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Tag: nuclear bailout

  • Coal company got big payback from HB 6

    Coal company got big payback from HB 6

    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.

    Read more: 

    Waiting

    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.

    Read more:

    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.

    Read more:

    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.

    Read more:

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

    Kathiann M. Kowalski, Energy News Network
    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.

    MORE FROM AUTHOR

  • Householder denies D.C. dinners, tying donations to legislation

    Householder denies D.C. dinners, tying donations to legislation

    BY: MARTY SCHLADEN – Ohio Capital Journal

    Former House Speaker Larry Householder, R-Glenford. Source: Ohio General Assembly.

    CINCINNATI — Former Ohio House Speaker Larry Householder on Wednesday claimed that he never promised any legislative action to FirstEnergy in exchange for the tens of millions the company paid into a 501(c)(4) dark money group he controlled.

    He also denied attending dinners in Washington, D.C., during Donald Trump’s inauguration during which other witnesses said he met with top FirstEnergy executives. 

    And the former speaker denied that he demanded unquestioning loyalty from lawmakers whose elections he worked for. Instead, he said, he wanted them to be independent thinkers.

    After sitting through federal court testimony since Jan. 23, Householder on Wednesday took the witness stand in his own defense. That’s considered by many lawyers to be a risky strategy because he will be subject to cross examination by prosecutors who are eager to catch the former speaker in a lie.

    Householder, a Republican from Glenford, and former Ohio GOP chair Matt Borges are being tried on accusations of racketeering in a case that federal prosecutors have said is likely the biggest bribery and money laundering scandal in Ohio history. 

    Householder is accused of masterminding a scheme to use $61 million in utility money to elect House members who would vote to make him speaker at the beginning of 2019. He led the effort to pass a $1.3 billion ratepayer bailout of failing nuclear and coal plants the following July and then protected it from a repeal campaign that failed in October 2019. Prosecutors say the bailout was explicitly tied to FirstEnergy’s contributions.

    On the stand, Householder introduced himself as a guy from Appalachia who had worked for years to protect Ohio’s energy independence. But he also made a number of statements prosecutors are likely to challenge.

    One is that as it neared passage, the bailout law, House Bill 6, became the object of “misinformation” in commercials that he said were financed by the American Petroleum Institute. The nuclear reactors the law would subsidize couldn’t compete with natural gas, which Householder said the petroleum institute supported instead of nuclear power.

    However, in his testimony, Householder didn’t point to anything specific that the group had misstated. Similarly, he complained of misinformation in a Cleveland Plain Dealer editorial, but he didn’t point to anything specific, nor did he say whether he asked for a correction.

    At the same time, the former speaker seemed guilty of some misinformation of his own.

    Householder said one of the chief goals of House Bill 6 — dubbed the “Ohio Clean Air Program” — was to lower carbon emissions. But the bill provided hundreds of millions in subsidies to coal-burning plants owned by FirstEnergy subsidiary FirstEnergy Solutions and other Ohio utilities.

    Householder’s claimed concern for carbon emissions also seems to clash with earlier statements he made on the stand. He testified that he was president of a group that owned an Alabama coal mine and that during an earlier stint in the Ohio House, he worked to subsidize coal production.

    Householder also tried to soften his image after three former House Republicans portrayed the former speaker as a heavy-handed autocrat who demanded loyalty at all times. He pointed out that even though they didn’t vote to make him speaker and they voted against HB 6, he didn’t remove Reps. Laura Lanese and Dave Greenspan from their leadership positions.

    In secret FBI recordings played earlier in the trial, lobbyist Neil Clark described Householder as ruthless and said he told Greenspan that because the lawmaker had opposed HB 6, Householder would never allow legislation Greenspan wanted to move forward. What Householder wanted, witnesses testified, were “casket carriers” — people so loyal that they would stay with him until he died and then lower his casket into the ground.

    But Householder on Tuesday said he didn’t want blind loyalty, he wanted independence. As for wanting casket carriers, that meant “I didn’t want enemies. I wanted friends,” Householder testified.

    Householder also disputed some of the basic factual allegations that had been made against him. 

    He denied testimony from former aide Jeffrey Longstreth that in an Oct. 10, 2018 meeting, lobbyist Robert Klaffky slid a $400,000 check from FirstEnergy Services across a conference table and under Householder’s hand. It was a FirstEnergy Services employee who gave him the check and there was no conference table to slide it across, Householder said.

    Even if that’s true, it’s hard to square that account with other parts of Householder’s testimony.

    At issue in the case is whether Householder pushed the bailout legislation in exchange for all the millions he received from FirstEnergy. He said he had little involvement in Generation Now, the main 501(c)(4) dark money group the company paid into and which supported Householder-friendly candidates and ferociously attacked their opponents.

    Householder said his understanding was that Generation Now was “a vehicle that would educate the public on issues that were important to Ohio.”

    But on Wednesday, Householder said he accepted a $400,000 check from FirstEnergy Solutions that was made out to Generation Now, which was created and controlled by Longstreth, his underling. The former speaker conceded that it was a huge contribution — and the jury might find it hard to credit that he played such a passive role in the group’s activities.

