FirstEnergy’s headquarters in Akron. Source: Google Maps.

BY: Ohio Capital Journal

A coal company got roughly $12.6 million above market prices to supply one of the 1950s-era plants subsidized by Ohio House Bill 6. That’s roughly 50 times the amount the company gave to the dark money group at the center of that coal and nuclear bailout law, according to a new analysis from the Checks and Balances Project.

In other developments:

  • An evidentiary hearing about the reasonableness and prudence of the subsidized coal plants’ costs wrapped up last week. But it’s unclear when regulators might issue rulings.
  • In a separate FirstEnergy case, opponents want regulators to deny or limit more customer charges, saying the rider items should be considered in the company’s full rate case to be filed next May. The evidentiary hearing is expected to continue until Nov. 21.
  • Former Ohio House Speaker Larry Householder and lobbyist Matt Borges have appealed their criminal convictions but still haven’t filed their briefs. The Department of Justice has not yet filed additional criminal charges related to HB 6, either.

Coal company overpayments

A new report highlights how much Resource Fuels has collected for coal supplied to one of the two 1950s-era coal plants subsidized by HB 6 and run by the Ohio Valley Electric Company, or OVEC.

OVEC paid roughly $12.6 million to Resource Fuels in above-market charges for coal, said Ray Locker, executive director of the Checks and Balances Project, which produced the report. And as a result of HB 6’s coal subsidies, Ohio ratepayers have been paying utilities for their share of OVEC’s costs that exceed their revenue.

In 2018, Resources Fuels also sent $250,000 to Generation Now, the main dark money group in the HB 6 corruption scandal. The Energy and Policy Institute reported that wire transfer earlier this year and connected Resource Fuels to the Boich Companies, which the Columbus Dispatch had earlier identified as “Company C” in the 2020 criminal complaint against Householder and others.

So, Resource Fuels “donated $250,000 to Generation Now to facilitate everything for Larry Householder. And the excess money they’ve been paid on this coal contract is 50 times more,” Locker said.

To back up his calculations, Locker reviewed testimony statements filed with the Public Utilities Commission of Ohio by Elizabeth Stanton, an expert witness for the Office of the Ohio Consumers’ Counsel, and from John Seryak, an expert witness for the Ohio Manufacturers’ Association Energy Group. The case file also includes redacted audit reports from London Economics International.

Stanton’s testimony showed that Clifty Creek, one of the two HB 6-subsidized coal plants, paid about one-fifth more per million BTUs (units of heat value) for coal bought from Resource Fuels, compared to another supplier of coal from the same mine. The price per million BTUs paid to Resource Fuels was also more than that paid to companies providing coal with a higher average heat value.

The PUCO had let some utilities collect OVEC costs from ratepayers even before HB 6 passed. Seryak’s testimony said London Economics “repeatedly found that the cost under the Resource Fuels coal contracts is unusually high.” OVEC had a long-term deal with Resource Fuels, but it was neither prudent nor reasonable, he added. In his view, Ohio utilities have used the HB 6 coal subsidy riders “to recoup losses resulting from an unreasonable decision.”

Seryak’s testimony also connected Resource Fuels to the Boich Companies and discussed the HB 6 corruption scandal.

American Electric Power and Duke Energy both want the PUCO to strike parts of the testimony, arguing against Seryak’s point that the PUCO should not authorize recovery of the coal subsidies while the HB 6 investigations continue. They also want to keep out evidence about cost reviews of pre-HB 6 OVEC riders, which supports points made by Seryak and others.

The PUCO’s hearing examiners struck those parts of Seryak’s testimony on Nov. 6 without a written opinion. The Ohio Manufacturers’ Association Energy Group appealed that decision to the full PUCO on Nov. 13.

“That’s a total smokescreen to divert people from the details of these contracts,” Locker said. “The information is out there. And now they’re trying to stick the genie back in the bottle and say it doesn’t matter.”

Representatives of the Boich Companies did not provide comments in response to Energy News Network’s questions.

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The PUCO wrapped up its evidentiary hearing on the 2020 OVEC charges about which Seryak and Stanton provided testimony on Nov. 6. The hearing started on Halloween and took less than one week. Besides the above-market payments to Resource Fuels, challengers contended that other spending by the OVEC coal plants was not reasonable and prudent, including costs related to times when it was uneconomic to run them.

Briefs and reply briefs are due Jan. 8 and Jan. 29, said Matt Schilling, spokesperson for the PUCO. After that, parties will wait for regulators to decide whether to disallow any costs that have already been passed through to ratepayers. Adjustments would presumably be reflected in future charges for the OVEC plants, which run through 2030.

That wait could take a while. Regulators still have not ruled on challengers’ objections to pre-HB 6 OVEC plant costs. Nor have lawmakers advanced bills to repeal the subsidies.

