The pair of 1950s-era coal plants bailed out under Ohio’s House Bill 6 law are likely to remain unprofitable even after a surge in grid operator payments to generators, experts say. 

The PJM Interconnection grid market makes capacity payments to line up power to meet expected demand in the years ahead. Aging, uneconomical coal plants are being retired at a time when data centers and manufacturers are starting to use more electricity, causing future power generation prices to rise.

But even record-high prices in PJM Interconnection’s recent capacity auction won’t cover the hundreds of millions of dollars in subsidies paid by ratepayers to cover Ohio utilities’ costs for the Ohio Valley Electric Corporation’s Kyger Creek and Clifty Creek power plants.

“Even with a super high price, OVEC is still going to be in the red,” said Neil Waggoner, Midwest manager for the Sierra Club’s Beyond Coal campaign.

The ratepayer subsidies are a result of HB 6, the 2019 state law at the heart of the largest corruption scheme in Ohio’s history. Republican legislative leaders have blocked all efforts to repeal the coal subsidies from coming to a floor vote.

This year alone, ratepayers are on track to pay nearly $200 million to prop up the two plants, one of which is in Indiana. By 2030, total ratepayer costs from the bailout could exceed $1 billion, according to RunnerStone, a consultant for the Ohio Manufacturers’ Association.

Starting next summer, the payments for generators to be ready to supply electricity when PJM Interconnection needs it will jump to about nine times the current rate for most of the grid operator’s service region. 

“Put simply, the market pays participants for the promise to produce electricity when called upon by PJM,” said Daniel Lockwood, a spokesperson for the regional grid operator. An auction sets the levels for each year’s capacity payments, and the payments go to generators that bid the clearing price or less.

A spokesperson for the power plants did not directly answer the Energy News Network’s question about whether both cleared the latest PJM auction, although he described the auction results as “positive.”

“The auction results were a positive development for the OVEC plants and are more broadly a signal to the market that additional generation resources are needed in the PJM region,” said Scott Blake, a spokesperson for American Electric Power and Ohio Valley Electric Corp. While the HB 6 rider charges depend on multiple factors, the impact of the 2025/2026 capacity pricing “is expected to be positive for customers,” he said.

AEP is OVEC’s largest shareholder, along with other utility companies in Ohio and other states.

HB 6’s OVEC subsidies currently require Ohio’s residential utility customers to pay between $1.30 and $1.50 per month, depending on whether their utility is owned by AEP, AES Ohio, Duke Energy or FirstEnergy, according to PUCO data from spokesperson Brittany Waugaman. Businesses pay for the rider, too. The HB 6 rider’s net total costs last year were more than $148 million.

Doing the math

While capacity payments will reduce the OVEC plants’ total costs to Ohio ratepayers, the revenue won’t, in itself, make the plants profitable.

Expert testimony from a Michigan case last year found the OVEC plants would need capacity payments averaging about $418/MW-day for several years to become economical. Last month’s record-high price that will take effect next summer was about $270/MW-day.

Economic analyst Devi Glick of Synapse Energy Economics testified in the case on behalf of the Sierra Club.

“To massively oversimplify the economics of the OVEC plants, there are two categories of costs and two categories of revenues,” Glick told Energy News Network. “Costs are on one side of the equation and revenues on the other.”

Based on then-current projections for costs and energy market revenue, Glick calculated what the plants’ capacity revenues would have to be for the equation to balance out.

Several caveats would apply, Waggoner acknowledged, including any differences from last year to this year that could affect projected energy revenues. Nonetheless, he noted, a significant gap would remain.

Glick’s estimate of about $418 as a break-even capacity price for the OVEC plants is realistic and may even be conservative now, said John Seryak, managing partner for RunnerStone.

“PJM is no longer paying for a coal plant’s full power capacity anymore under new rules it created just prior to this capacity auction,” Seryak explained. “That could mean that OVEC needs even higher-priced capacity and energy to be profitable.”

“Future energy market prices, OVEC’s future coal costs, and OVEC’s environmental compliance costs will also be important factors determining the extent of its losses or profitability,” Seryak continued. “All that said, we do not anticipate OVEC operating at a profit without further price increases.”

Meeting energy demand

Blake emphasized the OVEC plants’ role as a “reliable generation resource for our customers and for our region,” adding that the HB 6 rider “ensures that 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.”

That’s not exactly correct, said attorney Kimberly Bojko at Carpenter Lipps, who represents the Ohio Manufacturers’ Association in cases at the Public Utilities Commission of Ohio. “Customers pay the cost to operate and run OVEC and the power produced from OVEC is then sold into the wholesale electric market,” she said. Any revenue offsets the costs of HB 6’s coal subsidy.

The Ohio Manufacturers’ Association also has disputed the use of the HB 6 rider to pay down the OVEC plants’ debt in cases before the PUCO.

