LOVELAND MAGAZINE

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Tag: Public Utility Commission of Ohio

  • Ohio Senate committee advances energy compromise

    Ohio Senate committee advances energy compromise

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    By:  – Ohio Capital Journal

    With a final few tweaks, Ohio senators advanced a major piece of energy legislation.

    The Senate Energy Committee vote was unanimous. With both chambers in session Wednesday, it’s likely lawmakers could sign off on the legislation and send it along to the governor.

    The most substantive change had to do with the Public Utility Commission of Ohio clock — it moved from 320 days to 360. Lawmakers are putting a ceiling on PUCO deliberations because they want rate cases to move more quickly.

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    After Tuesday’s hearing, state Sen. Bill Reineke, R-Tiffin, connected the longer shot clock to broader changes in the ratemaking process. Utilities must come before the PUCO every three years, and they’ll be able to set rates in three-year increments with annual “true-ups” to reflect the companies’ actual balance sheet. Reineke explained the longer timeline will give regulators a bit of breathing room.

    Final testimony

    Before lawmakers put the bill to a vote, Ohio Consumers’ Counsel Maureen Willis made a final bid to remove a provision on consumer refunds. Under the changes, bill payers could receive refunds after the Supreme Court determines a charge was unwarranted, but any payments prior to that decision would be out of reach.

    Willis explained her office in the middle of a case against Dayton-area AES Ohio which could yield more than $300 in refunds per customer.

    “If HB 15 becomes law as written AES’s half a million consumers would lose that refund opportunity that has been in the making since 2019,” she said.

    The final version of the bill also left out a passage subjecting more power line projects to state oversight. Willis called that omission “disappointing.”

    “No one is reviewing these projects,” she argued. “Not the Ohio Power Siting Board, not the PUCO and not (the Federal Energy Regulatory Commission). Ohio consumers, your constituents, pay 100% of those costs through transmission riders.”

    Rebecca Mellino from the Nature Conservancy praised lawmakers for repealing a controversial coal subsidy approved as part of 2019’s HB 6 but argued “Ohio lags far behind neighboring states” when it comes to renewable energy. She suggested provisions encouraging brownfield redevelopment could offer an opportunity for renewable energy investment.

    Bigger picture

    The core incentive for new energy production is a reduction in tangible personal property taxes — levied on things like machinery and equipment. But while lawmakers attempt to boost energy production with a tax cut, they’re also trying to find reductions in property taxes.  Energy committee chairman, Sen. Brian Chavez, R-Marietta, insisted the reductions won’t undermine services.

    “We’re not changing any taxes that are in effect right now,” he explained. “So any taxes from power plants that are in place will stay in place as they depreciate out — this is only on new generation.”

    Sen. Kent Smith, D-Euclid, argued the tax break is an important cue to companies. When lawmakers passed HB 6, he said, they subsidized coal and nuclear facilities.

    “It was not just putting your thumb on the scale,” he said, “I mean, it wreaked havoc in natural gas generation.” With the current bill, lawmakers will remove the last of those subsidies.

    “So we’ve sort of restored capitalism in the energy generation space,” Smith argued. “And by reducing the tangible personal property percentage, hopefully that sends a signal.”

    Still, there’s little Ohio’s legislation can do to address lawmakers’ central concern about power demand outstripping supply. The 13-state power network PJM has a substantial backlog of power plants that want to connect to the grid, and large-scale consumers like data centers are pushing demand for power higher.

    “That’s why we focused on behind the meter generation,” Chavez said, “so that any new industry that comes into Ohio is not adding additional strain on the existing grid.”

    Behind the meter generation involves building a bespoke power plant directly connected to a given business.

    “PJM is aware of the concerns that are out there. They’re hearing that from all 13 states,” Chavez added. “They are on our list. We’re going to go talk to them in the fall, and we’re going to have some frank conversations with them to see how we can partner to get through this.”

    Follow Ohio Capital Journal Reporter Nick Evans on X or on Bluesky.

    Nick Evans
    Nick Evans

    Nick Evans has spent the past seven years reporting for NPR member stations in Florida and Ohio. He got his start in Tallahassee, covering issues like redistricting, same sex marriage and medical marijuana. Since arriving in Columbus in 2018, he has covered everything from city council to football. His work on Ohio politics and local policing have been featured numerous times on NPR.

    Ohio Capital Journal is part of States Newsroom, the nation’s largest state-focused nonprofit news organization.

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  • Multiple signs that federal corruption investigation in Columbus heating up — again

    Multiple signs that federal corruption investigation in Columbus heating up — again

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    BY:  – Ohio Capital Journal

    After two former Republican officials in June were sentenced for their roles in a massive racketeering conspiracy, U.S. Attorney Kenneth Parker said the investigation was continuing. At least two signs emerged last week that the proceedings might be intensifying.

