently released records, Husted is mentioned in the same breath as Householder, the convicted House speaker, and Randazzo, the former PUCO commissioner, by FirstEnergy leadership as they sought to pass and then defend HB 6, the nuclear and coal bailout law at the heart of Ohio’s ongoing corruption scandal.

Husted has maintained that his support for the 2019 law stemmed from his belief that nuclear energy is an important part of Ohio’s energy portfolio. Parties in HB 6-related shareholder litigation have subpoenaed Husted to answer questions under oath, although a new date needs to be set.

“The Husted campaign never received this donation and is not affiliated with any of these groups,” said spokesperson Hayley Carducci. By law, candidate campaigns are not supposed to coordinate with groups like Freedom Frontier, which can spend unlimited amounts to support or attack them.

The document and others reflect a major commitment by FirstEnergy to Husted’s political future. Before 2017, the company’s reported political spending to support Husted was less than $25,000 per campaign, according to data from OpenSecrets.

click to enlarge

A spreadsheet details dark money expenditures by northeastern power company FirstEnergy as it sought to secure a $1.3 billion bailout for its struggling nuclear power plants. The sheet reveals a previously unreported $1 million donation to benefit the candidacy of Ohio Lt. Gov. Jon Husted.

Dark money spending rises sharply

More broadly, the document also indicates a major increase in FirstEnergy’s political spending through nonprofit groups exempt from taxes under Section 501(c)(4) of the Internal Revenue Code. Those, along with privately held corporations, are common structures for dark money organizations — groups that aren’t required by law to disclose the ultimate source of their funding.

The company’s giving to such groups jumped to more than $12 million in 2017, after much lower levels of $200,000 in 2016 and $100,000 in 2015, according to the spreadsheet.

Starting in 2014, FirstEnergy had sought bailouts for noncompetitive coal and nuclear plants. And in late 2016, regulators approved a $456 million consumer surcharge that ultimately was held unlawful. Yet the company claimed it needed more.

The document details once-secret contributions to groups supporting “everyone from the mayor of Akron to President Trump that FirstEnergy made to secure bailouts for its soon-to-be bankrupt coal and nuclear plants and to gain influence on other key issues,” said Dave Anderson, policy and communications manager for the Energy and Policy Institute.

Anderson added that the spreadsheet also “provides some key new evidence for utility regulators and consumer advocates to use to ensure that every dollar of ratepayer money that FirstEnergy misused to fund its secret political spending is publicly disclosed and refunded, with interest and ideally serious financial penalties.”

At the time, the author of the document that details the donations, Kristina Housley, was executive assistant to FirstEnergy’s Mike Dowling, who is now a defendant in a state criminal case along with former CEO Chuck Jones.

Finding out all the details about the dark money spending behind HB 6 is like peeling back the layers of an onion, said Catherine Turcer, executive director of Common Cause Ohio.

“The reason that transparency matters so much is that money that is spent in the shadows influences elections, and it influences really important policy decisions that impact us every day,” Turcer said. “And we have the right to know what is going on in government and how decisions are being made and who’s attempting to influence those decisions.”

The ‘Golden Boy’ for FirstEnergy

A December 2017 email from former FirstEnergy lobbyist Joel Bailey said Husted was working to get DeWine on board with FirstEnergy’s “issues.” FirstEnergy also supported other pro-DeWine/Husted efforts during the election cycle.

After the election, Husted and DeWine dined with Jones and Dowling on December 18, 2018. Later that night, FirstEnergy agreed to pay $4.3 million to energy lawyer Randazzo, who went on to become DeWine’s first pick for chair of the Public Utilities Commission of Ohio. FirstEnergy later identified Jones and Dowling as the two people responsible for paying alleged bribes.

Husted’s office has been evasive about his recollections, despite Jones noting in texts to Randazzo that the PUCO chair position was discussed in at least general terms. Another text by Jones in 2019 said the DeWine/Husted team was forced “to perform battlefield triage” to secure Randazzo’s nomination after a 198-page dossier provided to DeWine’s staff threatened to derail it.

Evidence from last year’s criminal trial of Householder, the former Ohio House speaker, and lobbyist Matt Borges also included messages between former FirstEnergy executives Jones and Dowling about Husted working behind the scenes to build support for the bill. Among the actions were efforts to extend the bailout period for the company’s former nuclear power plants in Ohio.

Husted long a friend of utilities

Husted had been Ohio’s secretary of state immediately before becoming lieutenant governor. Before that, he served as House speaker in the General Assembly. In that role, he played a pivotal part in securing passage of another major energy bill, Senate Bill 221.

At the time, Husted supported the law’s clean energy standards that were ultimately gutted by HB 6. However, SB 221 set the stage for so-called electric security plans. Those have let FirstEnergy and other utilities avoid full rate cases for more than a decade, while allowing cross-subsidies and adding multiple additional charges to consumers’ bills.

“That bill upset the balance” of energy regulation in Ohio, said Ashley Brown, a former PUCO commissioner. “It was a humongous gift for the utilities.”

Lawmakers repealed HB 6’s $1 billion-plus in subsidies for FirstEnergy’s former nuclear power plants and its recession-proofing provisions in 2021, eight months after the arrests of Householder and others.

Earlier this year, Husted told NBC4 in Columbus the rest of HB 6 “needs to be completely removed.” He did not respond to Energy News Network questions this week about whether that includes both the law’s subsidies for two 1950s-era coal plants and its gutting of Ohio’s renewable energy and energy efficiency standards.

FirstEnergy spokesperson Jennifer Young declined to comment on the company’s 2017 donation to Freedom Frontier due to ongoing litigation. However, she added, “FirstEnergy will post information regarding its support of 501(c)(4) social welfare organizations on the company’s website on a quarterly basis.”

Those disclosures are currently required under the company’s July 2021 deferred prosecution agreement. That agreement expires later this year.

Meanwhile, FirstEnergy still has not disclosed its dark money spending for the years 2018 through 2020. And proposals for reforms that would require such disclosures from all electric utilities remain stalled in the General Assembly.

“It’s incredibly frustrating that Ohioans can be aware that dark money impacted decision-making at the statehouse,” Turcer said, “and yet we still haven’t gotten the legislators to create greater transparency.”

The Energy News Network is a nonprofit news site dedicated to keeping influencers, policymakers and citizens informed of the important changes taking place in the transition to a clean energy system. Floodlight is a nonprofit newsroom that investigates the powerful interests stalling climate action.

This article first appeared on Energy News Network and is republished here under a Creative Commons license.