“By using ratepayer funds to pay down its debt, AEP Ohio is essentially shifting its bad debt to the Ohio ratepayers,” Seryak said. “It’s akin to if a person forced their neighbor to pay for their mortgage payment.”

“Customers pay for more than just OVEC’s debt, though,” Seryak added. “Customers also pay for losses in the energy market OVEC incurs. When this occurs, it means the electric grid does not need OVEC for reliability. Instead, OVEC is burning coal pointlessly at a loss and charging it to Ohio’s ratepayers.”

Ohio coal plant subsidies still a bad deal for ratepayers despite growing generation demand, experts say 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. Was this forwarded to you? Click here to subscribe.

Ohio utility regulators will continue to consider four FirstEnergy cases related to HB 6 separately, despite requests by the utility, customer advocates, and others to combine the cases. Meanwhile, intervenors say the timeline set in two of the cases puts them at a disadvantage as they struggle to keep up with several hundred thousand pages of discovery documents.

Other recent developments in Ohio’s ongoing utility corruption scandal include: 

• Text messages show Gov. Mike DeWine played a more active role in soliciting money from FirstEnergy than was previously known.
• A former FirstEnergy executive plans to call both DeWine and Lt. Gov. Jon Husted as witnesses at his criminal trial.
• Former Ohio House Speaker Larry Householder is advancing a new argument on appeal from his criminal conviction in federal court last year.

Piecemeal approach continues at PUCO

The Public Utilities Commission of Ohio is sticking with a piecemeal approach to four HB 6-related cases despite requests earlier this month from the company and challengers asking for different degrees of consolidation.

FirstEnergy wanted issues in three HB 6 cases to be considered together next year, and would have split a fourth case over whether the company improperly used ratepayer money to subsidize affiliated businesses, including FirstEnergy Solutions’ unregulated coal and nuclear plant operations.

The Office of the Ohio Consumers’ Counsel, Ohio Manufacturers’ Association Energy Group and several other parties urged the PUCO to consolidate all four HB 6 cases. In addition to the corporate separation case, one case requires FirstEnergy’s utilities to show ratepayer money was not used for charitable or political purposes, and the other two deal with the company’s use of funds from two riders. 

Regulators stayed all four cases in mid-2022 after a request from the federal prosecutor’s office. Administrative Law Judge Jacky St. John ruled last week that the commission would not order further consolidation beyond its combination of the two rider cases when the stay was lifted in late February. 

“The Commission is vested with broad discretion to manage its dockets,” she wrote, adding that more delay was not warranted.

Critics see the decision not to combine the cases as a missed opportunity for a big-picture review of FirstEnergy’s operations and governance in the wake of HB 6.

“I don’t understand the logic,” said Ashley Brown, a former PUCO commissioner. “It’s hard to find any public policy or private interest not to consolidate.”

Multiple cases also require duplicative efforts and increase legal costs. “The commission is making us try HB 6 cases multiple times,” said Kim Bojko, an attorney for the Ohio Manufacturers’ Association Energy Group. 

The PUCO “seems like it’s still piecemealing it and kicking some of the can down the road, while trying to fast-track the rest,” said Dave Anderson, policy and communications manager for the Energy and Policy Institute. He noted the commission’s limited approach to addressing the HB 6 case began under former PUCO chair Sam Randazzo, who died from an apparent suicide this spring after criminal indictments in federal and state courts, plus charges of legal ethics violations.

Read more:

• Eye on Utilities: All hush-hush (Energy News Network)
• Freeze of regulator’s HB 6 cases could further harm Ohio consumers (Energy News Network/Eye on Ohio)

A ‘punitive’ schedule

The PUCO set schedules in its June 21 orders which call for testimony in the rider cases to be filed in early August, with an evidentiary hearing set to start later that month. 

Testimony in the corporate separation case must be filed in September, with a hearing to start in October. The PUCO also said it would move ahead in that case without an additional audit on the HB 6-related issues. A 2021 report by Daymark Energy Advisors found no major violations of corporate separation, but noted the company hadn’t gotten numerous documents for the time period relevant to HB 6. 

An independent audit still has not been completed in the political and charitable spending case. That case doesn’t have a hearing date yet. 

Several intervenors have raised concerns about the pace, noting that it’s still unclear when pre-hearing fact-finding will wrap up. The commission put that process on hold for a year and a half after federal prosecutors asked for a pause in state regulators’ investigations as they pursued criminal cases related to HB 6.

FirstEnergy still has not produced all the documents parties in the four cases asked for nearly three years ago, because the PUCO didn’t require the company to comply with earlier document requests when it stayed the cases.

From February through mid-June of this year, FirstEnergy produced roughly 725,000 pages of documents. “We just got another 500 pages last week,” with more still to come, Bojko said. Yet now she and other parties will have to file witnesses’ testimony in roughly six weeks without knowing whether they’ll have all the documents.

