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Eye on Utilities January 2022

Winter brings more chilling news in Ohio’s ongoing HB 6 scandal

Bill rider money unaccounted for, and DeWine backs away from coal subsidies 

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, 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:

  • The Office of the Ohio Consumers’ Counsel continues to face hurdles in getting information and documents at the Public Utilities Commission of Ohio. Nor does the PUCO’s order of an additional audit last month make matters easier for the consumer advocate and others.
  • Just as news breaks that one of two HB 6-supported coal plants may have to close under federal rules for coal ash ponds, Gov. Mike DeWine backs off on support for HB 6’s coal plant subsidies.
  • A federal judge dismissed a shareholder case against American Electric Power, characterizing company statements about environmental, social and governance matters as “puffery.”

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 finding

The 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 motion

Attorney 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 actions

Class 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 closed

U.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 2021

Objects in the rearview mirror are closer than they appear

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, 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:

  • FirstEnergy CEO Steven Strah says House Bill 6 is “something that’s behind us,” but the company remains embroiled in lawsuits seeking to hold it liable to shareholders and ratepayers.
  • Former FirstEnergy executives’ filings in civil cases raise questions about what Lt. Gov. Jon Husted, Gov. Mike DeWine and others in his administration or active in the Ohio GOP knew about the bribery scheme to pass legislation favorable to FirstEnergy.
  • Additional criminal indictments can be expected, suggest filings by Energy Harbor and FirstEnergy in a state case brought by Ohio Attorney General David Yost.
  • The cities of Columbus and Cincinnati have dismissed state court claims against FirstEnergy. 
  • Filings with the Public Utilities Commission of Ohio continue to question the lawfulness of actions by FirstEnergy’s utilities, as well as the limited inquiries undertaken by the commission.
  • AEP also faces litigation linked to HB 6.

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 challenges

FirstEnergy 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 2021

We’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:

  • Continued fallout and questions about what the Public Utilities Commission of Ohio is doing in the wake of corruption claims linked to former PUCO chair Sam Randazzo.
  • A Catch-22 and other glitches for challengers in regulatory cases linked to House Bill 6, but a settlement with FirstEnergy on “significantly excessive earnings” based on an unlawful rider charge.
  • New insights into business-as-usual political spending by FirstEnergy and its former subsidiary, FirstEnergy Solutions (now Energy Harbor).
  • Progress in the legislature on restoring some limited energy efficiency benefits after HB 6, while utilities fight against ending the law’s coal plant subsidies, which could reach $1.8 billion by 2030.
  • Passage of a federal infrastructure bill funding a wide range of programs, including some clean energy and grid modernization initiatives, while also providing money for noncompetitive nuclear plants and carbon capture for fossil fuels.

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 edition

This 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.