Defenders claimed corrupt energy bill would save money. Prosecutor smashed that claim, too
FirstEnergy’s headquarters in Akron. Source: Google Maps.
Jim Trakas was the Republican nominee for Ohio House District 6, but lost the General Election in 2018. As a consultant, he supported House Bill 6 the following year, but couldn’t vote for it. This story has been updated.
CINCINNATI — On the stand in federal court, one witness after another testified that he supported a massive utility bailout because it would save consumers more than $1 billion. But as they did with so many other claims, prosecutors on Thursday appeared to demolish that one as well.
The bailout legislation, House Bill 6, is at the center of the racketeering trial of former Ohio House Speaker Larry Householder and former Republican Party Chairman Matt Borges. They’re accused of facilitating a scheme to use $61 million in utility money to make Householder speaker. Fresh off of his election to the post at the start of 2019, Householder rammed through a $1.3 billion bailout that mostly went to prop up failing nuclear and coal plants owned by FirstEnergy Solutions, a subsidiary of Akron-based FirstEnergy.
Through more than five weeks of testimony, a parade of the bailout’s supporters claimed that it was something of a free lunch: Even though it would pay massive ratepayer dollars to the utility, customers would still end up saving money. The supporters pointed to a fiscal note produced by the Legislative Service Commission saying that the savings would come from the bill’s elimination of fees associated with energy efficiency and renewables.
Throughout the trial, U.S. District Judge Timothy Black limited testimony about the virtues or ills of HB 6, saying that he wanted to keep the proceeding from becoming a referendum on the bill. But its supporters still underlined the supposed savings as a major selling point.
“I wanted to do away with costly mandates,” Householder said on the witness stand as he tried to argue that he supported the bill not for personal gain, but because he thought it was good policy for his fellow Ohioans.
Rep. Bill Seitz, R-Cincinnati, also voted for HB 6. He said eliminating the mandates would save consumers $2.3 billion. Two Another Republican who voted for the bill, Reps. Brett Hillyer, also took the witness stand and cited the purported savings it would create for consumers.
Pat Tully, too, touted the purported savings.
He was working as a senior official for the Public Utilities Commission of Ohio. On Jan. 25, 2019, a lobbyist for FirstEnergy — a company he was supposed to be regulating — forwarded Tully’s resume to Householder’s right-hand man. Within weeks, Tully was working for the Republican Caucus, helping PUCO Chairman Sam Randazzo draft the bailout legislation.
Randazzo also was supposed to be regulating FirstEnergy and it’s unclear whether PUCO policy prevented him from drafting a bailout law benefiting it. But he later resigned after the FBI raided his Columbus condo — and after FirstEnergy admitted it paid him $4.3 million right around the time Gov. Mike DeWine appointed him to the state’s top regulatory post.
On the witness stand in the racketeering case, Tully claimed that getting rid of efficiency and renewable mandates would save ratepayers between $1 billion and $2 billion.
But as she cross examined Householder on Thursday, Assistant U.S. Attorney Emily Glatfelter poked some gaping holes in such claims of consumer savings.
One is that the legislative analysis didn’t take into account a $50-million-a-year “decoupling” charge House Bill 6 created. It used FirstEnergy’s best recent year as the basis to create subsidies for FirstEnergy coal plants in the event usage or lower electricity rates forced revenue to drop below what it was in that basis year.
In a 2019 conference call with investors, FirstEnergy CEO Chuck Jones made a comment about the charge showing that the provision placed the interests of shareholders above those of customers. He said the decoupling charge made the company “somewhat recession-proof.”
In other words, supporters claimed in court that HB 6 was good for consumers. But one of its provisions meant that if the economy went into the toilet, you could expect your electric bill to go up.
And, perhaps not coincidentally, HB 6 created a hedge for FirstEnergy against lower revenues due to increased efficiency at the same time that it gutted incentives for greater efficiency.
It might seem also hypocritical to build that and other coal subsidies into a bill titled the “Ohio Clean Air Program,” but Householder claimed to be in the dark about it.
“I’m not an expert on decoupling,” Householder said when Glatfelter asked him about the charge.
Despite the former speaker’s claims that he had a longstanding interest in getting rid of “expensive mandates,” and that House Bill 6 was one of his top priorities, he claimed not to be familiar with all its provisions. When asked about the $50-million-a-year cost of the decoupling subsidy, Householder said, “I wouldn’t know.”
Then Glatfelter described a pretty big oversight in the legislature’s fiscal analysis of HB 6. It calculated the cost of fees to incentivize energy efficiency without looking at how much customers would save because their homes and appliances were more, well, efficient.
Indeed, according to one analysis, efficiency programs actually reduced the average Ohio electric bill by $2 a month. Other research indicates that efficiency not only reduces the amount of electricity you have to pay for. It also produces savings because less infrastructure is needed to carry less power and spewing less carbon into the atmosphere produces potentially profound savings of its own.
Asked about that oversight in the fiscal analysis he touted, Householder made a confusing statement about how he’d been told that if lights generate less heat they cause problems with heating and air conditioning units.
In addition, Glatfelter cited a PUCO analysis of which Tully — until very recently an employee of the agency — and Householder were seemingly unaware. It said that instead of costing consumers, the efficiency provisions actually saved them money.
Confronted with that, Householder said, “I think it’s all in the eye of the beholder.”
Judge Black and the attorneys were expected to complete jury instructions Friday afternoon. The judge said he plans to read them to the jury on Monday. Closing arguments are expected to begin Tuesday morning. Deliberations will start after that.
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