This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal. Was this forwarded to you? Click here to subscribe.

FirstEnergy’s utility customers took heavy hits from severe thunderstorms and tornadoes last month. Nearly half a million of its Ohio utility customers lost power, with extended outages causing many to lose food and incur other expenses in addition to property damage due to the extreme weather. 

All of the company’s utility customers can also expect hits from higher energy bills next year after FirstEnergy’s pending rate case ends. On July 31, the company asked Ohio regulators to let it double the increased charges sought — from roughly $94 million per year to $190.3 million annually.

Yet state regulators still have not resolved multiple FirstEnergy cases involving millions of dollars and issues related to House Bill 6, the 2019 nuclear and coal bailout law at the heart of Ohio’s ongoing corruption scandal. And none of those cases will be decided before voters cast their ballots this fall.

Other recent developments include: 

• The State of Ohio settled potential criminal charges against FirstEnergy for $20 million, without stating how the figure was arrived at or making any provision for restitution to Ohio ratepayers.
• Federal prosecutors urged the Sixth Circuit Court of Appeals to uphold former Ohio House Speaker Larry Householder’s criminal conviction and 20-year sentence.
• Ohio regulators approved more than $100 million in challenged expenses for two 1950s-era coal plants for which subsidies are mandated by HB 6.

In the dark

Grid reliability is back in the spotlight after tornadoes and severe thunderstorms knocked out power to approximately 495,000 of FirstEnergy’s Ohio utility customers on August 6.

FirstEnergy Ohio President Torrence Hinton and other company executives provided a briefing on the company’s response to the Public Utilities Commission of Ohio after its September 4 meeting. “We haven’t had this amount of customers out for about 30 years,” Hinton said.

Restoring power took roughly a week, with outages lasting more than three days for more than 100,000 of those customers, data from the company show. 

The outages likely won’t count against the utilities’ reliability requirements for this year because of the extreme nature of the storms. 

Some Ohio lawmakers like House Rep. Dick Stein, R-Norwalk, have already expressed concern about reliability, although they have framed it as a consequence of retiring coal-fired power plants and have called for more electricity from fossil fuels or nuclear energy. 

However, the vast majority of electric grid reliability problems stem from bad weather and distribution issues. Those problems are likely to worsen as infrastructure ages and fossil fuel-driven climate change makes extreme weather more common.

“Without immediate and meaningful action, climate change will continue to cause extreme weather and drive up costs for all Ohioans,” 14 Democratic Ohio House representatives wrote in an August 14 letter, calling for regulators to address the effectiveness and reliability of the state’s current energy strategies, which are heavily depending on fossil fuels and nuclear power.

Read more:

Despite millions spent on service upgrades, Ohio utilities still miss reliability marks (Energy News Network)

About 1,000 power outages linger 7 days after storms (FOX 8 News)

Doubling increased charges

FirstEnergy asked the PUCO this summer to let it double its proposed increase for rates and riders for its three Ohio utilities to $190.3 million per year, compared with the $94 million sought just two months earlier.

The requested increase is “primarily due to lower current revenues, higher operating expenses and higher rate base balances” than estimated, said Santino Fanelli, FirstEnergy’s director for Ohio rates and regulatory affairs, in testimony filed with the PUCO on July 31.

Fanelli also said the requested increase reflects the use of actual cost and revenue data instead of estimates for the first five months of the rate case’s test year. A pending bill would give utilities more leeway in using estimates, and some advocates worry companies might pad them on the high side.

In late June the PUCO selected Blue Ridge Consulting Services to help it review financial data, management policies and other information. The commission’s staff will then likely prepare a report with recommendations. Ratepayers will also have a chance to comment at local public hearings, which have not yet been scheduled but will likely include a virtual session.

Read more:

FirstEnergy companies asking Ohio regulators for rate increases (WUXU)

Ohio ratemaking reform bill would give more favors to utilities, critics say (Energy News Network)

Slap on the wrist?

FirstEnergy agreed to pay $20 million to settle its state criminal liability related to HB 6, but it’s unclear how lawyers for the utility, the Ohio Attorney General’s office and the Summit County prosecutor’s office arrived at the number. 

The amount is just under one-third of the bribes the company admitted to paying when it settled federal criminal charges against it in July 2021. The law’s nuclear bailouts would have been $1.3 billion if they hadn’t been stayed and then repealed.

