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March 2023
Eye on Utilities: What’s next in Ohio’s ongoing HB 6 scandal?
Preview text (for Mailchimp): Other HB 6 cases continue in Ohio
This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network.
Got a question? Story idea? Send tips or comments to info@eyeonohio.com.
Was this forwarded to you? Click here to subscribe.
By Kathiann M. Kowalski
Now that jurors have returned guilty verdicts against former Ohio House Speaker Larry Householder and lobbyist and former Ohio Republican Party chair Matt Borges — the first criminal convictions in the ongoing House Bill 6 scandal — advocates for government integrity are breathing a sigh of relief, and other top Republicans are keeping quiet.
The $1 billion-plus nuclear bailout provisions of HB 6 were repealed in 2021. However, ratepayers continue to pay more than $130,000 daily for the costs of two 1950s-era coal plants. Bills to repeal the subsidies stalled in the last legislative session, and the Public Utilities Commission has not yet decided audit cases dealing with those charges. Ohio’s clean energy standards also remain gutted.
Developments in the criminal case and other matters include:
- While legal and policy experts say the Householder/Borges case shows that all are accountable under the law, they also call for more transparency and accountability in the political system.
- The federal government may still file criminal charges against additional defendants.
- At federal prosecutors’ request, Ohio regulators have ordered another six-month freeze on discovery in four FirstEnergy cases relating to HB 6.
- A March 3 brief filed by Ohio Attorney General Dave Yost urges the Supreme Court of Ohio to continue a freeze of another kind — namely, to prevent former Ohio regulator Sam Randazzo from disposing of certain property that might satisfy an eventual judgment in the state’s civil lawsuit relating to HB 6.
- Yost has also asked an Ohio trial court to resume a case that had been mostly in limbo until the HB 6 trial.
- Texas-based Vistra Corp announced on March 6 it is buying the two Ohio nuclear plants for which FirstEnergy and its subsidiary FirstEnergy Solutions (now Energy Harbor) sought bailouts through HB 6.
- A March 17 hearing in a separate federal court case will address whether a shareholder can move forward with claims against American Electric Power related to the HB 6 scandal.
Householder and Borges both found guilty
Jurors in Ohio’s HB 6 corruption trial returned guilty verdicts against both Householder and Borges. Each could face up to 20 years in prison in the $60 million scandal. Post-trial motions and appeals are likely.
Legal and policy experts see the case as confirmation that all are accountable under the law, despite the prevalence of dark money in politics. At the same time, they also call for reforms to increase transparency and accountability.
Advocates also have renewed calls to repeal the rest of HB 6, which continues to require Ohioans to subsidize two 1950s-era coal plants and gutted the renewable energy and energy efficiency standards.
However, the 2019 law still has some strong supporters in the Ohio legislature’s leadership. Among them are Rep. Bill Seitz, who testified as part of Householder’s defense case, and Ohio Senate President Matt Huffman, who opposes the clean energy standards.
Read more:
- What the guilty verdicts in the HB 6 corruption case mean for energy policy and good government in Ohio (Eye on Ohio/Energy News Network)
- Householder seeks to sow reasonable doubt in Ohio corruption trial (Eye on Ohio/Energy News Network)
- Gov. Mike DeWine, other top Ohio Republicans silent on Larry Householder’s corruption conviction (Cleveland.com)
- Ex-Ohio House Speaker Larry Householder, former Ohio GOP leader Matt Borges found guilty (Columbus Dispatch)
- How FirstEnergy wrapped its tentacles around Ohio government: Householder trial analysis (Cleveland.com)
- Jury must decide if Householder is ‘old Appalachian boy’ or lawmaker who ‘sold the statehouse’ (WCPO)
Celebrate National Sunshine Week: Join Kathiann M. Kowalski today (March 15) at 6 p.m. ET for a panel discussion hosted by Common Cause Ohio. Register now for the webinar: Shine a Light on the Statehouse: What Can We Learn from the Householder/Borges Trial?
More charges to come?
Federal prosecutors remain free to file criminal charges against additional defendants.
“One of the things you find oftentimes in public corruption cases is there is almost no end to where it goes,” said Michael Benza, who heads the Financial Integrity Institute at Case Western Reserve University School of Law. “How high up do you take it? And how low do you go?”
Although FirstEnergy was not named as a defendant in the Householder case, the company admitted wrongdoing in a July 2021 deferred prosecution agreement. The agreement does not bar prosecution against individuals.
Lawyers for the company previously identified former CEO Chuck Jones and former vice president Michael Dowling as the individuals who paid bribes to the alleged criminal enterprise in the Householder case. Both men are defendants in a civil lawsuit relating to House Bill 6 that was brought by the Ohio attorney general’s office. Both have denied liability.
Other individuals’ names also came up multiple times during the trial, including FirstEnergy Solutions executives John Kiani and David Griffing. FirstEnergy Solutions emerged from bankruptcy in 2020 as Energy Harbor, and both men continued as executives there. Energy Harbor has not responded to a request for comment.
Names of lobbyists, go-betweens and others have come up during the Householder trial as well.
FirstEnergy’s 2021 deferred prosecution agreement also said the company paid money to Sam Randazzo, a former chair of the Public Utilities Commission of Ohio, in return for action relating to HB 6 and other company priorities. Randazzo, also a defendant in the state’s civil lawsuit, has denied any liability. He has not been criminally charged.
Read more:
- Householder trial: New evidence shows depth of long-suspected scheme (Eye on Ohio/Energy News Network)
- Meet the Cleveland businessman who connected Householder to FirstEnergy (Columbus Dispatch)
- FirstEnergy’s CEO and SVP ordered $64 million bribery scheme, shareholders say (Ohio Capital Journal)
- Ousted FirstEnergy CEO Chuck Jones again asserts his innocence, after Householder guilty verdict (Cleveland.com)
- Nuclear exec would have made $100 million from sale of plants at heart of bribery trial, lobbyist says (Cleveland.com)
- Not all ‘conspirators’ charged as corruption trial heads to jury (The Blade)
An extended freeze
On Feb. 24, U.S. Attorney Kenneth Parker for the Southern District of Ohio requested another six-month pause, or “stay” on discovery in four FirstEnergy regulatory cases that have been on hold since last summer.
“As you are aware, the United States is conducting an ongoing investigation into corruption relating to Ohio House Bill 6 and action through the Public Utilities Commission of Ohio,” Parker wrote in his Feb. 23 letter.
The PUCO granted the request and extended the stay on March 8. However, there are consequences for consumers.
Each of the four cases deals with regulatory issues separate from any criminal charges. One case focuses on a charge called a delivery capital rider. A 2021 audit reported that roughly a quarter of $24.5 million in charges were improper and should be refunded.
Another case deals with money from a so-called “distribution modernization rider.” An audit found FirstEnergy failed to track the funds properly, so the use for HB 6 activities couldn’t be ruled out. Last year the Office of the Ohio Consumers’ Counsel and Ohio Manufacturing Association Energy Group asked the PUCO to assess penalties up to $1.4 billion.
Yet another case calls for FirstEnergy to show it did not use ratepayer money to fund political and charitable activities. The modernization rider case suggests that will be tricky at best.
The fourth case is about whether FirstEnergy violated Ohio law requiring corporate separation between utilities and their parents and affiliates.
The longer the stay on discovery lasts, the longer it will be until ratepayers might get any relief in the form of penalties or refunds.
Beyond that, FirstEnergy plans to file for changes to its Electric Security Plan during the first half of this year, spokesperson Jennifer Young confirmed. Among other things, that filing will seek to continue the capital rider involved in one of the cases, FirstEnergy Chief Financial Officer Jon Taylor said during the company’s Feb. 15 earnings call.
And next year FirstEnergy is due to file its first ratemaking case in more than 15 years. If the current cases aren’t resolved before then, regulators and the public may lack full information when the newer cases are decided.
Read more:
- Freeze of regulator’s HB 6 cases could further harm Ohio consumers (Eye on Ohio/Energy News Network)
- FirstEnergy’s admissions feed critics’ call for big-picture regulatory oversight and review (Energy News Network/Eye on Ohio)
Another freeze
A March 3 legal brief filed by the Ohio attorney general’s office urged the Ohio Supreme Court to reverse a lower court order that would make them release a freeze of certain assets of Sam Randazzo.
“The Court of Appeals botched its analysis” in finding that the trial court didn’t adequately consider if there would be irreparable harm if Randazzo continued disposing of various assets, the brief said. Without the freeze, the state said it might not be able to collect an eventual judgment against Randazzo in its civil lawsuit relating to HB 6.
In the seven months following his November 2020 resignation, Randazzo gave a $500,000 home to his son and sold multiple assets, including a Columbus house, a Naples condominium and boat slip, and a Cuyahoga Falls condominium roughly 10 minutes away from FirstEnergy’s headquarters.
In the attorney general’s view, the gift, property sales, and another $2.5 million transferred out of state, combined with the trial court’s other hearings and understanding of the case, more than justified the freeze. And at the trial court’s hearing on the freeze, Randazzo’s lawyers chose not to present evidence or argue against allegations supporting probable cause or irreparable injury, the brief added.
Read more:
- High court to weigh freezing ex-Ohio regulator’s $8M assets (Associated Press)
Seeking a thaw
Now that the HB 6 trial is over, Yost has renewed a request for the trial court in that same case to let the case move ahead. None of the defendants in the civil case is currently awaiting trial on criminal charges, the filing noted.
“Criminal justice has been had. Civil justice for the State of Ohio should commence,” state attorneys wrote.
Randazzo and former FirstEnergy executives Michael Dowling and Chuck Jones were added as defendants in the summer of 2021, after FirstEnergy admitted to bribery in a deferred prosecution agreement. Although all three added defendants have denied liability, it’s unclear whether the federal government might eventually file criminal charges against them.
Judge Chris Brown will still need to rule on the state’s motion after other parties have a chance to respond. For now, the court’s online docket system shows a status of “reinstated.”
FirstEnergy nuclear plants sold
Vistra Corp. announced on March 6 that Energy Harbor would merge into a new Vistra subsidiary called Vistra Vision. The subsidiary will combine Vistra’s and Energy Harbor’s existing nuclear and retail business with Vistra Zero’s renewable energy and storage projects, the March 6 press release said.
The deal involves roughly $3 billion in cash and a 15% equity interest in Vistra Vision.
Evidence in the Householder/Borges trial noted that one goal of HB 6 was to make it easier for FirstEnergy and its subsidiaries to sell the Davis-Besse and Perry nuclear plants. Co-defendant Juan Cespedes also suggested in his testimony that John Kiani, Energy Harbor’s executive chair, stood to make $100 million if the plants were sold.
House Bill 6’s subsidies were repealed in 2021, although other parts of the law remain in place, including its coal plant subsidies and a gut of Ohio’s clean energy standards.
Read more:
- Vistra to buy Energy Harbor in $3.43B cash and stock deal (Seeking Alpha)
- Vistra deepens nuclear push with $3.43 bln deal for Energy Harbor (Reuters)
- Energy Harbor, owner of nuclear plants at heart of HB6 scandal, sold for $3.4 billion to Texas-based Vistra Corp. (Cleveland.com)
Coal plant subsidies?
A new bill to repeal HB 6’s coal plant subsidies would also refund more than $150 million customers have paid under the law since January 2020.
“It’s time to undo the damage caused by the largest bribery scandal in Ohio’s history and bring financial relief to Ohioans who are still paying to bail out dirty, failing coal plants,” said Rep. Casey Weinstein, D-Hudson, who is co-sponsoring the bill with Rep. Sean Brennan, D-Parma.
Previous bills to repeal the coal plant subsidies stalled in legislative committees, as did earlier bills that called for a full repeal of HB 6. Whether the new bill will progress further now that guilty verdicts have been entered in the Householder/Borges case remains to be seen.
Read more:
- As Ohio regulators sit on coal plant subsidy cases, costs could rack up for ratepayers (Eye on Ohio/Energy News Network)
AEP litigation update
Federal Judge Sarah Morrison will hear arguments on March 17 in Columbus on whether to let an additional shareholder join litigation against American Electric Power based on alleged actions related to HB 6. The existing plaintiffs don’t mind if the new plaintiff joins the case, but AEP objects to it.
The additional shareholder’s proposed complaint would add additional facts and legal arguments to the case, his lawyers said. Among other things, his complaint notes AEP’s disclosure last fall that it had received a second subpoena from the Securities and Exchange Commission related to HB 6.
Empowering Ohio’s Economy, a dark money group funded by AEP, gave $900,000 to dark money groups involved in the HB 6 scandal. And AEP and other utilities continue to benefit from being able to recoup their costs for the two 1950s-era coal plants from ratepayers.
Judge Morrison will also hear arguments on March 17 about whether she should dismiss the amended complaint already filed in the litigation. AEP filed a motion asking her to do that last year.
February 2023:
Eye on Utilities: Trial details HB 6 scandal
This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network.
Got a question? Story idea? Send tips or comments to info@eyeonohio.com.
Was this forwarded to you? Click here to subscribe.
By Kathiann M. Kowalski
“It would be bad for both of us if the story came out. But it would be worse for you,” lobbyist Matt Borges told an FBI informant in a recorded conversation back in 2019.
Details about that story and others are coming out at the trial of Borges and former Ohio House Speaker Larry Householder on criminal charges relating to Ohio’s 2019 nuclear and coal bailout law, House Bill 6.
Developments in the case and other matters within the past month include:
- Householder and Borges’ trial is moving ahead, but with daily Covid testing after a second juror tested positive for the virus last week.
- So far, defendants’ cross-examination underscores their themes that the HB 6 scandal was basically politics as usual in Ohio, that Householder thought the law was a good idea, and that any dark money involved in the scandal was a form of constitutionally protected free speech.
- Testimony and exhibits show the five individual defendants in the case reaped financial benefits of roughly $4.3 million. The group includes Householder and Borges, deceased lobbyist Neil Clark, and Juan Cespedes and Jeff Longstreth, who have both pled guilty.
- Gov. Mike DeWine named John Williams to take the PUCO commissioner seat vacated by Beth Trombold. The Office of the Ohio Consumers’ Counsel wants reforms to the nomination process.
- Ohio Republicans have talked in the last month about introducing anti-corruption bills in the legislature. It’s unclear if the proposals would have prevented the alleged abuses underlying HB 6.
What’s at stake
Stakes in the House Bill 6 case go beyond Ohio’s energy generation mix and how much people pay for electricity. The case is shining a light on dark money — funds used to influence the political process in ways the public can’t trace.
Under the Supreme Court’s 2010 Citizens United ruling, organizations can spend unlimited amounts on political causes, as long as they don’t coordinate with a candidate’s campaign. Common forms of dark money groups include nonprofits set up under Section 501(c)(4) of the Internal Revenue Code and nonpublic companies known as limited liability corporations.
501(c)(4) groups are particularly ripe for abuse as a money laundering tool, said former U.S. Attorney David DeVillers at a Jan. 18 Columbus Metropolitan Club panel. A lack of disclosure requirements raises the potential for bribery, which is among the alleged underlying crimes for the racketeering charges in the case against Householder, Borges and others.
Generation Now, the primary dark money group in the alleged conspiracy, might also have violated conditions for its tax-exempt status, which require that candidate campaigns can’t be the primary purpose of a 501(c)(4) group. Funds from a nonprofit also should not personally benefit individuals.
Corruption claims affect the perceived legitimacy of Ohio’s state government.
Multiple levels of dark money groups also undermine the spending limits and donor disclosure requirements of campaign finance laws. That’s especially so when there’s coordination with a candidate’s campaign, as shown by some trial exhibits in the Householder case.
Ohioans’ constitutional rights are also at issue. Provisions in the Ohio Constitution could have given voters a chance to reject HB 6 in 2020 in a referendum. Prosecutors allege the defendants’ actions thwarted efforts to get the law on the ballot.
Money matters, too. HB 6’s nuclear subsidies and revenue guarantee provisions were repealed in 2021, but Ohioans continue to subsidize two 1950s-era coal plants.
Tracking by the Office of the Ohio Consumers’ Counsel estimates consumers have paid almost $147 million for those plants since the start of 2020. Under Ohio law, the Public Utilities Commission of Ohio likely “can’t refund any money that’s still being collected,” said former commissioner Ashley Brown, who also spoke at the Jan. 18 panel.
Read more:
- How utility corruption hurts ratepayers (Energy News Network)
- Stage is set for trial of Larry Householder and Ohio’s largest corruption case (Statehouse News Bureau)
- As Ohio regulators sit on coal plant subsidy cases, costs could rack up for ratepayers (Energy News Network/Eye on Ohio)
- HB 6 referendum fight highlights the troubling ways Ohio voters can be silenced (Cleveland.com)
- Rampant ‘good old boys’ corruption is robbing Ohioans blind (Ohio Capital Journal)
‘And it paid off’
Prosecuting attorney Emily Glatfelter’s opening argument told a story that Householder and co-conspirators “sold the Statehouse.” The defendants allegedly used dark money groups to funnel millions paid by FirstEnergy, its affiliates and others to pass and protect more than $1 billion in bailouts for non-competitive power plants.
Voluminous exhibits and testimony document the flow of more than $60 million from FirstEnergy and its affiliates through nonprofits or limited liability companies and into dark money groups allegedly controlled by Householder or otherwise set up in furtherance of a conspiracy.
The evidence also shows frequent communications by then-high-ranking FirstEnergy executives with each other and with Householder and other members of the alleged conspiracy.
For example, when HB 6 passed and was signed into law on July 23, 2019, texts between former CEO Chuck Jones and a former vice-president congratulated each other about having made “big bets.”
“And it paid off,” Jones wrote.
Read more:
- Householder trial: New evidence shows depth of long-suspected scheme (Eye on Ohio/Energy News Network)
- Why attention to detail matters in the government’s HB 6 corruption trial (Eye on Ohio/Energy News Network)
- Householder trial: Jurors dropped into world of dark money, energy, high-stake politics (Columbus Dispatch)
- Texts show close consultation between Householder and FirstEnergy execs on utility bailout (Ohio Capital Journal)
- ‘It all paid off’: Utility exec declared as nuclear bailout passed (The Blade)
- How an FBI agent says Householder, conspirators personally enriched themselves in corruption scheme (Cleveland.com)
On the stand
FBI special agent Blaine Wetzel testified for more than a week. Next up in the government’s case was fundraiser and communications expert Anna Lippincott. She worked with Longstreth, the president of Generation Now, which was the primary dark money group in the alleged conspiracy. Longstreth, a co-defendant in the case, pled guilty in October 2020 and is expected to testify for the government.
Co-defendant Juan Cespedes, who also pled guilty, took the stand after Lippincott. He testified that people acting on behalf of FirstEnergy Solutions made it clear to Householder that the company’s financial support hinged on getting a bailout for the nuclear plants. At the time, the company was a wholly owned FirstEnergy subsidiary.