    Former Ohio House Speaker Larry Householder was sentenced to 20 years in federal prison on June 29 and former state GOP Chairman Matt Borges was sentenced to five years a day later. Both played roles in a scandal in which Akron-based FirstEnergy and other utilities paid more than $61 million to pass a $1.3 billion ratepayer bailout that was mostly intended for a subsidiary that FirstEnergy was spinning off that owned two Northern Ohio nuclear plants.

    In addition to Householder and Borges, two others who were arrested in July 2020 have pleaded guilty and a third died by suicide.

    But on March 10, just after a jury convicted Householder and Borges, a reporter asked Parker an obvious question: What about the people who paid the bribes? Would they be charged? Parker would only say that the investigation was continuing.

    Attorneys for the men who were FirstEnergy’s top executives at the time of the conspiracy — former CEO Chuck Jones and former Vice President Michael Dowling — have already said in court filings that they believe federal investigators are looking at their clients.

    This month brought two more pieces of evidence that federal investigators are considering further prosecutions in the bribery and money laundering scandal.

    On Aug. 4, Hilary M. Williams, who is representing FirstEnergy, submitted a filing in a massive class-action case against the company over the bailout scandal. She informed the scores of lawyers for the pension and investment funds suing the company that they’re not the only ones who want to see the emails and text messages the FirstEnergy executives sent as the bribery scheme was taking place.

    “Counsel… we confirmed this morning that we may disclose to the parties that certain governmental authorities have requested the production of the entire contents of iPad and iPhone devices used by Mr. Jones or Mr. Dowling from January 1, 2016 through December 31, 2020,” Williams wrote. “In keeping with the protocol in this matter, those documents will be produced to all parties, and we expect to do so at approximately the same time that production is made to the requesting governmental authorities.”

    She added. “Mr. Dowling and Mr. Jones used more than a dozen devices during the relevant time period, and processing and reviewing the contents of those devices requires substantial processing time and then time to review for confidentiality and privilege. We are working to complete the review as quickly as possible, and expect to make these productions on or about September 15, 2023.”

    A spokeswoman for the U.S. attorney’s office didn’t comment on whether the “governmental authorities” Williams referred to worked for Parker, whose office prosecuted Householder and Borges.

    However, Parker last week sent a letter to the Public Utility Commission of Ohio asking the regulator to further postpone its investigation into the racketeering scandal.

    “The PUCO proceedings involve issues related to the U.S. Department of Justice of the United States’ investigation, and the United States believes that continued discovery in the PUCO proceedings may directly interfere with or impede the United States’ ongoing investigation,” the letter said. “For that reason, the United States respectfully requests that PUCO stay the PUCO proceedings for a period of six months from the date of this letter. The United States reserves the right to request that the stay be extended beyond this time.”

    Among those the feds may be investigating are Jones, Dowling and Sam Randazzo, whom Gov. Mike DeWine nominated to chair the PUCO in early 2019.

    In a deferred prosecution agreement, FirstEnergy said it paid Randazzo a $4.3 million bribe just before his nomination in exchange for favors the ostensible regulator did for the company. Randazzo denies wrongdoing, but in the Householder trial, witnesses testified that Randazzo played a key role in drafting the corrupt bailout legislation.

    Plaintiffs in the class-action suit earlier this month filed texts and emails between Jones, Dowling and Randazzo. They indicate that the three met in Randazzo’s Columbus condo in December 2018 and arranged to pay the soon-to-be regulator $4.3 million and made it clear that they expected something in return. They also appear to indicate that in addition to his work on the the bailout, Randazzo helped exempt FirstEnergy from a 2024 rate review it had been required to undergo.

    The class-action plaintiffs are accusing FirstEnergy of violating securities law by concealing its illegal conduct from investors. Last week, they filed a transcript of an earnings call from July 23, 2020 — days after Householder, Borges and three others were arrested in the racketeering conspiracy. In it, Jones appeared to mislead analysts about his and his company’s role in it.

    “I believe that FirstEnergy acted properly in this matter, and we intend to cooperate fully with the investigation to, among other things, ensure our company and our role in supporting House Bill 6 is understood as accurately as possible,” said Jones, who would be fired months later. “In the meantime, we wanted to share our preliminary perspective on this issue and reinforce the values with which we operate our company.”

    Jones also claimed that he and his subordinates followed “the highest standards of conduct.”

