Eye on Utilities: FirstEnergy continues to play hardball with Customers’ Counsel and others

This month-to-month e-newsletter offers updates on Ohio’s ongoing utility corruption scandal and is a joint mission of Eye on Ohio, the nonprofit, nonpartisan Ohio Middle for Journalism, and the nonprofit Vitality Information Community.

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New developments within the saga surrounding Home Invoice 6, Ohio’s nuclear and coal bailout regulation, embody:

  • Truth-finding efforts proceed to face frustrations in regulatory and court docket circumstances.
  • FirstEnergy cites the Eighth Modification’s bar in opposition to extreme fines in arguing in opposition to penalties for thwarting auditors.
  • One decide has given a preliminary thumbs as much as a settlement for a number of FirstEnergy shareholder by-product fits, however for now will look ahead to different judges to rule in their very own circumstances.
  • Ohio’s corruption scandal casts new mild on a pre-HB 6 deal that paid tens of millions to demolish and clear up a former coal plant web site.

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FirstEnergy supplied the Workplace of the Ohio Customers’ Counsel with varied paperwork it had beforehand produced in shareholder litigation. But the corporate continues to combat in opposition to different disclosures in regulatory circumstances associated to the Home Invoice 6 scandal.

Amongst different issues, FirstEnergy needs the Public Utilities Fee of Ohio to dam the OCC from requiring Bob Mattiuz, a vice chairman for compliance and controlled companies, to deliver paperwork on company and charitable contributions to his deposition. Depositions let attorneys query a witness beneath oath.

FirstEnergy argued that the doc requests had been premature beneath a previous deadline. The corporate additionally asserted that the request is “irrelevant” and “unrelated to the [utilities’] compliance beneath Ohio company separation regulation.”

The Could 9 submitting is daring in mild of audit findings that sure ratepayer costs had been improperly tracked. That conduct may have let FirstEnergy use ratepayers’ cash for political functions or to subsidize associates’ actions. These actions would arguably violate Ohio’s company separation regulation.

The submitting additionally exhibits FirstEnergy making an attempt to take most benefit of the PUCO’s piecemeal method to HB 6 points, versus a complete investigation. The PUCO has additionally been implicated within the corruption scandal because of FirstEnergy’s admission about funds to former PUCO Chair Sam Randazzo, who performed a job in organising the piecemeal method earlier than his resignation in November 2020.

Learn extra:

Extreme fines?

FirstEnergy filings additionally ask the PUCO to reject requests by OCC and the Ohio Producers’ Vitality Group for as much as $1.4 million in restitution and penalties for FirstEnergy’s failure to trace the rider funds after they went right into a cash pool. Amongst different issues, the corporate argues that statutory penalties of as much as $10,000 per day is perhaps improper beneath the U.S. Structure’s Eighth Modification, which forbids extreme bail, extreme fines and “merciless and strange” punishments.

FirstEnergy asserts there was no violation of the PUCO’s order organising the rider and contends that reimbursement is forbidden. Nevertheless, the penalty request focuses on FirstEnergy’s alleged wrongdoing for not monitoring rider cash, versus the rider itself. So, the penalty calls for are arguably distinct from the reimbursement declare that the Ohio Supreme Court docket denied when it dominated the rider illegal in 2019, simply earlier than HB 6 turned regulation.

FirstEnergy additionally claims that the penalty demand ignores advantages from a $300 million settlement in an extra earnings case. That case handled calculations of considerably extreme earnings, and the settlement got here after an Ohio Supreme Court docket ruling that the PUCO erred in excluding the rider cash from earnings take a look at calculations. Events reached the settlement earlier than audits from FERC and Daymark confirmed that FirstEnergy’s practices had obscured how the rider cash was finally used.

The PUCO has but to rule on the penalty subject. An opposed ruling may ultimately go earlier than the Ohio Supreme Court docket.

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Looking for information from FERC

OCC and others are also asking the Federal Vitality Regulatory Fee to share paperwork and knowledge from its ongoing circumstances on FirstEnergy. That features a full set of paperwork concerned in a latest audit, versus the smaller subset that the PUCO has instructed FirstEnergy to supply.

“FirstEnergy has an over-reaching method of claiming confidentiality of data that isn’t confidential (however is merely data that FirstEnergy seemingly prefers for Ohioans to not find out about concerning its conduct),” mentioned OCC’s April 28 submitting.  

Earlier this spring FirstEnergy opposed participation within the FERC case by each OCC and the New Jersey Division of Price Counsel. FERC has but to rule on the state client advocates’ intervention and doc requests.

Settlements nonetheless up within the air

U.S. District Court docket Decide Algenon Marbley gave a preliminary thumbs up to a deal to settle shareholder by-product claims. However he didn’t keep proceedings in different courts with related circumstances that will be settled by the deal introduced final winter. U.S. District Court docket Decide John Adams, who presides in a kind of different circumstances, has mentioned he needs extra truth discovering, known as discovery, to maneuver forward earlier than he okays the deal.