“It’s punitive,” Bojko said, adding that lawyers for intervening parties are still scrambling to try to review the materials they’ve recently gotten. In her view, factors that frustrate intervenors’ ability to prepare their cases will work to FirstEnergy’s advantage.

Maureen Willis, agency director for the Office of the Ohio Consumers’ Counsel, said the office is evaluating the PUCO’s approach to the cases. 

“OCC will continue to advocate for a fair process that allows all the facts to come out,” Willis said.

FirstEnergy spokesperson Jennifer Young declined to comment due to the ongoing nature of the proceedings.

Read more:

• Regulators’ foot-dragging on public records hides the full story behind Ohio’s utility corruption scandal (Energy News Network/Eye on Ohio)

Spotlight on DeWine and Husted

Newly revealed documents show Gov. DeWine played a larger role in soliciting money from FirstEnergy executives than was previously known.

FirstEnergy and its affiliates gave roughly $4 million to dark money groups supporting DeWine and Husted’s 2018 campaigns. Less than a month before the election, DeWine texted Chuck Jones, then CEO of FirstEnergy, to set up a call. Three days later, Mike Dowling, then a FirstEnergy vice president, texted Jones to let DeWine know $500,000 was going to a dark money group called State Solutions.

Other texts recently obtained by journalists show Husted trading statements about Ohio energy policy with Dowling in the summer of 2018. Documents produced earlier show Husted also performed “battlefield triage” to assure the appointment of Randazzo to chair the PUCO.

DeWine claimed he didn’t remember the call. Spokesperson Dan Tierney told the Energy News Network the texts “all document legal campaign fundraising and independent expenditures,” which have been previously reported. “The Governor follows all applicable campaign finance laws,” he added. Husted spokesperson Hayley Carducci did not respond to Energy News Network’s request for comment.

The newly produced documents don’t show a bribe or quid pro quo, and neither DeWine nor Husted has been named as a defendant in any criminal or civil cases relating to HB 6.

However, the timing so close to the election raises questions, Anderson said, because DeWine’s campaign staff likely knew FirstEnergy executives and the company’s political action committee would already have reached their limits for direct campaign contributions. Under federal campaign finance law, candidates are not supposed to coordinate fundraising or other activities with groups that make so-called independent expenditures in political races.

Read more:

• ‘Call Mike DeWine on the $500k:’ Governor’s text sparked dark money payment, texts show (Cleveland.com)
• Phenomenally corrupt or insanely incompetent? What is Ohio Gov. Mike DeWine’s deal? (Ohio Capital Journal)
• Text messages link DeWine to FirstEnergy dark money payment (Dayton Daily News)
• Gov. DeWine says he doesn’t remember text soliciting FirstEnergy for campaign cash (Toledo Blade) 
• New texts allegedly show Ohio Lt. Gov. Jon Husted leading FirstEnergy’s push for House Bill 6 (News 5 Cleveland)

On the witness list

Dowling, the former FirstEnergy vice president, listed both DeWine and Husted as potential witnesses in a June 18 filing in the state of Ohio’s criminal case against him, Jones and two companies that were controlled by Randazzo. The two also have received subpoenas in civil cases filed by FirstEnergy shareholders.

Others on Dowling’s witness list include former American Electric Power executives Nicholas Akins and Tom Froehle. AEP holds the largest interest among Ohio electric utilities in the two 1950s coal plants that ratepayers continue to subsidize as a result of HB 6. An estimate by RunnerStone for the Ohio Manufacturers’ Association found Ohioans will pay nearly $1 billion for those subsidies through 2030.

Jones was also named as a defendant in the case against Dowling, along with Randazzo and two companies he controlled before his death. The state is still pursuing charges against those companies, said Steve Irwin, press secretary for Ohio Attorney General Dave Yost.

Read more:

• Ex-FirstEnergy executive lists DeWine, Husted as possible witnesses in bribery trial (Columbus Dispatch)
• FirstEnergy VP Dowling plans to call DeWine and Husted to the stand in corruption trial (News 5 Cleveland)

Householder and Borges appeals

Former Ohio House Speaker Larry Householder wants to add an argument to his appeal of a criminal conviction in federal court last year. A June 11 filing argues Judge Timothy Black erred in instructing Householder not to talk about his ongoing testimony while he was still under oath during an overnight break on March 1 last year. Householder’s lawyers did not object to the instruction, and the judge told Householder he could otherwise talk with his attorneys.

The government has objected to allowing the extra argument, first raised months after Householder’s initial brief of more than 16,000 words was filed in late February. Even if the court doesn’t allow the extra argument, a June 21 filing said the government still needs another four weeks to file its response.

Briefing in lobbyist Matt Borges’ appeal from his criminal conviction in last year’s federal trial should wrap up by the end of this month, unless his lawyers ask for more time to reply to the federal government’s brief.

