Don't miss out
Every morning, the Energy News Network compiles the top stories about the clean energy transition and delivers them to your inbox for free. Sign up today!
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 email@example.com.
Was this forwarded to you? Click here to subscribe.
Now that jurors have returned guilty verdicts against former Ohio House Speaker Larry Householder and lobbyist and former Ohio Republican Party chair Matt Borges — the first criminal convictions in the ongoing House Bill 6 scandal — advocates for government integrity are breathing a sigh of relief, and other top Republicans are keeping quiet.
The $1 billion-plus nuclear bailout provisions of HB 6 were repealed in 2021. However, ratepayers continue to pay more than $130,000 daily for the costs of two 1950s-era coal plants. Bills to repeal the subsidies stalled in the last legislative session, and the Public Utilities Commission has not yet decided audit cases dealing with those charges. Ohio’s clean energy standards also remain gutted.
Developments in the criminal case and other matters include:
- While legal and policy experts say the Householder/Borges case shows that all are accountable under the law, they also call for more transparency and accountability in the political system.
- The federal government may still file criminal charges against additional defendants.
- At federal prosecutors’ request, Ohio regulators have ordered another six-month freeze on discovery in four FirstEnergy cases relating to HB 6.
- A March 3 brief filed by Ohio Attorney General Dave Yost urges the Supreme Court of Ohio to continue a freeze of another kind — namely, to prevent former Ohio regulator Sam Randazzo from disposing of certain property that might satisfy an eventual judgment in the state’s civil lawsuit relating to HB 6.
- Yost has also asked an Ohio trial court to resume a case that had been mostly in limbo until the HB 6 trial.
- Texas-based Vistra Corp announced on March 6 it is buying the two Ohio nuclear plants for which FirstEnergy and its subsidiary FirstEnergy Solutions (now Energy Harbor) sought bailouts through HB 6.
- A March 17 hearing in a separate federal court case will address whether a shareholder can move forward with claims against American Electric Power related to the HB 6 scandal.
Householder and Borges both found guilty
Jurors in Ohio’s HB 6 corruption trial returned guilty verdicts against both Householder and Borges. Each could face up to 20 years in prison in the $60 million scandal. Post-trial motions and appeals are likely.
Legal and policy experts see the case as confirmation that all are accountable under the law, despite the prevalence of dark money in politics. At the same time, they also call for reforms to increase transparency and accountability.
Advocates also have renewed calls to repeal the rest of HB 6, which continues to require Ohioans to subsidize two 1950s-era coal plants and gutted the renewable energy and energy efficiency standards.
However, the 2019 law still has some strong supporters in the Ohio legislature’s leadership. Among them are Rep. Bill Seitz, who testified as part of Householder’s defense case, and Ohio Senate President Matt Huffman, who opposes the clean energy standards.
- What the guilty verdicts in the HB 6 corruption case mean for energy policy and good government in Ohio (Eye on Ohio/Energy News Network)
- Householder seeks to sow reasonable doubt in Ohio corruption trial (Eye on Ohio/Energy News Network)
- Gov. Mike DeWine, other top Ohio Republicans silent on Larry Householder’s corruption conviction (Cleveland.com)
- Ex-Ohio House Speaker Larry Householder, former Ohio GOP leader Matt Borges found guilty (Columbus Dispatch)
- How FirstEnergy wrapped its tentacles around Ohio government: Householder trial analysis (Cleveland.com)
- Jury must decide if Householder is ‘old Appalachian boy’ or lawmaker who ‘sold the statehouse’ (WCPO)
Celebrate National Sunshine Week: Join Kathiann M. Kowalski tomorrow (March 15) at 6 p.m. ET for a panel discussion hosted by Common Cause Ohio. Register now for the webinar: Shine a Light on the Statehouse: What Can We Learn from the Householder/Borges Trial?
More charges to come?
Federal prosecutors remain free to file criminal charges against additional defendants.
“One of the things you find oftentimes in public corruption cases is there is almost no end to where it goes,” said Michael Benza, who heads the Financial Integrity Institute at Case Western Reserve University School of Law. “How high up do you take it? And how low do you go?”
Although FirstEnergy was not named as a defendant in the Householder case, the company admitted wrongdoing in a July 2021 deferred prosecution agreement. The agreement does not bar prosecution against individuals.
