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Tag: ohio House Bill 6

  • 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.

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  • Ohio utilities’ efficiency programs among the worst in wake of corrupt utility law, report says

    Ohio utilities’ efficiency programs among the worst in wake of corrupt utility law, report says

    Getty Images

    BY:  – Ohio Capital Journal

    House Bill 6 wasn’t only a bad law because it involved $61 million in bribes in exchange for a $1.3 billion utility bailout.

    Most of the bailout payments have been repealed, but somehow the law — the product of perhaps the biggest corruption scandal in Ohio history — remains on the books. And after it eliminated most efficiency programs, Ohio utilities have gone from above average to among the worst in the country, according to an analysis that was released last week.

    One of them, Columbus-based AEP, acknowledged that in the absence of the efficiency programs, acknowledged that the elimination of the programs has limited what it can offer customers to save electricity.

    The American Council for an Energy Efficient Economy, a Washington, D.C.-based non-profit, publishes an efficiency scorecard of the nation’s 53 largest electric utilities once every three years.

    It found that in 2018 — a year before the corrupt bailout was passed — Duke Ohio had the 18th-best score for efficiency programs. AEP Ohio had the 21st-best programs, according to the scorecard. Edison Ohio came in at 34th.

    But the scorecard published last week looked at data related to efficiency programs in 2021 — a year after HB 6 took effect. It found that AEP and Duke tied for 49th out of 53.

    In an email, AEP spokesman Scott Blake said “House Bill 6 ended energy efficiency requirements, which hampers our ability to offer programs to customers. AEP Ohio had implemented many successful energy efficiency programs prior to this change in state law. Our customers have expressed interest in energy efficiency, and we have proposed to offer a new menu of voluntary programs in our Electric Security Plan currently under consideration by the Public Utilities Commission of Ohio. They would need to approve those programs in order for us to offer them to customers.”

    Edison Ohio is a subsidiary of Akron-based FirstEnergy, which paid more than $60 million to finance the corrupt bailout law that gutted efficiency standards. It finished dead last in the most recent efficiency score.

    The 2019 law was ramrodded by former House Speaker Larry Householder, R-Glenford. The vast majority of the money it required from ratepayers went to prop up two failing nuclear plants in Northern Ohio. FirstEnergy wanted to prop them up so it could sell them and avoid liability for cleaning up the sites when they’re shut down.

    With global temperatures increasing at an alarming rate, HB 6 makes warming worse in at least two ways.

    It forces Ohio ratepayers to spend hundreds of millions propping up two aging coal plants — including one that isn’t even in Ohio. And it gutted energy-efficiency and renewable standards that utilities formerly had to adhere to.

    The efficiency standards were built into consumers’ bills to incentivize the use of technologies that save electricity and thus obviate the need for more carbon-spewing generation. For example, they enabled Ohio utilities to offer discounts on fluorescent light bulbs when they were relatively expensive, but much longer-lasting and efficient than incandescent bulbs.

    The idea was that with greater demand, manufacturers would scale up production and make them more cheaply. That approach helped to allow the federal government to completely phase out the sale of incandescent bulbs this year.

    The way efficiency standards worked, regulators set goals and offered “shared savings” to utilities and consumers once those goals were met. Rob Kelter, a senior attorney with the Environmental Law and Policy Center, conceded in an interview last month that the efficiency incentives weren’t perfect.

    “I think there were some legitimate concerns that legislators raised about the value of efficiency and whether the programs were well-run,” he said. “But the programs were always pretty good and they delivered good value to customers.Were we too generous with the incentives for utilities? Yeah. A little bit.”

    For example, Kelter said, when they were collecting money from incentives for fluorescent bulbs, utilities were slow to move to the next technology, LED bulbs, because they had a sure thing in fluorescents.

    Regardless of the programs’ merits, some Ohio officials have long opposed efficiency standards.

    Sam Randazzo — whom Gov. Mike DeWine in 2019 nominated to chair the Public Utilities Commission — had previously worked as a utility lobbyist to repeal efficiency and renewable standards.

    In a deferred prosecution agreement with the federal government, FirstEnergy said it bribed Randazzo $4.3 million to do its bidding as he was poised to become the state’s top regulator. The FBI searched his Columbus condominium a few months after the July 2020 arrests of Householder and four others in the HB 6 conspiracy, but Randazzo hasn’t been charged.

    During Householder’s federal court trial earlier this year, witnesses testified that even though he was supposed to be regulating utilities, Randazzo helped draft HB 6, the corrupt bailout legislation. Perhaps predictably, it eliminated efficiency and renewable standards and prompted the news organization Vox to call it “the worst energy bill of the 21st century.”

    One reason Randazzo and the HB 6 conspirators might have been so eager to eliminate the efficiency and renewable programs was to use the resulting savings as what government insiders call a “pay for.” The bailout that was going to FirstEnergy — and to a much lesser extent AEP and other utilities — was going to show up on ratepayers’ bills. So those pushing the legislation looked for other things to cut to pay for the new charges.

    On the witness stand, Householder, who was later sentenced to 20 years in prison, said he “wanted to do away with costly mandates.” He and other HB 6 supporters claimed that eliminating efficiency and renewable standards would save consumers more than $1 billion.

    But federal prosecutors smashed those claims, showing that the supporters’ math didn’t take the full cost of HB 6 into account. Householder and the others also failed to mention that through efficiency programs, ratepayers stood to save by using less electricity.

    The efficiency scorecard that found such precipitous drops among Ohio utilities in the wake of HB 6 scores them according to numerous metrics. But more than half of the available points are from three straightforward ones: net annual and lifetime electricity savings, and peak demand reduction.

    The latter measure is important because when electricity demand reaches a peak, system operators often have to fire up gas-powered generation facilities to meet it. By contrast, when customers use electricity during off-peak times, they’re pulling power that’s already on the grid.

    Mike Specian, lead author of the efficiency scorecard, praised the three big Ohio utilities for some of their offerings — including discounts to customers who use power at off-peak times.

    However, Specian said in an email, “the cancelation of utilities’ efficiency programs (in HB 6) had an adverse impact on nearly every other aspect of utility performance that we evaluated, including for low-income customers.”

    Duke didn’t respond to questions for this story.

    Lauren Siburkis, a FirstEnergy spokeswoman, said in an email that she isn’t “able to comment on the (efficiency) report itself.” But she said her company has numerous efficiency programs that it voluntarily offers customers.

    They include $100 rebates for energy-efficient appliances such as refrigerators, freezers and clothes dryers. The company also incentivizes efficiency among commercial and industrial customers through its commercial lighting program, Siburkis said.

    Blake, of AEP, said a bill is moving through the legislature that would allow ratepayers to voluntarily participate in efficiency programs.

    “The legislature is considering House Bill 79, a bipartisan effort sponsored by Bill Seitz and Bride Rose Sweeney, that would allow AEP Ohio and other utilities to offer energy efficiency programs while giving customers the option to participate,” Blake said.

    Marty Schladen
    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.

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