Costs for the coal subsidies continue to mount. The Office of the Ohio Consumers’ Counsel estimates those subsidies have cost ratepayers nearly $221 million since 2020 began.

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FirstEnergy riders

The PUCO began another evidentiary hearing on Nov. 7 in a FirstEnergy rider case with roughly $1.4 billion at stake. The PUCO currently expects that hearing to continue through Nov. 21, Schilling said.

Among other things, FirstEnergy wants to extend a “delivery capital recovery” charge. That DCR rider is involved in one of four cases the PUCO has put on hold since August 2022 while the Department of Justice considers more criminal charges related to HB 6. The new case also presents questions about possible side deals that may affect settlements. That issue was raised in another of the stayed cases.

Despite the parallels, regulators declared on Oct. 18 that the rider case and two grid modernization cases “are completely unrelated” and refused to lift the stay. The PUCO also refused to put the rider case on hold, because it also deals with charges for customers who don’t choose a competitive electricity supplier. The current tariff for that is due to expire, and Ohio law requires a plan for those customers to be in place, the order said.

The case “introduces various mechanisms aimed at ensuring the ongoing investment and maintenance of the distribution system,” FirstEnergy spokesperson Lauren Siburkis said, talking about the case’s charges for all customers. Those include the DCR rider and an advanced metering infrastructure rider, plus charges for vegetation management and storm mitigation.

The increase for a residential customer using about 750 kilowatt-hours per month of electricity would initially be $3.11 per month. But witnesses for multiple challengers want regulators to deny various riders.

For example, Justin Bieber, an expert for Kroger, said in a filed testimony statement that the DCR rider is improper “single-issue ratemaking.” Instead, he said, it should properly be considered in a full ratemaking case, which would look at all of a utilities’ revenues and expenses. He had a similar view about the vegetation management rider. FirstEnergy is due to file a full ratemaking case next May.

Greg Meyer, an expert for the Office of the Ohio Consumers’ Counsel, similarly challenged the DCR rider, along with the advanced metering rider and storm recovery rider. Aside from the single-issue ratemaking problem, he noted that a process already exists for utilities to recoup major storm costs if they show the costs would impact their total operations.

Colleen Shutrump, another expert for the Ohio Consumers’ Counsel, objected to a proposed energy efficiency rider, saying customers could get efficiency services in a competitive market.

If approved, the riders would last eight years, with some possible adjustments in next year’s ratemaking case. A hearing on charges in a separate grid modernization case is set for January.

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Convictions on appeal

Former Ohio House Speaker Larry Householder and lobbyist Matt Borges appealed their criminal convictions related to HB 6 this summer. Yet their lawyers have sought multiple extensions to file legal briefs on the trial court’s alleged errors.

The filings are currently due next month, with the government’s responses due in January. For now, both remain in federal prisons.

Meanwhile, Borges and Householder are still defendants in the state of Ohio’s HB 6 civil case, along with former PUCO Chair Sam Randazzo, FirstEnergy, Energy Harbor (formerly FirstEnergy Solutions), two former FirstEnergy executives and others.

Borges’ amended answer filed on Oct. 25 denies liability for the state’s claims under the Ohio Corrupt Practices Act. The filing also says he wouldn’t be liable anyway because of the legal doctrines of in pari delicto or unclean hands. Those doctrines basically say plaintiffs can’t recover on a civil claim if they themselves engaged in wrongdoing.

Borges’ lawyers did not respond to the Energy News Network’s request for comments about which state actors and what conduct they say supports those defenses.

More charges?

The Department of Justice has not yet filed charges against anyone other than Householder, Borges and others named in their July 2020 criminal complaint and indictment. (Three of the other defendants named have settled, and one has died.) As noted above, four FirstEnergy regulatory cases remain stayed, although various civil cases against the company continue to move ahead.

A Nov. 6 order in one of the shareholder cases calls for Ebony Yeboah-Amankweh, a former lawyer and ethics officer for FirstEnergy, to answer plaintiffs’ lawyers’ questions under oath in a pretrial process called a deposition. The company ended her employment a few months after the 2020 complaint came out.

A separate Nov. 6 order requires Randazzo to turn over documents and information which plaintiffs in that case have sought for months. Randazzo will also have to pay costs arising from the documents dispute.

People from regulatory agencies or utilities “should not get to have their lawyers pick and choose what discovery and subpoena requests they will respond to, and what documents they will turn over,” said Dave Anderson, policy and communications manager for the Energy and Policy Institute.

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This article first appeared on Energy News Network and is republished here under a Creative Commons license.

Kathiann M. Kowalski, Energy News Network

Kathi is the author of 25 books and more than 600 articles, and writes often on science and policy issues. In addition to her journalism career, Kathi is an alumna of Harvard Law School and has spent 15 years practicing law. She is a member of the Society of Environmental Journalists and the National Association of Science Writers. Kathi covers the state of Ohio.


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