Among other things, Cespedes testified about a 2018 meeting where a FirstEnergy check for $400,000 was handed to Householder.
Although FirstEnergy was not named as a defendant in the Householder case, the company admitted wrongdoing in a July 2021 deferred prosecution agreement. Treasurer Steven Staub has testified that the company was “bleeding cash” because of its non-competitive power plants. It’s unclear yet who else from the company may testify.
Subpoenas have also been issued for several current or former lawmakers and Ohio Attorney General David Yost. The government’s witness list also includes Megan Fitzmartin, a former political consultant for Householder.
Court orders extend immunity to two potential witnesses so far.
Read more:
- House Bill 6 trial: Over D.C. steakhouse dinners, Householder courted FirstEnergy (Columbus Dispatch)
- Corruption trial texts: OH AG Yost didn’t speak out against bailout because of utility support (Ohio Capital Journal)
- Prosecutor: Borges’ relationship with Ohio Attorney General Dave Yost was key to their plan to thwart HB6 referendum (Cleveland.com)
- Householder corruption trial: Regulator sent resume to utility he was regulating (Ohio Capital Journal)
- FBI testimony wraps in Householder, Borges corruption trial; fundraiser to testify Monday (Cleveland.com)
- Householder trial: $400,000 check in an envelope, a push for a bailout (Columbus Dispatch)
Freezing assets?
The Supreme Court of Ohio will hear Yost’s appeal of a lower court order that would make him release a freeze of certain assets of Sam Randazzo. The former chair of the Public Utilities Commission Ohio is a defendant in the state’s civil lawsuit relating to HB 6.
Randazzo resigned in November 2020, after FBI agents’ early-morning search of his home and FirstEnergy’s disclosure that it paid $4.3 million to a company linked to Randazzo shortly before he became PUCO chair. He has not been named as a defendant in criminal proceedings.
Read more:
New PUCO commissioner
Gov. Mike DeWine has named John Williams to replace Beth Trombold on the Public Utilities Commission of Ohio. Williams, who said he is politically independent, has been at the PUCO for roughly 20 years, most recently as director of transportation. He also spent nearly a decade in the natural gas and telecommunications industries. He still needs to be confirmed by the Ohio Senate.
DeWine chose Williams over Independent Christopher Healey and Democrats Mike Skindell and Jeff Crossman. Skindell, of Lakewood, continues to serve in the Ohio House of Representatives. Crossman, whose term there ended in December, unsuccessfully ran against Yost for attorney general last fall.
The Office of the Ohio Consumers’ Counsel has called for reform in the PUCO nominating process. Among other things, the consumers’ counsel wants all Nominating Council meetings, including candidate interviews, to be public.
Candidates should also provide more complete financial disclosures, consumers’ counsel board chair Michael Watkins wrote in November, noting former PUCO Chair Sam Randazzo’s financial relationship with a FirstEnergy affiliate through one of his companies.
“It’s news to me,” Nominating Council Chair Greg Lashutka said on Feb. 10, noting that he had not seen the letter and the consumers’ counsel representative did not bring it up at last month’s council meeting.
Lashutka also said he did not discuss Nominating Council matters with his daughter-in-law, Megan Lashutka, who was a registered lobbyist for FirstEnergy on HB 6 in 2019, as well as two other energy-related bills. “I don’t even know who her clients are,” he said.
Read more:
Anti-corruption bills?
Ohio Republicans have announced plans for two bills to address corruption in state government. Whether either proposal would have prevented the alleged corruption in the HB 6 case is unclear.
On Jan. 18, Rep. Derek Merrin, who lost a bid to become House speaker last month, described one bill to require more financial disclosures from lobbyists, members of the PUCO and others.
A separate proposal announced by State Auditor Keith Faber on Feb. 2 would require more training and speedy reporting when agency officials suspect a crime. That bill is expected to be introduced in the Ohio Senate.
Read more:
- Ohio auditor backs anti-corruption training, quick reporting (Associated Press)
- Ohio Auditor wants more money, stiffer penalties to fight public corruption (Columbus Dispatch)
- Republicans who backed Merrin for Ohio House speaker introduce ethics law changes (Statehouse News Bureau)
January 2023:
Utility corruption questions continue as HB 6 trial nears
The trial of Larry Householder and Matt Borges is just around the corner.
This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network.
Got a question? Story idea? Send tips or comments to info@eyeonohio.com.
Was this forwarded to you? Click here to subscribe.
By Kathiann M. Kowalski
Court orders last week rejected a motion to dismiss criminal charges against former Ohio House Speaker Larry Householder and confirmed he will stand trial with lobbyist Matt Borges later this month. The case charges them and others with bribery and a conspiracy centered on Ohio’s nuclear and coal bailout law, House Bill 6.
Additional developments in that case and other matters relating to Ohio’s ongoing corruption scandal include:
- U.S. District Judge Timothy Black rejected much of Borges’ and Householder’s efforts to limit factual evidence and expert testimony against them, while granting or reserving judgment on most of the federal government’s evidentiary motions. Jury selection is scheduled to start on Jan. 20.
- FirstEnergy will pay a $3.9 million penalty for hiding information about nearly $94 million in lobbying expenses from federal regulatory auditors.
- A public records response by the Public Utilities Commission of Ohio provides no evidence that either it or the DeWine administration formally initiated any ethics investigation of the commission in the wake of Chair Sam Randazzo’s resignation in late 2020.
- Exhibits used by lawyers to question FirstEnergy’s assistant controller under oath last year were released after months of delay. The materials highlight close dealings between company leadership and Republican operatives.
- Gov. Mike DeWine appointed former AEP lobbyist Anne Vogel to head the Ohio Environmental Protection Agency.
- Last month’s bomb cyclone caused a low water problem at the Davis-Besse plant now owned by Energy Harbor (formerly FirstEnergy Solutions).
Criminal trial ahead
On Jan. 3, U.S. District Judge Timothy Black denied former Ohio House Speaker Larry Householder’s motion to dismiss charges in the federal government’s HB 6 criminal case. A separate order that day refused to separate Householder’s trial from that of alleged co-conspirator Matt Borges, who had been a lobbyist for FirstEnergy Solutions and a former chair of the Ohio Republican Party.
The rulings set the stage for the trial of both defendants to move ahead, with jury selection scheduled to start on Jan. 20. The government has subpoenaed former Republican lawmakers Dave Greenspan, Kyle Koehler and Jay Hottinger to testify as part of its case. Householder allegedly pressured them to support HB 6. Federal prosecutors also have subpoenaed Ohio Attorney General Dave Yost.
In other orders issued last month, the court held the prosecution can use statements by alleged co-conspirator Neil Clark, now deceased, against Householder, as long as the government lays the proper foundation and meets its burden of proof at trial. But Judge Black did say the government shouldn’t use the phrase “Householder’s Enterprise” in opening and closing arguments — although the evidence may show Householder was in charge of a criminal enterprise.
Otherwise, Black wrote that defendants could use various approaches to try to impeach the government’s factual and expert witnesses, and he will rule on specific objections when they come up at trial. But evidence of “good acts” and claims of selective prosecution won’t be allowed. And, the judge warned, “the Court will not permit either side to suggest that party affiliation is an inherent sign of dishonesty, nor to stoke political divisions as a method of persuasion.”
Read more:
- Ohio AG Dave Yost says he has been subpoenaed in massive public corruption case (Columbus Dispatch)
- Ohio corruption case: Winks, nods, texts and more can prove bribery (Columbus Dispatch)
FirstEnergy agrees to federal penalty
FirstEnergy has agreed to pay roughly $3.9 million as a penalty for failing to provide information about lobbying expenses to federal regulatory auditors. The company did not properly account for that spending and other activities, the Federal Energy Regulatory Commission reported in February 2022.
In a similar vein, a January 2022 audit report filed with the Public Utilities Commission of Ohio found that FirstEnergy failed to properly track the use of an unlawful credit support rider. Use of a “money pool” among different subsidiaries made it impossible to determine if funds from the rider were used for HB 6 or other political activities. It’s unclear when or whether any money will be refunded to customers.
Read more:
- FirstEnergy to pay $3.9 million fine for withholding lobbying info from federal regulators (Cleveland.com)
- Federal regulators fine FirstEnergy $3.86 million for omitting House Bill 6 payments from audit (Akron Beacon Journal)
No ethics investigation
A public records response from the Public Utilities Commission of Ohio indicates the DeWine administration did not formally ask the commission to investigate ethics issues at the agency following former Chair Sam Randazzo’s resignation. Nor does it appear that the PUCO’s leadership took such steps on its own.
Randazzo resigned from the PUCO in November 2020, one day after FirstEnergy disclosed a $4.3 million payment to a firm controlled by him shortly before Randazzo took office. In July 2021, FirstEnergy admitted in a deferred prosecution agreement that payment was meant to secure favorable treatment in his official capacity. Randazzo has denied allegations of wrongdoing and has not been charged with a crime.
Public records have also shown that Randazzo played a central role in shaping HB 6 and in directing the PUCO’s limited response to FirstEnergy’s alleged corruption once the HB 6 scandal broke in mid-2020.
The Energy News Network and Eye on Ohio filed a public records request with the PUCO in April 2022 for materials referring or relating to various communications between the DeWine administration or Lt. Governor Jon Husted with leadership at the PUCO in the wake of Randazzo’s departure. The request was revised and narrowed after an initial denial by the PUCO in July 2022. After multiple follow-ups, the PUCO finally responded on Jan. 3, renewing earlier objections and claiming the request was overbroad and vague.
“It is unclear what you mean by ‘deal with any efforts to investigate alleged corruption by Sam Randazzo or anyone else at the PUCO,’” wrote PUCO lawyer Monica Waller. “That being said, as a courtesy, the PUCO attempted to identify any communications between the individuals listed, during the time period specified[,] and Mike DeWine and/or Jon Husted related to Inspector General, Ohio Ethics Commission, and/or internal investigations of Mr. Randazzo. The PUCO did not identify any records responsive to this part of your request.”
The response did not indicate whether there was any effort to investigate potential ethical breaches by others at the PUCO. Similar objections and responses were provided for requests relating to communications with other individuals in DeWine’s administration and for requests asking about communications relating to the timing of various FirstEnergy cases at the PUCO.
The PUCO did perform limited searches for materials and produced roughly 5 megabytes of documents. Many were transmittals or weekly recaps or comments on pending legislation.
Similar public records requests with follow-up to DeWine and Husted’s offices have gone unanswered by them since July.
Read more:
- Former Ohio regulator linked to $4 million payoff directed agency to limit response to FirstEnergy corruption (Eye on Ohio and Energy News Network)
- FirstEnergy faces another audit as advocates and others press for broader investigations (Eye on Ohio and Energy News Network)
Document duel
After months of delay, the Energy News Network, Eye on Ohio and others have obtained documents lawyers used in questioning FirstEnergy assistant controller Tracy Ashton in a civil lawsuit related to HB 6.
Multiple texts and emails show a close working relationship between company leadership and the DeWine-Husted administration. Former FirstEnergy vice president Michael Dowling described Husted as “highly engaged” on HB 6. Dowling also wrote that DeWine’s former legislative affairs director, Dan McCarthy, said the administration and others would “step in” to get HB 6 done.
“Danny said there will be one more shit bill in the Senate and then a fix for all to like,” Dowling wrote on July 12, 2019.
Before joining DeWine’s administration, McCarthy had been a lobbyist for FirstEnergy and president of a pass-through nonprofit organization that funneled millions of dollars into efforts to pass and preserve HB 6.
The materials also include communications about Randazzo going for the chair spot at the PUCO on the day after Dowling and former FirstEnergy CEO Chuck Jones dined with DeWine and Husted in December 2018. Jones’ texts also show DeWine sought FirstEnergy’s input about what they wanted in a PUCO chair.
The delay in getting the materials reflects ongoing efforts by FirstEnergy to limit disclosures about its role in the HB 6 scandal. The company argued in early September that a stay in four cases at the PUCO should block the Office of the Ohio Consumers’ Counsel from producing the records. The consumers’ counsel responded that the PUCO had no jurisdiction over another agency’s response to public records requests.
On Dec. 12, PUCO attorney examiner Megan Addison basically agreed the commission has no say in how another agency responds to public records requests. Yet her order still gave FirstEnergy extra time to ask a court to stop the disclosures.
The same day the consumers’ counsel appealed that order to the full commission, FirstEnergy then told the commission that it would not ask a court to block the documents’ release after all.
Read more:
- FirstEnergy execs promised DeWine administration would ‘step in’ for scandal-tainted HB6, emails show (Cleveland.com)
DeWine picks former AEP exec to head Ohio EPA
DeWine appointed his former policy director Anne Vogel as director of the Ohio Environmental Protection Agency. Vogel’s lobbying for DeWine’s office included work on HB 6. She also was a finalist to succeed Randazzo as PUCO chair after he resigned.
Prior to joining DeWine’s administration, Vogel was managing director of government affairs for American Electric Power. At the Ohio EPA, she will be responsible for enforcing air pollution permits and pollution limits on fossil-fueled power plants and other businesses, as well as laws dealing with water pollution, waste disposal and more.
On Jan. 6 the U.S. EPA proposed lowering the allowable limits for small particulate matter. On Dec. 30, the federal agency also revised its guidance about what counts as “waters of the United States.” Both steps will likely impose stricter limits and higher costs on coal mining, power plants and other industrial operations.
Read more:
- DeWine nominates former energy lobbyist to head Ohio EPA (Scioto Valley Guardian)
Bomb cyclone at Ohio nuclear plant
Strong winds across Lake Erie during the Dec. 23 and 24 bomb cyclone storm temporarily lowered water levels near Energy Harbor’s Davis-Besse nuclear plant in Oak Harbor. The conditions caused a technical violation of conditions for the plant’s ultimate heat sink, whose purpose is to draw heat away from a nuclear reactor.
The Nuclear Regulatory Commission described the issue in a Dec. 30 notice, which noted the temporary nature of the low water levels and backup actions taken by the company.
The incident is significant because federal regulators and advocates have raised questions about the reliability of electricity generation, transmission and distribution in the face of extreme weather. The plant is also one of two that ratepayers would have had to subsidize if portions of House Bill 6 had not been repealed. The law’s coal plant subsidies and its gutting of the state’s clean energy standards remain on the books.
Read more:
- Climate solutions for Great Lakes power grid include better planning, transmission (Energy News Network)
- ‘Bomb cyclone’ storm caused tense moments at Davis-Besse (Toledo Blade)
Help wanted
PUCO Commissioner Beth Trombold has resigned after a decade at the agency, effective Feb. 10. Applications for her seat are due to the PUCO Nominating Council by 5 p.m. Eastern time on Jan. 12.
December 2022:
Householder trial set to begin next month
This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network.
Got a question? Story idea? Send tips or comments to info@eyeonohio.com.
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By Kathiann M. Kowalski
Parties are in the home stretch of trial preparation in the federal government’s criminal case against former Ohio House Speaker Larry Householder and others. The case charges the defendants with bribery and a conspiracy related to House Bill 6, Ohio’s nuclear and coal bailout law. Developments include:
- Motions in the federal government’s criminal case against Householder and lobbyist Matt Borges shed light on the parties’ legal strategies.
- Pretrial fact-finding in shareholder cases could unearth more information from a dark money group linked to FirstEnergy, as well as an industry group that was a longtime client of former regulator Sam Randazzo.
- American Electric Power wants to stop the Office of the Ohio Consumers’ Counsel from getting copies of subpoenas the company received from federal securities regulators.
- The Public Utilities Commission of Ohio produced more documents responsive to federal subpoenas served last year, but it still has not provided all documents sought by the Energy News Network and Eye on Ohio.
Join us in Columbus!
Join Eye on Ohio and the Energy News Network on Jan. 18 for Shining a Light on Dark Money, a Columbus Metropolitan Club forum, featuring Kathiann Kowalski, Ashley Brown, David DeVillers and Jo Ingles. Registration opens soon for this virtual and in-person event. |
Co-conspirator statements
Jury selection in the federal government’s case against former Ohio House Speaker Larry Householder and lobbyist Matt Borges is still scheduled to begin on Jan. 20. Trial could then start as soon as Jan. 23, confirmed spokesperson Jennifer Thornton of the U.S. District Attorney’s Office for the Southern District of Ohio. Three other co-defendants pled guilty but have not yet been sentenced, including the dark money organization Generation Now.
Lobbyist Neil Clark, another co-defendant, was found dead from an apparent suicide last year. Among other things, Householder has asked the court to keep recordings of statements Clark made to undercover federal agents out of evidence.
But statements by a co-conspirator are admissible evidence, and evidence will prove the conspiracy existed, the government responded. The alleged goals included preserving and expanding Householder’s political power through secret payments, plus enriching and benefitting the criminal enterprise, its members and associates.
Read more:
- Public corruption case: Will undercover agents’ recordings be played at Householder trial? (Cincinnati Enquirer)
- Larry Householder wants incriminating evidence excluded from his bribery trial — because it is incriminating! Today in Ohio (Cleveland.com)
FirstEnergy’s admissions
Householder has also asked the court to block the government from introducing FirstEnergy’s deferred prosecution agreement or presenting evidence about the company’s alleged bribery of Sam Randazzo. Neither FirstEnergy nor Randazzo are defendants in the case. Among other things, FirstEnergy has admitted it paid $4.3 million to a company controlled by Randazzo shortly before Gov. Mike DeWine appointed him chair of the Public Utilities Commission of Ohio.
The government responded that it doesn’t currently plan to introduce evidence about payments to Randazzo. Similarly, the government said it doesn’t plan to use the deferred prosecution agreement as an exhibit, although it may be referred to at trial. Presumably, the government will call one or more witnesses from FirstEnergy to testify.
Meanwhile, the government has asked the court to exclude testimony from an expert witness for Householder, who is expected to talk about what is “commonplace” in raising money for politics. However, the case is about an alleged racketeering conspiracy involving bribery, the government argued.
Read more:
- Ex-Ohio House speaker wants state official’s bribe omitted from his corruption trial (Cleveland.com)
The Trump card
The government has also asked the court to bar evidence and arguments about selective prosecution, ignorance of the law and other claims by lobbyist Matt Borges, a former head of the Ohio Republican Party. Borges has alluded to some of those arguments in prior court filings. A Borges website also suggested the criminal charges were brought against him as retaliation for not supporting Donald Trump for president. “I know why they came after me in the first place,” Borges asserted.
Borges’ response to the government’s motion claimed he doesn’t plan to introduce evidence of selective prosecution, “but, even so, he just cannot understand why he was charged.” Also, the response suggested Borges’ lawyers might question the motivations and biases of the government investigators at trial.