The agreement with the state acknowledges the company’s cooperation but does not require any compensation to ratepayers, said Ashley Brown, a former PUCO commissioner.

Spokesperson Steve Irwin at the Ohio Attorney General’s office framed the settlement as “an important step in bringing the disgraced corporate leaders who used their positions of power to betray FirstEnergy’s ratepayers and employees and the people of Ohio to account for their crimes.” Irwin noted that the company is required to provide evidence, access to witnesses and testimony in the pending cases against former FirstEnergy executives Chuck Jones and Michael Dowling and in a civil proceeding relating to HB 6. “FirstEnergy today is not the company it was five years ago,” he added, noting steps taken to reform the company’s internal ethics program.

FirstEnergy President and CEO Brian Tierney echoed the theme in a press release, saying the company is “a stronger organization today.” 

Others are more critical.

“It is really disappointing to see the Ohio Attorney General’s office let FirstEnergy off the hook for its crimes with what amounted to more of a wink-wink than a slap on the wrist,” said Dave Anderson, policy and communications manager for the Energy and Policy Institute. He contrasted the August settlement with the potential remedies spelled out in the Ohio Attorney General’s initial civil complaint in a 2020 case, where potential punishments included corporate dissolution of FirstEnergy and penalties of triple the damages caused by allegedly wrongful actions.

Read more:

FirstEnergy to pay $20M, avoid criminal charges in state pay-to-play investigation (Akron Beacon Journal)

Ohio Attorney General Dave Yost settles with FirstEnergy for $20 million (Ohio Capital Journal)

Regulatory cases continue

Ohio voters can’t expect a resolution to any of FirstEnergy’s four HB 6-related regulatory cases before casting their votes this fall. Nineteen candidates on the ballot for Ohio’s General Assembly are among those who voted for HB 6 in 2019.

An audit in one case isn’t due before the end of September, and no date for an evidentiary hearing has been set. Two other cases about how FirstEnergy spent money from two bill riders won’t get an evidentiary hearing until next February.

A fourth regulatory case about corporate separation is set to start its hearing on October 9, when early voting will be underway. That date may move, however, because several depositions won’t take place until November and December. Depositions are sessions where witnesses answer lawyers’ questions under oath before a hearing or trial.

Questions in some of those depositions will likely follow up on information from recently produced documents. Possible topics also include why FirstEnergy fired various individuals besides former executives Jones and Dowling in the wake of Householder and others’ arrests in 2020.

Read more: 

FirstEnergy exec was fired amid bribery probe after his daughter pitched a $44k/month contract, records show (Cleveland.com)

FirstEnergy’s chief ethics officer knew about $4.3 million payment the company said was a bribe (Cleveland.com)

Rubber stamping?

Ohio regulators have approved more than $100 million in challenged 2020 expenses for two 1950s-era coal plants. HB 6 lets the plants’ Ohio utility owners pass costs on to ratepayers through 2030. By then the total subsidies could be around $1 billion, according to RunnerStone, a consultant for the Ohio Manufacturers’ Association.

“Consumers once again got stuck with the bill,” said Ohio Consumers’ Counsel Maureen Willis when the August 21 ruling came out.

The PUCO found that while the auditor, London Economics International, made several recommendations and conclusions critical of the coal plants’ practices and spending, the firm hadn’t come straight out and said any amount should be disallowed.

Paul Arbaje, an energy analyst for the Union of Concerned Scientists, said the ruling “sets a disturbing precedent. Coal-fired electricity is not only terribly destructive to our climate and public health, but it’s also completely uneconomical and has been for a long time.”

Higher capacity prices in the PJM grid region will take effect next June and could offset some of next year’s coal subsidies under HB 6. However, critics say the old plants will still be a bad deal for Ohioans. And higher capacity prices will affect wholesale electricity prices across the regional grid footprint, likely raising energy expenses overall.

Read more:

Ohio coal plant subsidies still a bad deal for ratepayers despite growing generation demand, experts say (Energy News Network)

HB 6 coal plant charges mount up again in Ohio (Energy News Network)

Coal company got big payback from HB 6 (Energy News Network)

Federal court filings

Briefing has been completed in lobbyist Matt Borges’ appeal from his federal criminal conviction alongside former Ohio House speaker Larry Householder last year. The court has not yet scheduled oral argument.

