This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal.
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Ohio’s consumer advocate is pushing to remove the freeze on four FirstEnergy cases. Former House Speaker Larry Householder and lobbyist Matt Borges are in prison, and the federal government still has not brought criminal charges against others relating to Ohio’s nuclear and coal bailout law.
Other developments include:
- FirstEnergy says its latest case for customer charges will have small impacts on residential customers, but the company is vague about the total amount at stake in the case.
- A new bill aims to prevent another HB 6 scandal by adding reporting requirements and tightening prohibitions against utilities using ratepayer money for political spending.
- Shareholders’ lawyers continue to spar with FirstEnergy about documents that could shed more light on dealings with Sam Randazzo, a former Public Utilities Commission chair whom the company has implicated in the HB 6 scandal.
- The Office of the Ohio Attorney General insists its civil racketeering claims against FirstEnergy and others still have legal merit despite a class action settlement that sent ratepayers small amounts ranging from $1 to $20.
Lift the stay, says consumer advocate
The Office of the Ohio Consumers’ Counsel called upon Ohio regulators to revisit the ongoing freeze of four FirstEnergy cases linked to HB 6. The cases have been stayed since August 2022.
“Going forward with other FirstEnergy cases while staying the four FirstEnergy investigations impairs the rights of FirstEnergy’s two million consumers,” the consumers’ counsel argued in a Sept. 22 filing.
The Public Utilities Commission of Ohio granted a third six-month stay in the cases last month before parties in the cases had an opportunity to respond to U.S. Attorney Kenneth Parker’s Aug. 10 request to keep the cases in limbo, despite the Ohio attorney general’s civil case moving ahead. Parker’s office still has not brought criminal charges against others.
Meanwhile, the commission is moving full steam ahead on three other cases, which the consumers’ counsel says are “inextricably tied” to the HB 6 investigation.
Two of those dealing with grid modernization have links to another case where FirstEnergy had not disclosed side dealings with one of Sam Randazzo’s companies. The PUCO ordered an investigation in 2021, but has forbidden further action on it so far.
The third seeks to increase rider charges in a so-called Electric Security Plan, or ESP. Some of the charges and issues in the case are also contested in the four frozen FirstEnergy cases.
Read more:
- Eye on Utilities: Hearings, a subpoena and more (Energy News Network)
- PUCO orders probe into whether FirstEnergy broke Ohio law by not disclosing Sam Randazzo contracts (Cleveland.com)
- PUCO delays probe into whether FirstEnergy broke Ohio law by not disclosing Randazzo contract (Columbus Dispatch)
How much?
The PUCO set Nov. 7 as the start date for an evidentiary hearing on FirstEnergy’s latest bid for rider charges in an eight-year “electric service plan.” Yet the company is vague about the plan’s total financial impacts and how much customers are projected to pay over its course.
A consumer alert from the Office of the Ohio Consumers’ Counsel described the plan as a $1.4 billion rate hike. FirstEnergy spokesperson Lauren Siburkis said that amount “is simply not accurate. We are unable to determine how it was calculated.”
A typical residential customer using 750 kilowatt-hours of electricity per month will initially pay about $3.11 more per bill, and then charges would increase an average of roughly 0.5% per year for the rest of the plan, Siburkis said.
“I’m unable to provide a total impact for all customers because this information could change throughout the review/approval process.” Some charges will also depend on baseline amounts to be set in the company’s next rate case, which it plans to file in May 2024, she added.
The company should definitely have an idea about the total amount at stake in the case, said Ashley Brown, a former PUCO commissioner. “It doesn’t make any sense that they don’t know that. … The utilities literally have total control of the information chain,” he said.
The company’s PUCO filings include a chart on the estimated incremental impacts of the plan. Adding all of its numbers for revenue, operation and maintenance, and amortization provides a sum of roughly $2 billion. Subtracting the company’s projected energy efficiency savings of nearly $638 million gives a balance of $1.4 billion.
Adding just the revenues on the chart comes to about $600 million. But operation and maintenance and amortization figures impact utilities’ bottom line, too.
One vegetation management rider includes a “final reconciliation” of other tariffs and the chart shows no new revenue. However, FirstEnergy projects roughly $760 million will be recovered for operation and maintenance over the eight-year period. Amortization numbers would presumably affect the returns earned on capital investments.