“The idea that Trump is somehow behind the federal House Bill 6 investigation in Ohio is bonkers,” said Dave Anderson, policy and communications manager for the Energy and Policy Institute.
Earlier this year, an assistant controller for FirstEnergy indicated that Trump was “Federal Official 1” in the in the company’s deferred prosecution agreement. And FirstEnergy’s deferred prosecution agreement admitted paying $5 million to a dark money group, which now appears to have been pro-Trump.
Read more:
- Matt Borges says House Bill 6 bribery case is a political attack because of opposition to Donald Trump (Cleveland.com)
- FirstEnergy utility gave to pro-Trump dark money group (E&E News)
Consumers’ counsel seeks subpoenas
The Office of the Ohio Consumers’ Counsel has asked the Public Utilities Commission of Ohio to make American Electric Power provide copies of two federal subpoenas relating to HB 6. The Securities and Exchange Commission issued the first subpoena in 2021. The company revealed the existence of the second subpoena in its third-quarter SEC filing this fall.
The consumers’ counsel argued that the subpoenas could lead to the discovery of admissible evidence in a pending case about charges for the two 1950s-era coal plants subsidized by HB 6.
AEP’s Nov. 29 response argued the subpoenas are irrelevant to the agency’s audit case. Alternatively, AEP wants any production to be confidential. That treatment would prevent news outlets, shareholders and others from finding out what the SEC asked for.
The materials could also shed light on AEP’s oversight of its corporate and political donations to Empowering Ohio’s Economy, a dark money group that in turn gave $700,000 to Generation Now. Without HB 6’s coal plant bailouts, AEP, AES Ohio and Duke Energy Ohio remain committed to pay for shares of those plants’ costs until 2040.
Read more:
- AEP Receives Second Subpoena From SEC on Ohio Corruption Probe (Bloomberg Law)
- American Electric Power hit with second subpoena tied to nuclear bailout bill (Columbus Dispatch)
Procrastination on public records
The PUCO waited until Wednesday afternoon before Thanksgiving to produce a fourth batch of documents covered by Department of Justice subpoenas issued a year and a half ago.
The documents largely reinforce the role that Randazzo and his staff played in shaping HB 6 and stalling any repeal. The delayed release came weeks after the materials might have been relevant to Ohio’s elections this fall.
The PUCO still has not produced numerous public records from after Randazzo resigned in November 2020. Those materials relate to communications between PUCO commissioners and staff, on the one hand, and representatives in DeWine’s administration on the other. The governor’s office has not yet provided those public records, either.
Read more:
- Regulators’ foot-dragging on public records hides the full story behind Ohio’s utility corruption scandal (Energy News Network/Eye on Ohio)
In abeyance
The PUCO also has not ruled on a September filing in which the Office of the Ohio Consumers’ Counsel argued that the commission went beyond the six-month stay on discovery sought this summer by U.S. Attorney Kenneth Parker of the Southern District of Ohio. The PUCO’s order is essentially a total freeze until sometime in February.
A Nov. 18 status report by FirstEnergy’s utilities indicates the company continues to view the stay very broadly, halting even the production of documents it was supposed to have turned over months ago.
The consumers’ counsel, Northeast Ohio Public Energy Council and the Ohio Manufacturers’ Association Energy Group have argued that rolling document production should continue, especially since the materials have already been produced in other litigation. The groups also want the PUCO to deal with FirstEnergy’s confidentiality claims, as well as other objections relating to the disclosure of materials that have already been produced.
The longer the PUCO delays acting on the issues raised in the Nov. 18 filings, the more time it will take for the regulatory cases to move ahead once the stay is lifted.
Read more:
- Freeze of regulator’s HB 6 cases could further harm Ohio consumers (Energy News Network/Eye on Ohio)
- FirstEnergy fights to keep records tied to bribery scheme from the public (Ohio Capital Journal)
Shareholder litigation
Cases continue in which shareholders claim they lost money due to FirstEnergy’s actions related to House Bill 6. One Nov. 18 order calls for the dark money group Partners for Progress to diligently search for and produce various non-privileged documents by Dec. 7.
Partners for Progress objected to the order, claiming it has no control over and no duty to produce documents from its former director, Dan McCarthy. The objection by Partners for Progress begs the question of why McCarthy might have kept material that arguably should have stayed with the organization. A November filing said the lead plaintiff in the litigation had so far been unable to serve a separate subpoena on McCarthy.
McCarthy was a FirstEnergy lobbyist before becoming DeWine’s director of legislative affairs. FirstEnergy and its affiliates allegedly gave millions to Partners for Progress, which then funneled funds to Generation Now and other organizations.
The documents would likely shed light on how Partners for Progress allegedly funneled money from FirstEnergy to groups in the alleged Householder conspiracy, along with efforts to keep FirstEnergy’s funding secret.
A separate court order deals with Industrial Energy Users–Ohio, which was a longtime client of Randazzo’s before DeWine appointed him to the PUCO. The court told IEU–Ohio and Randazzo’s former firm to do a more thorough search and produce documents sought by FirstEnergy’s former CEO, Chuck Jones, who is a defendant in the case.
The PUCO said last year that it would expand one of the FirstEnergy regulatory cases to investigate a purported side agreement that allegedly led Randazzo to drop IEU–Ohio’s opposition to an earlier bailout for FirstEnergy. The investigation hasn’t moved forward, however. Instead, the PUCO split off that part of the case and put it on hold.
Read more:
- Utility and fossil fuel influence in Ohio goes beyond passage of bailout (Energy News Network/Eye on Ohio)
Ohio’s civil court case
The Supreme Court of Ohio has not yet said if it will rule on the Ohio attorney general’s effort to keep millions of dollars’ worth Sam Randazzo’s assets frozen until the state’s civil corruption case concludes.
FirstEnergy disclosed in November 2020 that it had paid $4.3 million to one of his companies shortly before Gov. Mike DeWine appointed him chair of the PUCO. In July 2021, FirstEnergy admitted the money was meant as a bribe. Randazzo has denied liability.
The rest of the state’s civil corruption case remains frozen until after the trial of Householder and Borges. That stay could potentially be extended further if the federal government brings criminal charges against Randazzo or former FirstEnergy executives Chuck Jones and Michael Dowling, who are also defendants in the civil case, Ohio Attorney General Dave Yost said at a legal education seminar last month.
The U.S. attorney’s office hasn’t said when such charges, if any, might be filed against individuals.
Read more:
- Ohio Attorney General Dave Yost asks Ohio Supreme Court to keep former utility regulator’s assets frozen (Cleveland.com)
Correction: A previous version of this newsletter, and the version that we delivered to inboxes, incorrectly listed Trump as “Federal Official 1” in the complaint, not the deferred prosecution agreement. We regret this error.
October 2022:
Will HB 6 impact the 2022 election?
Full information about Ohio’s HB 6 scandal still isn’t out as early voting gets underway.
This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network.
Got a question? Story idea? Send tips or comments to info@eyeonohio.com.
Was this forwarded to you? Click here to subscribe.
By Kathiann M. Kowalski
Concerns about corruption factor into multiple races as early voting is underway in Ohio. Other developments in the saga surrounding House Bill 6, Ohio’s nuclear and coal bailout law, include:
- Ohio’s highest court may soon rule on whether the Office of the Ohio Attorney General can continue to restrict assets of former utility regulator Sam Randazzo until a civil corruption case against him and others wraps up.
- The Public Utilities Commission of Ohio continues to delay action in coal plant bailout and FirstEnergy cases, as well as public records requests.
- Disputes continue in shareholder cases related to FirstEnergy’s alleged actions on HB 6.
Voting begins
Early voting is underway in Ohio, where corruption remains an issue in various races.
Incumbent Republican Attorney General Dave Yost has defended his record in the civil litigation on HB 6. Jeff Crossman, the Democratic challenger, said he would take a more aggressive stance, saying that Yost hasn’t issued subpoenas or done a thorough investigation of possible charges.
In the governor’s race, Republican incumbent Mike DeWine has so far refused to appear in debates or candidate forums with Democratic challenger Nan Whaley. She now calls for firing the PUCO commissioners and making other reforms.
Various legislators who voted for HB 6 are also up for reelection. Delays in ongoing federal and state proceedings have kept full information about the scandal from the public. And while a federal court imposed the current district maps because of timing issues, the Ohio Supreme Court has held they were unconstitutional gerrymanders, which reduces accountability to voters.
“Columbus has been filled with this culture of corruption for longer than I’ve been alive,” said state House candidate Sam Lawrence, a Democrat from Oxford, during an Oct. 13 debate. His opponent, incumbent Republican Sara Carruthers of Hamilton, wasn’t among the “Team Householder” group known to have gotten money from him in 2018. But she voted for HB 6 in 2019 and against ousting former House Speaker Larry Householder in 2021.
Judicial candidates generally don’t take a position on policy matters that could come before them in court. Yet winners of the three races for Ohio Supreme Court seats may well rule on cases involving HB 6 and other energy issues. Republican incumbents Patrick DeWine and Patrick Fischer are challenged by Democrats Marilyn Zayas and Terri Jamison, while sitting justices Sharon Kennedy, a Republican, and Jennifer Brunner, a Democrat, vie for Chief Justice.
Read more:
- Ohio Election 2022: Dave Yost and Jeff Crossman run for Ohio Attorney General (WYSO)
- Democrat Nan Whaley: Much of agenda as governor would have to wait until another redistricting plan passes (Cleveland.com)
- Six key energy questions that winners of Ohio’s high court races will decide (Energy News Network/Eye on Ohio)
- 47th House District: Incumbent Sara Carruthers faces Dem challenger Sam Lawrence (Journal-News)
Campaign contributions continue
As of Oct. 21, reports for FirstEnergy’s political action committee to the Federal Election Commission and Secretary of State did not show spending to support Ohio candidates this year. AEP’s political action committee reported donations to multiple Ohio candidates in September, including House Majority Floor Leader Bill Seitz, who was at the forefront of key points in HB 6.
AEP and its political action committee also gave $350,000 and Duke Energy’s committee gave $180,000 to the Republican Governors Association during this election cycle, tracking by the Energy and Policy Institute shows. Dominion gave $510,000 through Sept. 30.
The RGA’s campaign arm spent roughly $570,000 through August on an ad campaign attacking Whaley. Earlier this year, the RGA gave more than $2 million to groups that ran ads supporting DeWine.
Read more:
- Big Ohio donors to GOP group behind Nan Whaley attack ad include DeWine appointees, state contractors (Cleveland.com)
Randazzo’s asset redux?
The Supreme Court of Ohio could soon rule on the Ohio attorney general’s effort to keep millions of dollars’ worth of Sam Randazzo’s assets frozen. FirstEnergy disclosed in November 2020 that it had paid $4.3 million to one of Randazzo’s companies shortly before DeWine appointed him chair of the PUCO. In July 2021, FirstEnergy admitted the money was meant as a bribe.
The attorney general then added Randazzo as a defendant to its civil racketeering case and got the trial court’s go-ahead to freeze some of his assets as security for any judgment in the case. Although the state stopped short of seizing cars, including a pink 2002 Porsche, it restricted various financial accounts. Affidavits related to real estate also were filed, said spokesperson Bethany McCorkle at the attorney general’s office.
Randazzo has denied liability and appealed the rulings allowing the attachments. The appellate court decided the trial court had erred in finding that the state would suffer “irreparable injury” if it couldn’t restrict Randazzo’s property. If the Court of Appeals’ decision is not stayed, the restrictions would be released, according to attorney Roger Sugarman, who represents Randazzo.
Yost’s filings note that Randazzo has already transferred a property he owns to his son for free and moved $3 million to his law firms.
On Oct. 17, the appellate court refused to issue a stay. But the next day, the Ohio attorney general’s office filed a notice of appeal with the Ohio Supreme Court and asked it to keep the restrictions in place until the case is decided.
If the restrictions are lifted, “Randazzo will no doubt continue to transfer property (rightfully owed to Ohioans for his part in the conspiracy) beyond the reach of the State and outside the jurisdiction of this Court,” the attorney general’s office wrote in an Oct. 18 filing.
The Ohio Supreme Court has discretion over whether to accept the case. It’s unclear whether any of the justices will recuse themselves, or step back from the case. In the past, Justices Pat DeWine, Sharon Kennedy and Pat Fischer have received campaign donations from FirstEnergy, according to data from Open Secrets’ FollowTheMoney.org.
Read more:
- Ohio Attorney General Dave Yost asks Ohio Supreme Court to keep former utility regulator’s assets frozen (Cleveland.com)
- Ex-PUCO Chair Sam Randazzo scores legal win as appeals court overturns order to seize $8 million in assets (Cleveland.com)
- Judge orders unfreezing of assets for Sam Randazzo, former Ohio regulator accused of taking bribe in FirstEnergy scandal (WKYC)
Coal plant cases drag on
Ratepayers could be owed millions of dollars if regulators or the Ohio Supreme Court hold that utilities improperly passed through various costs for two 1950s-era coal plants. The PUCO let some utilities collect the charges before House Bill 6 took effect. Audits would then see if costs were prudently incurred and in ratepayers’ interests. HB 6 wrote the subsidies into law through 2030.
Although some charges date back to 2018, Ohio regulators have taken no action in months in cases dealing with the Ohio Valley Electric Corporation plants in Ohio and Indiana. Ratepayers are getting tiny credits right now because of past overpayments. But the coal plant bailouts have had a net cost to customers of more than $173 million so far. Critics expect costs for the plants will rise in the future.
The PUCO has paused four FirstEnergy cases dealing with HB 6. Cases dealing with the OVEC plants are not bound by that stay.
Read more:
- As Ohio regulators sit on coal plant subsidy cases, costs could rack up for ratepayers (Energy News Network/Eye on Ohio)
- Coal plant subsidies from pay-for-play legislation have cost Ohioans $173 million (Ohio Capital Journal)
Consumers’ counsel seeks thaw from freeze
The Office of the Ohio Consumers’ Counsel has asked the PUCO to narrow the stay in the FirstEnergy cases. The total freeze goes beyond a federal prosecutor’s request to hold off on questioning witnesses under oath, it argued.
The consumers’ counsel also struck back against FirstEnergy’s gambit to block it from producing documents in response to public records requests. Among other things, the PUCO lacks jurisdiction over how the consumers’ counsel handles public records requests, the consumer protection agency argued. Also, it argued, a court would be the proper forum for any disputes under the relevant confidentiality agreement between the agency and FirstEnergy, not the PUCO.
FirstEnergy also hasn’t met its burden of showing the documents are confidential, the consumers’ counsel argued. The materials, sought by Energy News Network and Eye on Ohio, were exhibits when FirstEnergy’s assistant controller Tracy Ashton was questioned under oath in shareholder lawsuits.
FirstEnergy did agree to the release of three documents, including a 2019 text exchange between former FirstEnergy CEO Chuck Jones and Randazzo, congratulating him on his appointment to the PUCO.
Read more:
- FirstEnergy fights to keep records tied to bribery scheme from the public (Ohio Capital Journal)
Still seeking documents
The PUCO released another batch of documents in late September, which had been among those subpoenaed by federal authorities last year. The materials include more documents showing that Randazzo and others took an active role in defending HB 6 against its repeal following the arrest of former House Speaker Larry Householder in July 2020.
Among other things, Randazzo had staff compile data for his testimony to lawmakers in September 2020, when he stressed complications involved in a proposed repeal of HB 6. The data presented only the costs of the energy efficiency standards, and not their overall economic and health benefits, or long-term environmental impacts. And Randazzo urged staff to provide only aggregate numbers, instead of utility-specific data that would show how much companies profited from “shared savings” under the rules.
Shortly afterward, Rep. Bill Seitz praised Randazzo’s remarks as “excellent, excellent testimony.”
“The PUCO has been much more forthright under Chairman Randazzo than under previous chairmen,” Seitz added. “Because the previous governor [John Kasich] muzzled the PUCO and would not let the PUCO provide the kind of input that we used to get way back in the day.”
The PUCO still has not provided all the outstanding documents sought in public records requests, including materials sought by Energy News Network and Eye on Ohio for the period after Randazzo left the PUCO. The Office of the Ohio Attorney General has retained Seitz’s law firm, Dinsmore, to work with the PUCO on that and other document requests.
Read more:
- Special counsel hired to help Ohio regulators with document requests has multiple ties to HB 6 push (Eye on Ohio/Energy News Network)
No ‘free pass’
The departure of FirstEnergy CEO Steven Strah at the completion of an internal review shows the corporate governance reforms are working, said an Oct. 11 filing by shareholders settling derivative claims related to HB 6. Derivative claims are brought on behalf of a corporation and seek to recover for harm allegedly done by officers and directors.
An objecting shareholder argued last month that the settlement basically gave Strah a “free pass,” by letting him retire, keep past incentives, and not have to pay damages to FirstEnergy.
FirstEnergy hasn’t made the results of the internal review public and may face questions about it during its Oct. 26 earnings call, said Dave Anderson, policy and communications manager for the Energy and Policy Institute.
Meanwhile, litigation continues in cases brought by shareholders who incurred losses on FirstEnergy stock sales. Among other things, former FirstEnergy CEO Chuck Jones is seeking documents from Randazzo’s old law firm dealing with Industrial Energy Users-Ohio, for which he served as general counsel.
Despite ordering an audit last December to look into a 2015 settlement where IEU-Ohio withdrew opposition to FirstEnergy bailouts, the PUCO renewed the organization’s power aggregator license on Oct. 7. The case docket does not reflect any questioning by the PUCO about the relationships over the years between the organization, Randazzo and FirstEnergy.
Read more:
- House Bill 6: Meet the lesser-known FirstEnergy officials accused of ties to the largest bribery scandal in Ohio history (Cleveland.com)
Eye on Utilities, September 2022
Eye on Utilities: All hush, hush
Stay halts most new disclosures from the PUCO’s FirstEnergy cases before the fall elections.
This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network.
Got a question? Story idea? Send tips or comments to info@eyeonohio.com.
Was this forwarded to you? Click here to subscribe.
By Kathiann M. Kowalski
FirstEnergy’s CEO has stepped down just as the company announced the completion of an internal management audit, and four regulatory cases at the Public Utilities Commission of Ohio have been stayed until next year. Other developments in the saga surrounding House Bill 6, Ohio’s nuclear and coal bailout law, include:
- FirstEnergy wants the PUCO to block the Office of the Ohio Consumers’ Counsel from releasing documents the consumer advocate got through discovery before a stay took effect.
- The deposition of FirstEnergy’s assistant controller details who was who in the federal government’s July 2020 complaint and sheds light on the role of a Cleveland entrepreneur.
- The law firm retained by Ohio Attorney General Dave Yost to work with the Public Utilities Commission on responses to federal subpoenas and public records requests has multiple ties to House Bill 6.