Federal prosecutors filed their brief in the Householder case on August 26, arguing that the trial court got both Householder’s conviction and his 20-year sentence right. Three groups also filed a friend-of-the-court brief on August 30, countering Householder’s argument that bribes were campaign donations and a form of speech protected under the Constitution.

“The First Amendment provides no protection for the corrupt and knowing exchange of campaign contributions for official acts,” wrote lawyers for the Campaign Legal Center, the Environmental Law & Policy Center and the Brennan Center for Justice at New York University School of Law.

A July court filing in FirstEnergy’s deferred prosecution agreement case acknowledged the company has performed its obligations under that 2021 settlement, which resulted in a $230 million penalty. FirstEnergy must continue to cooperate in any other criminal cases the federal government brings relating to facts stated in that HB 6 case. However, the federal government has yet to bring criminal charges against any current or former FirstEnergy executives who allegedly made the bribes.

A separate case at the Sixth Circuit Court of Appeals involves FirstEnergy’s challenge to Judge Algenon Marbley’s May 6 ruling that the company must produce its internal investigation to lawyers in shareholder litigation. The appeals court docket includes friend-of-the-court briefs filed by several law firms and a malpractice insurance carrier, expressing concern about whether the ruling could erode attorney-client privilege.

Read more:

On appeal, DOJ affirms ex-Ohio House Speaker Householder took FirstEnergy’s $60 million ‘secret deal’ (Cleveland.com)

Scandal-tainted FirstEnergy demands appeal of ‘shockwave’ privilege ruling (Reuters)

FirstEnergy backed by dozens of law firms in ‘shockwave’ privilege appeal (Reuters)

HB 6 Updates: More bill charges on the way while cases continue is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

The pair of 1950s-era coal plants bailed out under Ohio’s House Bill 6 law are likely to remain unprofitable even after a surge in grid operator payments to generators, experts say. 

The PJM Interconnection grid market makes capacity payments to line up power to meet expected demand in the years ahead. Aging, uneconomical coal plants are being retired at a time when data centers and manufacturers are starting to use more electricity, causing future power generation prices to rise.

But even record-high prices in PJM Interconnection’s recent capacity auction won’t cover the hundreds of millions of dollars in subsidies paid by ratepayers to cover Ohio utilities’ costs for the Ohio Valley Electric Corporation’s Kyger Creek and Clifty Creek power plants.

“Even with a super high price, OVEC is still going to be in the red,” said Neil Waggoner, Midwest manager for the Sierra Club’s Beyond Coal campaign.

The ratepayer subsidies are a result of HB 6, the 2019 state law at the heart of the largest corruption scheme in Ohio’s history. Republican legislative leaders have blocked all efforts to repeal the coal subsidies from coming to a floor vote.

This year alone, ratepayers are on track to pay nearly $200 million to prop up the two plants, one of which is in Indiana. By 2030, total ratepayer costs from the bailout could exceed $1 billion, according to RunnerStone, a consultant for the Ohio Manufacturers’ Association.

Starting next summer, the payments for generators to be ready to supply electricity when PJM Interconnection needs it will jump to about nine times the current rate for most of the grid operator’s service region. 

“Put simply, the market pays participants for the promise to produce electricity when called upon by PJM,” said Daniel Lockwood, a spokesperson for the regional grid operator. An auction sets the levels for each year’s capacity payments, and the payments go to generators that bid the clearing price or less.

A spokesperson for the power plants did not directly answer the Energy News Network’s question about whether both cleared the latest PJM auction, although he described the auction results as “positive.”

“The auction results were a positive development for the OVEC plants and are more broadly a signal to the market that additional generation resources are needed in the PJM region,” said Scott Blake, a spokesperson for American Electric Power and Ohio Valley Electric Corp. While the HB 6 rider charges depend on multiple factors, the impact of the 2025/2026 capacity pricing “is expected to be positive for customers,” he said.

AEP is OVEC’s largest shareholder, along with other utility companies in Ohio and other states.

HB 6’s OVEC subsidies currently require Ohio’s residential utility customers to pay between $1.30 and $1.50 per month, depending on whether their utility is owned by AEP, AES Ohio, Duke Energy or FirstEnergy, according to PUCO data from spokesperson Brittany Waugaman. Businesses pay for the rider, too. The HB 6 rider’s net total costs last year were more than $148 million.

