FirstEnergy’s headquarters in Akron. (Photo from Google Maps.)
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FirstEnergy wants to swap out its latest rider package for a 2016 plan, which critics say was tainted by a secret side deal. The move is among the latest developments in Ohio regulatory cases and other matters relating to House Bill 6, the nuclear and coal bailout law at the heart of the largest corruption scandal in state history.
Other notable developments include:
- Some witnesses in regulatory cases related to HB 6 are pleading the Fifth Amendment to avoid answering questions under oath. An Ohio statute requires answers but grants immunity from criminal prosecution. The Ohio Attorney General’s office asked regulators to block another witness’s testimony to avoid the statute’s effect.
- Lawyers for former FirstEnergy executives argued the company can’t be considered a victim in the state’s criminal case against them, while another lawyer who represents Larry Householder suggested he could be a candidate for a Trump pardon.
- AEP has set aside $19 million to settle possible claims by the Securities and Exchange Commission.
Swap-out to revive side-deal plan
FirstEnergy wants to abandon a rider package approved by regulators earlier this year and go back to a previous plan approved in 2016 — but without that plan’s freeze on base electric rates.
FirstEnergy objects to changes the Public Utilities Commission of Ohio made earlier this year to the current rider package, which is called an electric security plan. Among other things, the regulators said they would reconsider amounts for some of the riders’ charges during the company’s basic rate case, which began in May.
“Our companies’ view is that the legal authority to approve riders is in an [electric security plan] case, not a base rate case,” said FirstEnergy spokesperson Lauren Siburkis.
The swap-out illustrates an ongoing imbalance in Ohio’s regulation of electric utilities: The PUCO can modify a company’s electric security plan, or the Ohio Supreme Court can hold part of it is unlawful. But the utility doesn’t have to accept those changes. Instead, it can withdraw the application for the plan and go back to an old one.
That gives the utility, not the regulators, the final say on what charges will be.
In this case, FirstEnergy asked the PUCO to reconsider its decision on the riders on June 14. But the regulators did not make a substantive ruling within 30 days, as required by an Ohio Supreme Court ruling this summer in another case. On October 29, the utility filed a notice with the PUCO that it was withdrawing the rider package and reverting to an earlier one.
Filings by FirstEnergy and some other parties say the right to withdraw an application for a plan applies in the current case. But the time to do so has passed, according to lawyers for the Ohio Manufacturers’ Association Energy Group and The Kroger Co.
FirstEnergy’s utilities “could have filed a notice of appeal with the Supreme Court of Ohio when they had the chance,” the lawyers wrote in a November 20 filing. Furthermore, the current rider package is “no longer an application, but an implemented [plan] that has been in effect and relied upon by customers since June.”
Aside from any time limits, challengers say the PUCO should not reinstate the old plan because it is tainted.
That earlier plan involved an alleged secret side deal arranged by FirstEnergy and Sam Randazzo while he represented Industrial Energy Users-Ohio, now known as the Ohio Energy Leadership Council. Randazzo later chaired the PUCO and faced federal and state criminal charges related to HB 6 when he took his own life earlier this year.
This year’s indictment against Randazzo and former FirstEnergy executives Chuck Jones and Michael Dowling alleges that under the side deal, the company paid Randazzo and his client to drop objections to the rider package. Just as that happened, FirstEnergy also added terms to the plan so some industrial customers, including members of Randazzo’s client, could avoid certain transmission costs and thus shift them onto other customers. The Energy News Network questioned the additions in 2015.
The PUCO did order an investigation into the alleged side deal several months after FirstEnergy admitted it had paid Randazzo $4.3 million shortly before Gov. Mike DeWine named him PUCO chair. A supplemental indictment in the state’s criminal case details how Jones and Dowling met with DeWine and Jon Husted at the Athletic Club in Columbus in December 2018, just before finalizing the payment plan.
For nearly four years, however, the PUCO blocked any fact-finding, called discovery, which could shed more light on the arrangement. A July 2024 order finally let that process move ahead. Documents and information about the side agreement are due to be produced sometime next month.
“Going back to an electric plan tainted by the HB 6 scandal is the last thing consumers need,” said Ohio Consumers’ Counsel Maureen Willis when her office and the Northwest Ohio Aggregation Council filed objections on November 13.
FirstEnergy also wants some changes made to the 2016 plan before it takes effect again. Most significantly, the earlier rider package included a condition that FirstEnergy would not increase its base rates while the plan was in effect. Now the company wants the 2016 rider package plus the $190 million rate increase being sought in a separate case.
“The PUCO has expressly ruled that a utility can’t cherry-pick the terms of the prior electric security plan it wishes to ‘reinstate,’” the Consumers’ Counsel and Northwest Ohio Aggregation Council wrote in their November 13 filing. The PUCO staff wrote on November 13 that they could agree to modify that condition. But, they added, “At this time, Staff does not consent.”
Briefing on the issue has wrapped up, and a decision from the PUCO should follow in the coming weeks.
Read more:
Ohio indictments provide a better picture of squalid relationships that spurred massive scandal (Ohio Capital Journal)
FirstEnergy bailout case: Are new additions ‘special deals?’ (Energy News Network)
Pleading the Fifth
The Office of the Ohio Consumers’ Counsel and others hoped to learn more facts in other regulatory cases related to HB 6 from depositions this fall. Those proceedings let lawyers question witnesses under oath before a trial or evidentiary hearing. Now it’s unclear how much substantive information the parties and the public will learn from those sessions.