Local public hearings were held in Cleveland on Sept. 7 and in Toledo on Sept. 14. Although attendance at both meetings was sparse, all local residents who presented remarks opposed the plans. A third hearing is planned in Akron for Tuesday, Sept. 26, at 4:30 p.m.
The PUCO still holds four other FirstEnergy cases in abeyance. The situation presents the possibility that utility customers could start paying more, even while millions of dollars in past charges remain in dispute.
“Utility regulators should prioritize ensuring that FirstEnergy refunds every dollar it wrongly charged to customers before even considering further requests by FirstEnergy to charge customers more on their electricity bills,” said Dave Anderson, policy and communications manager for the Energy and Policy Institute.
Read more:
Preventive measures
The Ohio Senate’s Energy and Public Utilities Committee held its first hearing on Sept. 20 on a bill to block utilities from using ratepayer money for political activities. Senate Bill 149 also would require utilities to file annual reports detailing all political spending for the last 12 months. Violations would subject companies to penalties.
State law already barred utilities from charging customers for political or charitable spending even before HB 6. Yet existing law didn’t stop FirstEnergy and others from using dark money groups to conceal such spending, as the company admitted in 2021.
“The reason to advance this legislation into law is that nothing in Ohio has changed that would prevent another House Bill 6 scandal from occurring,” said Sen. Kent Smith, a Democrat from Euclid, in his sponsor testimony.
Read more:
- Editorial: PUCO law needed (The Blade)
- Ohio bill would bar utilities from charging customers for politics (Energy and Policy Institute)
- What can Ohio regulators do to prevent future utility corruption scandals? (Energy News Network)
Randazzo redux
Lawyers for shareholders and FirstEnergy continue to fight about the company’s failure to produce all requested documents relating to former PUCO Chair Sam Randazzo.
The documents could shed more light on Randazzo’s dealings with the company, which admitted in 2021 that a $4.3 million payment shortly before he took office was a bribe. The government has not filed criminal charges against Randazzo, and he has denied civil and criminal liability.
Resolution of the dispute may involve more delay, depending on how Special Master Shawn Judge proceeds. Judge Algenon Marbley appointed him as special master on Sept. 12, despite objections from some defendants based on Judge’s past employment at a law firm that represented Ohioans for Energy Security, one of the dark money groups in the HB 6 scandal. That group was behind Chinese conspiracy ads opposing a referendum that would have axed HB 6.
An affidavit by Judge said he did not recall working on the matter and didn’t know anything about the representation, despite records showing he had conferred with a partner who worked on it. He also said that if he was related to Energy Harbor President and CEO John Judge, who previously had been at FirstEnergy, the two hadn’t seen each other in decades and any relationship wasn’t close enough for disqualification.
The fact that some defendants raised concerns about Judge’s appointment “really says something,” Anderson said. “Surely there is a candidate for special master in Ohio who doesn’t have a personal or professional connection to FirstEnergy and could perform their duties without such concerns about conflicts.”
Read more:
- Attorneys dig up thousands of new documents in case against FirstEnergy (Ohio Capital Journal)
Still in the fight
A Sept. 8 filing by the Office of the Ohio Attorney General said claims under Ohio’s civil racketeering statute remain strong, despite defendants’ arguments to the contrary. At most, the $49 million settlement of a ratepayer class action cited by the defendants might reduce the total amount of damages. But the racketeering statute includes claims and other types of harm that were not addressed in the other case, the state’s lawyers argued.
“In creating such a strong statute, Ohio lawmakers knew the type of corruption that could — and ultimately did — plague the State,” the filing said.
Defendants have not yet filed replies to the state’s arguments. Depending on whom Judge Chris Brown sides with, the case will either move forward with pre-trial fact-finding or large parts may be dismissed.
Either way, HB 6’s coal plant subsidies and its gut of Ohio’s clean energy standards remain in force, as repeal efforts in the legislature have so far been unsuccessful.
Schedules set for HB 6 appeals
Scheduling orders call for Larry Householder and Matt Borges to file briefs detailing their arguments on appeal next month. Responses from the government are due in November.
The schedules have slightly different dates, due to Householder having the trial court transcript filed for his appeal later than Borges did. Deadlines also can shift. Borges was initially supposed to file his brief this month, but his lawyers asked for a delay, citing the press of other business.
Borges is currently at the federal prison in Milan, Michigan. The court has not yet ruled on his motion for release while the appeal moves through the courts. Householder is at the Elkton federal correctional institution in Lisbon, Ohio.