- A federal court order has approved FirstEnergy’s settlement of shareholder derivative claims, but it’s unclear how that will affect another case where the judge wants more fact-finding before approving the settlement.
PUCO halts four FirstEnergy cases
On Aug. 24, the Public Utilities Commission of Ohio ordered a six-month stay in four FirstEnergy regulatory cases. The stays ensure that little new information will come out of the regulatory cases until after the gubernatorial elections this fall, where the HB 6 corruption scandal is an issue in the contest between incumbent Gov. Mike DeWine and challenger Nan Whaley.
The stay also prevents additional fact-finding interviews called depositions, where the Office of the Ohio Consumers’ Counsel and others sought to ask questions under oath to current and former executives of FirstEnergy. Texts between FirstEnergy executives suggest DeWine and Lt. Gov. Jon Husted played more active roles on HB 6 and on Sam Randazzo’s appointment as PUCO chair than they previously admitted.
U.S. Attorney Kenneth Parker of the Southern District of Ohio asked the PUCO to impose the stay last month, claiming that further action might interfere with “an ongoing investigation into corruption relating to Ohio House Bill 6 and action through the Public Utilities Commission of Ohio.”
Asking other courts or agencies to hold up on cases “is not unusual where there’s a pending criminal investigation,” said former U.S. Attorney David DeVillers. The government may also have additional targets in sight, although he could not comment on any names.
Yet Parker’s request came shortly after PUCO hearing examiners let FirstEnergy halt the deposition of a former ethics and compliance officer for the company. Notably, the Department of Justice has not sought to halt depositions in federal court cases where shareholders seek to recover damages for alleged stock losses.
An Aug. 19 order in one of those cases granted a motion by former FirstEnergy executives Chuck Jones and Michael Dowling to take another deposition of the company, noting that a former assistant controller, Tracy Ashton, could not answer many questions central to the case.
Read more:
- Freeze of regulator’s HB 6 cases could further harm Ohio consumers (Energy News Network/Eye on Ohio)
- PUCO agrees to postpone FirstEnergy investigations (The Press)
- Utility regulators freeze investigations into FirstEnergy bribes (Ohio Capital Journal)
- Ohio Lt. Gov. Jon Husted pushed to make tainted House Bill 6 nuclear bailout even larger (Cleveland.com)
FirstEnergy wants an additional gag order
FirstEnergy has asked the PUCO to also block the Office of the Ohio Consumers’ Counsel from producing various documents in response to public records requests for materials the consumer advocate obtained in the cases.
After months of delay, FirstEnergy asserted blanket confidentiality claims for roughly 470,000 documents produced in securities litigation. A protective order in the PUCO cases requires the consumers’ counsel to inform FirstEnergy each time it wishes to disclose any document. The consumers’ counsel has yet to file its response to FirstEnergy’s Sept. 7 motion.
As a practical matter, the arrangement built further delay into the process. And if the company’s motion is granted, it could block the release of materials that really are not confidential and have otherwise already been disclosed.
Prior to the PUCO’s Aug. 24 stay of its regulatory cases, for example, the Energy News Network and Eye on Ohio asked the consumers’ counsel for digital copies of various exhibits to a deposition of Tracy Ashton, FirstEnergy’s assistant controller, which was filed with the PUCO on Aug. 19.
Although Ashton could not answer many questions put to her, she nonetheless shed light on the identities of various actors in the HB 6 saga. Among other things, she indicated that Cleveland entrepreneur Tony George helped set up a meeting between FirstEnergy and Householder and had other interactions with FirstEnergy executives. A Feb. 4 audit released by federal regulators found that some charges for his work had likely been passed on to ratepayers. An audit in one of the stayed PUCO cases reached a similar conclusion last year.
Read more:
- FirstEnergy pumped $1M into backing DeWine, records show (Dayton Daily News)
- Cleveland businessman Tony George was go-between for FirstEnergy, ex-House Speaker Larry Householder over nuclear bailout (Cleveland.com)
A small world after all?
Dinsmore & Shohl, a law firm retained by Ohio Attorney General Dave Yost to work with the PUCO on responses to federal subpoenas and public records requests, has multiple ties to the push for HB 6.
Ohio Rep. Bill Seitz, who pushed for HB 6 and later defended former House Speaker Larry Householder from expulsion, is “of counsel” at the firm. Former partner Eric Lycan served as an officer of the dark money group Generation Now and other nonprofits that played roles in the scandal. And Matthew Davis at Dinsmore’s lobbying affiliate did work on behalf of FirstEnergy Solutions (now Energy Harbor).
The Dinsmore firm was selected because it was a large firm with criminal law expertise that didn’t practice before the PUCO, said spokesperson Bethany McCorkle at the Ohio attorney general’s office.
Even if everything is entirely proper, the connections may show “just how insular the power community is in the state,” said Neil Waggoner, senior campaign representative for the Sierra Club’s Beyond Coal campaign in Ohio.
The Ohio Attorney General also hired Kegler Brown Hill & Ritter in 2020 to represent the PUCO in a case brought by the city of Cincinnati to block the HB 6 nuclear charges, as well as another matter. Roger Sugarman was a partner with Kegler Brown at that time but left the firm in December 2020.
Since August 2021, Sugarman has represented Randazzo in the state’s civil racketeering case. Randazzo and former FirstEnergy executives Chuck Jones and Michael Dowling were added as defendants at that time. Sugarman said his representation of Randazzo is proper because Cincinnati’s constitutional claim against the HB 6 charges was not “substantially related” to the Ohio attorney general’s racketeering claims relating to HB 6.
The Franklin County Court of Common Pleas consolidated the state court cases on Dec. 14, 2020. And Cincinnati and Columbus did not move to dismiss their claims until December 2021. Except for the Ohio attorney general’s efforts to freeze assets and a related appeal, the state court cases have otherwise been largely stayed since February 2021.
Read more:
- Special counsel hired to help Ohio regulators with document requests has multiple ties to HB 6 push (Eye on Ohio/Energy News Network)
An abrupt departure
FirstEnergy CEO Steven Strah has retired from the company and its board. The same day FirstEnergy announced the news, it disclosed that the company had completed an internal management review required under a settlement agreement for shareholder derivative claims.
Strah announced last fall that as far as he was concerned, the HB 6 scandal was in the company’s “rearview mirror,” and FirstEnergy was moving ahead “to rebuild trust and confidence.” The settlement that led to the management review was apparently part of that effort.
FirstEnergy’s Sept. 15 filing with the Securities and Exchange Commission did not say whether the internal management review found any wrongdoing by Strah.
Emails made public last month before the PUCO’s regulatory stay indicate that Strah was involved in discussions on HB 6 and had supported “under the radar” measures to include terms in the law that would make the company’s Ohio utilities recession-proof. At the time, a FirstEnergy spokesperson had said Strah and other current employees were not involved in improper activities relating to HB 6.
Read more:
- FirstEnergy CEO Steve Strah abruptly retires. Search for outsider begins (Columbus Dispatch)
- FirstEnergy CEO Steven Strah emailed about “under the radar” House Bill 6 provision that cost Ohio ratepayers millions of dollars (Energy and Policy Institute)
Settlement approved, but expect an appeal
FirstEnergy’s management review was part of a $180 million settlement package announced last winter, which seeks to resolve shareholder derivative claims in multiple courts relating to the HB 6 scandal. A shareholder derivative case seeks to make a corporation whole for losses incurred from alleged wrongful conduct by its officers and directors.
On Aug. 23, U.S. District Court Judge Algenon Marbley of the Southern District of Ohio approved the settlement package for the cases consolidated in his court. In his view, the monetary award got most of the available insurance money, “while preserving the possibility of salary clawbacks.” He commended the settlement’s governance reforms, noted the complexity and uncertainty of continued litigation, and stated that the public had other “means of truth-seeking” about the alleged corruption.
Expect FirstEnergy and some other parties to argue that the approval in Marbley’s courtroom resolves all or most claims in a case before U.S. District Court Judge John Adams in the Northern District of Ohio. Adams recently appointed new plaintiffs’ lawyers to question witnesses under oath and do other fact-finding before he would make a ruling on the settlement.
One or both cases will likely be appealed.
Read more:
- FirstEnergy $180 million derivative deal wins final approval. Is it really over? (Reuters)
- Boies Schiller tripped up in apparent conflict in FirstEnergy derivative suit (Reuters)
- FirstEnergy Bribery-Related Derivative Suit Settlement Receives Final Approval; What Happens Next? (D&O Diary)
Eye on Utilities, August 2022
Finger pointing and a tug-of-war
Filing raises new questions about when FirstEnergy executives knew about $4.3 million payment.
This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network.
Got a question? Story idea? Send tips or comments to info@eyeonohio.com.
Was this forwarded to you? Click here to subscribe.
By Kathiann M. Kowalski
FirstEnergy continues its efforts to put the House Bill 6 scandal in the “rearview mirror,” while the DeWine/Husted re-election campaign remains mostly mum. Yet new developments in the saga surrounding HB 6, Ohio’s nuclear and coal bailout law, include:
Former executives fingered as having paid bribes have suggested other officers were briefed about a $4.3 million payment to a company linked to Sam Randazzo, the former chair of the Public Utilities Commission of Ohio, on or about Dec. 19, 2018. The day before, those executives texted about payment details with Randazzo and dined with Gov. Mike DeWine and Lt. Gov. Jon Husted.
Whether FirstEnergy settles several shareholder derivative cases may depend on the outcome of a tug-of-war between two federal district courts. Meanwhile, a settlement has been announced for class actions brought on behalf of ratepayers.
Subpoenas and litigation seek more documents from FirstEnergy and DeWine’s office relating to HB 6.
After long delays, the Public Utilities Commission of Ohio produced more documents subpoenaed by federal authorities last year, but it still hasn’t turned over all materials sought in public records requests.
PUCO hearing examiners shut down questioning of FirstEnergy’s former ethics officer in a regulatory case under Ohio law dealing with corporate separation between utilities and their parents and affiliates.
Who knew what, and when?
FirstEnergy fingered former Chair and CEO Chuck Jones and former Vice President Michael Dowling earlier this year when U.S. District Court Judge John Adams demanded to know who paid the bribes. Now a July 22 filing in another case suggests Jones briefed certain other top FirstEnergy executives on the $4.3 million paid to a company linked to Sam Randazzo shortly before Ohio Gov. Mike DeWine appointed Randazzo to chair the Public Utilities Commission.
The filing describes the briefing as taking place “on or about December 19, 2018.” Texts among Randazzo, Jones and Dowling on the night before that date reflected a meeting among at least those three, spelled out the payment amount, and referenced prior billing under a consulting agreement with Randazzo’s company whose purpose the company later questioned in late 2020. Jones and Dowling also dined with DeWine and Lt. Gov. Jon Husted at the Athletic Club in Columbus on Dec. 18, 2018.
If other executives were briefed in December 2018, it raises questions about why the company waited until October 2020 to disclose the payments in a filing with the Securities and Exchange Commission. It also raises questions about whether Jones briefed those executives on the meeting with DeWine and Husted the day before.
FirstEnergy has also tried to distance current company personnel from the HB 6 corruption scandal. But an Aug. 3 filing by Jones and Dowling suggests the company could readily find out more beyond facts already stipulated last year by talking with other current and former employees. Portions of that filing are blacked out, likely as a result of a protective order in the case.
Emails from FirstEnergy communications personnel said they could not comment on pending litigation, although one also wrote that neither current CEO Steven Strah nor current Vice President for Utilities Sam Belcher was aware of or approved the payment to Randazzo in 2018.
Last December, Husted spokesperson Hayley Carducci declined to say what was discussed at the Dec. 18 meal Husted attended with DeWine, Jones and Dowling. “The Governor has addressed this previously and the information is in [a Dayton Daily News article],” she wrote via email. But DeWine declined an interview for that article, and quotes by his spokesperson Dan Tierney also don’t spell out the substance of discussions at the meal.
Read more:
FirstEnergy’s executive council knew of Randazzo payout long before FBI closed in (Energy and Policy Institute)
FirstEnergy pumped $1M into backing DeWine, records show (Dayton Daily News)
Tug of war
FirstEnergy’s efforts to resolve shareholder derivative cases could soon be resolved — or not. Those cases seek to recover for damage done to the corporation for alleged wrongdoing by officers and directors. The challenge is that lawyers filed multiple cases in different courts.
U.S. District Judge Algenon Marbley in the U.S. District Court for the Southern District of Ohio gave a preliminary thumbs up to a $180 million deal to settle three cases in the spring. However, he didn’t halt the other cases pending in different courts.
Meanwhile, Judge Adams for the Northern District of Ohio said he wanted more discovery before ruling on the fairness of the discovery. In particular, he wants lawyers to question some witnesses under oath in proceedings called depositions. Last year Adams refused to transfer that case from his courtroom to Judge Marbley’s. The case before Adams was filed earlier, and FirstEnergy is headquartered in the Northern District of Ohio.
Plaintiffs and FirstEnergy tried to get around Adams by dismissing the case, but he blocked that gambit on July 5. Granting the motion would have let them evade the court’s jurisdiction after invoking it in the first place. In a July 13 ruling, Adams also said he would appoint new plaintiffs’ lawyers. On July 20, he directed five law firms who had shown interest in the job to describe their approaches to discovery in the case.
Meanwhile, a July 7 filing in Marbley’s case asked him to give final approval to the settlement there. Marbley held a hearing on the question on Aug. 4. Marbley said he would follow up with a written opinion, which is expected shortly.
Resolution of the cases may affect how much more detail the public will learn about the alleged corruption related to HB 6. The cases also raise questions about how much oversight judges can practically exercise over settlements when plaintiffs file cases in multiple courts.
Read more:
Judge boots lawyers from FirstEnergy bribery suit for failure to ‘diligently prosecute’ (Ohio Capital Journal)
FirstEnergy settlement be damned, judge orders new plaintiffs’ lawyers (Reuters)
Another summer settlement
Meanwhile, FirstEnergy and Energy Harbor have agreed to settle class action cases brought on behalf of electricity ratepayers who have been paying more as a result of HB 6. Under the deal announced on July 29, Energy Harbor will pay $11.5 million, with another $37.5 million coming from FirstEnergy.
The combined total of $49 million is less than the nearly $60 million FirstEnergy and its affiliates paid in the corruption scandal. It’s also less than one-fifth of the nearly $275 million Ohioans have paid so far for HB 6’s coal plant subsidies. Among Ohio’s regulated utilities, FirstEnergy subsidiaries serve just over 30% of the ratepayers.
FirstEnergy had tried to halt one of the cases last fall by arguing that HB 6 somehow blocked claims for corruption, despite the company’s alleged actions in passing the law and blocking a referendum on it.
FirstEnergy still faces several lawsuits brought on behalf of groups of shareholders whose holdings in the company fell in value and resulted in losses due to alleged wrongdoing by the company’s officers, directors and others.
Read more:
First Energy, Energy Harbor electricity rates $49M class action settlement (Top Class Actions)
FirstEnergy says Ohio law at center of corruption probe protects it from ratepayer lawsuits (Eye on Ohio/Energy News Network)
Subpoenas and more
On July 11, the SEC issued additional subpoenas to FirstEnergy. FirstEnergy “believes that it is probable that it will incur a loss in connection with the resolution of the SEC investigation,” but cannot yet estimate how much, the company said in a July 26 quarterly report.
Meanwhile, ongoing litigation between the Ohio Democratic Party and DeWine’s office seeks full copies of documents relating to the governor’s calendars, appointments and travel from before HB 6 and later. Partial materials produced by the governor’s office in response to public records requests had large parts blacked out. And many pages were unrelated attachments.
On July 21, Ohio Attorney General Dave Yost, representing DeWine’s office, opposed a motion to make it preserve unredacted copies of the materials, saying an order was unnecessary. However, current retention policies for calendars and schedules “are unclear and lack significant penalties,” the Ohio Democratic Party said in its July 7 motion.
The HB 6 corruption scandal is an issue in the fall election campaigns for governor, attorney general, and other races. Delays in getting all responsive materials could keep voters from having full information before November.
Read more:
Democrats: Make DeWine keep all HB 6 info in FirstEnergy scandal (Dayton Daily News)
FirstEnergy receives new subpoena from federal regulators in continued fallout from House Bill 6 corruption scandal (Cleveland.com)
PUCO drags out document production
Five months after producing its first group of materials turned over to federal authorities in February, the PUCO provided a second batch of documents to public records requesters on July 29.
The materials shed light on how Randazzo, DeWine and others acted leading up to and in the wake of HB 6. Among other things, Randazzo assured DeWine the former FirstEnergy nuclear plants needed the law’s $1.1 billion bailout, which was later repealed. They also reflect Randazzo meeting with Energy Harbor and trying to persuade lawmakers about “unwinding challenges” if HB 6 were to be fully repealed.
However, the PUCO has not yet produced all documents that were subpoenaed by federal authorities last year. Nor would an agency spokesperson give a yes or no answer to whether it had completed its response to those subpoenas.
The PUCO also has not yet provided materials requested by Energy News Network and Eye on Ohio about various communications by individuals at the agency and others for the period after Randazzo’s November 2020 resignation. Those materials could shed light on whether the PUCO has been asked to thoroughly investigate and address any alleged corruption, whether there have been communications about the timing or other issues in FirstEnergy cases, and more.
FirstEnergy admitted last year that a $4.3 million payment to a company linked to Randazzo was made with the expectation of favorable treatment in his official capacity. The PUCO has largely stayed with the piecemeal, limited approach orchestrated by Randazzo before he left. And various people who worked with Randazzo on HB 6 and its aftermath remain at the PUCO.
Read more:
Regulators’ foot-dragging on public records hides the full story behind Ohio’s utility corruption scandal (Eye on Ohio/Energy News Network)
Subpoenaed state records detail former top regulator’s work to protect nuclear bailout (Cleveland.com)
FBI subpoenaed records detail ex-PUCO chairman Sam Randazzo’s influence on energy policy (Columbus Dispatch)
Utility regulator accused of taking a bribe helped write bill targeting watchdog (Ohio Capital Journal)
Questioning blocked
PUCO hearing examiners, who act in judge-like roles, shut down questioning of FirstEnergy’s former ethics officer on July 21. The case deals with whether FirstEnergy violated Ohio laws requiring corporate separation of utilities’ business from their parents and affiliates. The Office of the Ohio Consumers’ Counsel and others appealed that ruling to the full commission. FirstEnergy’s utilities and the former ethics officer, Ebony Yeboah-Amankwah, opposed that appeal on Aug. 1.
Earlier attempts to avoid the ethics officer’s appearance to answer questions under oath had failed. Then FirstEnergy’s lawyers told hearing examiners they had contacted a federal prosecutor without other parties present and had gotten their view that questions improperly overlapped with matters being investigated in ongoing criminal proceedings. Lawyers for challengers disputed that, saying FirstEnergy had objected even to basic background questions.