Householder is currently serving a 20-year sentence, and Borges is serving a five-year sentence. Their appeals are pending before the Sixth Circuit Court of Appeals.

HB 6 Updates: Ohio regulators continue piecemeal review 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.

Versions of this story were published by Floodlight, Energy News Network and the Ohio Capital Journal. 

A surge in FirstEnergy political spending ahead of the utility’s push to secure a legislative bailout for its nuclear power plants included a $1 million dark money contribution to support the campaign of Ohio Gov. Mike DeWine’s eventual running mate.

The previously unreported gift linked to Lt. Gov. Jon Husted’s 2017 primary bid was revealed as part of a raft of documents obtained under Ohio’s public records law by a coalition of news organizations, including Floodlight, Energy News Network and the Ohio Capital Journal.

Among the documents are company emails describing behind-the-scenes efforts by Husted to persuade DeWine to support House Bill 6, the utility-backed legislation at the heart of the state’s ongoing $60 million public bribery scandal. 

Neither Husted nor DeWine, whose campaign also benefited from a previously reported $1 million in dark money from the utility, has been implicated in the scheme in which eight people, including the state’s former House Speaker Larry Householder, have been indicted.

Two of those charged in the multi-million-dollar scandal surrounding the passage of HB 6 may have taken their own lives, including Sam Randazzo, the former chairman of the Public Utilities Commission of Ohio, who was found dead earlier this week of an apparent suicide.  

‘Confidential’ email details campaign gift

One of the documents from the Office of the Ohio Consumers’ Counsel Office is a spreadsheet attached to a January 2020 message labeled “confidential.” It shows $1 million went from FirstEnergy to the conservative group Freedom Frontier in 2017, with “Husted campaign” noted as the reason.  

That group backed Husted during his 2017 primary campaign for governor. The group then supported DeWine after Husted dropped out of the race to become his running mate.

Husted is considered among possible front runners for the Republican nomination for governor in 2026. A January report by the Jon Husted for Ohio campaign committee shows it got roughly $1.7 million last year. 

Husted was also dubbed the “‘Golden Boy’ for FirstEnergy” by lobbyist Neil Clark, a co-defendant with Householder and others in the federal government’s criminal corruption case. Clark died by suicide in 2021.

In several of the recently released records, Husted is mentioned in the same breath as Householder, the convicted House speaker, and Randazzo, the former PUCO commissioner, by FirstEnergy leadership as they sought to pass and then defend HB 6, the nuclear and coal bailout law at the heart of Ohio’s ongoing corruption scandal. 

Husted has maintained that his support for the 2019 law stemmed from his belief that nuclear energy is an important part of Ohio’s energy portfolio. Parties in HB 6-related shareholder litigation have subpoenaed Husted to answer questions under oath, although a new date needs to be set.

“The Husted campaign never received this donation and is not affiliated with any of these groups,” said spokesperson Hayley Carducci. By law, candidate campaigns are not supposed to coordinate with groups like Freedom Frontier, which can spend unlimited amounts to support or attack them.

The document and others reflect a major commitment by FirstEnergy to Husted’s political future. Before 2017, the company’s reported political spending to support Husted was less than $25,000 per campaign, according to data from OpenSecrets. 

Dark money spending rises sharply

More broadly, the document also indicates a major increase in FirstEnergy’s political spending through nonprofit groups exempt from taxes under Section 501(c)(4) of the Internal Revenue Code. Those, along with privately held corporations, are common structures for dark money organizations — groups that aren’t required by law to disclose the ultimate source of their funding.

The company’s giving to such groups jumped to more than $12 million in 2017, after much lower levels of $200,000 in 2016 and $100,000 in 2015, according to the spreadsheet. 

Starting in 2014, FirstEnergy had sought bailouts for noncompetitive coal and nuclear plants. And in late 2016, regulators approved a $456 million consumer surcharge that ultimately was held unlawful. Yet the company claimed it needed more. 

The document details once-secret contributions to groups supporting “everyone from the mayor of Akron to President Trump that FirstEnergy made to secure bailouts for its soon-to-be bankrupt coal and nuclear plants and to gain influence on other key issues,” said Dave Anderson, policy and communications manager for the Energy and Policy Institute. 

Anderson added that the spreadsheet also “provides some key new evidence for utility regulators and consumer advocates to use to ensure that every dollar of ratepayer money that FirstEnergy misused to fund its secret political spending is publicly disclosed and refunded, with interest and ideally serious financial penalties.”

At the time, the author of the document that details the donations, Kristina Housley, was executive assistant to FirstEnergy’s Mike Dowling, who is now a defendant in a state criminal case along with former CEO Chuck Jones. 

Finding out all the details about the dark money spending behind HB 6 is like peeling back the layers of an onion, said Catherine Turcer, executive director of Common Cause Ohio. 