    Householder also denied Longstreth’s account of a dinner during Trump’s 2017 inaugural. Longstreth testified that he sat at one end of a long table in a crowded steakhouse with FirstEnergy Vice President Michael Dowling, while Householder sat at the other with CEO Chuck Jones. Longstreth said he couldn’t hear the conversation at the other end of the table, but he did hear Dowling instruct him to set up an organization that could accept “undisclosed and unlimited contributions” from FirstEnergy and its subsidiary. 

    Householder testified that he went to the inaugural with his wife and several of his sons and only briefly saw Jones and Dowling, but didn’t dine with them. Instead, he and his family went to the inauguration, the parade that followed and attended functions where they were photographed with such luminaries as former Indiana University basketball coach Bob Knight, Householder said.

    However, Householder said he and one of his sons flew to D.C. and back on a FirstEnergy jet. 

    The former speaker testified that on March 29, 2019 — more than two months later — he wrote a check for $2,647 reimbursing the company for the flight. But he didn’t say why it took him that long to make the payment or what prompted him to do so.

    In addition, paying for flights on private jets crashed pretty hard against another bit of Householder’s testimony Wednesday — that he is very frugal.

    “Anybody who’s been around me knows I’m cheap,” Householder said. “I drive a 2001 GMC Sonoma and I don’t like to spend money.”

  • Former associate testifies that ex-Ohio GOP Chair Borges paid to spy on bailout repeal effort

    Former associate testifies that ex-Ohio GOP Chair Borges paid to spy on bailout repeal effort

    BY: MARTY SCHLADEN – Ohio Capital Journal

    CINCINNATI — Former Ohio Republican Party Chairman Matt Borges paid $15,000 off the books in 2019, a witness testified Tuesday. It was in an attempt to gather inside information about the campaign to repeal a $1.3 billion utility subsidy that had just been passed by the legislature, a Borges associate said.

    In addition, the chairman of the company that benefited most from the subsidy in an email referred to the scheme as a “black op” and said he was prepared “to do whatever it takes” to defeat the repeal effort, the witness, Juan Cespedes, said. Coincidentally, the chairman, John Kiani, started his career at Enron, a Houston Energy company that collapsed under a wave of unmet contracts and accounting scandals in 2001.

    It was the 11th day in the federal court trial of Borges and former Ohio House Speaker Larry Householder, R-Glenford. Borges is accused of assisting Householder and others in a scheme to use $61 million from Akron-based FirstEnergy to make Householder speaker and pass the massive bailout.

    The bulk of the bailout was intended to benefit money-losing nuclear and coal plants owned by FirstEnergy subsidiary FirstEnergy Solutions. It was going through bankruptcy proceedings and executives with the parent company and the subsidiary desperately wanted the bailout to complete the bankruptcy, spin off FirstEnergy Solutions and possibly sell the nuclear plants.

    Gov. Mike DeWine signed the bailout the same day it passed in 2019, but a repeal effort started amid reports that it was “the worst energy bill of the 21st century.” Not only did it prop up 70-year-old coal plants under the guise of being a “Clean Air Program,” it also gutted the state’s renewable energy standards.

    Borges was part of a team of lobbyists who worked to pass and protect the bailout, House Bill 6. And, because of his long experience in Ohio politics, he was asked to make use of some of his relationships in the effort, Cespedes, another member of the team, testified.

    Cespedes was also charged with racketeering, but he pleaded guilty and is cooperating with prosecutors.

    The off-the-books payment

    One of the primary acts Borges is charged with has to do with a $15,000 payment he made during the repeal effort to Tyler Fehrman, who was helping manage the campaign to gather enough valid signatures to get the repeal on the ballot. 

    Inside information was valuable to the pro-H.B. 6 team because it enabled them to gauge the strategy and likelihood of success of the repeal effort.

    Cespedes testified that he tried to keep the plan to recruit Fehrman from Kiani, the FirstEnergy Solutions chairman whose company financed a big portion of the fight against the repeal. Kiani was a hard-charging executive and Cespedes believed that once he learned of the spying effort, he would press the operatives relentlessly. 

    However, Cespedes said, Borges told Kiani about it, and it seems Cespedes’s worries were well founded.

    In an Aug. 31, 2019 text, Kiani asked “what happened to the black ops?” in a reference that Cespedes said was to the spying effort. Then, in a Sept. 2, 2019 text, Cespedes told Borges that Kiani, “reiterated to do whatever it takes to get this information.”

    It appears that Fehrman was paid, but it’s unclear what he was paid for.

    In taped conversations played earlier in the trial, Borges discussed paying Fehrman, but he claimed to Fehrman that it was for work Fehrman might do some time in the future. But Borges made other statements that seemed to show that he knew the two were doing something wrong.

    “It would be bad for both of us if the story came out,” he told Fehrman in a recording that Fehrman made with the help of the FBI. “But it would be worse for you.”

    On Tuesday, Cespedes testified that he roughed out a budget at the time of the repeal campaign. He made an entry in it to pay $25,000 to an “employee.” Cespedes said the money was intended for Fehrman.

