Fight over controversial energy bailout law delayed in Ohio House

The push to repeal House Bill 6 – a controversial energy law at the center of an alleged $60 million bribery scandal – is on hold in the Ohio House.

A special committee tasked with considering plans to repeal and replace the bill has suspended its meetings until further notice. Gov. Mike DeWine said he now hopes lawmakers repeal the “tainted” law after the Nov. 3 election.

“I get the impression the lame duck session (after the Nov. 3 election) may be a very interesting session and I hope very productive,” DeWine said recently.

Environmental and consumer groups are pushing for repeal of HB6. If they succeed, a repeal would directly impact FirstEnergy Corp. and Energy Harbor Corp., formerly known as FirstEnergy Solutions (FES).

While not specifically named in an 82-page criminal complaint, descriptions in the complaint identify companies allegedly participating in the bribery scheme as FirstEnergy, FirstEnergy Solutions and FirstEnergy Services.

FirstEnergy publicly acknowledged it received subpoenas and is cooperating in the FBI investigation. The Wall Street Journal reported this month that Energy Harbor and its executives received subpoenas as well.

FirstEnergy spokeswoman Jennifer Young said the company supported HB6 because it’s good for Ohio to have clean, affordable energy generated from nuclear plants.

“We are cooperating fully with the Department of Justice investigation to ensure our company and our role in supporting HB 6 is understood as accurately as possible. Ethical behavior and upholding the highest standards of conduct are foundational values for the entire FirstEnergy family. We strive to apply these standards in all business dealings, including our participation in the political process,” she said in a written statement.

An Energy Harbor spokesman said the company is cooperating with the investigation and declined further comment.

The repeal effort is among many complex issues the Akron-based utilities are facing:

-- The Securities and Exchange Commission has opened an investigation into FirstEnergy, according to federal court documents.

-- FirstEnergy is facing multiple shareholder lawsuits over “material false and misleading statements” and failure to disclose its efforts in a campaign to win approval of HB 6. Share prices of FirstEnergy tumbled in the days after former Ohio House Speaker, State Rep. Larry Householder, R-Somerset, was arrested in the first public acknowledgement of a federal investigation into HB 6. Their share prices fell from $41.26 on July 20 to $27.09 on July 22, and has only slowly recovered. Share prices closed Friday at $33.30.

-- A former employee of a FirstEnergy contractor is accused of downloading sensitive corporate data before he left his job, according to a report in the Canton Repository. FirstEnergy and the contractor, Clearsulting, filed suit in U.S. District Court in northern Ohio to block the man, Michael Pircio, from disseminating the data.

-- The Federal Energy Regulatory Commission is conducting an audit of FirstEnergy that began in Feb. 2019. It marks the first FERC audit for the company since 2013.

-- Environmental groups filed a case in the 6th Circuit Court of Appeals asking the court to suspend the reorganization plan approved by federal bankruptcy court earlier this year for FES. The Ohio Consumers' Counsel filed a brief in that case.

-- Ohio Attorney General Dave Yost filed a civil lawsuit to block the subsidies from flowing to Energy Harbor and other utilities.

-- The Public Utilities Commission of Ohio is reviewing charitable and political giving by FirstEnergy’s subsidiaries related to HB6. Interest groups are pushing to expand that review to a full-blown investigation.

-- The Ohio Consumers Power Alliance, a group of clean energy advocates, is campaigning for the removal of Sam Randazzo as chairman of the powerful Public Utilities Commission of Ohio – Randazzo’s company had done work for FES. Randazzo declined comment through a PUCO spokesman.

There is more than $2 billion riding on whether HB6 remains Ohio law or is repealed. The law requires payments by customers across Ohio:

— $1.3 billion to subsidize nuclear power plants owned by Energy Harbor, through 2027;

— $444 million to subsidize coal plants owned by Ohio Valley Electric Corp. through 2030;

— $355 million in ‘decoupling’ revenues to FirstEnergy through 2024; and

— $140 million in subsidies for large solar projects though 2027.

On July 21, FBI agents arrested then Ohio House Speaker Larry Householder at his Perry County farm and four other men in what U.S. Attorney David DeVillers calls the biggest bribery scheme in Ohio history. Householder, lobbyists Neil Clark, Matt Borges and Juan Cespedes and political strategist Jeff Longstreth have each pleaded not guilty in U.S. District Court to racketeering charges.

House Bill 6 is the centerpiece of the case.

According to federal prosecutors, the utility companies funneled $60 million into dark money groups to elect Householder’s allies to legislative seats, position him to return as House speaker and then in return Householder helped pass and defend HB6.

The public corruption case marks a dramatic turn of events for FirstEnergy and Energy Harbor.

“They spent last year getting everything they wanted,” said Rachael Belz, director of Ohio Citizen Action, which is pushing for repeal of HB6.

In 2019, HB 6 enabled FirstEnergy Solutions to receive payments for the operation of two nuclear plants. The bill also included decoupling language included in the bill. DeWine named Randazzo to head the PUCO, and the referendum campaign against HB6 was defeated. Energy Harbor began an $800 million stock buyback that year, according to public records.

Although the companies are facing lawsuits, subpoenas and investigations, Belz said she is still wondering when or if state lawmakers will take action to repeal HB6.

“You have this indictment and certainly the Householder name is toxic and you have all these investigations going on — so many investigations — and yet why has the House not repealed HB6? Why have they not taken any real action?” Belz said. “Sure there is an election this fall but this is the biggest corruption scandal in our state history.”

Miranda Leppla, vice president of energy policy for the Ohio Environmental Council Action Fund, agreed.

“There simply is no excuse for this law still being on the books and we desperately need utility reform in Ohio that puts Ohioans first, instead of utilities, because right now that’s who gets the payout -- the utilities,” Leppla said. “It’s not Ohioans who are in the midst of a pandemic and trying to make ends meet. That’s who should be the focus of the Public Utilities Commission and the Statehouse, not the utilities.”

State Rep. Jim Hoops, R-Napoleon, who leading the special committee hearing multiple repeal bills, said lawmakers needed more time to understand all the implications of repeal and discuss replacement options.

Hoops said he supports keeping the nuclear plants open, saying they are an important mix in Ohio’s energy portfolio, but he’d like to see more transparency and accountability measures. “We are continually working on it and thoroughly investigating the issues.”

How did Miami Valley lawmakers vote on House Bill 6?

Yes: State Reps. Niraj Antani, John Becker, Tom Brinkman, Jim Butler, Sara Carruthers, George Lang, Scott Lipps, Rick Perales, Phil Plummer, J. Todd Smith, Nino Vitale, Paul Zeltwanger; State Sens. Bob Hackett, Peggy Lehner, Steve Wilson.

No: State Reps. Bill Dean, Candice Keller, Kyle Koehler, Susan Manchester, Jena Powell, Fred Strahorn; State Sens. Bill Coley, Steve Huffman.

About the Author