“The reason that transparency matters so much is that money that is spent in the shadows influences elections, and it influences really important policy decisions that impact us every day,” Turcer said. “And we have the right to know what is going on in government and how decisions are being made and who’s attempting to influence those decisions.”

The ‘Golden Boy’ for FirstEnergy

A December 2017 email from former FirstEnergy lobbyist Joel Bailey said Husted was working to get DeWine on board with FirstEnergy’s “issues.” FirstEnergy also supported other pro-DeWine/Husted efforts during the election cycle.

After the election, Husted and DeWine dined with Jones and Dowling on December 18, 2018. Later that night, FirstEnergy agreed to pay $4.3 million to energy lawyer Randazzo, who went on to become DeWine’s first pick for chair of the Public Utilities Commission of Ohio. FirstEnergy later identified Jones and Dowling as the two people responsible for paying alleged bribes. 

Husted’s office has been evasive about his recollections, despite Jones noting in texts to Randazzo that the PUCO chair position was discussed in at least general terms. Another text by Jones in 2019 said the DeWine/Husted team was forced “to perform battlefield triage” to secure Randazzo’s nomination after a 198-page dossier provided to DeWine’s staff threatened to derail it.

Evidence from last year’s criminal trial of Householder, the former Ohio House speaker, and lobbyist Matt Borges also included messages between former FirstEnergy executives Jones and Dowling about Husted working behind the scenes to build support for the bill. Among the actions were efforts to extend the bailout period for the company’s former nuclear power plants in Ohio.

Husted long a friend of utilities

Husted had been Ohio’s secretary of state immediately before becoming lieutenant governor. Before that, he served as House speaker in the General Assembly. In that role, he played a pivotal part in securing passage of another major energy bill, Senate Bill 221. 

At the time, Husted supported the law’s clean energy standards that were ultimately gutted by HB 6. However, SB 221 set the stage for so-called electric security plans. Those have let FirstEnergy and other utilities avoid full rate cases for more than a decade, while allowing cross-subsidies and adding multiple additional charges to consumers’ bills. 

“That bill upset the balance” of energy regulation in Ohio, said Ashley Brown, a former PUCO commissioner. “It was a humongous gift for the utilities.”

Lawmakers repealed HB 6’s $1 billion-plus in subsidies for FirstEnergy’s former nuclear power plants and its recession-proofing provisions in 2021, eight months after the arrests of Householder and others. 

Earlier this year, Husted told NBC4 in Columbus the rest of HB 6 “needs to be completely removed.” He did not respond to Energy News Network questions this week about whether that includes both the law’s subsidies for two 1950s-era coal plants and its gutting of Ohio’s renewable energy and energy efficiency standards. 

FirstEnergy spokesperson Jennifer Young declined to comment on the company’s 2017 donation to Freedom Frontier due to ongoing litigation. However, she added, “FirstEnergy will post information regarding its support of 501(c)(4) social welfare organizations on the company’s website on a quarterly basis.”

Those disclosures are currently required under the company’s July 2021 deferred prosecution agreement. That agreement expires later this year.

Meanwhile, FirstEnergy still has not disclosed its dark money spending for the years 2018 through 2020. And proposals for reforms that would require such disclosures from all electric utilities remain stalled in the General Assembly.

“It’s incredibly frustrating that Ohioans can be aware that dark money impacted decision-making at the statehouse,” Turcer said, “and yet we still haven’t gotten the legislators to create greater transparency.”

The Energy News Network is a nonprofit news site dedicated to keeping influencers, policymakers and citizens informed of the important changes taking place in the transition to a clean energy system. Floodlight is a nonprofit newsroom that investigates the powerful interests stalling climate action. 

FirstEnergy gave $1 million to boost Ohio Lt. Gov. Jon Husted’s campaign before scandal, document shows 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.

After two former Republican officials in June were sentenced for their roles in a massive racketeering conspiracy, U.S. Attorney Kenneth Parker said the investigation was continuing. At least two signs emerged last week that the proceedings might be intensifying.

Former Ohio House Speaker Larry Householder was sentenced to 20 years in federal prison on June 29 and former state GOP Chairman Matt Borges was sentenced to five years a day later. Both played roles in a scandal in which Akron-based FirstEnergy and other utilities paid more than $61 million to pass a $1.3 billion ratepayer bailout that was mostly intended for a subsidiary that FirstEnergy was spinning off that owned two Northern Ohio nuclear plants.

In addition to Householder and Borges, two others who were arrested in July 2020 have pleaded guilty and a third died by suicide. 

But on March 10, just after a jury convicted Householder and Borges, a reporter asked Parker an obvious question: What about the people who paid the bribes? Would they be charged? Parker would only say that the investigation was continuing.

Attorneys for the men who were FirstEnergy’s top executives at the time of the conspiracy — former CEO Chuck Jones and former Vice President Michael Dowling — have already said in court filings that they believe federal investigators are looking at their clients.