    Asked why he used “employee” to label the entry, Cespedes said, “I wasn’t going to write ‘bribe.’ I wasn’t going to write anything nefarious.”

    Prosecutors displayed a photograph of what they said was a contemporaneous budget that Borges roughed out in a notebook that Cespedes had photographed. Cespedes testified that when he asked Borges why a payment to Fehrman wasn’t in it, Borges “simply said it wasn’t something he wanted to write down.”

    Cespedes testified that Fehrman later went quiet on Borges and Cespedes assumed that their deal had fallen through. But after the repeal campaign had failed, an accounting showed that the $15,000 had been paid, Cespedes said. 

    When he asked Borges about it, “He said, ‘I just wanted to keep him quiet,’” Cespedes testified.

    Earlier in the HB 6 fight, Borges and Cespedes were struck by Kiani’s connections to Enron, which ceased to exist after one of the biggest corporate scandals to that point in American history.

    “The shocking thing last night was learning that Kiani came from Enron,” Borges said in a text.

    Kiani went from there to work as a hedge fund manager and then he made his way onto the FirstEnergy Services board as an activist investor. Cespedes testified that a Kiani aide told him that Kiani would make $100 million from the sale of FirstEnergy Solutions’ nuclear plants. 

    Regardless of whether that’s accurate, Kiani clearly was willing to spend lots of corporate money to win subsidies for them. To fund a statewide, eight-week media campaign for the bailout, bankrupt FirstEnergy Solutions approved a $15 million budget, Cespedes testified.

    That amount would grow after the bill passed and the repeal fight got underway.

    Kiani continues to be executive chairman of Energy Harbor, the new name for FirstEnergy Solutions after it emerged from bankruptcy. His company bio credits him with “the successful operational and financial turnaround of Energy Harbor into a leading, carbon free power infrastructure and energy supply company.”

  • Texts, calendars, emails link DeWine to FirstEnergy’s bribery scandal

    Texts, calendars, emails link DeWine to FirstEnergy’s bribery scandal

    BY: JAKE ZUCKERMAN – Ohio Capital Journal

    Gov. Mike DeWine and his administration played a hands-on role passing an allegedly pay-for-play nuclear bailout and appointing an industry-friendly regulator who has since been accused of taking a $4.3 million bribe, documents and messages show.

    Calendar records show DeWine, a Republican, met repeatedly to discuss energy policy with FirstEnergy Corp. officials and at least once with GOP House Speaker Larry Householder, who has been criminally accused of taking a separate, multimillion-dollar bribe from the company to pass the bailout.

    Despite a cautionary letter from environmental groups and a 198-page dossier from his former campaign staffer warning against the move, DeWine appointed Sam Randazzo in 2019 to the head of the Public Utilities Commission of Ohio. FirstEnergy last summer admitted it paid Randazzo a $4.3 million bribe. Randazzo has not been charged with a crime and denies wrongdoing.

    Newly released text messages show FirstEnergy executives describing an open line with the administration on the selection and inside support from Ohio’s chief executive.

    “When the Gov Elect asked me about attributes, I listed integrity, work ethic, creativity, thick skin, circumspection in public statements,” FirstEnergy’s then CEO texted Randazzo about the open PUCO seat in December 2018, just before DeWine took office.

    “You fit all of those.”

     Former FirstEnergy CEO Charles “Chuck” Jones. Source: FirstEnergy, via Flickr

    In one text, FirstEnergy executive Mike Dowling credits DeWine and Lt. Gov. Jon Husted with performing “battlefield triage” to save Randazzo’s appointment before a key vote. Both DeWine and Husted have previously denied that a redacted version of the text message that appeared in criminal documents referred to them.

    Federal prosecutors accused House Speaker Larry Householder of secretly controlling a nonprofit that took $60 million from FirstEnergy. He allegedly used the money to enrich himself personally and politically and to ensure the passage of House Bill 6, which provided a massive bailout to two nuclear plants owned at the time by FirstEnergy. Householder was charged with racketeering and awaits trial. Two alleged conspirators pleaded guilty.

    FirstEnergy admitted last summer to the $60 million payment as well as a separate $4.3 million bribe to Randazzo just before he started as Ohio’s top utility regulator. The payment topped off $22 million in consulting fees to Randazzo since 2010 from the company.

    Court documents from prosecutors reveal no focus on DeWine, who has not been charged with any crime. However, a review of records turned over in subpoenas, public records requests for his official calendars by the Energy and Policy Institute, text messages attached to regulatory filings, and others show DeWine and his staff repeatedly influencing and shepherding HB 6 into law.

    On the campaign trail in July 2018, DeWine visited one of the nuclear plants that would receive a bailout, his official calendar shows. A month later, he met with FirstEnergy executives at their Akron headquarters. In October of that year, DeWine met with FirstEnergy at a fundraiser for Republican governors.

    FirstEnergy contributed about $1 million in total to DeWine’s campaign, political organizations supporting it, and to another nonprofit supporting his daughter’s campaign for county prosecutor, according to the Dayton Daily News.