Doing the math

While capacity payments will reduce the OVEC plants’ total costs to Ohio ratepayers, the revenue won’t, in itself, make the plants profitable.

Expert testimony from a Michigan case last year found the OVEC plants would need capacity payments averaging about $418/MW-day for several years to become economical. Last month’s record-high price that will take effect next summer was about $270/MW-day.

Economic analyst Devi Glick of Synapse Energy Economics testified in the case on behalf of the Sierra Club.

“To massively oversimplify the economics of the OVEC plants, there are two categories of costs and two categories of revenues,” Glick told Energy News Network. “Costs are on one side of the equation and revenues on the other.”

Based on then-current projections for costs and energy market revenue, Glick calculated what the plants’ capacity revenues would have to be for the equation to balance out.

Several caveats would apply, Waggoner acknowledged, including any differences from last year to this year that could affect projected energy revenues. Nonetheless, he noted, a significant gap would remain.

Glick’s estimate of about $418 as a break-even capacity price for the OVEC plants is realistic and may even be conservative now, said John Seryak, managing partner for RunnerStone.

“PJM is no longer paying for a coal plant’s full power capacity anymore under new rules it created just prior to this capacity auction,” Seryak explained. “That could mean that OVEC needs even higher-priced capacity and energy to be profitable.”

“Future energy market prices, OVEC’s future coal costs, and OVEC’s environmental compliance costs will also be important factors determining the extent of its losses or profitability,” Seryak continued. “All that said, we do not anticipate OVEC operating at a profit without further price increases.”

Meeting energy demand

Blake emphasized the OVEC plants’ role as a “reliable generation resource for our customers and for our region,” adding that the HB 6 rider “ensures that 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.”

That’s not exactly correct, said attorney Kimberly Bojko at Carpenter Lipps, who represents the Ohio Manufacturers’ Association in cases at the Public Utilities Commission of Ohio. “Customers pay the cost to operate and run OVEC and the power produced from OVEC is then sold into the wholesale electric market,” she said. Any revenue offsets the costs of HB 6’s coal subsidy.

The Ohio Manufacturers’ Association also has disputed the use of the HB 6 rider to pay down the OVEC plants’ debt in cases before the PUCO.

“By using ratepayer funds to pay down its debt, AEP Ohio is essentially shifting its bad debt to the Ohio ratepayers,” Seryak said. “It’s akin to if a person forced their neighbor to pay for their mortgage payment.”

“Customers pay for more than just OVEC’s debt, though,” Seryak added. “Customers also pay for losses in the energy market OVEC incurs. When this occurs, it means the electric grid does not need OVEC for reliability. Instead, OVEC is burning coal pointlessly at a loss and charging it to Ohio’s ratepayers.”

Ohio coal plant subsidies still a bad deal for ratepayers despite growing generation demand, experts say is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal. Was this forwarded to you? Click here to subscribe.

Ohio utility regulators will continue to consider four FirstEnergy cases related to HB 6 separately, despite requests by the utility, customer advocates, and others to combine the cases. Meanwhile, intervenors say the timeline set in two of the cases puts them at a disadvantage as they struggle to keep up with several hundred thousand pages of discovery documents.

Other recent developments in Ohio’s ongoing utility corruption scandal include: 

• Text messages show Gov. Mike DeWine played a more active role in soliciting money from FirstEnergy than was previously known.
• A former FirstEnergy executive plans to call both DeWine and Lt. Gov. Jon Husted as witnesses at his criminal trial.
• Former Ohio House Speaker Larry Householder is advancing a new argument on appeal from his criminal conviction in federal court last year.

Piecemeal approach continues at PUCO

The Public Utilities Commission of Ohio is sticking with a piecemeal approach to four HB 6-related cases despite requests earlier this month from the company and challengers asking for different degrees of consolidation.

FirstEnergy wanted issues in three HB 6 cases to be considered together next year, and would have split a fourth case over whether the company improperly used ratepayer money to subsidize affiliated businesses, including FirstEnergy Solutions’ unregulated coal and nuclear plant operations.

The Office of the Ohio Consumers’ Counsel, Ohio Manufacturers’ Association Energy Group and several other parties urged the PUCO to consolidate all four HB 6 cases. In addition to the corporate separation case, one case requires FirstEnergy’s utilities to show ratepayer money was not used for charitable or political purposes, and the other two deal with the company’s use of funds from two riders. 