This month brought two more pieces of evidence that federal investigators are considering further prosecutions in the bribery and money laundering scandal.

On Aug. 4, Hilary M. Williams, who is representing FirstEnergy, submitted a filing in a massive class-action case against the company over the bailout scandal. She informed the scores of lawyers for the pension and investment funds suing the company that they’re not the only ones who want to see the emails and text messages the FirstEnergy executives sent as the bribery scheme was taking place.

“Counsel… we confirmed this morning that we may disclose to the parties that certain governmental authorities have requested the production of the entire contents of iPad and iPhone devices used by Mr. Jones or Mr. Dowling from January 1, 2016 through December 31, 2020,” Williams wrote. “In keeping with the protocol in this matter, those documents will be produced to all parties, and we expect to do so at approximately the same time that production is made to the requesting governmental authorities.”

She added. “Mr. Dowling and Mr. Jones used more than a dozen devices during the relevant time period, and processing and reviewing the contents of those devices requires substantial processing time and then time to review for confidentiality and privilege. We are working to complete the review as quickly as possible, and expect to make these productions on or about September 15, 2023.”

A spokeswoman for the U.S. attorney’s office didn’t comment on whether the “governmental authorities” Williams referred to worked for Parker, whose office prosecuted Householder and Borges.

However, Parker last week sent a letter to the Public Utility Commission of Ohio asking the regulator to further postpone its investigation into the racketeering scandal.

“The PUCO proceedings involve issues related to the U.S. Department of Justice of the United States’ investigation, and the United States believes that continued discovery in the PUCO proceedings may directly interfere with or impede the United States’ ongoing investigation,” the letter said. “For that reason, the United States respectfully requests that PUCO stay the PUCO proceedings for a period of six months from the date of this letter. The United States reserves the right to request that the stay be extended beyond this time.”

Among those the feds may be investigating are Jones, Dowling and Sam Randazzo, whom Gov. Mike DeWine nominated to chair the PUCO in early 2019. 

In a deferred prosecution agreement, FirstEnergy said it paid Randazzo a $4.3 million bribe just before his nomination in exchange for favors the ostensible regulator did for the company. Randazzo denies wrongdoing, but in the Householder trial, witnesses testified that Randazzo played a key role in drafting the corrupt bailout legislation.

Plaintiffs in the class-action suit earlier this month filed texts and emails between Jones, Dowling and Randazzo. They indicate that the three met in Randazzo’s Columbus condo in December 2018 and arranged to pay the soon-to-be regulator $4.3 million and made it clear that they expected something in return. They also appear to indicate that in addition to his work on the the bailout, Randazzo helped exempt FirstEnergy from a 2024 rate review it had been required to undergo.

The class-action plaintiffs are accusing FirstEnergy of violating securities law by concealing its illegal conduct from investors. Last week, they filed a transcript of an earnings call from July 23, 2020 — days after Householder, Borges and three others were arrested in the racketeering conspiracy. In it, Jones appeared to mislead analysts about his and his company’s role in it.

“I believe that FirstEnergy acted properly in this matter, and we intend to cooperate fully with the investigation to, among other things, ensure our company and our role in supporting House Bill 6 is understood as accurately as possible,” said Jones, who would be fired months later. “In the meantime, we wanted to share our preliminary perspective on this issue and reinforce the values with which we operate our company.”

Jones also claimed that he and his subordinates followed “the highest standards of conduct.”

“This is a serious and disturbing situation,” he said. “Ethical behavior and upholding the highest standards of conduct are foundational values for the entire FirstEnergy family and me personally. These high standards have fostered the trust of our employees, our customers and the financial community. We strive to apply these standards in all business dealings including our participation in the political process.”

Jones sat for a sworn deposition in the class-action case in July. Last week, U.S. Magistrate Judge Kimberly Jolson ordered Dowling to sit for one in October.

Ohio corruption investigation might be heating up — again 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 article is provided by Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, in partnership with the nonprofit Energy News Network. Please join the free mailing lists for Eye on Ohio or the Energy News Network, as this helps provide more public service reporting.

Ohio’s largest corruption case continues in federal court in Cincinnati, where former Ohio House Speaker Larry Householder and lobbyist and former Ohio Republican Party leader Matthew Borges are on trial. The alleged conspiracy deals with the dark money saga surrounding House Bill 6, Ohio’s nuclear and coal bailout law.

“The most astonishing aspect of this so far for Ohio Citizen Action has been the brazenness of the corruption and the overall disdain that Ohio elected officials had for voters and ratepayers,” said the group’s political director, Kyle Marcum.

Yet, “for anyone that was working really closely on HB 6, it’s been clear how much money was going into it,” said Neil Waggoner, federal deputy director of energy campaigns for the Sierra Club. In many ways, the trial confirms there was a lot of coordination between Householder’s office and FirstEnergy, he said.