    After winning a close race, DeWine, Husted, Jones and Dowling celebrated over dinner at The Athletic Club in Columbus. The next day, Jones sent Randazzo the text message (above) indicating they discussed the open PUCO seat.

    In January of 2019, the FirstEnergy officials texted one another trying to fill not just one but two open PUCO seats, all the while mentioning phone calls with “DeWine guys” about it.

    “That’s their plan but nothing certain until Sam’s [Randazzo’s] meeting [with DeWine],” Jones texted Dowling. “Four people in DeWine world, you, Sam, and I know about this.” The PUCO seats would eventually be filled by Randazzo with another commissioner renewed.

    Dowling relayed to the other two men a message from Josh Rubin — a DeWine 2018 campaign adviser and a FirstEnergy lobbyist. He said once Randazzo takes office, DeWine will “lean on him on everything.”

    Several texts focus on HB 6. The bill (and eventual law) would bail out FirstEnergy’s nuclear plants, subsidize two coal plants owned by other Ohio utility companies, and create a “decoupling” mechanism that effectively put ratepayers on the hook to guarantee certain revenue streams of FirstEnergy’s. Prosecutors estimate the bill as worth about $1.3 billion to the company.

    Two days before the bill was introduced, DeWine’s calendar shows a slot for an “Energy Discussion” at the governor’s residence. Later that month, after the bill was repeatedly criticized during an opponent testimony hearing at the statehouse, DeWine, Husted, Randazzo and various staffers all met up at 5 p.m. for what the governor’s calendar calls a “Nuclear Bailout Bill Discussion.”

    Over the next month, DeWine’s calendars show two entries for energy policy meetings, plus a call with Householder about HB 6, and another call on the bill.

    On June 9, 2019, DeWine showed signs of wavering.

    “Sam, what do we know about whether nuclear plants need this boost?” DeWine, using his personal email, wrote to Randazzo. “One editorial suggested testimony was not conclusive.”

    Dowling paid a visit to the governor’s residence the next day. Randazzo responded to DeWine’s email on June 11, casting doubt on the studies referenced in the editorials.

    On July 1, Dowling texted Jones.

    “Just had a long conversation with JHusted just now,” he said, going on to explain that Husted sought to extend the length of the bailout. “All is well.”

    Court records contain another text from Jones stating that “State Official 2,” later confirmed to be Husted, joined with others in “fighting to the end” for a beefier bailout.

    After a long slog, lawmakers passed HB 6 on July 23, 2019. DeWine signed it into law mere hours later.

     FBI agents remove boxes of materials from PUCO Chairman Sam Randazzo’s condo in Columbus Nov. 17, 2020. Photo courtesy of Daniel Konik/Statehouse News Bureau.

    Loyalty to staff and HB 6

    As the FBI made its first arrests, DeWine began a pattern of defending HB 6 on the merits and showing unflinching loyalty to his staffers, some of whom have ties to FirstEnergy.

    Householder, his political strategist, a prominent GOP lobbyist, and two FirstEnergy lobbyists were arrested and charged with racketeering in connection with HB 6 on July 21, 2020. The next day, DeWine stood by the law he signed.

    “Because people did bad things does not mean that the policy is not a good policy,” he said.

    He reversed himself the next day and called for a repeal of the bill.

    In October, FirstEnergy fired Jones, Dowling, and fellow executive Dennis Chack as it waged an internal investigation. The company fired another two executives days later “due to inaction and conduct that the Board determined was influenced by the improper tone at the top.”

    At this point, the public remained unaware of the multimillion-dollar financial arrangement between the embattled FirstEnergy and Randazzo. However, on Nov. 16, 2020, FBI agents were seen raiding Randazzo’s condo and removing boxes of material from inside. The next day, FirstEnergy submitted a little-noticed securities filing outlining the $4.3 million payment.

    Despite the images of FBI agents entering Randazzo’s condo, DeWine publicly defended his appointee.

    “We have no indication he’s under investigation or he’s the target of an investigation. We’ll wait until we find additional facts,” he said in a Nov. 17, 2020 news conference. “Look, the FBI many times will indicate if someone is a target. They have not indicated he’s a target. I have no reason to think he’s a target. I don’t know. So, we’re waiting for additional information, quite candidly. I hired him. I think he’s a good person. If there is evidence to the contrary, then we’ll act accordingly, but not going to act without facts.”

    Randazzo would resign three days after that statement.

    Mid-summer 2021, FirstEnergy signed a deferred prosecution agreement with the U.S. Department of Justice. The company agreed to pay a $230 million penalty and cooperate with investigators to avert a charge of honest services wire fraud.

    The agreement contained a lengthy set of facts from the company, stating it paid the $64 million in bribes in exchange for official action from Householder and Randazzo.

    Days after the agreement was announced, DeWine held a press conference on anti-hazing legislation. Reporters asked questions afterward about the agreement, including a line that refers to “State Official 1” and “State Official 2” lobbying to ensure Randazzo’s appointment. DeWine said he’s “not aware” of anyone in his administration, including himself, appearing in the document. Husted, in a statement, said he too “does not believe” he’s referenced in the document.

