FirstEnergy Posts Profit Despite Nuclear Bailout Bribery Scandal
FirstEnergy held its first earnings call since announcing the departure of CEO Chuck Jones who was ousted as the result of an internal review related to a federal racketeering investigation. The utility says, although the company is under investigation in possible connection to a bribery scheme, earnings are still up.
The utility announced earnings per share of $0.84 with revenue of $3 billion. Both figure beat investors’ predictions, although shares remain down 38% from the beginning of the year.
Chris Pappas, executive director of FirstEnergy's board, says Jones and two other executives were fired for violating policies but did not provide more details.
"When we determine that employee conduct is inconsistent with our policy and values no matter how senior the individual we have a duty to take action and that is what we have done here," Pappas said on the call.
FirstEnergy is under investigation for its possible role in a $61 million racketeering scheme.
Defendants have pleaded guilty saying that scheme helped the nuclear bailout that had many things on FirstEnergy's wish list become law. Among those defendants is Juan Cespedes, a FirstEnergy lobbyist, who says he orchestrated payments to a dark money group known as "Generation Now."
That group used millions of dollars to campaign for HB6, which bailed out nuclear power plants and accomplished other legislative objectives laid out by FirstEnergy.
FirstEnergy says it still projects earnings growth to result in $600 million in equity issued annually.
Acting CEO Steven Strah said on the call, "With that said, we are mindful that the current situation may present additional challenges to meet this objective."
One of those challenges could be the potential repeal of HB6, which is at the center of the racketeering case. FirstEnergy says a repeal could result in a $0.05 dip in earnings.
The company is no longer tied to the subsidiary that owned the two nuclear power plants, Energy Harbor formerly known as FirstEnergy Solutions. However, FirstEnergy executives said that dip in earnings would be from eliminating the "decoupling" provisions created in HB6.
Traditional decoupling cuts the link between the amount of electricity consumed and the profits a utility makes from that. But opponents of HB6 say the language in the bill guaranteed large profits for FirstEnergy.
FirstEnergy argues the decoupling provision encourages new programs without losing revenue needed for reliability.