A FirstEnergy lawyer had told the hearing examiners the issue was “just a matter of timing.” However, while FirstEnergy is subject to a deferred prosecution agreement, federal authorities have not yet charged Randazzo or former FirstEnergy officers with crimes. And former Ohio House Speaker Larry Householder’s trial isn’t scheduled until next year, after the 2022 elections.
Unless reversed, the ruling could hinder challengers’ ability to prepare for the evidentiary hearing in the PUCO case. Additionally, the ruling “may block the public’s right to know how the former PUCO chair [Randazzo] may have disadvantaged Ohio consumers in favor of the FirstEnergy Utilities and their affiliates,” the Ohio consumers’ counsel and other challengers argued in their July 26 filing.
On Aug. 4, the Office of the Ohio Consumers’ Counsel also filed motions for additional subpoenas for current and former FirstEnergy executives, including Dowling and current CEO Strah.
Meanwhile, the PUCO still has not granted OCC’s July 7 motion for a subpoena for Jones. The delay is unusual because the issuance of deposition subpoenas is basically a ministerial function, said former PUCO Commissioner Ashley Brown.
Read more:
Regulators block deposition of FirstEnergy’s former ethics chief (Ohio Capital Journal)
Eye on Utilities, June 2022
Ohio utilities and policymakers facing heat
A FirstEnergy end run may help it score approval of a settlement agreement.
This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network.
Got a question? Story idea? Send tips or comments to info@eyeonohio.com.
Was this forwarded to you? Click here to subscribe.
By Kathiann M. Kowalski
New developments in the saga surrounding House Bill 6, Ohio’s nuclear and coal bailout law, include:
- Massive outages during a June heat wave trigger criticism of lawmakers, regulators and utilities in the wake of HB 6.
- FirstEnergy and other parties use a dismissal motion to get around a judge’s push for fact-finding before he approves a settlement agreement.
- FirstEnergy’s proposal to combine three Ohio utilities sparks concerns about excess profits and transparency.
- A former chair of the Public Utilities Commission of Ohio texted he knew a charge was likely unlawful but FirstEnergy would keep the money anyway.
- The Cleveland City Council has called for FirstEnergy to relinquish naming rights for the Cleveland Browns stadium.
- A pending bill would let the Ohio consumers’ counsel nominate one PUCO commissioner.
Hot stuff
House Bill 6 didn’t directly cause Ohio’s massive power outages in mid-June. Many trees fell during a major storm. And a heat wave greatly increased electricity demand and strained an aging grid, leading to intentional utility outages to minimize equipment damage.
Such extreme weather is more likely as climate change continues. And the gutting of Ohio’s clean energy standards and subsidies to old coal plants thwarted steps utilities and policymakers should have taken to make the grid more resilient in the face of climate change, critics said.
“Mike DeWine had the opportunity to invest in modernizing our utility systems and diversifying our energy generation in Ohio,” said Spencer Dirrig, political director for the Conservation Ohio PAC. “Instead, Gov. DeWine chose to side with the corrupt utilities bankrolling his political campaigns, signing the worst energy bill in the nation and subjecting Ohioans to higher costs and power services. Responsibility for this crisis lands squarely at the governor’s feet.”
“The obvious link is the elimination of energy efficiency programs,” said Ashley Brown, a former member of the Public Utilities Commission of Ohio. Steps to reduce peak demand, use of time-of-day pricing and other demand-response programs could have let utilities handle the situation much better.
Instead, utilities’ incentive under HB 6 was just to “throw electricity at customers and that’s it — and use dirty coal plants to do it,” Brown said. Money spent on coal plants added to greenhouse gas emissions that drive climate change, instead of making the grid more resilient. “Ohio is rapidly marching backward,” he said.
“The power outages and rolling blackouts are a case of electric utilities putting profit above the service provided to residents,” said Trish Demeter, acting interim director for the Ohio Environmental Council. “For years, utilities have used their profits to lobby elected officials at the Statehouse to allow them to take more of our money and provide less effective services.”
Read more:
- Massive power outage continues in Columbus area, leaving residents to struggle with heat (Columbus Dispatch)
- AEP Ohio intentionally shut off power to some Greater Columbus neighborhoods. Here’s why (Columbus Dispatch)
- Storms strain Ohio’s electric grid, and climate change could make it worse (Energy News Network)
Settlement could prevent document disclosures
A federal court filing could let FirstEnergy and other parties make an end run around a judge’s efforts to get more facts before approving a settlement.
The settlement affects three pending cases and would resolve claims brought on behalf of the company for alleged wrongdoing by its directors and officers. The settlement would provide some reimbursement to the company and pay off legal fees, mostly from insurance.
The judge in one case gave a preliminary thumbs up to the deal last month. U.S. District Court Judge John Adams, who presides in one of the other cases, wanted discovery to move ahead first. When that didn’t happen, Adams ordered the parties to explain why he shouldn’t order other lawyers to step in.
On June 10, FirstEnergy and other parties moved to dismiss the case “without prejudice.” In theory, that means it could be refiled later. But approval of the settlement deal in another case would block future cases with the same claims. Separate filings argued no new counsel should be appointed in light of all the work that went into the settlement. Adams has not yet ruled on the filings.
At issue is how much oversight courts can practically exercise over settlements in shareholder derivative cases. The parties’ move also may shield important facts from coming to light.
Read more:
Combining utilities
FirstEnergy is looking to combine its three Ohio utilities, CEO Steven Strah said at the company’s May 17 shareholder meeting. “It’s still early in the comprehensive review process,” said spokesperson Jennifer Young. Any combination would need regulatory review, she noted.
The plan could provide administrative efficiencies and easier access to capital. FirstEnergy Service Company, an unregulated affiliate, already performs some common activities for utilities. Recent audits noted poor tracking of utility funds after they went into a joint money pool.
FirstEnergy’s plan also “could circumvent a 2008 law requiring refunds of too-high profits charged to consumers,” said Merrilee Embs, spokesperson for Ohio Consumers’ Counsel Bruce Weston. HB 6 had let FirstEnergy average its calculations among its three utilities, which let it keep millions more in profits compared to making determinations for each one separately. That change was repealed last year.
Strah’s meeting comments also touted progress toward reducing greenhouse gas emissions. However, it could take until 2050 for FirstEnergy to transition away from coal in West Virginia.
Read more:
Text talk
Utility influence in Ohio government apparently goes further back in time than FirstEnergy’s dealings with former PUCO Chair Sam Randazzo. Asim Haque chaired the Public Utilities Commission of Ohio before Randazzo. After he left to work at PJM, Haque texted a former FirstEnergy vice president that he knew a credit support rider “would likely be held unlawful and could not be refunded.”
Haque sent the texts on the same day the Ohio Supreme Court case held the charge unlawful. But because the PUCO didn’t make the charge refundable, the court let FirstEnergy keep roughly $456 million.
Critics said the texts were inappropriate and further undermine public confidence in the fairness and integrity of the PUCO. Haque said his remarks were tongue-in-cheek. He also noted that the 2016 ruling gave FirstEnergy much less than the company had sought.
Haque’s comments don’t explain why the PUCO refused to make the charge refundable. Even more unusual was that the idea for the rider apparently originated with the PUCO as an alternative to a virtual power purchase plan that was widely opposed.
“Clearly someone was intervening to force his hand,” suggested former PUCO commissioner Ashley Brown.
Read more:
- Former PUCO chair texted he knew FirstEnergy charge was likely unlawful, but company would keep money anyway (Energy News Network)
Regulatory reform
A bill introduced on May 31 would require the governor to name one PUCO commissioner from candidates nominated by the Ohio consumers’ counsel. Republican Reps. Laura Lanese of Grove City and Gayle Manning of North Ridgeville are primary sponsors of HB 690. Additional co-sponsors include both Republicans and Democrats.
The bill is “especially important given the PUCO is out-of-balance with two of five commissioners having formerly worked for the utility industry,” said Ohio Consumers’ Counsel Bruce Weston. “Just recently the PUCO even had three of five commissioners who had worked for utilities — until a FirstEnergy scandal led the former PUCO chair to resign.” The bill has not yet been assigned to a committee.
Read more:
‘The Bribery Bunch’
Ohio Citizen Action continues its Crime with DeWine campaign, calling for the governor to refuse campaign money from utilities and take affirmative steps to prevent corruption. A June 7 parody of The Brady Bunch theme garnered 62,000 views in the week after its release.
“The Bribery Bunch is our campaign’s ‘elevator speech,’” said CEO Rachael Belz. “In one minute, it quickly tells the story of how we got to where we are today with Ohio’s most appalling scandal.”
No charges have been brought against DeWine and Husted. However, they “are decision-makers that allowed HB 6 to become law,” Belz said. Much of the law remains on the books. And neither DeWine nor Husted has taken steps to reduce utility influence and reform regulation in the wake of HB 6.
“They’re now responsible for continuing the culture of corruption in Ohio by not dealing with it,” Belz said.
Read more:
- Ohio advocacy group hits Gov. DeWine over HB 6 scandal in new video: ‘The Bribery Bunch’ (TiffinOhio.net)
The name game
A June 7 resolution by Cleveland City Council calls for removal of FirstEnergy’s name from the Browns football stadium. The resolution formally condemns FirstEnergy’s role in the HB 6 corruption scandal.
However, the resolution is not binding. Roughly seven years remain on the $102 million naming rights contract between FirstEnergy and the Cleveland Browns.
Read more:
- Council Passes Resolution Urging FirstEnergy to Relinquish Stadium Naming Rights (Cleveland Scene)
- Cleveland City Council passes resolution calling for FirstEnergy to relinquish naming rights to stadium (WKYC.com)
- ‘Remain committed:’ Browns release statement on call to drop FirstEnergy from stadium name (FOX8.com)
Editor’s note: A previous version of this email incorrectly stated, “Haque’s comments don’t explain why the PUCO refused to make the charge nonrefundable.” [Emphasis added.]
Eye on Utilities May 16, 2022
Eye on Utilities: FirstEnergy gets the John Oliver treatment The company also bucks efforts to get more facts and impose consequences for the alleged HB 6 conspiracy This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network. Got a question? Story idea? Send tips or comments to info@eyeonohio.com. Was this forwarded to you? Click here to subscribe. By Kathiann M. Kowalski Ohio’s HB 6 woes were one of several utility scandals featured on John’s Oliver’s HBO Show Last Week Tonight on May 15. The program also highlighted how utilities often oppose renewable energy in order to protect profits and how various public utilities commissions seem to serve companies more than the public they are supposed to protect. Meanwhile, new developments in the saga surrounding House Bill 6, Ohio’s nuclear and coal bailout law, include:
Irrelevant? FirstEnergy provided the Office of the Ohio Consumers’ Counsel with various documents it had previously produced in shareholder litigation. Yet the company continues to fight against other disclosures in regulatory cases related to the House Bill 6 scandal. Among other things, FirstEnergy wants the Public Utilities Commission of Ohio to block the OCC from requiring Bob Mattiuz, a vice president for compliance and regulated services, to bring documents on corporate and charitable contributions to his deposition. Depositions let lawyers question a witness under oath. FirstEnergy argued that the document requests were untimely under a prior deadline. The company also asserted that the request is “irrelevant” and “unrelated to the [utilities’] compliance under Ohio corporate separation law.” The May 9 filing is bold in light of audit findings that certain ratepayer charges were improperly tracked. That conduct could have let FirstEnergy use ratepayers’ money for political purposes or to subsidize affiliates’ activities. Those actions would arguably violate Ohio’s corporate separation law. The filing also shows FirstEnergy trying to take maximum advantage of the PUCO’s piecemeal approach to HB 6 issues, versus a comprehensive investigation. The PUCO has also been implicated in the corruption scandal as a result of FirstEnergy’s admission about payments to former PUCO Chair Sam Randazzo, who played a role in setting up the piecemeal approach before his resignation in November 2020. Read more:
Excessive fines? FirstEnergy filings also ask the PUCO to reject requests by OCC and the Ohio Manufacturers’ Energy Group for up to $1.4 million in restitution and penalties for FirstEnergy’s failure to track the rider funds after they went into a money pool. Among other things, the company argues that statutory penalties of up to $10,000 per day might be improper under the U.S. Constitution’s Eighth Amendment, which forbids excessive bail, excessive fines and “cruel and unusual” punishments. FirstEnergy asserts there was no violation of the PUCO’s order setting up the rider and contends that reimbursement is forbidden. However, the penalty request focuses on FirstEnergy’s alleged wrongdoing for not tracking rider money, versus the rider itself. So, the penalty demands are arguably distinct from the reimbursement claim that the Ohio Supreme Court denied when it ruled the rider unlawful in 2019, just before HB 6 became law. FirstEnergy also claims that the penalty demand ignores benefits from a $300 million settlement in an excess profits case. That case dealt with calculations of significantly excessive earnings, and the settlement came after an Ohio Supreme Court ruling that the PUCO erred in excluding the rider money from earnings test calculations. Parties reached the settlement before audits from FERC and Daymark showed that FirstEnergy’s practices had obscured how the rider money was ultimately used. The PUCO has yet to rule on the penalty issue. An adverse ruling might eventually go before the Ohio Supreme Court. Read more:
Seeking info from FERC OCC and others also are asking the Federal Energy Regulatory Commission to share documents and information from its ongoing cases on FirstEnergy. That includes a complete set of documents involved in a recent audit, versus the smaller subset that the PUCO has told FirstEnergy to provide. “FirstEnergy has an over-reaching approach of claiming confidentiality of information that is not confidential (but is merely information that FirstEnergy seemingly prefers for Ohioans to not know about regarding its conduct),” said OCC’s April 28 filing. Earlier this spring FirstEnergy opposed participation in the FERC case by both OCC and the New Jersey Division of Rate Counsel. FERC has yet to rule on the state consumer advocates’ intervention and document requests. Settlements still up in the air U.S. District Court Judge Algenon Marbley gave a preliminary thumbs up to a deal to settle shareholder derivative claims. But he did not stay proceedings in other courts with similar cases that would be settled by the deal announced last winter. U.S. District Court Judge John Adams, who presides in one of those other cases, has said he wants more fact finding, called discovery, to move ahead before he okays the deal. That discovery includes multiple depositions of current and former FirstEnergy executives under oath. But parties have haggled over scheduling. Among other things, FirstEnergy CEO Steven Strah’s questioning was postponed to an unknown date after company lawyers objected that he would be vacationing in Cape Cod in late May. Meanwhile, former FirstEnergy vice president Michael Dowling, a defendant in multiple cases, has subpoenaed documents from Partners for Progress. That dark money group, led by FirstEnergy’s former lobbyist and others, gave $1.2 million in 2017 to two other dark money groups in the HB 6 scandal, Generation Now and the Coalition for Growth & Opportunity. FirstEnergy lawyers have identified Dowling and former CEO Chuck Jones as having authorized various payments. Although Dowling’s legal strategy isn’t known, the subpoena might be an effort to support an argument that others misused funds for a bribe, versus dark money donations that fit within legal loopholes under election law. The shareholder derivative cases would not pay money directly to shareholders, because their purpose is to protect the corporation from wrongdoing by directors and officers. So, the settlement would provide FirstEnergy with roughly $180,000 million, primarily from insurers, after deducting fees for plaintiffs’ lawyers, whose clients sued on behalf of the company. Separate cases deal with shareholder claims for lost stock value or other damages. Read more:
Political ripples The Ohio Democratic Party also wants more detail about what involvement, if any, Gov. Mike DeWine had in the HB 6 scandal. Public records obtained by the group include copies of DeWine’s calendars from 2019 onward. However, widespread redactions and broad privilege claims make it hard to determine whom DeWine met and spoke with on many occasions, the group alleges. Materials produced so far also have a gap from June 16, 2020, until May 2021. That covers the period when Householder was arrested, Randazzo resigned and current PUCO Chair Jenifer French was appointed. On May 5 the group asked the Franklin County Court of Common Pleas to order more disclosures. The court has not taken any action yet. Renewed The PUCO earlier this month approved Energy Harbor’s request to continue operating as a competitive retail energy supplier with no mention of the company’s role in the ongoing HB 6 corruption scandal. Energy Harbor is the successor to FirstEnergy Solutions following its bankruptcy case, where filings first showed a payment to Generation Now in 2019. Energy Harbor’s initial renewal application on April 4 noted the bankruptcy case but failed to mention any of the HB 6-related cases in which it is a defendant, or the ongoing federal investigation. The company added detail about several cases after an April 6 tweet by Dave Anderson of the Energy and Policy Institute noted the omission. The PUCO’s approval came three weeks later, with no opinion and no comments in the file from staff. “The whole thing seemed odd,” Anderson said. “Here was seemingly an opportunity for the PUCO to do a deeper investigation of this former affiliate company.” The case raises the question of what substantive review, if any, the PUCO conducts and how, if at all, alleged corruption issues matter when it comes to approving retail electricity providers. Cleaning up FirstEnergy’s ongoing corruption scandal has cast new light on a deal that relieved the company of more than $12 million in cleanup costs for a former coal plant. JobsOhio forgave the loan after FirstEnergy completed its work at the site ahead of a Dec. 2017 deadline. JobsOhio’s plan is for PTTGC America to build a petrochemical cracker at the Belmont County site, although the company has not yet made a final commitment. FirstEnergy transferred the property to PTTGC America, said FirstEnergy spokesperson Mark Durbin. Meanwhile, JobsOhio has spent $70 million on the site, $20 million of which was reimbursed by PTTGC, said JobsOhio spokesperson Matt Englehart. That work “included demolition of the power plant, environmental remediation, draining and filling of ponds that were created by a former sand and gravel quarry, and grading and leveling the site,” Englehart said. He did not say who negotiated the deal for FirstEnergy, noting that all project discussions are deemed confidential. JobsOhio is a statutorily created corporation that works with the Department of Development to attract businesses and jobs. It is exempt from Ohio’s public records law. Funding comes from Ohio Liquor revenues. “The plant demolition was quite public, is very old news, and cleaned up a site of a dirty former coal plant to make it more attractive to investment to bring jobs to the people of Ohio,” Englehart said. The deal matters because it relieved FirstEnergy of environmental liabilities the company otherwise would have had to pay. Plus, the structure of the deal shielded discussions by the company, JobsOhio and other involved parties from public scrutiny. The environmental cleanup deal also meant FirstEnergy was arguably more flush with cash around the time that it and its affiliates began funding the alleged HB 6 scheme. Read more:
Eye on Utilities April 26, 2022Eye on Utilities: Challengers ask Ohio regulators to impose penalties on FirstEnergyChallengers want FirstEnergy’s utilities to pay up to $1.4 billion for blocking auditors from tracking ratepayer money.This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network. Got a question? Story idea? Send tips or comments to info@eyeonohio.com. Was this forwarded to you? Click here to subscribe. By Kathiann M. Kowalski New developments in the saga surrounding House Bill 6, Ohio’s nuclear and coal bailout law, include:
Asking for forfeitureApril 19 filings by the Office of the Ohio Consumers’ Counsel and the Ohio Manufacturers’ Association Energy Group ask the Public Utilities Commission of Ohio to order penalties and restitution from FirstEnergy’s utilities for millions of dollars that went into a money pool and could have funded HB 6 spending and other political activities. The case deals with a so-called distribution modernization rider that FirstEnergy’s utilities collected from 2017 through mid-2019. The order said the PUCO would audit company spending of the money, but FirstEnergy resisted the consumers’ counsel’s efforts to get information in 2018. The Ohio Supreme Court held the charge was unlawful in June 2019, but refused to order a refund. A few days before that court order came out, an interim report from Oxford Advisors noted that money went into a shared pool of funds and that dividends from the utilities to FirstEnergy had markedly increased in 2017 and 2018. Former PUCO Chair Sam Randazzo and others canceled the final audit report in February 2020. A March 4 text by former FirstEnergy CEO Chuck Jones referred to Randazzo as overruling staff and others on “burning the final DMR [distributed modernization rider] report.” The PUCO finally ordered another audit at the end of 2020, five months after the first arrests in the HB 6 scandal. This month’s filings by the consumers’ counsel and the Ohio Manufacturers’ Association Energy Group comment on the January 2022 audit filed by Daymark, which found that FirstEnergy failed to properly track the funds after they went into the money pool. Daymark could not rule out that the money was not used for HB 6 spending. The OMA Energy Group argued that the report “raises a strong inference” not only that the money could have been used for HB 6, but also that FirstEnergy’s utilities “intentionally disguised the ultimate destination of these funds.” The consumers’ counsel stressed that FirstEnergy’s action’s thwarted the PUCO’s earlier order for periodic review “to ensure that such funds are used, directly or indirectly, in support of grid modernization.” “Preliminarily, it seems that consumers were damaged up to $456 million,” before any added penalties, the consumers’ counsel’s filing said. Under Ohio law, triple damages could up the amount to nearly $1.4 billion. The PUCO also can assess forfeiture penalties of up to $10,000 per day, the OMA Energy Group’s filing said. For its part, FirstEnergy argued that the unlawful rider was “unique in purpose and structure” and that Daymark should have found that the funds were used as authorized. Read more:
Discovery delayed or deniedThe consumers’ counsel’s April 19 filing also asked for the “burned” final report and a chance to question Oxford Advisors under oath. The counsel’s initial motion was denied last fall by hearing examiner Greg Price, who stepped away from HB 6 cases last month after public records showed he had been involved in HB 6 matters before and after the law was passed. The Public Utilities Commission of Ohio had affirmed that ruling on March 9, but the consumers’ counsel asked the commission to “reverse course and end its impeding of lawful case preparation.” And now the consumers’ counsel wants an independent administrative law judge from outside the PUCO to rule on the issue. Meanwhile, an April 7 order in a corporate separation case scheduled a hearing for Aug. 22. Yet the PUCO refused to extend the cut-off on pretrial fact-finding, called discovery, which Price set last year. The consumers’ counsel, the Ohio Manufacturers’ Association Energy Group and the Northeast Ohio Public Energy Council have asked the full commission to allow the discovery. In yet another of the PUCO’s separate HB 6 cases, a hearing examiners’ March 11 order told FirstEnergy to provide the consumers’ counsel and others with thousands of documents that were turned over to the Federal Energy Regulatory Commission last year. The full commission scaled back that order to a narrow time frame on April 6 and told FirstEnergy to produce the materials by April 10. However, FirstEnergy then sought to drag turnover of the materials out through mid-June. On April 20, a PUCO hearing examiner told FirstEnergy to produce all documents within the scope of the April 6 order by May 22. By then it will be more than 15 months since the consumers’ counsel first sought the materials, which are relevant to issues in all of the PUCO’s fragmented HB 6 cases.“The PUCO claims it wants to follow the facts for its investigation of the FirstEnergy scandal. But the facts to follow must first be found,” said spokesperson Merrilee Embs at the Office of the Ohio Consumers’ Counsel. “Our efforts to find some of the key facts for investigating FirstEnergy are being delayed or denied. That needs to change.” Read more:
Briefing warned DeWine about Randazzo“Why is Randazzo so close to FirstEnergy?” asked the first page of a 198-page dossier provided to Ohio Gov. Mike DeWine before he appointed Randazzo to chair the Public Utilities Commission of Ohio. The materials came from J.B. Hadden, a lawyer who represented American Electric Power and has been on the board of two dark money organizations linked to AEP, one of which funneled roughly $900,000 to other dark money groups involved in the HB 6 scandal. Hadden also had been DeWine’s campaign treasurer from 2009 to 2015 and told the Ohio Capital Journal he had always been honest with the governor “when I think he needs to know something to aid in a decision.” Randazzo’s position as counsel for a group of large industrial electricity users was “technically adverse” to FirstEnergy, the dossier noted. Yet “the FirstEnergy relationship has always seemed sacrosanct,” the dossier said. Last winter, the PUCO did order a separate audit to look into Randazzo’s withdrawal of Industrial Energy Users-Ohio’s objections to FirstEnergy’s gambit to get a bailout in the case that ultimately led to the so-called distribution modernization rider. That took place around the time FirstEnergy and a company controlled by Randazzo amended a consulting agreement between them. Until the audit is done, however, the PUCO won’t let other parties conduct prehearing fact-finding relating to the arrangement. Read more:
Corruption as a campaign issueDemocratic hopefuls to challenge DeWine both noted the HB 6 corruption scandal as a campaign issue during a candidates’ forum at the Columbus Metropolitan Club on April 19. The candidates differ in their approaches, however. Candidate Nan Whaley has called for a public accountability commission and closing of dark money loopholes. Candidate John Cranley has said he would fire all the PUCO commissioners and name new ones. The May 3 primary for the governor’s and other statewide offices also includes races for the U.S. House of Representatives. On April 14 the Ohio Supreme Court again ruled that Ohio’s statewide maps are unconstitutional. But a federal court ruling on April 20 said it may impose the unconstitutional maps anyway if the state hasn’t enacted another plan by May 28. Read more:
So, who paid the bribes?A March 24 order by U.S. District Judge John Adams repeated his refusal to pause proceedings in one of several shareholder derivative cases involved in a proposed settlement announced this winter. That ruling came the day after an affidavit in that case named former FirstEnergy CEO Chuck Jones and former vice president Michael Dowling as having “orchestrated FirstEnergy’s payments to public officials in exchange for favorable legislation and regulatory action.” For now, it appears that depositions in the case will likely move ahead. Those proceedings let lawyers for parties question witnesses under oath before trial. The proceedings could shed more light on just where the bribery money came from, although protective orders often shield discovery materials in shareholder cases from the public unless and until they’re filed with the court. FirstEnergy also announced a $37.5 million settlement of ratepayer class action cases stemming from HB 6, CEO Steven Strah announced during the company’s first-quarter earnings call on April 22. If approved, the settlement would resolve cases where FirstEnergy argued last fall that HB 6 somehow protected the company against ratepayer claims based on FirstEnergy’s role in corruption behind the law. Other cases seeking damages for lost value of shares continue. Additionally, an April 21 ruling by the Federal Energy Regulatory Commission rejected a protest by Public Citizen and approved FirstEnergy’s sale of shares to investment firms Blackstone and Brookfield with representation on the company’s board of trustees. The arrangement was initially announced last fall. FERC rejected protests when FirstEnergy sold an interest in the company with board representation to investor Carl Icahn. Read more:
Eye on Utilities March 15, 2022‘Nobody at the PUCO seems to respect the consumer in Ohio’: Ohio regulators stay the course, while federal judges want cases to move aheadA hearing examiner’s sudden recusal has not changed PUCO’s approach to limiting access to documents and information. This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network. Got a question? Story idea? Send tips or comments to info@eyeonohio.com. Was this forwarded to you? Click here to subscribe. By Kathiann M. Kowalski New developments in the saga surrounding House Bill 6, Ohio’s nuclear and coal bailout law, include:
‘Who paid the bribes?’U.S. District Court Judge John Adams walked out of a March 9 court hearing when a FirstEnergy lawyer evaded his question of who paid bribes relating to HB 6 matters. The hearing in Adams’ court dealt with a proposed settlement of several shareholder derivative cases. Under the deal, insurers would pay FirstEnergy $180 million, minus lawyer fees for the plaintiffs in the cases. Adams also wanted to know why plaintiffs were agreeing to settlements before questioning any current or former company executives under oath. “You are not here to answer my questions. You are here to duck and avoid,” Adams told FirstEnergy’s lawyer, Jeroen van Kwawegen. Van Kwawegen tried to shield the information as part of settlement discussions between the parties, but Adams’ follow-up order on March 11 cast doubt on that argument. He gave parties until noon on March 16 to file briefs. Former PUCO commissioner Ashley Brown, who headed the Harvard Electricity Policy Group, noted the contrast between Adams’ approach and the PUCO commissioners’ adherence to a more tempered approach that same day. “It’s just astounding to read these things back-to-back,” he said. It’s unclear who approved all the payments involved in the scandal. FirstEnergy statements attached to a Feb. 18 filing at the PUCO indicate that the company’s former head of external affairs, Michael Dowling, approved at least $1 million of payments to Generation Now in 2017. The filing also shows that former executive Joel Bailey approved a 2018 payment to Hardworking Ohioans. Both organizations acted as dark money groups in the alleged HB 6 conspiracy. Read more:
Maintaining consistencyRegulatory judge Gregory Price withdrew from four FirstEnergy House Bill 6 cases on March 4, following multiple news reports showing he had acted on the policy side of HB 6. Former PUCO Chair Sam Randazzo looped Price in on communications before the law passed in 2019 and after calls for repeal following the arrests of former Ohio House Speaker Larry Householder and others in July 2020. Critics stressed the potential for bias and the appearance of impropriety if someone in a judge-like role may have already taken a position on an issue, especially when allegations against Randazzo raised the specter of corruption within the PUCO. Yet on March 9, the PUCO commissioners doubled down on their piecemeal approach to the controversy and affirmed Price’s latest refusal to allow prehearing fact-finding by the Office of the Ohio Consumers’ Counsel. Specifically, the order refuses to let the consumers’ counsel get a never-finalized audit report on an unlawful FirstEnergy rider. The order likewise bars the consumers’ counsel from questioning the auditor, Oxford Advisors, under oath prior to the hearing in the case. The PUCO will produce someone from Oxford Advisors at the hearing in the case. But the inability to take a deposition will arguably limit challengers’ ability to prepare cross-examination of that witness. Texts by former FirstEnergy executives suggest Randazzo may have had Oxford Advisors’ draft report “burned” at the company’s behest. Yet the PUCO order dismissed arguments about unusual circumstances as “nothing more than unsubstantiated speculation.” And it treated issues about whether the rider might have funded HB 6 activities as limited to another case. Comments by PUCO Chair Jenifer French and Commissioner Daniel Conway accepted ownership of the rulings in the FirstEnergy cases, although neither spoke about the corruption allegations relating to FirstEnergy or Randazzo. Regulatory judges in cases “work for us, and the decisions that are made are made by us, not by utility examiners,” Conway said. French said the ruling “maintains consistency by treating OCC’s request for information as it has treated other requests of this nature in the past.” Read more:
Another limited auditAlso on March 9, the PUCO said it would hire an outside auditor in a case opened in September 2020 to find out if ratepayer money directly or indirectly funded FirstEnergy’s HB 6 activities. However, the order limits the auditor’s work to assisting agency staff in reviewing FirstEnergy’s response to the PUCO’s initial order asking the company to show that it didn’t use ratepayer money for HB 6. In other words, the auditor won’t conduct an independent audit to answer the question of whether ratepayer money paid for HB 6 activities. Instead, the auditor will basically help PUCO staff look over FirstEnergy’s shoulder to see if they’re satisfied with FirstEnergy’s position on whether it acted properly. FirstEnergy has gone from a categorical denial of any improper use of ratepayer money to an admission that some ratepayer funds were used for political or other unauthorized purposes. Those amounts are far less than the nearly $71 million for lobbying and HB 6 expenses noted in a Feb. 4 audit report from the Federal Energy Regulatory Commission. But that report and a Daymark Advisers audit released in January found that money from the rider involved in the “burned” audit dispute went into a money pool. The ultimate disposition of funds from that money pool was not clearly tracked, the two reports found. Consequently, it’s unclear whether FirstEnergy can show that additional ratepayer money wasn’t used directly or indirectly on HB 6. Much will depend on who bears the burden of proof on the issue. A final version of the new audit report won’t be due until December 2022. Meanwhile, rulings on March 11 supported most of FirstEnergy’s privilege claims in the case, although other parties will be able to get materials FirstEnergy provided in connection with FERC’s audit. However, PUCO won’t let the consumers’ counsel get copies of various communications between FirstEnergy and FERC relating to that audit or an ongoing review. The consumers’ counsel has asked to intervene in that ongoing review. Read more:
A ‘plausible, persuasive case’In a separate case, U.S. District Court Judge Algenon Marbley held on March 7 that shareholders had “set out a plausible, persuasive case for securities fraud under theories of both misstatement liability and scheme liability.” Other claims likewise withstood FirstEnergy’s motion to dismiss, subject to a few tweaks. Nor did a dismissed AEP case control the outcome for FirstEnergy. “To dismiss this Complaint, as Defendants urge, would be to adopt a severely strained view of bribery laws, pleading requirements, and the facts of the case,” Marbley wrote. FirstEnergy noted a potential risk of loss from shareholder claims and the Ohio attorney general’s lawsuit in its most recent annual report to the Securities and Exchange Commission. ‘The cows have left the barn’Filings in the Ohio attorney general’s civil corruption case seek to move ahead with discovery, noting that other cases already have allowed extensive discovery from FirstEnergy and other parties. “The cows have left the barn. It is time to stop manning the only closed barndoor,” said a Feb. 22 filing by the state’s lawyers. A March 8 filing provided additional support under Ohio law for moving ahead, despite the pending criminal claims against Householder and others. FirstEnergy’s March 11 response stressed that the stay in the case resulted from an agreed-upon order from February 2021, as part of a compromise for the utilities to stop collecting fees under HB 6’s recession-proofing provisions, which have since been repealed. In other words, FirstEnergy would treat the stay as a rock-solid freeze against moving ahead, even though other cases have moved forward and there’s no longer any benefit flowing to the state and ratepayers from a stay. Read more:
‘Crime With DeWine’Outside of court and regulatory hearings, Ohio Citizen Action launched a Crime With DeWine campaign on March 8. The title is a play on Gov. Mike DeWine’s 2020 “Wine with DeWine” briefings on the COVID-19 pandemic. The focus is on getting DeWine and Lt. Gov. Jon Husted to reject utility funding and to adopt reforms for both the PUCO and its nominating council. “The activity is not tied to any election or campaign. It’s a grassroots effort,” said Rachael Belz, executive director of Ohio Citizen Action. The organization had been critical of the PUCO since before Randazzo’s appointment in 2019. That criticism continued after news surfaced about payments from FirstEnergy to Randazzo. “There’s never been any cleaning house of any kind except for Randazzo resigning after his house was raided by the FBI,” Belz said. Among other things, the group wants reforms that will include consumer advocacy as one of the required background fields for PUCO commissioners, full disclosure about both PUCO candidates and people serving on the nominating council, rejection of campaign donations from all Ohio utilities who have benefited from HB 6, and more. “Nobody at the PUCO seems to respect the consumer in Ohio, and that continues to be troubling,” Belz said. Meanwhile, the We the People coalition continues to call for the revocation of FirstEnergy’s corporate charter. And Democratic challengers for governor continue to focus on the HB 6 scandal and call for reform at the PUCO.“Mike DeWine’s PUCO continues its coverup,” tweeted John Cranley, a former Cincinnati mayor and challenger for the Democratic governor nomination, adding that “it’s no surprise that the findings don’t have to be public until after the November election.” Eye on Utilities February 15, 2022Damage control: FirstEnergy works to limit impact in HB 6 casesHB 6 scandal consequences limited for FirstEnergyThis monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network. Got a question? Story idea? Send tips or comments to info@eyeonohio.com. Was this forwarded to you? Click here to subscribe. By Kathiann M. Kowalski New developments in the saga surrounding House Bill 6, Ohio’s nuclear and coal bailout law, include:
FERC follows the moneyA Feb. 4 audit of FirstEnergy by the Federal Energy Regulatory Commission found seven major areas where the company did not properly track and allocate expenses among affiliates. The findings upped the amount paid by FirstEnergy and its subsidiaries to groups involved in the HB 6 scandal to nearly $71 million. “Of the $70.9 million, $1.5 million was allocated to some of our utilities and transmission companies,” said FirstEnergy spokesperson Mark Durbin. Included lobbying expenses had previously been disclosed, he said. “None of the rest of the $70.9 million was collected from customers,” he added. Yet it remains unclear what happened to ratepayers’ rider money after it went into a money pool at FirstEnergy’s shared services subsidiary. That subsidiary arguably could have disbursed some of the money received to parent corporation FirstEnergy. FirstEnergy then could have sent the money to dark money groups involved in HB 6. Or, some of the money could have found its way to FirstEnergy Solutions (now Energy Harbor), which then might have used it for lobbying or other HB 6 activities. Problems with the company’s money pool also were noted in a Jan. 14 report by Daymark Energy Advisors on a $457 million credit support rider that was ultimately held unlawful. FERC’s audit report also dealt with payments to companies linked to former PUCO Chair Sam Randazzo and noted additional amounts paid to another Ohio individual whose role remains unclear. Spending for lobbying and political matters beyond Ohio was covered as well. “What started off as a ‘$60 million bribery scandal’ is now more like a $133 million scandal,” said David Anderson, policy and communications manager for the Energy and Policy Institute. FirstEnergy has said it will provide some refunds, at least for the $1.5 million and probably some other non-HB 6 charges. It’s unclear whether FERC might go further and fine FirstEnergy, he added. Read more:
A contrast …In light of FERC’s report, the Office of the Ohio Consumers’ Counsel wants to question current and former ethics officers at FirstEnergy in proceedings known as depositions. The consumers’ counsel has also asked PUCO senior attorney examiner Gregory Price to revisit his earlier decision to shield FirstEnergy from having to disclose information and documents relating to FERC’s audit. That ruling and others have hindered the consumers’ counsel and others in fact-finding efforts to contest FirstEnergy’s claims in four limited-issue cases at the PUCO. FERC’s comprehensive audit report also sparked comparisons to the PUCO’s approach to the HB 6 scandal. “The contrast between what a regulatory agency should be doing and what the people in Columbus are doing cannot be more stark,” said Ashley Brown of the Harvard Electricity Policy Group. As a former PUCO commissioner, he has been critical of the PUCO’s piecemeal approach. In FirstEnergy’s case, FERC “is doing its job,” while the PUCO “is literally sleepwalking,” he said. New light on Randazzo’s roleNewly produced documents show that former PUCO Chair Sam Randazzo came up with the idea for the PUCO to take the “baby step” of letting FirstEnergy show it didn’t use ratepayer money for HB 6. And it’s questionable whether the agency would have done anything about it without a motion from the Office of the Ohio Consumers’ Counsel and bad publicity. Randazzo and others at the PUCO also reviewed repeal bills and considered possible legislative alternatives after news broke about then-House Speaker Larry Householder’s arrest and FirstEnergy’s involvement in the HB 6 scandal. Price was a party to various discussions and emails before HB 6 was enacted and when possible repeal bills were being considered. Shareholder suits settled FirstEnergy is settling several shareholder derivative lawsuits arising out of its HB 6 activities. In those cases, shareholders asserted claims on behalf of the corporation for harm arising out of alleged breaches of offices and directors’ fiduciary duties to the company. Terms announced on Feb. 10 call for six longtime board members to step down this year. Other provisions aim to strengthen board oversight of company action plans, lobbying activities and other corporate governance matters. Individual defendants’ insurers will also pay FirstEnergy $180 million, less any attorney’s fees the courts award to plaintiffs. The settlements let FirstEnergy’s officers and directors avoid potential liability, and the company avoids embarrassment from potential disclosures from witnesses. The payment to FirstEnergy should cover plaintiffs’ lawyer fees. Any extra is meant to compensate the company for alleged harms from individual defendants’ alleged breach of their duties. The governance reforms aim to ensure better oversight and prevent future problems. FirstEnergy continues to face other litigation, including cases seeking to recover losses sustained by shareholders, as well as a class action case brought by ratepayers against it, Energy Harbor and others. In November, FirstEnergy argued that enactment of HB 6 should bar any claim for alleged corruption and other actions in the ratepayer case. Plaintiffs’ response is currently due in late February. Unopposed extensions prolonged their initial deadline. Read more:
State and federal claimsOn Feb. 7, the Ohio attorney general’s office renewed its request for Judge Chris Brown to let fact-finding discovery move ahead in the state’s civil case against FirstEnergy, Energy Harbor, Randazzo, former FirstEnergy executives and others. Meanwhile, Householder and co-defendant Matt Borges have sought to dismiss or limit the federal government’s criminal case against them relating to HB 6. Read more:
PUCO: More of the sameGov. Mike DeWine has chosen Commissioner Daniel Conway for a second five-year term on the PUCO. The governor’s Feb. 10 announcement stressed Conway’s “track record of being judicious and weighing issues from all sides.” Conway has had a decades-long history representing electric and gas utilities and telecommunications companies before the PUCO. All three of the other candidates nominated on Feb. 7 also have ties to the energy industry, as do several members of the Nominating Committee. Conway’s reappointment clashes with statements DeWine made to Gongwer News Service last month, saying he hoped to choose someone “who did not have the background or connections in the industry.” The day before, the Office of the Ohio Consumers’ Counsel and Ohio Poverty Law Center had asked him to reopen the application process with a goal of selecting a consumer advocate. The Consumers’ Counsel and others also have called for reform of the process to select PUCO commissioners. Read more:
Eye on Utilities– February 1, 2022Trials lie ahead in Ohio’s HB 6 scandalPreview text (for Mailchimp): As Ohio prepares to name a new PUCO commissioner, criminal and civil cases move ahead in the FirstEnergy House Bill 6 scandal. This periodic newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network. Got a question? Story idea? Send tips or comments to info@eyeonohio.com. Was this forwarded to you? Click here to subscribe. By Kathiann M. Kowalski New developments in the saga surrounding House Bill 6, Ohio’s nuclear and coal bailout law, include:
Who will be the next PUCO commissioner?The Public Utilities Commission of Ohio Nominating Committee will meet on Feb. 4 to interview and choose candidates for the seat currently held by Daniel Conway, whose term ends in April. He has applied for a second five-year term. Six other candidates will go through interviews as well. The Nominating Committee still has multiple members with ties to companies or groups that supported HB 6. Chair Michael Koren resigned on Jan. 25, citing health reasons. He was previously a lobbyist for FirstEnergy, and his position as committee chair had been criticized since late 2020. Cheryl Burchard, Koren’s replacement, is at a law firm that represented a FirstEnergy utility that tried to block Cleveland Public Power’s purchase of solar energy from a facility in Brooklyn, Ohio. Lawyers at the firm also have represented Murray Energy and opponents in wind energy cases. The coal company gave $100,000 to a dark-money group called Hardworking Ohioans, which supported HB 6. Among the other committee members, Steve Cuckler worked as a legislative aide and then deputy chief legal counsel for former Ohio House Speaker Larry Householder from 2000 to 2004. Others at Cuckler’s firm apparently did work in connection with forming Hardworking Ohioans. Dave Wondolowski is with a union that supported HB 6. Louis Terhar was a co-sponsor of HB 6.