    Texts obtained by the Ohio Consumers’ Counsel from FirstEnergy and attached to a regulatory filing contain the unredacted version of the text, identifying DeWine and Husted by name.

    In 2017, a lobbyist named Dan McCarthy created a nonprofit entity called Partners for Progress to engage in “advocacy in support of nuclear power,” tax records show. FirstEnergy would later admit to paying $25 million to Partners for Progress, some $15 million of which went to Householder’s nonprofit.

    DeWine hired McCarthy as his legislative director in 2019, around the time McCarthy stepped down from the organization’s board. In February 2021, after media reports identified McCarthy’s role with Partners for Progress, DeWine defended McCarthy.

    “As far as I know, Dan McCarthy has been well-respected for many, many years, long before he started working for me as our legislative director, and I have faith in his integrity,” DeWine said.

    McCarthy resigned in September 2021.

    DeWine response

    In a phone interview, DeWine spokesman Dan Tierney said the OCC-obtained text messages and meetings listed by the Ohio Capital Journal contain no new information.

    The texts, he said, in fact show the lack of a role from DeWine and Husted within the scandal. He said prosecutors have not subpoenaed him or any of his employees.

    “This all along has been a Larry Householder scandal and a FirstEnergy scandal,” he said.

    When asked whether DeWine, a former prosecutor and attorney general, detected any sense of impropriety during all his contacts with Householder and FirstEnergy leading up to the passage of House Bill 6, he declined comment.

    Husted offered a similar comment through a spokeswoman, stating that “there is nothing new here” in the texts, emails and meetings.

    “This kind of advocacy is well within his responsibilities as a public official, and, as we know, the bill was ultimately passed with bipartisan support,” he said.

  • Nearly a year after a racketeering indictment, Ohio House expels Larry Householder

    Nearly a year after a racketeering indictment, Ohio House expels Larry Householder

    By Jake Zuckerman and Ohio Capital Journal

    Larry Householder addresses reporters June 16 after lawmakers voted to expel him from the General Assembly. Photo by Jake Zuckerman.

    Federal prosecutors accused the men of secretly accepting $61 million from FirstEnergy Corp

    The Ohio House voted Wednesday to expel Larry Householder, arrested on charges of public corruption nearly one year ago, from the chamber his Republican — and even some Democratic — colleagues thrice elected him to control.

    The expulsion could mark the end of Householder’s decades-long political career, which has included a previous tenure as speaker of the House in the 2000s that was derailed by a separate FBI investigation. No charges were filed.

    The House voted 75-21 to eject Householder. All but one Democrat voted in support.

    Wednesday’s vote extinguishes Householder’s political flame, but he remains innocent until proven guilty as his criminal trial draws nearer. Both he and former Ohio Republican Party chairman turned lobbyist Matt Borges await trial.

    Jeff Longstreth, Householder’s former political adviser, and Juan Cespedes, a lobbyist, both pleaded guilty to racketeering charges. Neil Clark, a lobbyist and once a towering figure in Ohio politics, was charged as well but pleaded innocent. He died by suicide before trial.

    Federal prosecutors accused the men of secretly accepting $61 million from FirstEnergy Corp via a dark money, pass-through entity. They allegedly used the funds for personal enrichment and to engineer the passage of House Bill 6, a coal and nuclear bailout worth an estimated $1.3 billion to the company.

    After his July 2020 arrest, House lawmakers quickly dethroned Householder as speaker. However, all but a handful of Republicans voted down an effort from Democrats to expel him. Speaking to House leadership on Tuesday, a confident Householder denied the allegations against him. On Wednesday, he listened from the House floor in silence as lawmakers publicly debated his fate.

    Those seeking his ouster emphasized the House is not a courtroom and thus can apply its own professional standards. They said the 43-page indictment and the plea deals entered into by two allies (and one dark money political entity) warrant his ouster from public office.

    “If selling legislation does not count as disorderly conduct, then frankly, nothing does,” said Rep. Brian Stewart, R-Ashville, who sponsored the expulsion resolution along with Rep. Mark Frazier, R-Newark.

    Rep. Kyle Koehler, a Republican who voted against HB 6, dismissed those trying to reduce Householder’s indictment as “allegations.” He identified himself as the anonymous “Representative 6” in the indictment itself, which describes the unnamed lawmaker subjected to political pressure funded by FirstEnergy for his vote.

    “These things occurred,” Koehler, one of few who have publicly demanded Householder’s ouster in recent months. “They’re not accusations. They’re not speculations.”

    Householder’s defenders argued it’s premature to punish Householder before he faces trial. Some argued that the allegations against him don’t qualify as “disorderly conduct,” the undefined Constitutional threshold for expulsion.

    “This is about due process. It’s about the Constitution. It’s not about that man sitting right over there,” said Rep. Al Cutrona, R-Canfield, pointing at Householder.

    What’s more, he won reelection in November, despite the indictment against him.

    “We do not get to choose who represents someone else’s district,” said Rep. Nino Vitale, R-Urbana, who chaired a committee specially created by Householder to review HB 6.