Regulators stayed all four cases in mid-2022 after a request from the federal prosecutor’s office. Administrative Law Judge Jacky St. John ruled last week that the commission would not order further consolidation beyond its combination of the two rider cases when the stay was lifted in late February. 

“The Commission is vested with broad discretion to manage its dockets,” she wrote, adding that more delay was not warranted.

Critics see the decision not to combine the cases as a missed opportunity for a big-picture review of FirstEnergy’s operations and governance in the wake of HB 6.

“I don’t understand the logic,” said Ashley Brown, a former PUCO commissioner. “It’s hard to find any public policy or private interest not to consolidate.”

Multiple cases also require duplicative efforts and increase legal costs. “The commission is making us try HB 6 cases multiple times,” said Kim Bojko, an attorney for the Ohio Manufacturers’ Association Energy Group. 

The PUCO “seems like it’s still piecemealing it and kicking some of the can down the road, while trying to fast-track the rest,” said Dave Anderson, policy and communications manager for the Energy and Policy Institute. He noted the commission’s limited approach to addressing the HB 6 case began under former PUCO chair Sam Randazzo, who died from an apparent suicide this spring after criminal indictments in federal and state courts, plus charges of legal ethics violations.

Read more:

• Eye on Utilities: All hush-hush (Energy News Network)
• Freeze of regulator’s HB 6 cases could further harm Ohio consumers (Energy News Network/Eye on Ohio)

A ‘punitive’ schedule

The PUCO set schedules in its June 21 orders which call for testimony in the rider cases to be filed in early August, with an evidentiary hearing set to start later that month. 

Testimony in the corporate separation case must be filed in September, with a hearing to start in October. The PUCO also said it would move ahead in that case without an additional audit on the HB 6-related issues. A 2021 report by Daymark Energy Advisors found no major violations of corporate separation, but noted the company hadn’t gotten numerous documents for the time period relevant to HB 6. 

An independent audit still has not been completed in the political and charitable spending case. That case doesn’t have a hearing date yet. 

Several intervenors have raised concerns about the pace, noting that it’s still unclear when pre-hearing fact-finding will wrap up. The commission put that process on hold for a year and a half after federal prosecutors asked for a pause in state regulators’ investigations as they pursued criminal cases related to HB 6.

FirstEnergy still has not produced all the documents parties in the four cases asked for nearly three years ago, because the PUCO didn’t require the company to comply with earlier document requests when it stayed the cases.

From February through mid-June of this year, FirstEnergy produced roughly 725,000 pages of documents. “We just got another 500 pages last week,” with more still to come, Bojko said. Yet now she and other parties will have to file witnesses’ testimony in roughly six weeks without knowing whether they’ll have all the documents.

“It’s punitive,” Bojko said, adding that lawyers for intervening parties are still scrambling to try to review the materials they’ve recently gotten. In her view, factors that frustrate intervenors’ ability to prepare their cases will work to FirstEnergy’s advantage.

Maureen Willis, agency director for the Office of the Ohio Consumers’ Counsel, said the office is evaluating the PUCO’s approach to the cases. 

“OCC will continue to advocate for a fair process that allows all the facts to come out,” Willis said.

FirstEnergy spokesperson Jennifer Young declined to comment due to the ongoing nature of the proceedings.

Read more:

• Regulators’ foot-dragging on public records hides the full story behind Ohio’s utility corruption scandal (Energy News Network/Eye on Ohio)

Spotlight on DeWine and Husted

Newly revealed documents show Gov. DeWine played a larger role in soliciting money from FirstEnergy executives than was previously known.

FirstEnergy and its affiliates gave roughly $4 million to dark money groups supporting DeWine and Husted’s 2018 campaigns. Less than a month before the election, DeWine texted Chuck Jones, then CEO of FirstEnergy, to set up a call. Three days later, Mike Dowling, then a FirstEnergy vice president, texted Jones to let DeWine know $500,000 was going to a dark money group called State Solutions.

Other texts recently obtained by journalists show Husted trading statements about Ohio energy policy with Dowling in the summer of 2018. Documents produced earlier show Husted also performed “battlefield triage” to assure the appointment of Randazzo to chair the PUCO.

