This story was originally published by Canary Media.
In landmark rulings in November, the Public Utilities Commission of Ohio ordered FirstEnergy’s three regulated companies to pay roughly $250 million for violations linked to the state’s largest-ever utility corruption scandal. More than $186 million of that will be refunded or credited to consumers.
It’s one of the biggest such penalties in U.S. history. The rulings in three cases represent “an important milestone in fixing the harms FirstEnergy caused,” said Ohio Consumers’ Counsel Maureen Willis — even though the relief comes more than five years after her office first asked regulators for accountability and falls well short of what she and others pushed for.
The utility corruption scandal surrounding FirstEnergy and House Bill 6 isn’t just the largest in Ohio history — it also ranks up there nationwide, where such occurrences have happened more often than regulators or consumers would want.
As part of the scheme, FirstEnergy paid roughly $60 million in bribes to pass the law bailing out unprofitable nuclear and coal plants, and then to thwart Ohioans’ constitutional right to a referendum on it. FirstEnergy also admitted that it paid $4.3 million to Sam Randazzo shortly before he became chair of Ohio’s utilities commission in 2019, with the understanding that he would provide favorable treatment for the company.
A lawsuit and subsequent legislation halted HB 6’s nuclear subsidies before they began. But the law’s coal subsidies lasted five and a half years, up until this August, costing consumers approximately half a billion dollars in all.
On July 21, 2020, just about a year after Gov. Mike DeWine (R) signed HB 6 into law, federal agents arrested former Ohio House Speaker Larry Householder (R), former Ohio Republican Party Chair Matt Borges, and others in connection with the bribery scheme. Householder and Borges were found guilty of federal racketeering charges in 2023.
The Nov. 19 rulings by the utilities commission, also known as the PUCO, mark the first time FirstEnergy’s utilities will pay anything to Ohio and its consumers for regulatory violations related to HB 6.
The company previously paid $230 million under an agreement with the Department of Justice to resolve a criminal charge, plus another $100 million to settle federal securities claims, and $20 million to avoid state criminal charges. The company also paid nearly $50 million to settle a class action lawsuit.
Ripples in the rate cases
On the same day as its HB 6 rulings, the PUCO also approved a rate hike for some of FirstEnergy’s customers, albeit one much smaller than what the company initially requested. Regulators granted an annual increase of nearly $76 million for approximately 745,000 customers served by the Cleveland Electric Illuminating Co.
Meanwhile, rates will fall for customers of Toledo Edison and Ohio Edison by $24.4 million and $17.4 million per year, respectively. All told, regulators approved a net rate increase of about $34 million — far less than the combined $183 million FirstEnergy asked for.
Consumer advocates had pushed for regulators to go further. The Office of the Ohio Consumers’ Counsel — the state advocate for utility consumers — sought rate decreases totaling roughly $132 million for FirstEnergy customers, including a cut in the company’s rate of return to account for the poor management that enabled the HB 6 corruption scheme.
“FirstEnergy’s executive decisions contributed to increased financial risk, and it is unfair for its consumers to bear this burden through higher electric bills,” Willis said, adding that shareholders should shoulder the cost. “Reducing the profits built into rates is also a way to ensure accountability.”
Regulators ultimately rejected that approach.
Yet another battle over FirstEnergy’s rates will probably play out this year, and the HB 6 scandal will likely loom over that process, too.
The day after the PUCO rulings came out, FirstEnergy announced that its three Ohio utilities will file their next rate case in early 2026. So, different rates from the ones just approved will likely kick in as early as 2027.
“FirstEnergy’s announcement does not come as a surprise,” Willis said. That’s because legislation passed earlier this year calls for an end to most bill riders and speeds up rate cases. At least one company has already filed a new rate case under the law.
FirstEnergy’s utilities could use their new rate case to revisit some issues from the recently decided one.
All in all, “customers of Ohio Edison and Toledo Edison should be wary of the lower bills” they’ll get after last month’s rulings, said Dave Anderson, policy and communications manager for the Energy and Policy Institute, a watchdog group.
They’re an improvement for now, he said, but may not last.
The book is not yet shut on HB 6
The PUCO’s rulings in the HB 6 cases also stopped far short of the relief sought by consumer and industry groups, which would have topped half a billion dollars.
And while regulators held that another corporate-separation audit should begin within the next three years, they refrained from providing a full review of FirstEnergy’s management practices, which advocates have sought since 2020.
Nonetheless, the $250.7 million in penalties and refunds imposed by regulators “are significant and welcome,” said Tom Bullock, executive director of the Citizens Utility Board of Ohio, a nonprofit watchdog group.
For their part, PUCO Chair Jenifer French and Commissioner Lawrence Friedeman each conveyed relief that the three HB 6 cases had wrapped up. “As this journey began, the commission has expressed an unequivocal intent to follow the facts wherever they led, and today we reached the destination,” Friedeman said at the Nov. 19 meeting.
But, as one of the commission’s rulings notes, another case has yet to be addressed. Five years ago, in response to calls for investigations following the initial arrests of Householder, Borges, and others, the PUCO — then led by Randazzo — took the “baby step” of ordering FirstEnergy to show that it did not use money from Ohio customers for its HB 6 efforts.
FirstEnergy’s utilities bear the burden of proof in the case. It may be difficult for them to prove the negative, because FirstEnergy had mixed funds from different sources in a money pool. It’s also unclear how much of a penalty regulators will impose if the companies can’t demonstrate that they followed a state law banning use of customers’ money for political or charitable purposes.
Written testimony in that case is due next month, and an administrative trial, called an evidentiary hearing, is set to start on Feb. 24.
Overall, Ohio’s rulings on the HB 6 saga so far have been a mix of good news and bad news when it comes to holding utilities accountable, consumer advocates say.
“What we’ve learned from the whole HB 6 affair was that there was an extremely lax attitude towards regulation [at] FirstEnergy and the other majority utilities in Ohio … that enabled the scheme to be played out,” Anderson said.
He is encouraged by the commission’s decisions last month, which reflected less deference to utilities and more serious financial consequences than past rulings.
“What the PUCO did do here that was quite strong was find FirstEnergy broke multiple Ohio laws,” Anderson said. The assessed penalties also include several instances where the commission levied fines of $10,000, $16,000, or $25,000 per day for different violations, which added up to tens of millions of dollars. If regulators in Ohio applied that approach all the time, not only in the wake of scandal, “it would provide utilities with a strong disincentive to take things as far as FirstEnergy did,” he added.
Beyond that, criminal charges remain pending in state and federal court against two former FirstEnergy executives. Whether the outcome of those cases will reduce the incidence of future utility scandals remains to be seen.
This story is republished from the Ohio Capital Journal. View the original article.