    At around 3 p.m., Householder began what would be his last floor speech of the 134th General Assembly.

    He reiterated a claim of his innocence, said that the allegations against him do not qualify as disorderly conduct, and criticized lawmakers for banishing from a chamber without gathering any evidence of their own.

    “I have not, nor have I ever, took a bribe, or provided a bribe,” he said. “I have not, nor have I ever, solicited a bribe. And I have not, nor have I ever, sold legislation.”

    After the vote, Householder approached the clerk and walked out from the chamber. He reiterated claims of his innocence to reporters gathered outside. There, he left open the possibility of a return to public office, and issued a warning to those who he feels crossed him.

    “Fellow elected officials who didn’t like public citizen Householder, are really not going to like private citizen Householder,” he said.

    This is a developing story and will be updated.

  • Power company says utility commission has no power to investigate role in bailout scandal

    Power company says utility commission has no power to investigate role in bailout scandal

    By Marty Schladen

    An Akron-based utility company that figures prominently in a massive nuclear bailout scandal is saying that state regulators don’t have the authority to investigate whether the company improperly financed the bailout effort.

    Over the past week, FirstEnergy Corp. has filed two documents with the Public Utilities Commission of Ohio saying that the commission and the state’s consumer representative don’t have standing to investigate whether FirstEnergy and affiliated companies improperly used ratepayer money in what has been called the largest bribery scandal in state history. 

    Marty Schladen

    Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He’s won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.

    Federal prosecutors say $60 million in utility money was used to pass a $1.3 billion nuclear bailout into law. But FirstEnergy says the utility commission lacks the authority to investigate whether it improperly used ratepayer funds in the affair.

    “The commission lacks any statutory basis to conduct an investigation of FirstEnergy Corp. with respect to the alleged expenditures or to order FirstEnergy Corp. to show cause that it has not violated Ohio utility law,” FirstEnegy said in a Sept. 23 filing. 

    It was in response to an order by the utility commission that it show “that the costs of any political or charitable spending in support of (the bailout bill), or the subsequent referendum effort, were not included, directly or indirectly, in any rates or charges paid by ratepayers in this state.” 

    Federal prosecutors in July charged then-House Speaker Larry Householder and four associates with using $60 million from FirstEnergy and related interests in a scheme to make Householder speaker and pass a $1.3 bailout of two failing nuclear plants owned by FirstEnergy Solutions, a successor company to FirstEnergy Corp.

    The effort was successful, although there is an effort in the legislature to repeal it before the charge hits ratepayers’ bills on Jan. 1.

    FirstEnergy and associated companies haven’t been charged, but in announcing criminal charges against Householder, U.S. Attorney David M. DeVillers stressed that the investigation was far from over. An affidavit supporting the criminal complaint also refers repeatedly to “Company A,” or FirstEnergy, and it makes reference to its CEO.

    In addition, Ohio Attorney General Dave Yost last week filed a civil suit that names FirstEnergy, a subsidiary and its successors — as well as Householder and his associates — as defendants.

    The Ohio Consumers’ Counsel, the state’s official consumer representative in utility matters, has asked for an independent investigation into whether FirstEnergy improperly used ratepayer funds in the dark-money scheme to pass House Bill 6, the bailout legislation. The agency was disappointed when the utilities commission only directed the company to show that it had not acted improperly.

    But even that is too much for FirstEnergy.

    In documents filed on Monday with the utility commission, it said it was legally entitled to a reasonable profit. The company also seemed to argue that what it did with much of its money was nobody’s business.

    “Beyond the investment necessary to provide adequate service, a public utility may spend its funds in the best interests of the utility as determined by its management.,” the company argued, later adding, “To the extent the Companies use a portion of their revenues to make political or charitable contributions, this is not improper or illegal.”

  • Consumer advocate wants to know where utility got $60M from in alleged bribery scandal

    Consumer advocate wants to know where utility got $60M from in alleged bribery scandal

    By Marty Schladen – Ohio Capital Journal

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    Ohio’s official utility watchdog wants to know where Akron-based FirstEnergy got the $60 million that federal prosecutors say fueled the largest bribery scandal in Ohio history.

    The Office of Ohio Consumers’ Counsel on Tuesday evening filed several motions with the Ohio Public Utilities Commission: 

    • A request for an investigation and a management audit of FirstEnergy.
    • A requirement that the company show that it hadn’t misused consumer money to support the passage of a nuclear bailout. 
    • And that the regulator reopen a probe into how FirstEnergy spent money intended to upgrade the electricity grid.

    In July, the U.S. Attorney’s office charged then-House Speaker, Larry Householder, R-Glenford, in an alleged scheme to funnel FirstEnergy money through 509(c)(4) “dark money” groups in a corrupt effort to elect supportive lawmakers and make Householder speaker. 

    The feds say the goal was to pass House Bill 6, a $1.3 billion bailout that went primarily to two failing nuclear power plants, but also subsidized two failing coal-powered generators. In addition, the money was used to fund a xenophobic campaign to stop a voter repeal of HB 6 and to line the pockets of Householder and his alleged conspirators, federal officials said.

