Former FirstEnergy CEO Chuck Jones sits in the courtroom at his Feb. 13 indictment.
Former FirstEnergy CEO Chuck Jones sits in the courtroom at the Summit County courthouse in Akron, Ohio on Tuesday, Feb. 13, 2024. Credit: AP Photo/David Dermer

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

The first criminal charges have been filed against two former FirstEnergy executives, nearly four years after the initial arrests of former Ohio House speaker Larry Householder and others in Ohio’s ongoing House Bill 6 corruption scandal. The company says it has taken significant steps to move forward. Yet issues related to HB 6 continue to play a role in the company’s push to raise ratepayer charges, ongoing shareholder litigation and more.

A flurry of filings over the last several weeks reflects additional developments:

  • Sam Randazzo, the former head of Ohio’s utilities commission, was also named in the state of Ohio’s indictment against former FirstEnergy executives Chuck Jones and Michael Dowling. Randazzo now faces criminal charges in both state and federal courts.
  • Ohio’s consumer advocate wants to freeze a FirstEnergy grid modernization case until questions are resolved about Randazzo’s tenure at the Public Utilities Commission of Ohio.
  • Briefing wrapped up in an Ohio regulatory case that could let FirstEnergy collect $1.4 billion or more in added rider charges over an eight-year period.
  • FirstEnergy continues to be under fire in shareholder litigation, where opponents say it has dragged its feet on providing its internal HB 6 investigation and other disclosures.
  • FirstEnergy has dropped its pledge to cut greenhouse gas emissions 30% by 2030, just three years after making that commitment.
  • Former Ohio House Speaker Larry Householder and lobbyist Matt Borges continue to pursue appeals from their criminal sentences. Borges filed his appellate brief in January, and the government’s reply is due next month.

Former FirstEnergy execs face charges

The state of Ohio’s Feb. 9 indictment against former FirstEnergy executives Chuck Jones and Mike Dowling marks the first time anyone from the company has been criminally charged in connection with the corruption scandal surrounding Ohio’s 2019 nuclear and coal bailout law.

Sam Randazzo, the former chair of the Public Utilities Commission of Ohio, was also charged, along with two pass-through companies linked to him. The story told by the 27-count indictment centers around the three men’s alleged “joint enterprise to hijack Ohio’s regulatory structure for the benefit of FirstEnergy,” Ohio Attorney General David Yost said.

The charges include multiple counts of bribery, theft, money laundering, telecommunications fraud, record tampering, and a pattern of corrupt activity. The allegations relate to House Bill 6 but also include other actions reaching back more than a decade.

The first criminal charges against Jones and Dowling are “critical and long-overdue steps forward in bringing justice for the people of Ohio,” said Rachael Belz, CEO of advocacy group Ohio Citizen Action. Federal charges against former Ohio House Speaker Larry Householder and others were filed nearly four years ago. Yet the state’s criminal prosecution seemed to be in slow gear until last spring, when the Ohio Organized Crime Investigations Commission began looking into the matter.

“Ohioans continue to bear the cost of corruption,” Ohio Consumers’ Counsel Maureen Willis said in response to the charges. She called for an immediate end to HB 6’s coal plant subsidies and a refund of all amounts paid.

The indictment also spurred the Ohio Environmental Council to renew its call for a full investigation into PUCO activities during Randazzo’s tenure. Beyond the 2019 law’s nuclear and coal plant subsidies, Randazzo played a role in HB 6’s gutting of Ohio’s clean energy standards. The charges have implications for current energy policy, too.

“Just this month, Ohio legislators debated allowing investor-owned utilities to own more generation under the guise of ‘reliability,’” said Nolan Rutschilling, managing director of energy policy for the group. “How can we justify giving our utilities more control over our energy system?”

The defendants have pled not guilty.

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Randazzo charged in two cases

The state’s indictment means Randazzo now faces charges in two criminal cases. The federal government indicted him in December on 11 counts of bribery, embezzlement and other crimes. It’s unclear whether both cases will proceed against Randazzo at the same time, or whether one case will be put on hold while the other moves ahead.

A Feb. 13 notice in the state’s civil RICO lawsuit arising out of HB 6 told Judge Christopher Brown about the new criminal charges against Jones, Dowling, Randazzo and his companies. It’s possible the court might put the civil case against those defendants on hold, but let it continue against FirstEnergy, Energy Harbor and other defendants.

Just weeks before the new indictment, the Ohio Supreme Court said the Ohio Attorney General’s office could continue to freeze millions of dollars of Randazzo’s assets, which could be used to satisfy a judgment against him in the state case.

On Feb. 9, Randazzo asked the U.S. District Court for the Southern District of Ohio to transfer his criminal case from Cincinnati to Columbus. He cited health issues and inconvenience to himself, witnesses and family members as reasons for the shift.

The Feb. 9 filing also said likely witnesses in the federal case include current and former PUCO commissioners and staff, members of the Ohio executive branch, former state lawmakers, and current and representatives of FirstEnergy and Industrial Energy Users-Ohio (now called the Ohio Energy Leadership Council). 