Former FirstEnergy lobbyists Joel Bailey and Justin Biltz refused to answer most questions during their depositions this month, pleading their right to avoid self-incrimination under the Fifth Amendment to the Constitution. A 1953 Ohio law bars witnesses from doing that in PUCO proceedings, but adds that no one can be prosecuted or penalized based on any matters they testify about.
“The whole truth is needed to make FirstEnergy fully accountable to Ohio utility consumers,” said Ohio Consumers’ Counsel Maureen Willis. “Ohioans deserve answers. The PUCO should make sure they get them.” Her office has asked the PUCO to seek a court order compelling the testimony.
A court order would protect Bailey, Biltz or other witnesses from prosecution under state law if they testify in the PUCO cases. It’s unclear, however, whether it would block prosecution under federal laws. An agreement with the U.S. Attorney’s office could provide immunity, but that office has never said its HB 6 investigations were concluded, and it’s unclear whether they would agree to such an arrangement.
The Ohio Attorney General’s office did ask the PUCO on Nov. 14 not to compel deposition testimony from former FirstEnergy executive Eileen Mikkelson, noting there were “reservations” about any grant of automatic immunity to her. She was previously responsible for ratemaking issues for FirstEnergy’s Ohio utilities.
Read more:
State prosecutors nix ex-FirstEnergy executive’s deposition, leaving criminal charges on the table (Cleveland.com)
Another ex-FirstEnergy lobbyist pleads the Fifth in investigation, citing self-incrimination risks (Cleveland.com)
Was FirstEnergy a victim?
Judge Susan Baker Ross heard arguments on November 15 about whether FirstEnergy can be considered a victim in the criminal case against Jones and Dowling, where the state alleged and FirstEnergy admitted it intentionally made various payments as part of the claimed HB 6 conspiracy.
Other items on the agenda for the hearing included whether the state acted properly in securing a supplemental indictment filed this fall, which amended two of the existing counts and added a 28th charge for conspiracy.
Written decisions on those issues have not been issued yet. However, the judge did rule on November 18 that the state’s designation of confidentiality for discovery materials it produced in the criminal case was proper. That may be enough to block plaintiffs in ongoing shareholder litigation from getting the materials before Jones and Dowling stand trial for their alleged crimes, which they sought to do in a November 11 motion.
Read more:
Was FirstEnergy a victim in HB 6 scandal? Judge will hear arguments in criminal case (Akron Beacon-Journal)
Will Householder do the time?
Lawyers for former Ohio House Speaker Larry Householder might start a process to ask Donald Trump for clemency even before the appeal from Householder’s criminal conviction wraps up, suggested Scott Pullins, an attorney who has represented him in noncriminal matters. A pardon or decision to commute Householder’s sentence could result in his release from federal prison.
Householder and lobbyist Matt Borges are currently in federal prison following their criminal convictions last year under the federal Racketeer Influenced and Corrupt Organizations Act. Both convictions are on appeal.
Most cases involve defendants who have been in prison longer than Householder and whose appeal cases are complete. Cases for clemency also have generally included arguments about a miscarriage of justice.
Householder’s arguments on appeal do include a claim that his 20-year sentence is too long. But his political ties to Trump may play a big role in his attempts to get out of prison. “Larry has a long history with Donald Trump,” Pullins told News5 Cleveland.
Householder would still face criminal charges in a separate state case, which is currently set to start trial on April 28. That case includes a count for aggravated theft of $1.2 million from a campaign committee for which Pullins is the treasurer.
Pullins had no comment in response to the Energy News Network’s questions about whether he expects to be a witness in the state’s case against Householder or what factors would justify clemency for him in the federal case.
Read more:
Imprisoned ex-Ohio House Speaker Larry Householder to ask Donald Trump for clemency, campaign attorney says (Cleveland.com)
Attorney says ex-Ohio Speaker Larry Householder using Trump ‘connections’ to try to get out of prison (News5Cleveland.com)
AEP settlement in the offing?
AEP has set aside $19 million to settle potential civil claims by the Securities and Exchange Commission related to HB 6, according to a November 6 filing. Although most dark money in the HB 6 corruption scheme came from FirstEnergy and its affiliates, $900,000 also flowed from a nonprofit funded by American Electric Power to dark money groups involved in the scandal.
The amount set aside by AEP is just under one-fifth the amount FirstEnergy agreed to pay the SEC earlier this year. Due to HB 6’s nuclear subsidies being canceled by 2021, AEP has indirectly reaped the biggest financial benefits from HB 6. That’s because AEP is the largest Ohio shareholder for OVEC, the Ohio Valley Electric Corporation, whose two 1950s-era coal plants are subsidized by HB 6. Ratepayers’ costs for those subsidies could approach $1 billion by 2030.
Read more:
AEP sets aside $19 million to cover possible settlement over House Bill 6 (Columbus Dispatch
PUCO continues contortions to justify expensive OVEC coal contract (Checks and Balances Project)
This article first appeared on Energy News Network and is republished here under a Creative Commons license.
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