That discovery contains a number of depositions of present and former FirstEnergy executives beneath oath. However events have haggled over scheduling. Amongst different issues, FirstEnergy CEO Steven Strah’s questioning was postponed to an unknown date after firm attorneys objected that he can be vacationing in Cape Cod in late Could.

In the meantime, former FirstEnergy vice chairman Michael Dowling, a defendant in a number of circumstances, has subpoenaed paperwork from Companions for Progress. That darkish cash group, led by FirstEnergy’s former lobbyist and others, gave $1.2 million in 2017 to 2 different darkish cash teams within the HB 6 scandal, Technology Now and the Coalition for Progress & Alternative.

FirstEnergy attorneys have recognized Dowling and former CEO Chuck Jones as having approved varied funds. Though Dowling’s authorized technique isn’t identified, the subpoena is perhaps an effort to help an argument that others misused funds for a bribe, versus darkish cash donations that match inside authorized loopholes beneath election regulation.

The shareholder by-product circumstances wouldn’t pay cash on to shareholders, as a result of their goal is to guard the company from wrongdoing by administrators and officers.  So, the settlement would offer FirstEnergy with roughly $180,000 million, primarily from insurers, after deducting charges for plaintiffs’ attorneys, whose purchasers sued on behalf of the corporate. Separate circumstances cope with shareholder claims for misplaced inventory worth or different damages.

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Political ripples

The Ohio Democratic Social gathering additionally needs extra element about what involvement, if any, Gov. Mike DeWine had within the HB 6 scandal. Public information obtained by the group embody copies of DeWine’s calendars from 2019 onward. 

Nevertheless, widespread redactions and broad privilege claims make it exhausting to find out whom DeWine met and spoke with on many events, the group alleges. Supplies produced up to now even have a niche from June 16, 2020, till Could 2021. That covers the interval when Householder was arrested, Randazzo resigned and present PUCO Chair Jenifer French was appointed. 

On Could 5 the group requested the Franklin County Court docket of Frequent Pleas to order extra disclosures. The court docket has not taken any motion but.


The PUCO earlier this month authorised Vitality Harbor’s request to proceed working as a aggressive retail power provider with no point out of the corporate’s function within the ongoing HB 6 corruption scandal. Vitality Harbor is the successor to FirstEnergy Options following its chapter case, the place filings first confirmed a cost to Technology Now in 2019.

Vitality Harbor’s preliminary renewal software on April 4 famous the chapter case however failed to say any of the HB 6-related circumstances wherein it’s a defendant, or the continuing federal investigation. The corporate added element about a number of circumstances after an April 6 tweet by Dave Anderson of the Vitality and Coverage Institute famous the omission. The PUCO’s approval got here three weeks later, with no opinion and no feedback within the file from employees.

“The entire thing appeared odd,” Anderson mentioned. “Right here was seemingly a chance for the PUCO to do a deeper investigation of this former affiliate firm.” 

The case raises the query of what substantive assessment, if any, the PUCO conducts and the way, if in any respect, alleged corruption points matter in the case of approving retail electrical energy suppliers.

Cleansing up

FirstEnergy’s ongoing corruption scandal has forged new mild on a deal that relieved the corporate of greater than $12 million in cleanup prices for a former coal plant. JobsOhio forgave the mortgage after FirstEnergy accomplished its work on the web site forward of a Dec. 2017 deadline. JobsOhio’s plan is for PTTGC America to construct a petrochemical cracker on the Belmont County web site, though the corporate has not but made a closing dedication.

FirstEnergy transferred the property to PTTGC America, mentioned FirstEnergy spokesperson Mark Durbin. In the meantime, JobsOhio has spent $70 million on the positioning, $20 million of which was reimbursed by PTTGC, mentioned JobsOhio spokesperson Matt Englehart.

That work “included demolition of the ability plant, environmental remediation, draining and filling of ponds that had been created by a former sand and gravel quarry, and grading and leveling the positioning,” Englehart mentioned. He didn’t say who negotiated the deal for FirstEnergy, noting that every one mission discussions are deemed confidential.

JobsOhio is a statutorily created company that works with the Division of Improvement to draw companies and jobs. It’s exempt from Ohio’s public information regulation. Funding comes from Ohio Liquor revenues.

“The plant demolition was fairly public, could be very previous information, and cleaned up a web site of a grimy former coal plant to make it extra enticing to funding to deliver jobs to the folks of Ohio,” Englehart mentioned.

The deal issues as a result of it relieved FirstEnergy of environmental liabilities the corporate in any other case would have needed to pay. Plus, the construction of the deal shielded discussions by the corporate, JobsOhio and different concerned events from public scrutiny.

The environmental cleanup deal additionally meant FirstEnergy was arguably extra flush with money across the time that it and its associates started funding the alleged HB 6 scheme.

Learn extra: Earlier than bribery scandal, JobsOhio forgave a $12M mortgage to FirstEnergy to wash up a coal plant (Ohio Capital Journal)

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