Lawyers for the company previously identified former CEO Chuck Jones and former vice president Michael Dowling as the individuals who paid bribes to the alleged criminal enterprise in the Householder case. Both men are defendants in a civil lawsuit relating to House Bill 6 that was brought by the Ohio attorney general’s office. Both have denied liability.
Other individuals’ names also came up multiple times during the trial, including FirstEnergy Solutions executives John Kiani and David Griffing. FirstEnergy Solutions emerged from bankruptcy in 2020 as Energy Harbor, and both men continued as executives there. Energy Harbor has not responded to a request for comment.
Names of lobbyists, go-betweens and others have come up during the Householder trial as well.
FirstEnergy’s 2021 deferred prosecution agreement also said the company paid money to Sam Randazzo, a former chair of the Public Utilities Commission of Ohio, in return for action relating to HB 6 and other company priorities. Randazzo, also a defendant in the state’s civil lawsuit, has denied any liability. He has not been criminally charged.
- Householder trial: New evidence shows depth of long-suspected scheme (Eye on Ohio/Energy News Network)
- Meet the Cleveland businessman who connected Householder to FirstEnergy (Columbus Dispatch)
- FirstEnergy’s CEO and SVP ordered $64 million bribery scheme, shareholders say (Ohio Capital Journal)
- Ousted FirstEnergy CEO Chuck Jones again asserts his innocence, after Householder guilty verdict (Cleveland.com)
- Nuclear exec would have made $100 million from sale of plants at heart of bribery trial, lobbyist says (Cleveland.com)
- Not all ‘conspirators’ charged as corruption trial heads to jury (The Blade)
An extended freeze
On Feb. 24, U.S. Attorney Kenneth Parker for the Southern District of Ohio requested another six-month pause, or “stay” on discovery in four FirstEnergy regulatory cases that have been on hold since last summer.
“As you are aware, the United States is conducting an ongoing investigation into corruption relating to Ohio House Bill 6 and action through the Public Utilities Commission of Ohio,” Parker wrote in his Feb. 23 letter.
The PUCO granted the request and extended the stay on March 8. However, there are consequences for consumers.
Each of the four cases deals with regulatory issues separate from any criminal charges. One case focuses on a charge called a delivery capital rider. A 2021 audit reported that roughly a quarter of $24.5 million in charges were improper and should be refunded.
Another case deals with money from a so-called “distribution modernization rider.” An audit found FirstEnergy failed to track the funds properly, so the use for HB 6 activities couldn’t be ruled out. Last year the Office of the Ohio Consumers’ Counsel and Ohio Manufacturing Association Energy Group asked the PUCO to assess penalties up to $1.4 billion.
Yet another case calls for FirstEnergy to show it did not use ratepayer money to fund political and charitable activities. The modernization rider case suggests that will be tricky at best.
The fourth case is about whether FirstEnergy violated Ohio law requiring corporate separation between utilities and their parents and affiliates.
The longer the stay on discovery lasts, the longer it will be until ratepayers might get any relief in the form of penalties or refunds.
Beyond that, FirstEnergy plans to file for changes to its Electric Security Plan during the first half of this year, spokesperson Jennifer Young confirmed. Among other things, that filing will seek to continue the capital rider involved in one of the cases, FirstEnergy Chief Financial Officer Jon Taylor said during the company’s Feb. 15 earnings call.
And next year FirstEnergy is due to file its first ratemaking case in more than 15 years. If the current cases aren’t resolved before then, regulators and the public may lack full information when the newer cases are decided.
- Freeze of regulator’s HB 6 cases could further harm Ohio consumers (Eye on Ohio/Energy News Network)
- FirstEnergy’s admissions feed critics’ call for big-picture regulatory oversight and review (Energy News Network/Eye on Ohio)
A March 3 legal brief filed by the Ohio attorney general’s office urged the Ohio Supreme Court to reverse a lower court order that would make them release a freeze of certain assets of Sam Randazzo.
“The Court of Appeals botched its analysis” in finding that the trial court didn’t adequately consider if there would be irreparable harm if Randazzo continued disposing of various assets, the brief said. Without the freeze, the state said it might not be able to collect an eventual judgment against Randazzo in its civil lawsuit relating to HB 6.