“There’s no way this money was coming out of the blue. It was very clearly coming from FirstEnergy,” Waggoner said.

Here’s a rundown so far on what was known and what’s been learned since the trial began in January.

Labor unions gave $840,000 to Generation Now. And they got $1.4 million back for ads to thwart a drive to give voters a chance to reject HB 6.

The evidence: A Jan. 30 filing indicates Generation Now gave $1.4 million to the Ohio AFL-CIO to pay for ads during the campaign to block a voter referendum on HB 6.

A Feb. 6 response by Householder’s lawyers said they want to question Tim Burga, the union president, about donations he approved for Generation Now, the primary dark money group in the alleged conspiracy.

What we knew: Unions or their political action committees reported $840,000 in donations to Generation Now in 2018 and 2019, the Energy News Network and Eye on Ohio reported three years ago.

What’s new: The Jan. 30 court filing is the union’s first public acknowledgment that its 2019 “Decline to Sign” ads were paid for with money from Generation Now.

The filing notes that the Ohio AFL-CIO insisted on having the final say on the ads’ content. However, the fact that the money came from a FirstEnergy-funded group would likely have weakened the ads’ credibility if it had been disclosed.

The Feb. 6 response by Householder’s lawyers also suggests Burga knew some donations he authorized were meant to support “Team Householder” candidates. The filing suggests that would undermine the government’s arguments about secrecy and show that funds going to Generation Now “were not bribe payments but were political contributions protected by the First Amendment.”

Open questions: What was the source of money for the unions’ donations? Why did they make the donations? And who asked them to give money to Generation Now in the first place?

And why did people involved with Generation Now decide to have some anti-referendum ads come from the union and other entities, rather than itself?

If the answers involve FirstEnergy, that’s “pretty disturbing,” said David Anderson, policy and communications manager for the Energy and Policy Institute. 

The situation also raises questions about whether other union-sponsored ads in Ohio or elsewhere might have been paid for with company or special interest money.

Moves to block a voter referendum on House Bill 6 sought help from the Ohio Attorney General and Ohio Secretary of State.

The evidence: Trial exhibits suggest Borges and Householder wanted Ohio Attorney General Dave Yost to block the referendum. Phone records indicate Yost had phone conversations with both Householder and Borges. Text messages also reveal maneuvering.

“Had dinner with Yost last night and put the referendum issue on his radar,” said a June 2019 text from Borges to co-defendant Juan Cespedes, who has pled guilty. Borges also reported that Yost said he would have opposed HB 6 “if it weren’t for FE’s support and your involvement.” 

Additional texts said Borges was in touch with Ohio Secretary of State Frank LaRose. “LaRose is expecting us to be publicly supportive of him,” Borges wrote in a July 2019 text. In another text, Borges wrote that LaRose wanted to meet with John Kiani, now chair of Energy Harbor (then FirstEnergy Solutions).

What we knew: One month of the 90-day period for seeking signatures on petitions was taken up with getting necessary approvals from Yost and LaRose’s offices. Ohio attorneys general have rejected initial filings for bill referendums before. This time, though, FirstEnergy Solutions was actively trying to block the referendum.

Among other things, a lawyer for FirstEnergy Solutions urged Yost to rule HB 6 was not subject to a referendum on the grounds that it was a tax. Yost ultimately let the referendum move ahead, but only after rejecting the first bill summary language.

LaRose’s office likewise waited until the end of August 2019 before letting the referendum effort move ahead. Ohioans Against Corporate Bailouts, the group wanting a voter referendum, later complained about HB 6 supporters being able to get contact information for signature collectors. That information let a pro-HB 6 group pay off some of those workers to quit.

What’s new: A text from Borges also suggests he got a heads-up before Yost rejected the first bill summary language on Aug. 12, 2019. In other texts, Borges indicated Yost was sympathetic to the anti-referendum effort, although Yost would have been against HB 6 but for the fact that FirstEnergy supported it.

HB 6 opponents filed a revised bill summary several days later. In a recorded voicemail message, Yost told Householder, “We will be undertaking our bill analysis again. And I look forward to talking with you soon or eventually.”

Borges’ claim that LaRose wanted to meet with Kiani is also a new development. Cespedes responded that LaRose would regret it. 

Open questions: Up until 2021, FirstEnergy was known to spend large amounts on political campaigns. To what extent did those campaign contributions alter how public officials acted with respect to HB 6?

“Yost received $24,000 from FirstEnergy and Mr. Borges” as campaign contributions, noted Ohio Citizen Action’s Marcum. And Borges’ text statements suggest FirstEnergy’s support might have swayed Yost’s position on HB 6, “despite his duty to protect Ohio voters and consumers.”

Just what was said in communications between Yost or LaRose and people connected with the alleged conspiracy?

And did Yost or LaRose act improperly in any of those communications or other actions related to HB 6 and the ballot referendum?

