Five years after Gov. Mike DeWine signed House Bill 6 into law, Ohio citizens and ratepayers are still paying the price. 

Ohio lawmakers still haven’t taken steps to repeal the rest of the nuclear and coal bailout bill, which is the focus of what prosecutors say was a roughly $60 million bribery scheme by utility FirstEnergy and its affiliates. Cases continue to wind through the courts, and two men implicated in the scandal have apparently taken their own lives. 

“It’s been really painful, and we’re still living with the consequences of House Bill 6,” said Catherine Turcer, executive director of Common Cause Ohio.

Shepherded by former Ohio House Speaker Larry Householder, the bill swept through the legislature in 2019, passing just 3 and a half months after its first introduction and despite massive opposition from consumer advocates, environmental groups, renewable energy interests and others.

The law called for more than $1 billion in subsidies for two nuclear plants for which FirstEnergy had been seeking bailouts since 2014. Additional provisions included subsidies for two 1950s-era coal plants known as the OVEC plants, along with gutting of the state’s renewable energy and energy efficiency standards. A referendum effort that would have let voters reject the law under Ohio’s constitution was ultimately thwarted amid claims of misleading ads, harassment of signature collectors and other problems.

One year after the bill passed, federal agents arrested Householder and others on charges under the Racketeer Influenced and Corrupt Organizations Act, known as RICO. The complaint outlined a $60 million criminal enterprise scheme funded by dark money, most of which came from FirstEnergy or its affiliates — roughly four times as much as the Energy News Network and Eye on Ohio had been able to track before the arrests.

Sam Randazzo resigned his position as chair of the Public Utilities Commission of Ohio months later, following an FBI raid on his home in November 2020. In July 2021, FirstEnergy entered into a deferred prosecution agreement with the Department of Justice, admitting it had bribed Householder and Randazzo.

Neil Clark, a lobbyist indicted in the scandal, apparently committed suicide in Florida in March 2021. Randazzo did the same in a Columbus warehouse he owned in April of this year, as he faced indictments on both federal and state criminal charges, along with loss of his license to practice law.

Calls for a full repeal of HB 6 came immediately after the 2020 arrests, but languished for months. Months after the next election, lawmakers finally repealed the law’s nuclear subsidies and a provision for guaranteed utility revenue, but left the rest of the law intact.

Bills to repeal the coal plant subsidies still have not gotten a full vote, and the state’s clean energy standards remain gutted. And full information about the corruption scandal has yet to come out, including answers to questions about Gov. Mike DeWine’s and Lt. Gov. Jon Husted’s involvement.

“The legislature hasn’t done anything to create greater transparency, to address dark money, to ensure we aren’t ripped off,” Turcer said.

“There’s this interesting intersection of dark money and gerrymandering and general decision-making and accountability at the statehouse,” Turcer continued.

Dark money refers to political spending that can’t be readily traced, and gerrymandering is the drawing of voting districts to advantage one political party over another. Together, both can undermine democracy and have delayed progress on climate change.

Still subsidizing coal

“The fact that we’re still bailing out the coal plants is just insane to me,” said Neil Waggoner, Midwest campaign manager for the Sierra Club’s Beyond Coal program. The Kyger Creek plant is in Cheshire, Ohio, and the Clifty Creek plant is in Madison, Indiana. Both plants consistently lose money.

“Those coal subsidies are costing consumers $500,000 per day,” said Ohio Consumers’ Counsel Maureen Willis. Her office estimates Ohioans have paid more than $330 million since January 2020. RunnerStone, a consultant for the Ohio Manufacturers’ Association Energy Group, projects the HB 6 coal subsidies could reach $1 billion by 2030.

The utilities that own the plants defend their continued operation.

“Customers in Ohio receive electricity from OVEC for what it costs to produce it and the funds are used to pay down debt with no proceeds going to shareholders,” said Scott Blake, a spokesperson for American Electric Power, which owns the largest share of OVEC, with other utilities inside and outside ofn Ohio owning shares. More than 500 employees work to make sure the plants operate as efficiently as possible, he added.

