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This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network.

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Ohio regulators are moving ahead with a case seeking to increase FirstEnergy charges to customers, even as four proceedings remain on hold due to the government’s investigation of corruption relating to Ohio’s nuclear and coal bailout law, House Bill 6. Other developments include:

  • An Aug. 1 disclosure by FirstEnergy suggests an organized crime commission within the Office of the Ohio Attorney General is looking into issues relating to the HB 6 corruption scandal.
  • Although checks have started to go out in a ratepayer class action settlement, a spam-like email address could discourage recipients from claiming amounts ranging from $1 to $20 for residential consumers.
  • Former Ohio House Speaker Larry Householder and lobbyist Matt Borges appealed their convictions under the federal Racketeer Influenced Corrupt Organizations Act. Borges’ gambit to get out of prison during the appeal previews his arguments, which the government says are groundless.

An extended freeze

U.S. Attorney Kenneth Parker has asked Ohio regulators for a third six-month stay on prehearing fact-finding in four FirstEnergy regulatory cases. That would extend the current freeze until mid-February. 

In an Aug. 9 letter, Parker said further discovery “may directly interfere with or impede the United States’ ongoing investigation” into HB 6 and action through the Public Utilities Commission of Ohio.

Spokespeople for PUCO and the Office of the U.S. Attorney for the Southern District of Ohio declined to comment further on the request.

If state regulators comply, the delay means Ohioans will continue to be out millions of dollars in bill charges allegedly tied to HB 6 corruption while challengers wait for regulators to decide the cases. Parties in the cases have also argued FirstEnergy should pay up to $1.4 billion in penalties for how it misused or failed to properly account for ratepayer money.

“What Parker is effectively doing is asking the consumers of Ohio to continue to pay the ill-gotten gains of companies that are engaged in illegal activities,” said former Ohio utility commissioner Ashley Brown, who also headed the Harvard Electricity Policy Group. And while a short stay might be understandable, he said, there’s no indication yet of when any further indictments might come out. “This is just indefinite delay,” Brown said. 

The continued stay also effectively limits information available to the public. 

Some new information has recently come out in a federal shareholder class action case, including emails that expand on the close ties between former PUCO Chair Sam Randazzo and former FirstEnergy executives Chuck Jones and Mike Dowling. On Aug. 4, a FirstEnergy lawyer also disclosed that information from the former executives’ phones and notepad devices would be provided to other parties in the case, after production to “certain governmental authorities.” 

However, protective orders generally prevent the public from getting access to all discovery in private cases unless it is used at trial or filed with the court as exhibits. Jones, Dowling and Randazzo have all denied that they engaged in unlawful activities.

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Hearings set for new rider case

Meanwhile, FirstEnergy is seeking to add or continue various charges to customers’ bills and to revise how it purchases electricity for customers who don’t shop for their own power. If the new “electric security plan” is approved, average residential customers would pay an additional $3.11 per month for the next eight years.

Among other things, FirstEnergy wants to continue a rider to pay for certain capital investments. However, an audit in one of the HB 6-linked cases found that roughly one-quarter of the revenue for that charge in certain years was improperly spent.

The improper spending included payments to a company run by former PUCO Chair Sam Randazzo and to Cleveland entrepreneur Tony George, whose name came up in testimony at the trial of convicted former House Speaker Larry Householder. Although the PUCO ordered a further investigation into the payments to Randazzo’s company, it has delayed any fact-finding or hearing on the issue. 

Critics have called for more transparency in utility cases, especially when it comes to special deals that could be inducements for settlements and which could allow further corruption to go undetected.

A June 26 filing by FirstEnergy’s lawyers denied there are any side deals relevant to the new electric security plan case. The Office of the Ohio Consumers’ Counsel’s July 3 reply challenged the company’s narrow definition of relevance and asked regulators to require at least a list of all contracts with any intervening parties in the case. 

FirstEnergy says the electric security plan would also provide funding for energy efficiency programs, grid improvements and enhanced tree trimming to improve resilience to extreme weather. A bill for utility-sponsored energy efficiency programs is pending in the Ohio House.

The Public Utilities Commission of Ohio set an evidentiary hearing date of Nov. 7 on FirstEnergy utilities’ electric security plan. Local public hearings are also set for Sept. 7 in Cleveland, Sept. 14 in Toledo, and Sept. 26 in Akron.

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Missed their chance?

FirstEnergy, Energy Harbor and former executives Chuck Jones and Michael Dowling are arguing that a state civil racketeering case should be dismissed because the allegations were already addressed, they say, in a $37.5 million settlement in a class action case brought on behalf of ratepayers.