Missing textsReminiscent of the missing 18 1/2 minutes of a tape recording from the Watergate era, former FirstEnergy CEO Chuck Jones “had not preserved” text messages from personal devices he got shortly after being fired in October 2020. Jones’ lawyers disclosed the issue just before New Year’s Day, according to a Jan. 27 filing in a shareholder class action case. Efforts are underway to recover the texts, via forensic consultants, inquiries to his phone carrier, and examination of additional devices, including an Apple watch and Garmin golf watch. In Jones’ case, the texts could potentially contain damaging admissions or other evidence that could be used by plaintiffs in that case. The plaintiffs hope to start trial by late summer. If the texts are recovered, parties in other proceedings might also call on Jones to produce them.
Case against Householder and Borges moves aheadLawyers anticipate the criminal trial against former Ohio House Speaker Larry Householder and lobbyist Matt Borges will likely take six weeks. Pretrial motions are due Feb. 1, with responses and replies due later this month and in early March. The defendants presumably will ask the court to dismiss the charges or to keep out evidence the government may need to prove its criminal conspiracy case. Resolving those motions and other pretrial proceedings could take several months, so the trial likely won’t start until late fall.
Deal or no deal?Consumer advocacy group Public Citizen has filed a protest with federal regulators, challenging FirstEnergy financing deals announced in November. Public Citizen wants the Federal Energy Regulatory Commission to find out if there was any collusive agreement between Blackstone Inc. and Icahn Enterprises. Icahn Capital acquired a chunk of FirstEnergy voting securities and a say on its board last year. Icahn Enterprises’ portfolio manager Andrew Teno sits on FirstEnergy’s board and is a member of its finance committee, according to the protest. As with Icahn, the November deals give Blackstone voting rights on FirstEnergy’s board. If there was collusion, the potential for cooperation by the two might trigger FERC’s “affiliate” rules, Public Citizen argued. The worry would be that the institutional investors could use their combined voting power and seats on the board to the detriment of FirstEnergy’s captive utility customers.
Eye on Utilities January 2022Winter brings more chilling news in Ohio’s ongoing HB 6 scandalBill rider money unaccounted for, and DeWine backs away from coal subsidiesThis monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network. The next edition will be sent on Tuesday, February 16. Got a question? Story idea? Send tips or comments to info@eyeonohio.com. Was this forwarded to you? Click here to subscribe. By Kathiann M. Kowalski This past month’s developments in the ongoing saga surrounding House Bill 6, Ohio’s nuclear and coal bailout law, include:
Where did the money go?An independent audit report can’t say just what FirstEnergy did with more than $457,000 collected under a rider that was eventually held unlawful. Daymark noted that FirstEnergy used other bill riders to recover $1.7 million spent on grid modernization projects from 2017 through 2019. And the unlawful rider money went into a joint pool that hadn’t been audited in the past five years. The lack of tracking leaves open the possibility that FirstEnergy could have used rider money from that joint pool as a source for nearly $60 million spent by the company and its subsidiaries on dark money efforts to pass and preserve HB 6. The audit report’s findings also suggest “pure negligence on the part of the Commission,” said former PUCO commissioner Ashley Brown, who now heads the Harvard Electricity Policy Group. Basic regulatory principles require a mechanism to make sure any special charges actually get used for a specific purpose. “It really is Regulation 101,” he said. Before the report’s release, a PUCO staff filing opposed the Office of the Ohio Consumers’ Counsel’s efforts to question an earlier auditor, Oxford Advisers, about a draft that was allegedly “burned” at FirstEnergy’s behest. Hearing examiner Gregory Price put off ruling on the issue until at least late February, when witness testimony is currently due in a corporate separation case. The Consumers’ Counsel wants the full commission to rule on those and other matters. The “burned” report remains relevant. FirstEnergy has long resisted the Consumers’ Counsel’s efforts to find out where the money went. Emails released last year show that the PUCO has let both its staff and utilities comment and suggest revisions to at least some supposedly independent audits before they are finalized. Any agency or company efforts to shape or suppress an earlier version of the audit may cast doubt on regulators’ independence and adherence to the law. Read more: Audit: No evidence that FirstEnergy’s $168M-per-year grid modernization fee was used for intended purpose (Cleveland.com) Editorial: PUCO must allow deposition to go ahead (Toledo Blade) Frustrations in fact findingThe Consumers’ Counsel faces additional fact-finding frustrations in the PUCO’s HB 6-related cases, including privilege claims by FirstEnergy, inability to get all materials related to firings of company executives in 2020 and 2021, and delays in getting documents requested months ago. The Consumers’ Counsel has asked for full commission review of several of the Ohio hearing examiner’s rulings. Meanwhile, a January 6 order by the Public Service Commission of Maryland reversed a November ruling that had ordered FirstEnergy to provide that state’s consumer advocate agency with the internal report that led to the company’s firing of former CEO Chuck Jones and former vice president Michael Dowling. A December 15 order by the Public Utilities Commission of Ohio did expand the scope of an ongoing case to include a “side agreement” relating to FirstEnergy’s earlier bailout case when former PUCO Chair Sam Randazzo represented Industrial Energy Users – Ohio. But the PUCO won’t start its investigation right away. And it has frozen other parties’ fact-finding efforts on the issue, called discovery. PUCO Chair Jenifer French said the purpose was not to interfere with the U.S. Attorney’s criminal investigation or a state court case brought by Ohio Attorney General Dave Yost. The “side agreement” allegedly deals with action taken by Randazzo and FirstEnergy in the company’s bailout case more than four years before HB 6 was passed. However, it was apparently part of a long relationship that led up to a $4.3 million payment to Randazzo shortly before he became PUCO chair. Advocates want to probe that relationship to learn which improper or unlawful actions may have wound up costing ratepayers more. Read more: PUCO delays probe into whether FirstEnergy broke Ohio law by not disclosing Randazzo contract. (Columbus Dispatch) On second thought…Earlier this month, Ohio Gov. Mike DeWine said he would support ending the HB 6 coal subsidies for two 1950s-era coal plants known as the OVEC plants. The move marks a switch from July 2020, when he said he still backed the law. DeWine also told Cleveland.com he would no longer accept political contributions from FirstEnergy. DeWine’s professed shift may have little practical effect. The U.S. Environmental Protection Agency plans to deny one of the plants an extension for complying with rules for coal ash ponds. The OVEC plant in Indiana apparently told the EPA it would likely shut down if it didn’t get more time to meet the rule. And lawmakers in the General Assembly haven’t taken action since hearings last year on bills to axe the coal subsidies. FirstEnergy also said it would dial back political contributions and increase transparency under the deferred prosecution agreement announced last summer. DeWine also said he’s open to possible PUCO reform — as long as the governor still picks the regulators. DeWine already faces criticism for having put former PUCO Chair Sam Randazzo in a position to allegedly do FirstEnergy’s bidding at the commission. And PUCO reform and ethics issues have already been made campaign issues by his likely Democratic opponents, former mayors John Cranley of Cincinnati and Nan Whaley of Dayton. Meanwhile, applications for an open PUCO slot are due January 20. On December 30, DeWine appointed David Wondolowski of the Cleveland Building and Trades Council to the PUCO Nominating Council. The union supported House Bill 6. Wondolowski, who is also on the Cuyahoga County Board of Elections, was criticized last fall after stating at a campaign event for former Cleveland mayoral candidate Kevin Kelley, “when we win this election on Tuesday, we’re going to kick the shit out of the media.” Wondolowski’s immediate predecessor on the nominating council was Mark Totman of the International Union Operating Engineers Local 18. That union gave more than $350,000 to Generation Now, a dark money group that pled guilty in the pending criminal case against former Ohio House Speaker Larry Householder. “Presumably, there are representatives from the labor community who aren’t allies of FirstEnergy that DeWine could have appointed,” said Dave Anderson, policy and communications manager for the Energy and Policy Institute. Read more: Gov. Mike DeWine says he doesn’t support HB 6’s coal-plant subsidies, pledges not to take FirstEnergy donations. (Cleveland.com) Midwest power plants face shutdown after EPA proposes denying requests to keep using unlined coal ash ponds. (Utility Dive) Assets in motionAttorney General David Yost continues efforts to attach assets under a court order issued last year by Judge Chris Brown in the Franklin County Court of Common Pleas. A December 23 filing by Yost’s office compared movement of funds from the sale of Randazzo’s Florida condominium to parking a car somewhere else to avoid having it repossessed. And the brief noted, “electronic funds move much faster than any car.” The court has yet to rule on that and other objections to a magistrate’s order entered in December. The ongoing disputes could affect whether the state can eventually collect against Randazzo if it wins its case against him for alleged corruption related to HB 6 and FirstEnergy. Class actionsClass action cases continue against FirstEnergy. An amended complaint in a state court ratepayer case now aims to find out whether FirstEnergy and its subsidiaries used money from ratepayers “to fund illegal efforts to pass HB 6.” Other relief sought includes damages related to a loss of public confidence and other costs incurred as a result of the alleged HB 6 conspiracy. Meanwhile, yet another shareholder case alleges violations of federal securities laws by FirstEnergy and various current and former officers. That case is pending in the U.S. District Court for the Southern District of Ohio. Judge Sarah Morrison dismissed a shareholder case against American Electric Power in late December. The case had alleged misrepresentations relevant to the company’s dark money spending and HB 6. AEP’s lawyers argued that company statements pledging transparency about lobbying and political spending were “‘textbook’ puffery,” and the judge agreed. The ruling contrasts sharply with the Securities and Exchange Commission’s announced intent to ramp up enforcement related to companies’ statements about environmental, social and governance matters. Read more: AEP admits in court: Its corporate accountability reports are mere “puffery”(Energy and Policy Institute) Revoke the charter?Move to Amend Ohio and other groups began the new year by asking Attorney General David Yost to revoke FirstEnergy’s corporate charter because of its conduct related to HB 6. Chances that the groups’ letter will cause FirstEnergy to lose its corporate charter are nearly nil. Nonetheless, the letter fits into the Move to Amend Coalition’s larger efforts to get a constitutional amendment to reverse court rulings that have let corporations give to dark money groups with practically no limits, said spokesperson Greg Coleridge. Case closedU.S. Bankruptcy Judge Alan Koschik ordered the bankruptcy case for FirstEnergy Solutions (now Energy Harbor) closed on December 22. Closing the case ends the bankruptcy chapter in the saga of FirstEnergy’s former subsidiary, even as questions about Energy Harbor’s involvement in HB 6 continue. Rulings in 2020 largely insulated the former parent company from cleanup and closure costs for the Davis-Besse and Perry nuclear power plants. Some of those costs could fall on taxpayers if Energy Harbor later becomes insolvent. Eye on Utilities: December 2021Objects in the rearview mirror are closer than they appearThis monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network. The next edition will be sent on Tuesday, Jan. 18. Got a question? Story idea? Send tips or comments to info@eyeonohio.com. By Kathiann M. Kowalski This past month’s developments in the ongoing saga surrounding House Bill 6, Ohio’s nuclear and coal bailout law, include:
Objects in the rearview mirror?Earlier this month, FirstEnergy CEO Steven Strah said he sees the House Bill 6 scandal as something in the company’s “rearview mirror.” In his view, the company is moving ahead after taking steps “to rebuild trust and confidence.” Some of those steps were taken under a July 2021 deferred prosecution agreement. Under its terms, the company admitted to paying millions of dollars to organizations in return for official action from former Ohio House Speaker Larry Householder and the former chair of the Public Utilities Commission of Ohio, Sam Randazzo. Yet the company’s HB 6 legal challenges aren’t as long ago and far away as Strah or others might wish. While some civil lawsuits are stayed, other lawsuits brought on behalf of shareholders or ratepayers are moving ahead. In one class action brought on behalf of ratepayers, FirstEnergy argued on Nov. 19 that HB 6 should shield the company from claims for money and other relief, despite any admitted or alleged wrongdoing on the part of the company. Read more:
Persons with knowledge?Former FirstEnergy CEO Chuck Jones and ex-external affairs vice president Michael Dowling have listed Ohio Lt. Gov. Jon Husted as someone “believed to have knowledge” about facts relevant to shareholder claims arising out of alleged corruption at the company. Others listed include lawmakers who voted for HB 6, current and former utility commissioners, staff and hearing examiners, co-defendants, and more. Dowling followed up with subpoenas to dark money groups Generation Now and Partners for Progress, seeking documents relating to communications with other dark money organizations, as well as Husted, Gov. Mike DeWine, former DeWine aide and FirstEnergy lobbyist Dan McCarthy, and a variety of other people. Pre-trial lists of potential witnesses are typically very broad. Nonetheless, the filings raise questions about what involvement the lieutenant governor’s and governor’s offices may have had in any alleged corruption. “The Lt. Governor doesn’t have any idea why he was named as he doesn’t know what information they might be referencing,” said Husted’s press secretary, Hayley Carducci. She did not answer a question about what Husted, DeWine, Jones and Dowling discussed when they dined at the Athletic Club of Columbus on Dec. 18, 2018, just weeks before DeWine took office and Randazzo was appointed to the PUCO. DeWine previously said he couldn’t recall the discussion at that meeting. His office did not respond to further questions from the Energy News Network and Eye on Ohio after Dowling’s filings in November and December. Meanwhile, initial depositions have been scheduled in the case. A deposition lets lawyers for a party ask questions that a witness must answer under oath. The various depositions could verify or uncover facts needed to prove claims in the case. However, transcripts or other materials from pre-trial fact-finding may be subject to orders that keep them from the public unless those materials are later filed with the court. Read more:
Half-speed ahead?The office of the Ohio attorney general wants to move ahead with legal fact-finding procedures, or discovery, in its civil racketeering case against FirstEnergy, Energy Harbor and others. As far as Energy Harbor and FirstEnergy are concerned, the case has been mostly idle since February. FirstEnergy and Energy Harbor have both opposed the move, claiming that pre-trial fact-finding and other actions could prejudice Jones, Dowling and Randazzo. Energy Harbor’s brief used the term “unindicted defendants” to refer to those individuals added to the case this summer. FirstEnergy entered into a deferred prosecution agreement with federal prosecutors in July. As of Dec. 12, Energy Harbor had not yet been indicted for any criminal charges in connection with HB 6. Both remain potentially liable for claims by the state of Ohio. Additionally, Ohio’s 10th Circuit Court of Appeals also upheld Brown’s order requiring a bond from Randazzo while he appeals the state’s attachment and garnishment of various assets. The ruling limits Randazzo’s ability to dispose of assets that might pay a judgment against him if the state prevails in its civil racketeering case. Meanwhile, the cities of Columbus and Cincinnati settled their lawsuit against FirstEnergy and Energy Harbor. The dismissals are “with prejudice,” meaning they preclude the cities from bringing the same claims at a later time. Read more:
Not looking for the facts?Although the PUCO has multiple cases open to look into FirstEnergy’s actions surrounding HB 6, those inquiries continue to be largely fragmented and limited. “I don’t think there’s ever been a commission that’s so completely passive than this one,” said Ashley Brown, a former PUCO commissioner who now heads the Harvard Electricity Policy Group. The PUCO’s first step was basically to tell FirstEnergy to investigate itself. Since then, information about FirstEnergy’s payments to Randazzo have emerged, and the company entered into a deferred prosecution agreement that essentially admitted to bribery and wrongdoing. Yet while some audit reports have been ordered, rulings by the commission and hearing examiners have stayed the course of looking at narrow issues, instead of the big picture. Meanwhile, the company has fought against and continues to resist full disclosure of information and documents, including the investigation report that led to firing Jones, Dowling and others. And PUCO staff told bidders on a corporate separation audit not to include HB 6 within its scope. That September audit on corporate separation also noted it was missing documents spanning five years. “It is difficult in this case for the PUCO to discover the facts about the FirstEnergy scandal while not looking for them. A supplemental audit is needed,” said lawyers for the Office of the Ohio Consumers’ Counsel in their Nov. 22 comments. That non-regulated subsidiary’s money pool arguably makes it harder to trace where millions from an unlawful credit support rider and other ratepayer money went. Read more:
AEP also faces challengesFirstEnergy and its current and former affiliates funded most of the dark money spending behind HB 6, but there were others as well. AEP gave about $8.7 million to Empowering Ohio’s Economy from 2015 through 2020. That group, in turn, funneled roughly $900,000 to other groups involved in the HB 6 scandal. AEP received a subpoena from the Securities and Exchange Commission earlier this year, and the company faces shareholder claims as well. On Nov. 23, Judge Sarah Morrison heard arguments on AEP’s motion to dismiss a case in which plaintiffs claim “that while AEP distanced itself from HB6 publicly, it was in fact flooding Householder (and politicians aligned with Householder) with contributions to secure HB6’s passage, including dark money contributions.” A ruling had not yet been issued as of Dec. 12. Meanwhile, the latest IRS filing by Empowering Ohio’s Economy shows that it gave about $1.5 million to other dark money groups in 2020. Most of that went to Open Road Path, which had gotten roughly $2 million from Empowering Ohio’s Economy in 2019. One of the organizations that got money last year was involved in Householder’s efforts to change Ohio’s existing term limits. If successful, it could have let Householder keep his House seat for up to 16 years. Read more:
Eye on Utilities: November 2021We’re here to help you keep track of Ohio’s HB 6 scandal.This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network. The next edition will be sent on Tuesday, December 14. Got a question? Story idea? Send tips or comments to info@eyeonohio.com. Was this forwarded to you? Click here to subscribe. By Kathiann M. Kowalski The month’s developments include:
Full speed ahead? The Office of the Ohio Consumers’ Counsel renewed its call for an independent audit of FirstEnergy’s charitable and political spending, along with a request for independent oversight, on October 26. Two days later, a PUCO hearing examiner said a ruling would be put off until a review of any “relevant and probative evidence proffered in the comments” that are now due on November 29. OCC’s motion seems to reflect growing public distrust of the PUCO as an independent regulatory agency. And the hearing examiner’s response raises questions about whether the PUCO intends to find out the full story behind FirstEnergy’s political and charitable spending, or stick to its initial approach of basically letting FirstEnergy investigate itself. The October 28 ruling also presents OCC and other challengers with an apparent Catch-22: Present “relevant and probative evidence” that FirstEnergy and its utilities improperly used ratepayers’ money, but do it without all the facts that an independent audit would provide — or even all the documents and testimony that challengers have said they need. OCC’s request for a mid-case appeal on certain efforts to get that information likewise remains outstanding. Read more: FirstEnergy’s admissions feed critics’ call for big-picture regulatory oversight and review (Energy News Network) Seeking full disclosure? In a related case, a PUCO hearing examiner ruled last month that FirstEnergy didn’t have to produce its report showing why former CEO Chuck Jones and others were let go last year. The report and other materials could have shed more light on alleged wrongdoing by those persons and the company, as well as by Randazzo. FirstEnergy has admitted it paid $4.3 million to a company linked to Randazzo shortly before his appointment to the PUCO. During a November 4 pre-hearing conference for a Maryland case, however, Public Service Commissioner Odogwu Obi Linton said that FirstEnergy and its Potomac Edison subsidiary must nonetheless answer questions about the report and provide documents from its investigation. The ruling may make it harder for the PUCO to shield the materials from scrutiny as the Ohio Consumers’ Counsel pursues further action. Pay no attention… Dennis Chack, who had texted with Jones about Randazzo’s efforts for FirstEnergy, was a senior vice president for the company and had previously headed its Ohio operations. Before FirstEnergy let him go last year, Chack also had been president and manager of Suvon, a FirstEnergy subsidiary formed after HB 6 passed and known as FirstEnergy Advisors. On October 14, the Ohio Supreme Court reversed a ruling by Randazzo and other PUCO commissioners that had approved Suvon’s power broker application in April 2020. The PUCO’s “barebones order” didn’t explain how the company met relevant legal requirements. Moreover, the PUCO didn’t give the Ohio Consumers’ Counsel or the Northeast Ohio Public Energy Counsel any chance to get documents and information from the company, or any hearing on their objections on corporate separation and other issues, the court noted. On November 3 the PUCO let Suvon withdraw its application and closed the case. The day before, FirstEnergy Advisors had argued that the PUCO should take that action and let it submit a new application, thus providing a “fresh start” and avoiding “any appearance of impropriety” from texts between Jones and Chack about “talking with Sam on energy license.” In other words, when the company refiles its application, FirstEnergy will want the PUCO to ignore evidence relevant to alleged corruption, despite FirstEnergy’s lawyers including that evidence with its November 2 filing. By ruling the very next day, the PUCO did “exactly what the [Ohio] Supreme Court said not to do,” said former PUCO commissioner Ashley Brown, who now heads up the Harvard Electricity Policy Group. The commission gave FirstEnergy “exactly what it asked for—no record, no nothing. They dismissed the case without even giving the opponents an opportunity to be heard on remand.” The Office of the Ohio Consumers’ Counsel and NOPEC now want the PUCO to broaden its corporation separation audit of FirstEnergy, pointing to the Chack and Jones texts as apparent evidence of both a violation of the separation rules and improper communications with Randazzo about a pending case. Additionally, the filing notes, although a September report found no major violations of corporate separation rules, PUCO staff had told auditors bidding on that work not to investigate HB 6 spending. Read more: FirstEnergy foray into energy brokering raises issues of fair competition. (Energy News Network) Texts detail how Ohio regulator gave FirstEnergy inside help. (AP) Seeking reform Expect PUCO reform to be on some candidates’ agendas next year. On November 4, Cincinnati Mayor and Democratic gubernatorial hopeful John Cranley suggested firing all current PUCO commissioners and naming new ones, as well as reforming processes within the commission and restoring Ohio Consumers’ Counsel funding that was cut several years ago. The Energy Jobs and Justice Act introduced this fall likewise proposes reforms at the PUCO. The bill would also require refunds of charges later held unlawful. HB 429 was referred to the Ohio House Public Utilities Committee on October 12. No hearings have yet been held. Meanwhile, Randazzo remains on the hook financially in the State of Ohio’s civil case arising out of HB 6. On October 25, Judge Chris Brown refused to stay, or suspend, an order that let the state attach his assets — including a now-infamous pink 2002 Porsche — unless Randazzo puts up an $8 million bond pending his appeal from that order. Read more: “You’re fired.” Dem gov. Candidate Cranley promises to clean house at PUCO.” (Ohio Capital Journal) Ordinary expenses? Filings in the bankruptcy case for FirstEnergy Solutions shed new light on the extent of company spending for HB 6 lobbying and other political matters and show that such payments were treated as “commonplace.” Filings by Akin, Gump, Strauss, Hauer & Feld, LLC said the firm’s lawyers and advisors knew about FirstEnergy Solutions’ spending for HB 6 lobbying and other political purposes, but denied being aware of any illegal activity. Roughly $2.8 million of the law firm’s nearly $68 million in fees for the bankruptcy case was for Ohio-related lobbying and political activities. The company’s lawyers didn’t seek prior approval from the bankruptcy court for various political expenditures, even though the firm at one point charged for preparing an unfiled motion for that purpose. Read more: Bankruptcy court overseeing Energy Harbor case didn’t pre-approve $500K political donation. (Columbus Dispatch) House Bill 6 lobbying: Push by lawyers, others on FirstEnergy Solutions’ team detailed in filing. (Columbus Dispatch) Still spending on politics FirstEnergy itself has had a long history of lobbying and campaign contributions. Indeed, Brown at the Harvard Electricity Policy Group, described the company as a “giant lobbying firm that runs a utility as a sideline.” FirstEnergy did not report spending on Ohio campaigns from June through September of this year. Nonetheless, the company still shelled out half a million dollars on lobbying at the federal level from July through September, suggesting that lobbying is still central to the company’s business. FirstEnergy’s lobbying in Congress has focused on the bipartisan infrastructure framework, grid modernization, clean energy issues, and other matters. A company spokesperson would not provide detail on what positions the company pushed for on those issues. Among other things, the $1 trillion infrastructure bill passed on November 5 includes funding for energy- efficient weatherization, electric vehicles, and grid modernization, which could advance a transition to clean energy. The bill also authorizes $6 billion for noncompetitive nuclear power plants, as well as expanded funding for carbon capture technology from fossil fuels. Read more: FirstEnergy and AEP still spending big on lobbying Coal subsidies costing more Ohioans can now expect to pay up to $1.8 billion by 2030 for HB 6’s coal subsidies to two 1950s-era power plants, according to an updated analysis by RunnerStone for the Ohio Manufacturers’ Association. Representatives of AEP Ohio, Duke Energy Ohio, AES Ohio and the Ohio Valley Electric Corporation testified against getting rid of those subsidies on October 27. There is bipartisan support for bills to eliminate the subsidies, but not momentum. House Bill 351, is sponsored by Republicans Laura Lanese and Reggie Stoltzfus; however, comments by House Speaker Bob Cupp and House Majority Leader Bill Seitz raise questions about how far the bill will progress. Meanwhile, the Ohio Senate has yet to schedule more committee hearings on its bipartisan bill to get rid of the subsidies. Read more: Ohio’s solar project queue on pace to surpass coal capacity this decade. (Energy News Network) Energy efficiency after HB 6? HB 6 supporter Seitz and HB 6 foe David Leland have nonetheless teamed up as primary sponsors of a bill to let utilities offer voluntary energy efficiency programs in the wake of HB 6. HB 389’s potential benefits for consumers can’t be estimated until utilities propose specific programs. However, savings would almost certainly fall short of what Ohio ratepayers would have had without HB 6, due to a lower annual target and other provisions. Hearings in October raised additional concerns, such as paying incentives to utilities for energy efficiency programs, as well as lost distribution revenues. Read more: Report: Ohio and other states losing millions from rollbacks of energy efficiency standards (Energy News Network) Money back In yet another case, FirstEnergy will refund $306 million to consumers over a five-year period in a settlement announced on November 1. Earlier PUCO rulings on its utilities’ “significantly excessive earnings” hadn’t figured in millions of dollars from an unlawful credit support rider. The PUCO will likely approve the unopposed settlement. Critics have questioned whether the rider was a source of some of the roughly $60 million that FirstEnergy and its current and former affiliates spent on House Bill 6. Refunds under the new settlement agreement won’t be for the credit support rider itself, but only for some of the excessive profits FirstEnergy’s utilities reaped as a result. The Ohio Supreme Court reversed the PUCO’s earlier order favoring FirstEnergy last December. And earlier this year, lawmakers repealed an HB 6 provision that had let FirstEnergy’s utilities average among its three Ohio utilities in making the excessive earning calculations. Read more: FirstEnergy agrees to give more than $300 million in customer refunds under settlement. (Cleveland.com) FirstEnergy refunds renews calls for PUCO reform. (Statehouse News Bureau) HB 6 Update: Football season editionThis periodic newsletter provides updates on Ohio’s ongoing House Bill 6 scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network. Joining the free mailing lists for Eye on Ohio and the Energy News Network helps provide more public service reporting. By Kathiann M. Kowalski A ‘complex’ case Don’t expect the criminal corruption case against former Ohio House Speaker Larry Householder and others to go to trial before spring of next year. The briefing schedule set by Judge Timothy Black on October 5 calls for any pretrial motions to be filed by February 1, with responses and any replies by early March. Government lawyers said the Department of Justice has produced most discovery materials to the defendants and are working to review and process additional documents it has received. The “complex” nature of the case makes it unreasonable to adequately prepare for trial within the normal guidelines for guaranteeing a speedy trial under the Constitution, the court found. The court’s next status conference will be on January 26, 2022, before pretrial motions are due. The delay also means it will take longer to find out whether and how Householder and other defendants in the case will be held accountable for their alleged actions. Several court cases are also stayed, or on hold, while the criminal case is pending. They include the state of Ohio’ civil cases against Householder, FirstEnergy, Energy Harbor, former FirstEnergy executives Chuck Jones and Michael Dowling, and Sam Randazzo, former chair of the Public Utilities Commission of Ohio. Document disputes Without full transparency, advocates say it will be harder to find out how much money for the HB 6 scandal ultimately came out of consumers’ pockets. And it will be harder to prevent future cases of corruption. Nonetheless, FirstEnergy continues to resist producing all documents relevant to its HB 6 activities. A September 14 mid-case ruling limited what materials the Office of the Ohio Consumers’ Counsel can get so far. Government agencies have likewise lagged behind in document production. Speaking on September 28, Rep. Jeffrey Crossman, D-Parma, detailed problems he and Casey Weinstein, D-Hudson, faced in trying to get public records from Gov. Mike DeWine’s office and from the PUCO. ‘Independent’ audits? The PUCO’s independent audits may not be so independent after all, suggest emails attached to testimony on a bill to repeal HB 6’s coal plant subsidies. Before HB 6 became effective, the two 1950s-era plants were subsidized under certain PUCO orders, subject to an audit. Ohioans now shell out about $233,000 per day for them under HB 6. The emails from last year show that American Electric Power’s Ohio utility got an advance copy of an audit on the coal plants’ costs “for redacting.” Additionally, PUCO staff asked for “reduced subjectivity” and less detail about the HB 6 scandal, along with changes to the auditor’s conclusion that “keeping the plants running does not seem to be in the best interests of the ratepayers.” It’s unclear how many other times similar practices have happened, or how FirstEnergy may have shaped audit reports in its HB 6 cases at the PUCO. In at least one case from 2013, FirstEnergy provided extensive comments on a draft audit report after its utilities paid their affiliate FirstEnergy Solutions between $481 and $700 per credit for renewable energy credits for 2009, 2010 and 2011. Other materials suggested $45 to $52 per credit was a reasonable price at the time. No major violations? The importance of impartial, independent audits is underscored by a September 13 audit report on FirstEnergy’s corporate separation compliance. The auditor, Daymark, found no major violations of the company’s legal obligation to keep the businesses of its regulated Ohio utilities separate from their affiliates. Nonetheless, the eight minor violations and 13 opportunities for improvement might have facilitated money transfers related to the alleged corruption scheme or improper charges to consumers. Additionally, that report noted that the auditor was missing five years’ worth of materials from FirstEnergy’s former compliance officer, who was let go in the wake of the HB 6 scandal. The gaps matter because they could have influenced the report’s conclusions. Beyond that, they raise more questions about the thoroughness and integrity of the PUCO audit process. Former dark money man out Dan McCarthy resigned as Gov. Mike DeWine’s director of legislative affairs on Friday, September 24. Prior to serving in DeWine’s administration, McCarthy was president of the Success Group, where he was a registered lobbyist for FirstEnergy and various other clients. McCarthy also had been the president of the nonprofit group Partners for Progress, Inc. FirstEnergy admitted in July that its former executives were involved in setting up the group, funding it, and directing its payments to other groups in the HB 6 scandal. DeWine stood by McCarthy for more than a year after federal officials arrested former House speaker Larry Householder and others in July 2020. Still to go? Crossman, Weinstein and Kent Smith, D-Euclid, have also called for the resignation of Laurel Dawson, DeWine’s former chief of staff. She continues to serve as a counselor to the governor. Former PUCO chair Sam Randazzo said in 2019 that Dawson and Lt. Gov. Jon Husted helped recruit him for the position. Dawson apparently had warnings about Randazzo’s ties to FirstEnergy before his appointment as PUCO chair. Dawson’s involvement also raises questions about how long she or DeWine might have sat on knowledge about FirstEnergy’s $4.3 million payment to Randazzo. DeWine’s statements this summer indicated that Randazzo may have told her about the money as early as late October of 2020, and she told him. But DeWine was vague about the timing. The FBI raided Randazzo’s home in November last year. He didn’t resign until days later. Stadium saga Also in September, Smith and Crossman asked Cleveland Browns owners Jimmy and Dee Haslam and Cleveland Mayor Frank Jackson to remove FirstEnergy’s name from the lakefront stadium where the team plays. Spokesperson Jennifer Young said the costs were incurred by the parent company, FirstEnergy Corp., and that the company “has a longstanding commitment to supporting communities through sponsorship of civic, athletic and arts organizations.” Nonetheless, on September 29, the PUCO expanded an ongoing rate audit to find out if costs for the naming rights had been passed on to ratepayers. Meanwhile, unless all parties concur, any name change for the stadium likely would depend on contractual terms agreed upon by the parties and approved by Cleveland’s city council in 2013. That 17-year deal was reportedly worth $6 million a year, for a total of $102 million. |