    “This is a serious and disturbing situation,” he said. “Ethical behavior and upholding the highest standards of conduct are foundational values for the entire FirstEnergy family and me personally. These high standards have fostered the trust of our employees, our customers and the financial community. We strive to apply these standards in all business dealings including our participation in the political process.”

    Jones sat for a sworn deposition in the class-action case in July. Last week, U.S. Magistrate Judge Kimberly Jolson ordered Dowling to sit for one in October.

    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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  • Never needed? Senate president predicts little opposition to nuclear bailout repeal

    Never needed? Senate president predicts little opposition to nuclear bailout repeal

    By Marty Schladen and Ohio Capital Journal

    A billion-dollar nuclear subsidy was the subject of an intense fight in 2019 and great controversy since. But the president of the Ohio Senate this week predicted that a repeal will make it through the House, Senate and that Gov. Mike DeWine will sign it.

    The reason: The company that owns the nuclear reactors no longer wants the money, he said. And that raises serious questions about whether the subsidies were needed in the first place.

    The subsidy was the product of House Bill 6. The legislation was passed in 2019 after a nasty fight which led to federal criminal charges against then-House Speaker Larry Householder, four associates and a dark-money group. 

    Prosecutors said $61 million from Akron-based First Energy and associated groups was used in the corrupt effort to pass the bailout. Two of Householder’s associates and the dark money group have pleaded guilty, FirstEnergy’s CEO was fired and Gov. Mike DeWine’s appointee to chair the Public Utility Commission of Ohio has resigned as part of the scandal. 

    Despite intense calls for a full repeal of HB 6, it remains in place — although a Franklin County Judge has temporarily stopped collection of the money by the owner of the nuclear plants, FirstEnergy successor Energy Harbor.

    DeWine and others have said they want a repeal, but they want to continue to subsidize the Northern Ohio nuclear plants for environmental reasons.

    “We were for nuclear power,” he said Tuesday, referring to his initial support for HB 6. “Nuclear power was the only way in this state, today, that we can have very much non-carbon production. It’s the only way we can do it.”

    But early this month, Sens. Jerry C. Cirino, R-Kirtland, and Michael Rulli, R-Salem, introduced legislation, Senate Bill 44, to get rid of the subsidies. On Wednesday it received a hearing by the Senate Energy and Public Utilities Committee.

    Despite the governor’s statements, Senate President Matt Huffman, R-Lima, said he expects the repeal legislation to become law.  

    “I think that provision will likely get passed out of the Senate and I think it will pass out of the House and get signed by the governor,” Huffman told the governing board of the Ohio Consumers’ Counsel, the state’s official utility watchdog. “When I say the House and the governor, I’m not speaking for them, nor have I spoken to them about this. But if a large company that got a subsidy in a dubious way… says ‘We don’t want it,’ that seems to me to be a pretty easy call.”

    Energy Harbor, the owner of the plants, didn’t respond to requests for comment on Wednesday. But Huffman was apparently referring to a December 2019 ruling by the Federal Energy Regulatory Commission and Energy Harbor’s response to it. 

    The ruling said, in essence, that the company that would become Energy Harbor would have to cut its prices if it was going to sell its subsidized nuclear energy onto the massive grid that serves all or part of 13 states, including Ohio. 

    It would “threaten the competitiveness” of the long-term, or “capacity,” marketplace if companies like Energy Harbor could sell subsidized power on the same basis as power that wasn’t subsidized. So Energy Harbor and the others have to discount it according to a formula, the ruling said.

    Recent developments appear to be a sharp reversal from 2019.

    As proponents pushed HB 6, they threatened that closure of the Ohio nuclear plants was imminent if they didn’t get a bailout — and quickly. But Huffman’s statements on Tuesday indicate that Energy Harbor has no plans to shutter the plants even now that it isn’t getting the money. 

    “I don’t want the nuclear power plants to close,” he said. “However, it’s been made clear to me that the plants will not close if this subsidy is removed. In fact, they’re better off because of machinations at another level. In fact, these subsidies will likely harm these power plants.”

    There’s other evidence that Energy Harbor’s pre-bankruptcy predecessor, FirstEnergy Solutions, might not have been as broke as it claimed in 2019. 

    Shortly after emerging from bankruptcy in early 2020, it did an $800 million stock buyback. Such buybacks typically raise stock values, in this case enriching shareholders just months after pleading poverty and winning a $1 billion bailout from Ohio ratepayers.

    The federal ruling also raises questions about whether it was wise even to start the bailout fight, which has caused so much damage in Ohio. On June 29, 2018, more than a year before DeWine signed HB 6 into law, FERC issued a ruling strongly foreshadowing what it later did: effectively erase the subsidies bailout supporters had gained if they wanted to sell power into the long-term market.