Since 1999, however, Ohio law has generally let consumers choose their electricity supplier. “And recent testimony by Duke executive [Amy] Spiller confirms the coal plants will continue to operate even if the subsidy ends,” Willis said.

The question comes down to whether the companies that made bad business decisions to keep noncompetitive plants running should pay their expenses, “as opposed to the public eating the cost,” Waggoner said.

Higher bills

HB 6 not only added subsidies to consumers’ electric bills. It also axed clean energy standards whose net savings for Ohioans had been about $9 per month.

“The elimination of the energy efficiency programs never made sense because they helped customers reduce their electricity usage,” said Rob Kelter, an attorney with the Environmental Law & Policy Center. “They lowered their bills. And they reduced pollution.”

Yet a legislative analysis claimed cutting those programs to pass HB 6 could save Ohioans’ money, a position that was further buttressed by testimony from then-PUCO chair Randazzo. Those arguments left out customers’ savings from avoiding wasted energy and lower overall capacity costs, Kelter said.

A bill to allow some permissive energy efficiency programs finally passed in the Ohio House last month, but passage in the state Senate isn’t guaranteed.

Regulatory scrutiny

Randazzo not only played a key role in shaping HB 6 and getting it passed. He also shaped the PUCO’s piecemeal response after Householder and others were arrested. That approach has continued, even after criminal charges were brought against Randazzo in federal and state court.

“Even after the revelations of what former PUCO Chair Sam Randazzo did for FirstEnergy in the halls of the PUCO, the agency itself has not had to answer to the public,” Willis said. “Case decisions issued while the former Chair led the agency have not been examined.”

“Why has there not been a management audit at the commission?” asked Ashley Brown, a former PUCO commissioner who subsequently headed the Harvard Electricity Policy Group. “Something clearly went wrong. We know that the chairman was bribed. We know that the other people went along.”

Agency spokesperson Brittany Waugaman noted the PUCO has four ongoing investigations in cases relating to FirstEnergy, but did not respond to questions about whether regulators plan to conduct an internal review of its own operations or otherwise review decisions in which Randazzo had participated.

Moreover, “the PUCO too often has made it difficult to get to answers for consumers,” Willis said. “Adverse discovery rulings, unrealistic case schedules, and limited audits, are a few of the problems for consumers.”

Who else?

The federal Department of Justice asked for three delays in discovery for the state regulatory cases, but after the initial 2020 arrests Randazzo was the only additional individual to face federal criminal charges, and he is now deceased. Meanwhile, Ohioans remained on the hook for charges. So in Brown’s view, the delays made sure consumers continued to be victimized by the crime.

The state did file criminal charges earlier this year against former FirstEnergy executives Chuck Jones and Mike Dowling, along with Randazzo and companies he controlled, as well as Householder. Company lawyers previously identified Jones and Dowling as having paid the bribes behind HB 6. But it remains unclear whether they or others will ever face federal criminal charges, said Dave Anderson, policy and communications manager for the Energy and Policy Institute.

Anderson and others also have questions about the involvement of American Electric Power, which paid $900,000 to dark money groups that supported HB 6.

Blake, the AEP spokesperson, said “management does not believe that AEP was involved in any wrongful conduct in connection with the passage of HB 6.” 

Anderson rejects that notion.

“While AEP has not been charged with any crime in connection with HB 6, disturbing new details about the financial relationship between Householder and the utility emerged during the convicted former Ohio House Speaker’s trial last year,” Anderson responded. And the company also has acknowledged it may face civil penalties from a SEC investigation, he added.

“I don’t how AEP defines wrongdoing, but common sense should tell AEP’s customers and regulators that something stinks here,” Anderson said. “AEP owes ratepayers answers, and unfortunately the PUCO has completely failed to investigate AEP’s role in the HB 6 scandal.”

Some bright spots

As consumers continue to face consequences from HB 6, so do Householder and lobbyist Matt Borges, Turcer said. Both are in federal prison while they appeal their criminal convictions in federal court from last year.

