FirstEnergy Solutions behind argument against Ohio nuclear subsidy referendum

Documents show the company retained the law firm arguing that HB 6 is exempt from state referendum procedures.

A public records request confirms that FirstEnergy’s bankrupt generation subsidiary, FirstEnergy Solutions, is behind a tax argument being advanced to block a referendum on an Ohio bill granting subsidies to nuclear and coal plants.

Ohio lawmakers passed the nuclear and coal subsidy bill on July 23 despite widespread opposition from environmental groups, consumer advocates, renewable energy industry interests, petroleum industry interests, free market advocates and others. Six days later, a coalition of some of those interests filed its first proposed referendum against the bill, with an eye toward getting it on the ballot for November 2020.

Two days later, attorney John Zeiger of Columbus sent a letter and legal memorandum to the Ohio secretary of state’s office, arguing that House Bill 6 is a “law providing for a tax levy” that would be exempt from the state constitution’s referendum procedures.

Neither that Aug. 1 letter nor the accompanying memorandum identified any client on whose behalf Zeiger and his firm were working. However, a July 17 filing in FirstEnergy Solutions’ bankruptcy case confirms that the company engaged Zeiger’s firm “in the ordinary course of their business since approximately June 26.” Zeiger’s declaration said the firm had agreed to provide “litigation services and, if necessary, litigation services regarding pending legislation.”

After the Ohio attorney general’s Aug. 12 rejection of the proposed referendum’s summary of the bill, the Energy News Network submitted a public records request to that office. The response included an Aug. 2 letter from Zeiger to Ohio Attorney General Dave Yost, repeating the tax levy claim, outlining alleged problems with the coalition’s summary of HB 6, and this time identifying FirstEnergy Solutions as his client.

“Our Firm has been retained by FirstEnergy Solutions Corp. in connection with the proposed Referendum Petition concerning the recently enacted H.B. 6,” the letter began.

FirstEnergy Solutions spokesperson Tom Becker said, “FES doesn’t have any comment on Mr. Zeiger’s [Aug. 1] letter or your other questions but we certainly appreciate you giving us the opportunity.”

Zeiger did not respond to an email inquiry asking if he had sent the Aug. 1 letter on behalf of FirstEnergy Solutions and seeking additional comments for this article.

‘Misleading through silence’?

House Bill 6 will impose fees on all electricity customers to support subsidies to FirstEnergy Solutions’ Davis-Besse and Perry nuclear stations, as well as two 1950s-era coal-fired power plants. At the same time, it effectively guts Ohio’s renewable energy and energy efficiency standards, which together have been shown to save customers money while adding jobs and attracting investment to the state.

FirstEnergy’s generation subsidiary had repeatedly stated that it would close its two nuclear plants in Ohio if state lawmakers didn’t approve the subsidies in HB 6.

“They’re hoping they can get lucky here and keep this thing off the ballot,” said Gene Pierce, spokesperson for the referendum coalition, called Ohioans Against Corporate Bailouts. “They know that if it goes to the ballot, it’s a very noxious bill that Ohio voters just will not stand for. … It’s a billion-dollar bailout.”

The omission of a mention of Zeiger’s client in the Aug. 1 letter raised suspicions among advocates. There’s no general requirement for a lawyer to disclose that information. However, it is common for attorneys to indicate who their client is.

“What struck me was the oddness” of the attorney filing the declaration in the bankruptcy case, but then not disclosing that in the Aug. 1 letter, said David Anderson, policy and communications manager for the Energy and Policy Institute.

While the nuclear subsidy bill was still pending this spring, he and his colleagues analyzed the digital document properties of testimony submitted in favor of HB 6. They found seven documents where a FirstEnergy Solutions lobbyist was identified as an author.

In Anderson’s view, acts like that ghostwriting and the failure to name a client in the Aug. 1 letter are “misleading through silence.”

Transparency of the process matters, Anderson continued.

“I think both the attorney general and secretary of state’s offices would benefit from just posting any materials they receive about the ballot referendum in a publicly available place.”

Next steps

In Pierce’s view, the tax argument advanced by Zeiger is a non-starter. The bill language refers to monthly utility charges billed to customers to cover the cost of its subsidies. Also, state Rep. Bill Seitz, one of the bill’s champions, had strongly stated that the bill was not a tax, Pierce noted.

Any referendum petition on the bill must pass several hurdles no later than Oct. 21, he reported. That includes getting the proposed referendum and a summary of the bill past the Ohio secretary of state’s office and the Ohio attorney general.

On Aug. 12, Attorney General Yost rejected the group’s first try, on the grounds that there were multiple errors in its four-page summary of the bill. The letter did not mention Zeiger’s tax argument. One of its points did note that each fund created with fees from the bill “shall not be part of the state treasury.”

“It’s pretty typical with initiatives like this to work the kinks out before you get it satisfactory for the attorney general,” Pierce noted.

“I don’t have any questions as to whether or not the attorney general or the secretary of state will deal fairly with us,” Pierce said. “We have a lot of trust in both officeholders.”

“But we do think FirstEnergy is desperate,” he added. “They’re trying to protect a $1 billion bailout, and they’ll spend as much as it takes, whatever they can, if they think they can keep it.”

A response from the Ohio attorney general’s office is due Aug. 30.

UPDATE: Necessary approvals for the referendum campaign to move ahead came from the Ohio attorney general’s office and the Ohio secretary of state on August 29 and 30, respectively. The campaign now has until October 21 to collect approximately 265,000 signatures from registered Ohio voters.