The state brought its case under Ohio’s civil racketeering statute, and Ohio Attorney General Dave Yost said in March that the state plans to “claw back those ill-gotten gains” from unlawful activity. But the same set of facts gave rise to both cases, and the relief sought overlaps with that in the settled ratepayers’ case, the defendants argued. Lawyers for state agencies even appeared in the class action case to dispute the lawyers’ fees awarded there.

FirstEnergy argued in late 2021 that HB 6 and orders under it barred the ratepayers’ class action in federal court despite the company having admitted to unlawful activity in its deferred prosecution agreement with federal prosecutors.

“The class action and class settlement have no impact on the Attorney General’s authority to assert the powers and authority granted to this office by statute and common law to protect the interests of Ohio and its people,” said Bethany McCorkle, communications director for Ohio Attorney General Dave Yost. 

The state’s responses to the motions for summary judgment are due Aug. 30.

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A state criminal investigation?

On June 29, the Ohio Organized Crime Investigations Commissions served FirstEnergy with a subpoena relating to conduct described in the company’s July 2021 deferred prosecution agreement, in which the company had admitted to bribing Householder and Randazzo. FirstEnergy disclosed its receipt of the subpoena in an Aug. 1 filing with the Securities and Exchange Commission.

FirstEnergy spokesperson Jennifer Young declined to provide a copy of the subpoena but said the company is cooperating with the commission and referred to the 2021 deferred prosecution agreement with the Department of Justice, under which the company paid a $230 million penalty.

By its terms, the agreement does not bar state or local law enforcement from pursuing claims against the company or current or former employees.

The organized crime commission is part of the Office of the Ohio Attorney General. A March 2023 statement from Yost’s office said it could not take criminal action on its own.

“The Attorney General’s Office cannot comment on a complaint to or ongoing investigation involving OCIC,” McCorkle said, citing a statutory provision requiring confidentiality before an indictment is issued or a case begins. 

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The check’s not in the mail

Settlement payments in the FirstEnergy ratepayer class action case have started to go out, with amounts for consumers ranging from $1 to $20. But instead of getting physical checks in the mail, many consumers have gotten emails telling them to click on a link to get their payment. And the email address — rewards@reward.tremendous.com — is one many consumers would pass over as spam. The Energy News Network’s email to that address bounced back as undeliverable. 

FirstEnergy spokesperson Young said she believes the settlement administrator was assigned by the court and directed questions to it. Questions sent to the email address on the website Young referred to went unanswered. 

“Our role in this case is as the payouts platform,” said spokesperson Jesse Friedman at Tremendous, declining to provide further comment. The company provides online payments for company incentives and other purposes. A July 7 court order identifies A.B. Data, Ltd. as the settlement administrator. The company has not responded to questions from the Energy News Network. 

That federal court case “is just one piece of the puzzle for making things right for Ohioans harmed by the FirstEnergy scandal,” said spokesperson Merrilee Embs at the Office of the Ohio Consumers’ Counsel. “We are working for justice and reform to protect Ohio consumers at the PUCO and in the legislature,” including credits on consumers’ bills for improper FirstEnergy charges and repeal of HB 6’s subsidies for two old coal plants. 

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Get out of jail?

Former Ohio GOP leader Matt Borges asked the Sixth Circuit Court of Appeals to release him from the low-security federal prison at Milan, Michigan, while he appeals his criminal conviction. His lawyers’ July 24 filing previews arguments his lawyers will make on appeal.

Borges’ lawyers argued the federal RICO statute is too broad and impermissibly vague as it relates to him. They claimed Borges didn’t commit the required two offenses necessary for a RICO conviction. And they criticized several of Judge Timothy Black’s rulings before, during and after the trial, as well as the jury instructions.

The government’s Aug. 3 response explained that cases about public servants cited by Borges’ lawyers don’t apply to him. The government also maintained that Borges’ repeated acceptance of funds that originated with FirstEnergy or its affiliates counted as multiple events of money laundering. Just as importantly, the government stressed that Borges’ involvement in the conspiracy was broader than his lawyers suggested.

“Borges was a member of the enterprise. He knew that FirstEnergy and Householder were involved in a corrupt bargain to exchange money for official action related to H.B. 6. … He then agreed to further the corrupt bargain through coordination with enterprise members,” the government’s lawyers wrote.

The court’s schedule currently calls for all briefs in the Borges appeal to be filed before November.

Householder has not yet filed a similar motion in his appeal, and a schedule has not yet been set for briefs in that case. 

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Kathi is the author of 25 books and more than 600 articles, and writes often on science and policy issues. In addition to her journalism career, Kathi is an alumna of Harvard Law School and has spent 15 years practicing law. She is a member of the Society of Environmental Journalists and the National Association of Science Writers. Kathi covers the state of Ohio.