FirstEnergy might have to allow some credits or pay penalties as a result of the four pending PUCO cases, Anderson noted. That would be in addition to a $230 million penalty paid to the federal government and class action settlements in a few court cases.

Quarterly reporting requirements under the deferred prosecution agreement of donations to nonprofit groups also may have reined in some of FirstEnergy’s political influence in Ohio, Anderson said. FirstEnergy spokesperson Jennifer Young said the company plans to continue reporting donations, even after the deferred prosecution agreement’s term ends.

Young also highlighted other company reforms including enhanced controls, separation of functions for its top ethics and legal officers and better transparency to stakeholders.

“Today, FirstEnergy is a different, stronger company with a sound strategy, a highly effective compliance program and a companywide culture of ethics, integrity and accountability,” Young said.

Yet the company’s claims about transparency have fallen short, Willis said. “Lawyered-up FirstEnergy… continues to block efforts to publicly disclose their internal investigation reports produced in the wake of the HB 6 scandal.”

Energy policy

Ohio’s energy policy continues to feel impacts from HB 6 as well.

“It does make me wonder where we would be with renewable energy if HB 6 had been completely repealed, or if there hadn’t been this orchestrated campaign, not just to bail out nuclear plants or subsidize coal plants, but also to diminish our commitment to renewable energy and our funding for renewable energy,” Turcer said. Yet now, “the air we breathe is actually dirtier.”

HB 6 “cast such a long shadow over energy policy in Ohio,” said Tom Bullock, executive director for the Citizens Utility Board of Ohio. The energy industry is going through the greatest change in a century, with technological innovations in how energy is produced and stored, as well as new business models, he noted.

“We need to be thoughtful, so that we can grow industry and keep prices affordable and convert to clean and smart and distributed energy,” Bullock said. Otherwise, “We’ll be the last in the Midwest to get there if the way we make energy policy decisions is based on the wish list from traditional energy interests.”

Consequences continue as bill at center of Ohio utility corruption scandal marks fifth anniversary is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal 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.

U.S. District Judge Timothy Black sentenced former Ohio House speaker Larry Householder to 20 years in federal prison and gave lobbyist Matt Borges a five-year sentence for their roles in Ohio’s House Bill 6 corruption scandal. Here’s what to expect next, plus an update on other developments:

• Appeals by Householder and Borges will likely raise multiple issues.
• On June 28, the Ohio Supreme Court heard arguments on whether the state should still be able to freeze some assets owned by Sam Randazzo, who formerly headed the Public Utilities Commission of Ohio. Randazzo is a defendant in the state’s civil corruption case against FirstEnergy, Energy Harbor and others. 
• A challenge to FirstEnergy’s privilege claim for its internal investigation on HB 6 raises more questions about the company’s former employees.
•  The U.S. attorney’s office said its investigation into other individuals continues, but it’s unclear when more criminal charges might be filed.
• HB 6 charges for two 1950s era coal plants started mounting up again on July 1. The current House speaker blocked an effort to repeal the charges.

What’s next for Householder and Borges?

Householder’s 20-year prison sentence for his role in the HB 6 corruption scheme was at the high end of the government’s requested 16- to 20-year range. Borges’ five-year sentence was at the low end of the five- to eight-year range sought by prosecutors. Householder’s lawyers had asked for just 12 to 18 months, and Borges’ lawyers asked for a sentence of one year and a day.

Householder’s sentence in particular “sends a strong message to Ohio politicians that politics isn’t, and shouldn’t be, a game,” said Miranda Leppla, who heads the environmental law clinic at Case Western Reserve University School of Law. “I hope any politician that thinks their donors’ interests are more important than their constituents thinks long and hard about their role in the statehouse and whose interests they’re supposed to serve as an elected member of the legislature.”

Both defendants “have the right to appeal any trial and sentencing issues they identify,” said Michael Benza, who teaches criminal law and procedure at Case Western Reserve University School of Law. “Clearly one of those issues will be related to the burden of proof outlined in cases from the Supreme Court like McDonnell v. United States.”