DeWine claimed he didn’t remember the call. Spokesperson Dan Tierney told the Energy News Network the texts “all document legal campaign fundraising and independent expenditures,” which have been previously reported. “The Governor follows all applicable campaign finance laws,” he added. Husted spokesperson Hayley Carducci did not respond to Energy News Network’s request for comment.

The newly produced documents don’t show a bribe or quid pro quo, and neither DeWine nor Husted has been named as a defendant in any criminal or civil cases relating to HB 6.

However, the timing so close to the election raises questions, Anderson said, because DeWine’s campaign staff likely knew FirstEnergy executives and the company’s political action committee would already have reached their limits for direct campaign contributions. Under federal campaign finance law, candidates are not supposed to coordinate fundraising or other activities with groups that make so-called independent expenditures in political races.

Read more:

• ‘Call Mike DeWine on the $500k:’ Governor’s text sparked dark money payment, texts show (Cleveland.com)
• Phenomenally corrupt or insanely incompetent? What is Ohio Gov. Mike DeWine’s deal? (Ohio Capital Journal)
• Text messages link DeWine to FirstEnergy dark money payment (Dayton Daily News)
• Gov. DeWine says he doesn’t remember text soliciting FirstEnergy for campaign cash (Toledo Blade) 
• New texts allegedly show Ohio Lt. Gov. Jon Husted leading FirstEnergy’s push for House Bill 6 (News 5 Cleveland)

On the witness list

Dowling, the former FirstEnergy vice president, listed both DeWine and Husted as potential witnesses in a June 18 filing in the state of Ohio’s criminal case against him, Jones and two companies that were controlled by Randazzo. The two also have received subpoenas in civil cases filed by FirstEnergy shareholders.

Others on Dowling’s witness list include former American Electric Power executives Nicholas Akins and Tom Froehle. AEP holds the largest interest among Ohio electric utilities in the two 1950s coal plants that ratepayers continue to subsidize as a result of HB 6. An estimate by RunnerStone for the Ohio Manufacturers’ Association found Ohioans will pay nearly $1 billion for those subsidies through 2030.

Jones was also named as a defendant in the case against Dowling, along with Randazzo and two companies he controlled before his death. The state is still pursuing charges against those companies, said Steve Irwin, press secretary for Ohio Attorney General Dave Yost.

Read more:

• Ex-FirstEnergy executive lists DeWine, Husted as possible witnesses in bribery trial (Columbus Dispatch)
• FirstEnergy VP Dowling plans to call DeWine and Husted to the stand in corruption trial (News 5 Cleveland)

Householder and Borges appeals

Former Ohio House Speaker Larry Householder wants to add an argument to his appeal of a criminal conviction in federal court last year. A June 11 filing argues Judge Timothy Black erred in instructing Householder not to talk about his ongoing testimony while he was still under oath during an overnight break on March 1 last year. Householder’s lawyers did not object to the instruction, and the judge told Householder he could otherwise talk with his attorneys.

The government has objected to allowing the extra argument, first raised months after Householder’s initial brief of more than 16,000 words was filed in late February. Even if the court doesn’t allow the extra argument, a June 21 filing said the government still needs another four weeks to file its response.

Briefing in lobbyist Matt Borges’ appeal from his criminal conviction in last year’s federal trial should wrap up by the end of this month, unless his lawyers ask for more time to reply to the federal government’s brief.

Householder is currently serving a 20-year sentence, and Borges is serving a five-year sentence. Their appeals are pending before the Sixth Circuit Court of Appeals.

HB 6 Updates: Ohio regulators continue piecemeal review is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Versions of this story were published by Floodlight, Energy News Network and the Ohio Capital Journal. 

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. 

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. 

FirstEnergy gave $1 million to boost Ohio Lt. Gov. Jon Husted’s campaign before scandal, document shows is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

After two former Republican officials in June were sentenced for their roles in a massive racketeering conspiracy, U.S. Attorney Kenneth Parker said the investigation was continuing. At least two signs emerged last week that the proceedings might be intensifying.

Former Ohio House Speaker Larry Householder was sentenced to 20 years in federal prison on June 29 and former state GOP Chairman Matt Borges was sentenced to five years a day later. Both played roles in a scandal in which Akron-based FirstEnergy and other utilities paid more than $61 million to pass a $1.3 billion ratepayer bailout that was mostly intended for a subsidiary that FirstEnergy was spinning off that owned two Northern Ohio nuclear plants.