  • Investigation of $460M in FirstEnergy charges back on, but why was it stopped in the first place?

    Investigation of $460M in FirstEnergy charges back on, but why was it stopped in the first place?

    By Marty Schladen and Ohio Capital Journal

    The Public Utility Commission of Ohio has restarted an audit of $465 million that Akron-based FirstEnergy collected from ratepayers in 2017 and 2018, supposedly to modernize the utility grid.

    The state’s official watchdog, the Office of the Ohio Consumers’ Counsel, wants to know whether any of the money was used in a $61 million bribery scandal. That affair so far has resulted in a $1.3 billion nuclear bailout, the indictment of then-House Speaker Larry Householder and the guilty pleas of two of his associates.

    But why the audit was called off in the first place also raises serious questions.

    Leading the commission in voting to shut down the audit was Chairman Sam Randazzo. He resigned in November after FirstEnergy disclosed that it paid $4 million to someone just before he started regulating the utility in early 2019. Gov. Mike DeWine later said that Randazzo received the payment, but DeWine said he was unaware of it when he appointed the former FirstEnergy lobbyist to chair the PUCO.

    For its part, FirstEnergy fired its CEO, Chuck Jones, when news of the payment came to light.

    The Randazzo-led utility commission’s timing in stopping the audit might seem strange. It came just after the Ohio Supreme Court ruled in January 2020 that the charge FirstEnergy had been collecting was unlawful — seemingly a time when a regulator would want to know more about what happened with the funds.

    A big reason why the court struck down the distribution-modernization charge: Despite allowing FirstEnergy to collect almost a half-billion extra dollars from ratepayers, the PUCO didn’t implement effective rules to ensure that FirstEnergy used the money to update the utility grid.

    “Utility companies can be expected to respond to financial motivations, but not if the commission awards them money up front with no meaningful conditions attached,” the decision said. “The PUCO staff’s wishful thinking cannot take the place of real requirements, restrictions, or conditions imposed by the commission for the use of (distribution-modernization) funds.”

    Not only did the PUCO call off the audit just as the charge was declared illegal, it did so as the auditors were making some interesting findings.

    For example, it found that instead of using all the funds to improve its Ohio distribution system, FirstEnergy was placing some in a “Regulated Utility Money Pool,” from which out-of-state utilities could borrow.

    To justify ending the audit — for which PUCO staff wanted more time — Randazzo and the other commissioners claimed that’s what the Supreme Court wanted.

    “The court directed the commission to eliminate” the distribution-modernization charge, the PUCO wrote in its dismissal. “In support of this ruling, the court specifically objected to the usefulness of the proposed final review, questioning the lack of an effective remedy resulting from such review.”

    However a reading of the Supreme Court’s opinion doesn’t mention any “specific objection” to the audit.

    The relevant passage says that the auditors final report wouldn’t be available until after FirstEnergy had collected and spent the money.

    “Thus, it is not clear what remedy would be available should the commission (or this court on appeal) find that FirstEnergy has misused DMR funds,” the ruling said.

    One reason there’s no remedy, the court noted, is because when it allowed FirstEnergy to jack up its rates, the PUCO didn’t create any mechanism to refund the money to ratepayers if the charge is later declared unlawful or if it is shown the  money was misused.

    “FirstEnergy has been recovering (distribution-modernization) revenue since January 1, 2017, and the commission did not make the (revenue) subject to refund if FirstEnergy does not meet the required conditions,” the court wrote.

    The $465 million FirstEnergy collected from the upcharge isn’t the only such money collected — and kept — by Ohio utilities. The consumer’s counsel reports that since 2009, $1.5 billion has been collected from Ohio ratepayers in upcharges that were later struck down by the courts. 

    As with the FirstEnergy charge, the PUCO didn’t create a mechanism to force other utilities to pay back the extra money they got back, either. 

    FirstEnergy objected to reopening that audit, but wouldn’t comment further Monday. 

    “Due to the ongoing PUCO audits, FirstEnergy is unable to provide additional information at this time,” spokeswoman Jennifer Young said in an email.

    In a filing, the consumers’ counsel slammed the company’s objections.

    “In an unfortunate display of corporate arrogance, the FirstEnergy Utilities are opposing an investigation by their state regulator, the PUCO, into utility consumer protection issues surrounding what has been described by a prosecutor as ‘likely the largest bribery scheme ever perpetrated against the state of Ohio,’” it said. “The PUCO has the authority under Ohio law to investigate the FirstEnergy Utilities and their owner, FirstEnergy Corp. FirstEnergy should get out of the PUCO’s way and cooperate.”