That case dealt with jury instructions on what was required to show “official action” by a former Virginia governor.

Notices of appeal are generally due 14 days after the court’s entry of the judgment of conviction.

Expect the defendants to raise more objections, too. Those might include:

• Procedural issues. Among other things, lawyers for Householder and Borges might challenge whether they should have been tried together, whether the indictment was proper and other rulings.
• Admissibility of evidence. Pretrial motions objected to different types of evidence, such as recordings of co-defendants, particularly of lobbyist Neil Clark. Clark implicated Householder and the dark money group Generation Now in talks with undercover federal agents but could not be called at trial because he died in 2021. Defendants might also challenge rulings on other exhibits, as well as whether the court should have let in more evidence about the claimed merits of HB 6, Borges’ argument that the Trump administration was biased against him, or the general use of dark money as part of business as usual in Ohio politics.   
• Sufficiency of the evidence. Defendants will likely challenge Judge Black’s ruling that the government presented enough evidence against them to allow the case to go to the jurors.
• Jury instructions. The defendants might object to multiple jury instructions beyond the “official action” issue. Householder’s lawyers wanted the court to let jurors speculate about what one witness might have said if he had been put on the stand, for example. (The person’s lawyer had indicated the witness would invoke his Fifth Amendment right against self-incrimination.)
• Post-verdict motions. Although neither Householder nor Borges filed timely post-verdict motions, Borges might challenge a May 22 ruling denying yet more time based on two recent Supreme Court cases. The cases didn’t apply to Borges, Judge Black found.
• Sentencing issues. The defendants might also challenge the length of their sentences, including how the court applied federal sentencing guidelines or whether there was possible bias against them.

Both Borges and Householder were taken into custody immediately after their sentencing hearings, pending transfer to a federal prison. Co-defendants Jeff Longstreth and Juan Cespedes pleaded guilty and testified at trial. They have yet to be sentenced.

Read more:

• Federal judge blasts disgraced Ohio House speaker as a “bully,” sends him straight to jail (Ohio Capital Journal) 
•  Ex-Ohio House Speaker sentenced in one of the largest corruption cases in state history (Columbus Dispatch, subscription)
• Who bankrolled convicted ex-Ohio Speaker Larry Householder’s slush fund? (Cleveland.com, subscription)
• Ex-Ohio GOP chair, lobbyist Matt Borges shows remorse, gets 5 years for role in $60M bribery scheme (Associated Press)
• How does Householder’s 20-year sentence compare to other corrupt politicos? Spoiler alert: Harsher (Cleveland.com, subscription)

Money matters

Lawyers for the Ohio attorney general’s office and former PUCO chair Sam Randazzo argued at the Ohio Supreme Court on June 28 about whether the state should be able to continue restrictions on some of his assets pending a trial on civil claims relating to HB 6.

FirstEnergy admitted in 2021 that it paid $4.3 million to one of Randazzo’s companies shortly before he took office, with the expectation that Randazzo would act at the PUCO in FirstEnergy’s interests on HB 6 and other matters. Randazzo has denied the allegations.

Yet, said lawyer Charles Miller arguing for the state, Randazzo moved millions of dollars beyond the state’s reach, including a transfer of real estate to his son and placing funds with law firms in out-of-state accounts.

Meanwhile, Judge Christopher Brown has set a schedule for motions, discovery and trial in the case at the Franklin County Court of Common Pleas.

Deadlines and dates for Randazzo will depend on when the Ohio Supreme Court rules on the assets matter, which is expected to happen in the next several months.

In any case, trial against other defendants is not slated to start before March 2025. Other defendants in the case include FirstEnergy, Energy Harbor (formerly FirstEnergy Solutions), former FirstEnergy executives Chuck Jones and Michael Dowling, and defendants from the Householder criminal case.