    Also charged were Matt Borges, a lobbyist who was formerly chairman of the Ohio Republican Party, Neil Clark, a lobbyist who owns Grant Street Consulting, Juan Cespedes, also a lobbyist, and Householder’s aide, Jeffrey Longstreth.

    In its filing, the consumers’ counsel said it was asking the utilities commission to do its job.

    “The (Public Utilities Commission of Ohio) has the right and duty to regulate public utilities, for the protection of the public,” it said. “The PUCO should require FirstEnergy to show that money it collected from consumers, including the distribution modernization charge money, was not improperly used regarding House Bill 6 and that it did not violate any utility regulatory laws or PUCO orders regarding House Bill 6.”

    A FirstEnergy spokeswoman said her company will comment through official channels.

    “We are unable to comment on pending litigation, but we will respond to the motion by September 23 as required,” External Communications Manager Jennifer M. Young said in an email.

    In its filings, the consumers’ counsel noted that “Long before the House Bill 6 subsidies, FirstEnergy was authorized to charge its consumers nearly $7 billion for these and other FirstEnergy power plants as part of the transition to power plant competition (and a supposed end to future power plant subsidies) under Ohio’s 1999 electric deregulation law.”

    The documents also focused on $465 million FirstEnergy was allowed to collect from Ohio ratepayers in 2017 and 2018 as a “distribution modernization rider.” In other words, the charge was meant to fund improvements to the lines and poles and other equipment needed to efficiently deliver electricity in Ohio.

    The consumers’ counsel pointed to an independent audit showing that at least some of the money was used for other purposes. For example, it was placed in FirstEnergy’s “Regulated Utility Money Pool,” where its out-of-state utilities could borrow from it.

    The dividends FirstEnergy paid shareholders also took a big jump once the company started collecting more from ratepayers, supposedly to improve the power grid. The money for dividends from FirstEnergy’s Ohio utilities went from $141 million in 2016 to $350 million in 2017 — the first year of the subsidy — to $400 million in 2018.

    The Ohio Supreme Court subsequently declared the charge to be unlawful, but the money wasn’t refunded to ratepayers. 

    After the court ruling, the utilities commission shut down an investigation into the extra charge and how the money was used. But now the consumers’ counsel says it “should be reopened in light of the new information alleged in the U.S. Criminal Complaint about FirstEnergy’s use of extraordinary amounts of money in its efforts for the passage of House Bill 6.”

    After other interested parties have a chance to respond to the consumers’ counsel motions the utilities commission will decide whether to approve them.

    Marty Schladen

    Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He’s won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.
  • Ohio House speaker, four others arrested amid massive dark-money, pay-to-play allegations

    Ohio House speaker, four others arrested amid massive dark-money, pay-to-play allegations

    All are charged with racketeering

    Make no mistake – the $61 million came from Company A’s ratepayers and ultimately extorted from every residential and commercial electrical utility user in Ohio. The racketeering scheme of lies and deception corrupted Ohio citizen’s ability to overturn corrupt legislation at the ballot box. – David Miller, Loveland Magazine Publisher

    By Marty Schladen The Ohio Capital Journal and David Miller/LovelandMagazine
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    Cincinnati, Ohio – Ohio House Speaker Larry Householder, four political operatives and a dark-money group were charged Tuesday in a criminal complaint that an Ohio energy company paid them $61 million to get a $1.5 billion nuclear bailout from taxpayers.

    Read the Press Release issued by the Department of Justice

    Neil Clark, a lobbyist who owns Grant Street Consulting – Photo from Grant Street Consulting who exclaim, “Clark’s decades of experience and role in shaping Ohio’s political landscape makes him an indispensable resource to Ohio’s elected leaders, to whom he often serves as a trusted and highly sought after campaign advisor.”

    Charged along with Householder were Matt Borges, a lobbyist who was formerly chairman of the Ohio Republican Party, Neil Clark, a lobbyist who owns Grant Street Consulting, Juan Cespedes, also a lobbyist, and Householder’s aide, Jeffrey Longstreth.

    All are charged with racketeering, which carries a prison sentence of up to 20 years.

    David M. DeVillers, U.S. Attorney for the Southern District of Ohio

    The alleged conspiracy, which revolved around the bailout of two failing nuclear plants in Northern Ohio, is “likely the largest bribery and money-laundering scheme ever in the state of Ohio,” David M. DeVillers, U.S. Attorney for the Southern District of Ohio, said at a Tuesday afternoon press conference.

    Shortly after the press conference, Ohio Gov. Mike DeWine called on his fellow Republican to step down.

    “I am deeply concerned about the allegations of wrongdoing in the criminal complaint issued today by the U.S. Attorney’s Office,” DeWine, who last year signed the bailout into law, said in a written statement. “Every American has the presumption of innocence until proven guilty.  Because of the nature of these charges, it will be impossible for Speaker Householder to effectively lead the Ohio House of Representatives; therefore, I am calling on Speaker Householder to resign immediately. This is a sad day for Ohio.”

