FirstEnergy firings prompt regulatory audit in nuclear bailout scandal

Davis-Besse Nuclear Power Station with electricity pylons, Ohio

It slipped under the radar last week, but on the day after the presidential election the Public Utility Commission of Ohio ordered a management audit of Akron-based FirstEnergy Corp. to determine whether it abided by separation rules when it spun off its nuclear reactors in 2016.

The regulators made the move after FirstEnergy on Oct. 29 fired CEO Chuck Jones in the wake of a $61 million nuclear bailout scandal.

Former House Speaker Larry Householder and four associates were arrested in July in what federal law enforcement called the largest bribery scandal in Ohio history. They’re accused of funneling money from FirstEnergy and associated companies through 501(c)(4) “dark money” groups and into House campaigns aimed at making Householder speaker and passing House Bill 6 — a $1.3 billion bailout of two Northern Ohio nuclear reactors owned by FirstEnergy until late 2016.

The audit ordered last week appears to be aimed at determining whether FirstEnergy violated Ohio laws governing the company’s 2016 separation from its nuclear-owning subsidiary, FirstEnergy Solutions.

FirstEnergy had staunchly defended Jones in the wake of Householder’s arrest, claiming that corporate leadership “has not had any decision-making power regarding the strategic direction” of the successor company that owned the nuclear plants. FirstEnergy Solutions went through bankruptcy and after it emerged earlier this year it was renamed Energy Harbor.

Despite the company’s claims that he had no control over FirstEnergy Solutions, Jones also acted as CEO of FirstEnergy Services. Until June, the latter company provided Energy Harbor with “administrative, management, financial, compliance, ethical, external affairs, and political and regulatory advocacy services… ”

After news of the Householder scandal broke, FirstEnergy’s board of directors launched its own investigation. It culminated in the firings of Jones and two other executives because they “violated certain FirstEnergy polices and its code of conduct.”

That prompted the Ohio utilities commission to vote last week to order its audit, which is separate from one investigating whether ratepayer funds were improperly used in the HB 6 scheme. The audit ordered last week is needed because the results of FirstEnergy’s internal investigation “warranted further examination of compliance with corporate separation regulations by FirstEnergy’s electric distribution utilities and its affiliates,” the utility commission said in a press release.

The commission issued a request for proposals and plans to hire an auditor by early December.

Asked why consideration of the audit was added to the agenda only hours before commissioners met on Nov. 4, spokeswoman Anna Perry said in an email that per commission rules, “items are added to the agenda when ready for the Commission’s consideration. It is not uncommon for items to be added to agenda the day of a voting session.”

The Office of the Ohio Consumer Counsel, the state’s official consumer watchdog, in the past has said that the utilities commission isn’t investigating the bailout scandal aggressively enough. On Tuesday, it said it’s still reviewing last week’s order.

“We are assessing whether the audit of FirstEnergy outlined by the PUCO last week will adequately address the consumer protection that OCC sought in its earlier motions,” OCC spokesman J.P. Blackwood said in an email.

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