Read more:

• Utility regulator accused of taking a bribe asks Supreme Court for his money back (Cleveland.com, subscription)
• Ohio froze an ex-utility regulator’s $8 million in assets. Lawyers disagree over whether it’s legal (Associated Press)

More from FirstEnergy’s investigation?

FirstEnergy might have to disclose its internal HB 6 investigation after all if a June 30 motion by shareholders suing the company succeeds.

Despite FirstEnergy’s claims of privilege, the shareholders’ filing suggests the real purpose was to get accountants to sign off on the company’s annual audit. As such, the investigation would have been primarily for a business purpose, versus a legal, attorney-client privileged matter, they argue.

“FirstEnergy’s position is doubly indefensible because its counsel is instructing witnesses not to answer questions about facts from the Company’s internal investigation that it has repeatedly chosen to disclose in other contexts,” the plaintiffs’ lawyers argued.

Company press releases and filings with the Securities and Exchange Commission refer to facts uncovered in the investigation, for example.

The June 30 filing also suggests the abrupt retirement of FirstEnergy CEO Steven Strah in September 2022 might have been at the behest of the board. According to the shareholders’ lawyers, a FirstEnergy vice-president “was only prepared to testify that ‘the board’s offer [was] that Mr. Strah retire,’ but he was completely unprepared to testify as to what the alternative was if Strah declined the ‘offer.’”

As stated in a company press release last September, “Steve Strah elected to retire from FirstEnergy. There isn’t any new information to provide,” said company spokesperson Jennifer Young.

Read more:

• FirstEnergy fights consumer watchdog’s request for records on company’s internal investigation (Cleveland.com)
• Strah’s sudden departure as FirstEnergy CEO appears to be voluntary, report indicates (Akron Beacon Journal)

Who’s next?

So far no criminal charges have been filed against current or former executives at FirstEnergy or Energy Harbor, against former PUCO chair Randazzo, or others beyond those named in the federal government’s July 2020 criminal complaint. Individual defendants named in shareholder litigation or the state’s civil action have denied liability.

Yet some of those individuals have raised the threat of prosecution in efforts to avoid responses otherwise seek delays in civil cases. And the U.S. Attorney’s Office for the Southern District of Ohio has repeatedly said that its investigations are ongoing.

“We continue to look through evidence. We continue to listen to recordings and speak to individuals,” U.S. Attorney Kenneth Parker said on June 29, when asked about the possibility of more prosecutions. “So if something’s there, we’re going to go there and address matters.”

Read more:

•  U.S. Attorney Kenneth Parker speaks on the sentencing of former Ohio House speaker Larry Householder (WBNS)

HB 6 coal subsidies continue

HB 6 charges for two 1950s-era coal plants began mounting up again on ratepayers’ bills after a pause of several months due to prior overpayments. “Ohioans have already paid for $400 million in losses for OVEC, and I expect that to double by 2030,” said John Seryak, CEO of RunnerStone, which recently updated its cost estimates for the Ohio Manufacturers’ Association.

HB 120 would repeal and refund the coal subsidies. After no action since it was referred to the House Public Utilities Committee in March, 50 lawmakers signed a petition to get it out of committee so the full House could vote on it.

Rather than allow the vote, however, House Speaker Jason Stephens sent the bill to the House Rules and Reference Committee, where it has sat since June 20. Stephens also refused to allow any floor amendments to the two-year budget bill, HB 33, when lawmakers might have tried to add terms to repeal the coal subsidies. The subsidized Kyger Creek plant is in Stephens’ district.

The PUCO has not yet ruled on the reasonableness of the coal plant charges for 2018 and 2019, when regulatory rulings imposed the subsidy charges, or for 2020 after HB 6 went into effect.

Read more:

•  HB 6 coal plant charges mount up again in Ohio (Energy News Network; Eye on Ohio)
• Ohio lawmakers plan repeal of scandal-ridden coal plant subsidies (Ohio Capital Journal; WEWS)
• Ohio House passes its version of the budget, but not without some controversy (Statehouse News)

After Householder and Borges sentences, what — or who — comes next? is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.