    Read the Criminal Complaint

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    The criminal complaint says that “Company A,” the former FirstEnergy Solutions of Akron, worked to save its failing nuclear plants by funneling $61 million into Generation Now, a 501(c)(4) “dark money” group controlled by Householder.

    On September 9, 2019, President Donald Trump nominated DeVillers for the United States Attorney in the Southern District of Ohio. The Senate confirmed the nomination in October, and DeVillers took his oath on November 1, 2019.

    “Make no mistake, this is Larry Householder’s 501(c)(4),” the U.S. attorney said.

    The money was used for three general purposes, the complaint said. First it was used to build “Team Householder” through campaign contributions and other measures that helped Householder win the speakership in 2019.

    “In exchange for payment from Company A, Householder’s enterprise helped pass House Bill 6, legislation described by an enterprise member as a billion-dollar ‘bailout’ that saved from closure two failing nuclear power plants in Ohio affiliated with company A,” the complaint said

    The money was also used for the personal benefit of Householder and the other conspirators, DeVillers said. Householder got about $500,000, he said.

    Despite the companies claims of poverty, the interests behind the bailout spent millions — much of it in the form of hard-to-trace dark money on campaign contributions, a xenophobic ad campaign and then on an aggressive effort to stymie a petition drive to repeal the bailout DeWine signed into law a year ago.

    And the money was used to fend off a petition effort to repeal HB6, going so far as to buy plane tickets for and pay $1,000 each to people circulating it to get out of town, DeVillers said.

    The federal prosecutor said that it was crucial to keep the investigation secret until Tuesday. Now it begins a new phase that might be causing some lawmakers, energy executives and some others to lose sleep.

    “We are not done with this case,” he said. “There were things we couldn’t do before. People we couldn’t interview. People we couldn’t subpoena. Documents and search warrants we couldn’t execute. 

    “As of this morning there are a lot of FBI agents knocking on a lot of doors asking a lot of questions, serving lots of subpoenas. That’s going to go on for days.”

    “It takes courage for citizens to assist law enforcement in the ways detailed in the affidavit,” U.S. Attorney David M. DeVillers said. “We are grateful to those who felt a moral duty to work together with agents in bringing to light this alleged, significant public corruption.”

    House Bill 6 is adding $1.5 billion in additional taxpayer bailouts to the $10.2 billion that Akron-based FirstEnergy Solutions and its former parent company, FirstEnergy Corp, have received from taxpayers since 1999. Most of the funds have gone to prop up the Davis-Besse and Perry nuclear power plants in Northern Ohio.

    The company that owns the plants was renamed Energy Harbor after emerging from bankruptcy earlier this year.

    Despite the companies claims of poverty, the interests behind the bailout spent millions — much of it in the form of hard-to-trace dark money on campaign contributions, a xenophobic ad campaign and then on an aggressive effort to stymie a petition drive to repeal the bailout DeWine signed into law a year ago.

    The interests behind the nuclear bailout also contributed heavily to the effort at the beginning of 2019 to elect Householder speaker. He ended up winning the support of 26 Republicans and 26 Democrats, His opponent, Ryan Smith, R-Bidwell, got the votes of 34 Republicans and 12 Democrats.

    The Ohio Republican Party didn’t respond Tuesday to requests for comment.

    The Ohio Democratic Party didn’t respond when asked about the fact that Householder wouldn’t have worn the speakership without Democratic votes. However, the party chairman, David Pepper called on Householder to step down as speaker.

    “As the U.S. attorney indicated, this investigation is ongoing, and we will wait to hear all the facts as they emerge. However, given what was revealed in today’s complaint and the taint of corruption over Ohio legislative activity, we believe Speaker Householder should step down from leadership immediately as he avails himself of his due process rights,” Pepper said in a written statement.

    House Bill 6, which passed 51-38, was quickly signed into law by Gov. Mike DeWine. Under the bill, from 2021 until 2027, every Ohio electricity customer will have to pay a new monthly surcharge that ranges from 85 cents for residential customers to $2,400 for large industrial plants. Ratepayers around the state would also have to chip in up to $1.50 monthly (and up to $1,500 per month for commercial and industrial users) to subsidize coal plants in Ohio and Indiana run by the Ohio Valley Electric Corporation.- cleveland.com

    Starting next January, ratepayers around the state would also have to chip in up to $1.50 monthly (and up to $1,500 per month for commercial and industrial users) to subsidize coal plants in Ohio and Indiana run by the Ohio Valley Electric Corporation.

    This isn’t Householder’s first encounter with federal law enforcement. 

    In 2006, the Justice Department told the FBI that it wouldn’t pursue charges against Householder. The FBI had been told two years earlier that Householder had used his post as head of the House Republican Campaign Committee to overpay some vendors in exchange for kickbacks from them.

    Nor is Householder, 61, of Glenford, the first Ohio House speaker to find himself in the FBI’s crosshairs. In 2018, Speaker Cliff Rosenberger, a Republican, resigned amid an FBI probe of his overseas travel. He has not been charged, but the investigation remains open.

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