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

By: - October 1, 2020 12:50 am

Electrical pylons. Photo from Getty Images.

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. 

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.”


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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.