The monthly Eye on Utilities newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of the Energy News Network and Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism.
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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.
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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.
- Q&A: FirstEnergy CEO Steven Strah discusses his role in rebuilding the utility’s reputation (Cleveland Business Journal)
- FirstEnergy CEO Steve Strah fields questions on HB 6 scandal (Akron Beacon Journal)
- FirstEnergy says Ohio law at center of corruption probe protects it from ratepayer lawsuits (Energy News Network)
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.
- Lt. Gov. Jon Husted says he has ‘no idea’ why former FirstEnergy execs want him to talk. (Spectrum News 1)
- Former FirstEnergy exec wants more records to mount defense against shareholder lawsuit (Columbus Dispatch)
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.
- FirstEnergy fights against disclosing more details about alleged HB 6 bribery cases. (Energy News Network)
- Ohio cities settle civil claims related to power plant bailout (Energy News Network/Eye on Ohio)
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.
- Watchdog or lapdog? Ohio’s utility regulator did more to help FirstEnergy than hamper it (Cincinnati Enquirer)
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.
American Electric Power-backed dark money group spent over $1.5 million in 2020 (Energy and Policy Institute)