In addition to Householder and Borges, two others who were arrested in July 2020 have pleaded guilty and a third died by suicide. 

But on March 10, just after a jury convicted Householder and Borges, a reporter asked Parker an obvious question: What about the people who paid the bribes? Would they be charged? Parker would only say that the investigation was continuing.

Attorneys for the men who were FirstEnergy’s top executives at the time of the conspiracy — former CEO Chuck Jones and former Vice President Michael Dowling — have already said in court filings that they believe federal investigators are looking at their clients.

This month brought two more pieces of evidence that federal investigators are considering further prosecutions in the bribery and money laundering scandal.

On Aug. 4, Hilary M. Williams, who is representing FirstEnergy, submitted a filing in a massive class-action case against the company over the bailout scandal. She informed the scores of lawyers for the pension and investment funds suing the company that they’re not the only ones who want to see the emails and text messages the FirstEnergy executives sent as the bribery scheme was taking place.

“Counsel… we confirmed this morning that we may disclose to the parties that certain governmental authorities have requested the production of the entire contents of iPad and iPhone devices used by Mr. Jones or Mr. Dowling from January 1, 2016 through December 31, 2020,” Williams wrote. “In keeping with the protocol in this matter, those documents will be produced to all parties, and we expect to do so at approximately the same time that production is made to the requesting governmental authorities.”

She added. “Mr. Dowling and Mr. Jones used more than a dozen devices during the relevant time period, and processing and reviewing the contents of those devices requires substantial processing time and then time to review for confidentiality and privilege. We are working to complete the review as quickly as possible, and expect to make these productions on or about September 15, 2023.”

A spokeswoman for the U.S. attorney’s office didn’t comment on whether the “governmental authorities” Williams referred to worked for Parker, whose office prosecuted Householder and Borges.

However, Parker last week sent a letter to the Public Utility Commission of Ohio asking the regulator to further postpone its investigation into the racketeering scandal.

“The PUCO proceedings involve issues related to the U.S. Department of Justice of the United States’ investigation, and the United States believes that continued discovery in the PUCO proceedings may directly interfere with or impede the United States’ ongoing investigation,” the letter said. “For that reason, the United States respectfully requests that PUCO stay the PUCO proceedings for a period of six months from the date of this letter. The United States reserves the right to request that the stay be extended beyond this time.”

Among those the feds may be investigating are Jones, Dowling and Sam Randazzo, whom Gov. Mike DeWine nominated to chair the PUCO in early 2019. 

In a deferred prosecution agreement, FirstEnergy said it paid Randazzo a $4.3 million bribe just before his nomination in exchange for favors the ostensible regulator did for the company. Randazzo denies wrongdoing, but in the Householder trial, witnesses testified that Randazzo played a key role in drafting the corrupt bailout legislation.

Plaintiffs in the class-action suit earlier this month filed texts and emails between Jones, Dowling and Randazzo. They indicate that the three met in Randazzo’s Columbus condo in December 2018 and arranged to pay the soon-to-be regulator $4.3 million and made it clear that they expected something in return. They also appear to indicate that in addition to his work on the the bailout, Randazzo helped exempt FirstEnergy from a 2024 rate review it had been required to undergo.

The class-action plaintiffs are accusing FirstEnergy of violating securities law by concealing its illegal conduct from investors. Last week, they filed a transcript of an earnings call from July 23, 2020 — days after Householder, Borges and three others were arrested in the racketeering conspiracy. In it, Jones appeared to mislead analysts about his and his company’s role in it.

“I believe that FirstEnergy acted properly in this matter, and we intend to cooperate fully with the investigation to, among other things, ensure our company and our role in supporting House Bill 6 is understood as accurately as possible,” said Jones, who would be fired months later. “In the meantime, we wanted to share our preliminary perspective on this issue and reinforce the values with which we operate our company.”

Jones also claimed that he and his subordinates followed “the highest standards of conduct.”

“This is a serious and disturbing situation,” he said. “Ethical behavior and upholding the highest standards of conduct are foundational values for the entire FirstEnergy family and me personally. These high standards have fostered the trust of our employees, our customers and the financial community. We strive to apply these standards in all business dealings including our participation in the political process.”

Jones sat for a sworn deposition in the class-action case in July. Last week, U.S. Magistrate Judge Kimberly Jolson ordered Dowling to sit for one in October.

Ohio corruption investigation might be heating up — again is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.