In the seven months following his November 2020 resignation, Randazzo gave a $500,000 home to his son and sold multiple assets, including a Columbus house, a Naples condominium and boat slip, and a Cuyahoga Falls condominium roughly 10 minutes away from FirstEnergy’s headquarters.
In the attorney general’s view, the gift, property sales, and another $2.5 million transferred out of state, combined with the trial court’s other hearings and understanding of the case, more than justified the freeze. And at the trial court’s hearing on the freeze, Randazzo’s lawyers chose not to present evidence or argue against allegations supporting probable cause or irreparable injury, the brief added.
- High court to weigh freezing ex-Ohio regulator’s $8M assets (Associated Press)
Seeking a thaw
Now that the HB 6 trial is over, Yost has renewed a request for the trial court in that same case to let the case move ahead. None of the defendants in the civil case is currently awaiting trial on criminal charges, the filing noted.
“Criminal justice has been had. Civil justice for the State of Ohio should commence,” state attorneys wrote.
Randazzo and former FirstEnergy executives Michael Dowling and Chuck Jones were added as defendants in the summer of 2021, after FirstEnergy admitted to bribery in a deferred prosecution agreement. Although all three added defendants have denied liability, it’s unclear whether the federal government might eventually file criminal charges against them.
Judge Chris Brown will still need to rule on the state’s motion after other parties have a chance to respond. For now, the court’s online docket system shows a status of “reinstated.”
FirstEnergy nuclear plants sold
Vistra Corp. announced on March 6 that Energy Harbor would merge into a new Vistra subsidiary called Vistra Vision. The subsidiary will combine Vistra’s and Energy Harbor’s existing nuclear and retail business with Vistra Zero’s renewable energy and storage projects, the March 6 press release said.
The deal involves roughly $3 billion in cash and a 15% equity interest in Vistra Vision.
Evidence in the Householder/Borges trial noted that one goal of HB 6 was to make it easier for FirstEnergy and its subsidiaries to sell the Davis-Besse and Perry nuclear plants. Co-defendant Juan Cespedes also suggested in his testimony that John Kiani, Energy Harbor’s executive chair, stood to make $100 million if the plants were sold.
House Bill 6’s subsidies were repealed in 2021, although other parts of the law remain in place, including its coal plant subsidies and a gut of Ohio’s clean energy standards.
- Vistra to buy Energy Harbor in $3.43B cash and stock deal (Seeking Alpha)
- Vistra deepens nuclear push with $3.43 bln deal for Energy Harbor (Reuters)
- Energy Harbor, owner of nuclear plants at heart of HB6 scandal, sold for $3.4 billion to Texas-based Vistra Corp. (Cleveland.com)
Coal plant subsidies?
A new bill to repeal HB 6’s coal plant subsidies would also refund more than $150 million customers have paid under the law since January 2020.
“It’s time to undo the damage caused by the largest bribery scandal in Ohio’s history and bring financial relief to Ohioans who are still paying to bail out dirty, failing coal plants,” said Rep. Casey Weinstein, D-Hudson, who is co-sponsoring the bill with Rep. Sean Brennan, D-Parma.
Previous bills to repeal the coal plant subsidies stalled in legislative committees, as did earlier bills that called for a full repeal of HB 6. Whether the new bill will progress further now that guilty verdicts have been entered in the Householder/Borges case remains to be seen.
- As Ohio regulators sit on coal plant subsidy cases, costs could rack up for ratepayers (Eye on Ohio/Energy News Network)
AEP litigation update
Federal Judge Sarah Morrison will hear arguments on March 17 in Columbus on whether to let an additional shareholder join litigation against American Electric Power based on alleged actions related to HB 6. The existing plaintiffs don’t mind if the new plaintiff joins the case, but AEP objects to it.
The additional shareholder’s proposed complaint would add additional facts and legal arguments to the case, his lawyers said. Among other things, his complaint notes AEP’s disclosure last fall that it had received a second subpoena from the Securities and Exchange Commission related to HB 6.
Empowering Ohio’s Economy, a dark money group funded by AEP, gave $900,000 to dark money groups involved in the HB 6 scandal. And AEP and other utilities continue to benefit from being able to recoup their costs for the two 1950s-era coal plants from ratepayers.
Judge Morrison will also hear arguments on March 17 about whether she should dismiss the amended complaint already filed in the litigation. AEP filed a motion asking her to do that last year.