The state’s indictment, filed that same day, alleges Randazzo told Gov. Mike DeWine’s chief of staff, Laurel Dawson, he got a $4.3 million payment from FirstEnergy due to a “consulting agreement.” DeWine and Lt. Gov. Jon Husted dined with Dowling and Jones the same day the FirstEnergy executives visited with Randazzo and finalized details of that payment.

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Raising rider charges

Corporate spokesperson Jennifer Young said FirstEnergy can’t comment on the indictment against its former executives, but added that the company “has taken significant steps to move forward, including reconstituting our senior leadership team and instilling a culture of ethics, integrity and accountability at every level.”

FirstEnergy continues to push forward on its request for roughly $1.4 billion in added rider charges. The case now rests with the PUCO after the company and other parties filed reply briefs on Feb. 9.

The case stands out because it would extend one of the riders involved in the PUCO’s frozen HB 6-related cases, where a prior audit found millions of dollars of the reviewed charges were improper. The Ohio Manufacturers’ Association Energy Group has challenged the hearing examiners’ ruling to keep evidence about HB 6 out of the current case.

Multiple challengers have argued the company’s request for riders should be denied altogether or otherwise considered in the company’s full rate case later this year. The PUCO staff urged the commission to modify some riders and shorten the length of the company’s plan.

The Ohio Environmental Council, Citizens Utility Board of Ohio and Environmental Law & Policy Center did support a proposed rider for energy efficiency programs. Utility-run energy efficiency programs can cut greenhouse gas emissions when designed well. However, the PUCO has generally not allowed ratepayer-funded energy efficiency programs since 2020, after HB 6 took effect.

HB 6 gutted Ohio’s prior energy efficiency standard, which had been paused and weakened by a 2014 law. FirstEnergy began pushing to suspend the standard back in 2012.

In a separate proceeding, the Office of the Ohio Consumers’ Counsel asked the PUCO to freeze FirstEnergy’s case to collect more grid modernization money. The federal and state criminal cases against Randazzo include allegations that relate to a side deal in another case that gave rise to the grid modernization case. And Randazzo played a role in letting the case move ahead while he was at the PUCO.

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Shareholder litigation continues

Pre-trial fact-finding remains temporarily on hold in shareholder class actions against FirstEnergy and others, as the trial court considers whether to hold such discovery in limbo while an appeals court reviews class certification issues. Lawyers for both sides presented arguments to Special Master Shawn Judge on Jan. 4.

Since then, FirstEnergy has opposed a motion by plaintiffs for the court to clarify its class certification order. Class certification matters because it lets a large group of similarly situated shareholders move ahead with claims that otherwise might not merit the costs of litigation.

Other filings continue FirstEnergy’s objections to turning over its internal investigation on HB 6, as ordered by the special master last fall.

It’s unclear how soon the court will rule on the stay and other issues. On Feb. 13, however, the court did overrule Energy Harbor’s privilege objections to providing materials the special master said it should provide to plaintiffs in response to a subpoena.

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Continuing with coal

FirstEnergy has abandoned its 2020 pledge to cut greenhouse gas emissions 30% by 2030. FirstEnergy’s about-face comes as many companies operating in Ohio have stepped up work to reduce greenhouse gas emissions.

FirstEnergy’s Feb. 8 securities filing announced the change just over three years after the company made its commitment for cuts by 2030. At the time FirstEnergy had just ousted Jones, Dowling, and some other executives in the wake of the federal government’s arrests of Householder, Borges and others.

FirstEnergy’s updated website statement says the about-face is necessary so it can keep two aging coal plants in West Virginia running longer, consistent with that state’s coal-dependent energy policy. The company also cites resource adequacy in the PJM transmission region and changing market conditions. It claims it still plans to be carbon neutral by 2050.

FirstEnergy doubled down on coal power a dozen years ago, even as the boom for fracked oil and gas was underway. Bailout efforts in Ohio led to nearly half a billion dollars in ratepayer charges. The Supreme Court of Ohio ultimately held those charges unlawful, but they were not refunded. FirstEnergy similarly spent years lobbying to make West Virginia ratepayers cover costs for coal power there.

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Borges and Householder appeals

Appealing his conviction in the federal government’s HB 6 criminal case, lobbyist Matt Borges filed his appellate brief on Jan. 9. Among other things, Borges took issue with the trial court’s jury instructions and rulings on evidence. He also argued the evidence does not support the government’s sole charge under the federal Racketeer Influenced and Corrupt Organizations Act.

Appellate courts generally defer to trial courts on weighing evidence, and here jurors found Borges guilty beyond a reasonable doubt. Yet some recent federal cases have tried to scale back what counts for a pattern of criminal activity under the RICO statute. Whether Borges’ case fits into any exceptions is unclear.

The government’s response in the Borges appeal is due March 8. Former Ohio House speaker Larry Householder’s appeal is a separate case. His brief is due Feb. 26.

Borges has so far served seven-and-a-half months of his five-year sentence at a federal prison in southeastern Michigan. Householder is serving a 20-year sentence and is at a federal prison in Lisbon, Ohio.

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Kathi is the author of 25 books and more than 600 articles, and writes often on science and policy issues. In addition to her journalism career, Kathi is an alumna of Harvard Law School and has spent 15 years practicing law. She is a member of the Society of Environmental Journalists and the National Association of Science Writers. Kathi covers the state of Ohio.