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FirstEnergy Fires Two More Executives As HB6 Repeal Languishes in Legislature

The Davis-Besse Nuclear Power Station on Lake Erie.
Ron Schwane
/
Associated Press
The Davis-Besse Nuclear Power Station on Lake Erie is scheduled to shut down in 2020.

Akron-based FirstEnergy is at the center of a bribery scandal that has rocked Ohio politics as well as the company’s front office.

In late October, FirstEnergy fired its CEO and two other executives for violating company policy. In a filing Monday, it announced that two more executives, including the chief legal officer and chief ethics officer, have been dismissed.

It all centers around House Bill 6, an energy bill approved last year by the Ohio General Assembly that dramatically altered the state’s energy policy. The law grants subsidies to keep open two Ohio nuclear plants owned by Energy Harbor, once a FirstEnergy subsidiary.

Federal authorities allege FirstEnergy funneled millions of dollars through a dark money group to benefit Ohio politicians, centrally former House Speaker Larry Householder, in exchange for securing the bill’s passage and preventing a referendum. There have been calls—but no action yet—to repeal HB6 in the legislature.

Reporter and attorney Kathiann Kowalski, who been covering the story for Eye on Ohio, says without repeal, there will be ramifications for Ohio ratepayers.

"If there is no repeal, it will likely mean higher bills for Ohioans," Kowalski said.

On average, the increase is expected to be about $7 a month "due to the nuclear plant subsidies, subsidies for two 1950s-era coal plants and the elimination of the energy efficiency standard, plus gutting of the renewable energy standard."

Kowalski says HB6 eliminated cost savings provided by the energy efficiency standard.

The current speaker of the Ohio House, state Rep. Bob Cupp (R-Lima), has said that he wants to make repeal of HB 6 a priority for the rest of the lame duck session.

"Honestly, we don't know what form that will take," Kowalski said. "There have been a variety of lawmakers pushing since August for a straight repeal of the bill. They tried to bring those up for a vote in early September. House leadership thwarted those efforts. So although repeal of House Bill 6 is on the agenda, we have to wait and see what form, if any, that will take."

She points out that many legislators who voted in favor of HB6, including Householder, were re-elected this month.

"Householder did not face an opponent on the ballot," Kowalski said. "There were a couple of write-in opponents, so he was re-elected. The rest of the House may or may not decide to oust him come January. Again, we have to wait and see what happens."

Householder has pleaded not guilty to the charges. Last month, two other defendants named in the federal case reached guilty pleas with prosecutors.

The Public Utilities Commission of Ohio (PUCO) announced last week the initiation of an audit of FirstEnergy's compliance with corporate separation laws and regulations. The agency is seeking an independent auditor to complete a report by next April. Kowalski is waiting to see the scope of the audit.

"If it is a very limited review, that may or may not shed much new light on the case," Kowalski said. "There was an audit back in 2018. At that point there were a few recommendations made for corporate separation. But it seemed to be a relatively limited review of the records at that point."

She says a broader view would look into not only the money FirstEnergy took in from its utility operations, but also what the company did with it.

"That kind of review, I'm told, could shed light on corporate governance issues and could actually help the corporation going forward," she said.

Kowalski says criminal charges against individuals currently or formerly with the company could be coming.

"I'm not a criminal lawyer, so I honestly can't say one way or the other," she said. "The federal criminal case does allege that there was a bribery scheme. So arguably somebody was paying a bribe. I would not be surprised to see some charges coming down eventually."

Kowalski says there's also a state court case with allegations against FirstEnergy, Energy Harbor and the defendants in the federal case. No federal charges have been filed yet against FirstEnergy or any current or former employees.

In its filing with the Securities and Exchange Commission Monday, FirstEnergy also noted that new acting CEO Steven Strah’s base salary increased by $150,000 to $950,000.