“It’s kind of awkward when the evidence starts to mention the state attorney general who’s prosecuting a case” in state court relating to HB 6, Anderson said. That case has been mostly on hold pending the Householder trial, although Yost has added former FirstEnergy executives as defendants, as well as former Public Utilities Commission Chair Sam Randazzo.

Yost “was subpoenaed to potentially be a witness in this case. At this time it is inappropriate for him to comment,” said spokesperson Bethany McCorkle at the attorney general’s office. He gave the amount of campaign donations from Borges and FirstEnergy to charities a few months after Householder and Borges’ arrests in 2020.

Asked about Borges’ comments concerning LaRose, Secretary of State spokesperson Rob Nichols said, “This is a lobbyist bragging to his HB 6 clients about influence he never had, and the secretary didn’t do anything he wanted.” Nichols also wrote that LaRose never met with Kiani.

The DeWine administration helped behind the scenes.

The evidence: Texts by FirstEnergy executives show they were in touch with Gov. Mike DeWine’s office. Texts also indicate that Lt. Gov. Jon Husted was trying to get the Ohio Senate to extend the time period for subsidizing the nuclear plants.

DeWine signed HB 6 into law on July 23, 2019, within hours of the final vote in the House. Householder also made plans for a state-owned plane to fly lawmakers back to Columbus for the vote, if necessary. A text by former FirstEnergy Vice President Mike Dowling implies approval came from Laurel Dawson, who was then DeWine’s chief of staff.

What we knew: DeWine and Husted dined with former FirstEnergy executives in December 2018, and trial exhibits suggest there were additional meetings as well.

Both DeWine and Husted have previously said they would have supported HB 6 in any case. Neither has provided detail about what was discussed in meetings with FirstEnergy or others about HB 6.

What’s new: Texts referred to Husted pushing to extend the time for HB 6 subsidies in the Senate. Other texts among FirstEnergy executives asked if they should get DeWine to make a call to former Ohio Senate President Larry Obhof.

In yet another text conversation, DeWine’s director of legislative affairs, Dan McCarthy, texted with Dowling about the possibility of a ballot drive.

“You guys are freaking out about a potential referendum,” McCarthy wrote. Dowling’s response indicated concern that the bill’s language would make it harder to block a referendum.

Before joining DeWine’s administration, McCarthy had been a registered lobbyist for FirstEnergy and a president of Partners for Progress, one of the pass-through groups that funneled money from the company and its affiliates to Generation Now.

Open questions: Much remains unknown about how much DeWine and Husted knew about the flow of money behind HB 6 and other aspects of the alleged conspiracy.

There also hasn’t been a full accounting of money FirstEnergy gave to other dark money groups to support DeWine or his daughter’s political races, Anderson said.

Financial motives drove FirstEnergy’s subsidy-seeking, despite the company’s claims about customers’ interests.

The evidence: FirstEnergy Solutions “was just bleeding cash” before the HB 6 bailouts, company treasurer Steven Staub testified last month.

The company invested heavily in coal-fired power plants as the natural gas fracking boom took off, and its nuclear plants were even more expensive. HB 6 also paved the way for the company to attract investors when it decided to exit the power generation business.

What we knew: “It had been clear to observers for the past decade that the root of FirstEnergy’s problems was a series of bad financial decisions aimed at propping up its uncompetitive coal and nuclear plants,” said Sandy Buchanan, CEO of the Institute for Energy Economics and Financial Analysis. “The company’s strategy was to make ratepayers and taxpayers pay the consequences.”

“FirstEnergy is apparently still trying to solve its underlying financial problems today, as evidenced by their recent $3.5 billion cash sale of part of their transmission system, which they say will improve their credit profile,” Buchanan added.

Ashley Brown, former head of the Harvard Electricity Policy Group, observed two years ago that HB 6 made it “easier to unload Energy Harbor” in the bankruptcy case.

Asim Haque, a former public utilities commissioner, also testified in 2019 about a PJM report that the costs of HB 6 could exceed its nuclear bailout subsidies.

What’s new: Staub’s trial testimony may be the clearest public contradiction yet of FirstEnergy’s earlier insistence that bailouts were good for customers.

When FirstEnergy sought its first subsidies in 2014, the company claimed they would promote reliability and eventually produce savings on electric bills. And in 2019, David Griffing, a FirstEnergy Solutions vice president, testified on HB 6, claiming it “saves Ohio consumers millions of dollars annually while also promoting clean energy.”

Open questions: What else might FirstEnergy’s communications show about executives making statements that seemed to belie the financial realities?

And might there be potential liability under securities laws or tax laws?

Actions where FirstEnergy, Householder, Borges and others sought to make sure things stayed secret also raise questions.

“If they had Ohioans’ best interests in mind,” Marcum said, “what did they have to hide?”

Householder trial: New evidence shows depth of long-suspected scheme 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.