Ohio utility regulators handed down a quarter billion-dollar penalty Wednesday against FirstEnergy for its part in the Ohio House Bill 6 political bribery and utility bailout scandal.
The Public Utility Commission of Ohio decision comes more than five years after former Ohio House Speaker Larry Householder was indicted, and the Ohio Consumers’ Counsel sought a review of FirstEnergy’s conduct.
Ohio House Bill 6
The tainted legislation tacked charges onto Ohioans’ electric bills to bail out aging coal plants.
According to a deferred prosecution agreement with the U.S. Department of Justice, the company admitted to funneling almost $60 million to Householder to pass the bill and neuter a referendum effort.
“These funds represent an unnerving shadow over our regulatory role in this State and have harmed each and every consumer whose interests we aim to protect in proceedings before us,” the PUCO’s order said.
The bulk of the PUCO’s penalty gets chalked up a provision in Ohio law requiring triple damages when a regulated utility violates state law.
That turned the $60 million slush fund into $180 million in customer restitution. The commission ordered FirstEnergy to refund customers with a bill credit over three billing cycles.
Still, even with triple damages, that amount falls far short of the complete refund many challengers were seeking.
Under H.B. 6, FirstEnergy collected about $460 million from customers through surcharges on their monthly bills to fund grid modernization.
Challengers like the Ohio Consumers’ Counsel argued the company should pay it all back with interest.
But commissioners determined, “the more appropriate amount of restitution to be the very amounts paid in furtherance of the H.B. 6 activities.”
The former chairman
The commission also ordered the company to pay a little more than $40 million in penalties related to bribes it paid to former PUCO chairman Sam Randazzo.
The payments began in 2013, well before Randazzo joined the commission.
In its order, the PUCO found that consulting agreement with a Randazzo controlled company amounted to a corporate separation violation.
FirstEnergy, the distribution company, is a regulated monopoly. But it’s affiliate, FirstEnergy Solutions, operated in the unregulated energy generation market.
The problem is Randazzo’s work was meant to benefit FirstEnergy Solutions, but it got billed to FirstEnergy, effectively charging everyday Ohio ratepayers for Randazzo’s services.
In its order, the commission wrote, “the severity of the violation involved and pattern developed over the course of a number of years requires the maximum forfeiture to be assessed.”
The penalty amounted to $21.78 million, or $25,000 a day for the roughly two years that agreement was in place before it was amended with a ‘side deal’ in 2015.
The commission also assessed a $10,000 a day penalty for the more than five years between inking the 2015 side deal and publicly disclosing it in a federal financial filing in 2021. That fine amounted to $18.93 million.
In a separate order, the PUCO levied an additional $23.36 million penalty for corporate separation violations unrelated to H.B. 6.
Reactions
Alongside its order, the PUCO issued statements from the commissioners.
PUCO Chair Jenifer French insisted they “have followed the facts wherever they may lead.”
“These proceedings were the first, and we trust the last, of their kind,” she said. “It is our responsibility and duty to impose appropriate remedies so as to ensure that they are.”
The Ohio Manufacturers’ Association welcomed the decision but insisted the “PUCO’s job isn’t done yet.”
The organization warned regulators are still too willing to accept the utilities’ word when it comes to future projections.
The association is currently appealing a PUCO decision on data centers in the Ohio Supreme Court.
The group argues, in part, that utilities haven’t backed up their forecasts about future power demand.
“Ohio manufacturers won’t tolerate anything less than a fair, transparent energy market,” Ohio Manufacturers Association President Ryan Augsburger said.
“When corruption is ignored, ratepayers get fleeced. Today’s long-overdue action makes clear that accountability isn’t optional and Ohio’s job creators won’t be the ones footing the bill.”
Karin Nordstrom, a clean energy attorney with the Ohio Environmental Council, said the ruling sent a clear message that corruption won’t be tolerated.
“At a time when Ohioans’ electric bills are skyrocketing, the Commission has finally acted to hold FirstEnergy accountable for H.B. 6, forcing FirstEnergy to repay its customers for money it unduly collected,” she said.
Ohio Consumers’ Counsel Maureen Willis said, “Ohioans should never be made to pay for corporate misconduct.”
“Ohioans expect and deserve fair utility bills and utility companies that follow the law,” Willis said.
“Today’s PUCO order requiring fines, restitution and refunds is an important milestone in fixing the harms FirstEnergy caused.”
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This story is republished from the Ohio Capital Journal. View the original article.
