FirstEnergy agrees to stop $102M fees

Ohio Attorney General Dave Yost announced Feb. 1 that FirstEnergy has agreed to end the collection of decoupling revenues permitted by an Ohio bill at the center of an alleged corruption scandal.

Yost said that a provision in House Bill 6 would have allowed the company to collect $102 million this year.

The agreement comes after the Attorney General’s Office filed a motion in Franklin County Common Pleas Court last month to block FirstEnergy from using the decoupling provision. The Attorney General’s Office stated that as written, the provision would have allowed FirstEnergy to “adjust rates to ensure it made at least $978 million a year going forward.” Yost’s office stated that benchmark comes from 2018 when “a cold winter and a scorching summer combined to boost FirstEnergy’s revenue to a record $978 million.”

Yost’s office stated that FirstEnergy will file an emergency application with the Public Utilities Commission of Ohio Feb. 1 to immediately set the decoupling rider to zero. PUCO will then need to hold a meeting to approve the application. Once FirstEnergy confirms that rates are no longer being charged, the Attorney General’s Office will withdraw its court motion.

The remainder of the case will remain in Franklin County Common Pleas Court, but the Attorney General’s Office stated the parties have agreed to hold off on further proceedings pending the end of the federal criminal trials related to House Bill 6.

“I appreciate the governance changes that FirstEnergy has made and the new direction their new leadership team is undertaking in recognizing changes need to be made with regard to law and the application of House Bill 6,” Yost said during a Feb. 1 news conference.

FirstEnergy fired its CEO Chuck Jones in late October, along with other executives after an “internal review related to the government investigations... determined that these executives violated certain FirstEnergy policies and its code of conduct.”

A FirstEnergy spokeswoman confirmed in an email the company is planning to file the application Feb. 1 with PUCO.

“Working to constructively resolve this matter in cooperation with the Ohio Attorney General and other parties is part of decisive actions the board and management are taking to position FirstEnergy for the future and continue to deliver safe, reliable electric service to our customers,” the spokeswoman said in a statement. “FirstEnergy’s leadership is committed to transparency and integrity in every aspect of its business.”

FirstEnergy began collecting decoupling funds last year. Yost said the agreement does not affect the money that has already been collected, but he added they still have the ability to litigate over the money that had been previously paid.

“There are some legal differences between 2020 and 2021, so we felt it was important to get this thing stopped on a going-forward basis,” Yost said. “We still have the right to litigate in court — after the federal process is finished — regarding the past.”

House Bill 6 was signed into law in July 2019. It, among other things, gives North Perry’s Perry Nuclear Power Plant and Ottawa County’s Davis-Besse Nuclear Power Plant $150 million annually between 2021 and 2027. The funds are raised through charges paid by residential, commercial and industrial electric customers. Residential customers will be charged 85 cents per month.

In July 2020, then Ohio Speaker of the House Larry Householder and four others were arrested for an alleged bribery scheme involving House Bill. Federal investigators allege that Generation Now was incorporated in February 2017 as a “social welfare entity purporting to promote energy independence and economic development,” but was secretly controlled by Householder.

Millions of dollars from the electric company known in the complaint as “Company A” were allegedly used to support Householder’s bid to become speaker, to support House candidates believed to back Householder for the position and for personal benefit. Householder’s case is pending in federal court.

In late October two of the men arrested for their alleged roles in the scandal, FirstEnergy lobbyist Juan Cespedes and political strategist Jeff Longstreth, pleaded guilty to racketeering charges.

Following the arrests some state lawmakers on both sides of the aisle have called for House Bill 6 to be repealed and/or replaced, but as of yet it remains in effect.

Franklin County Judge Chris Brown in December granted a preliminary injunction blocking the nuclear plant subsidies that were set to be added to every electric bill in the state starting Jan. 1.

Yost said that taken together, his court actions related to House Bill 6 are “projected to save Ohioans nearly $2 billion over the years House Bill 6 would have been effective.”

Ohio’s two nuclear plants are now owned by Energy Harbor, a former FirstEnergy subsidiary known as FirstEnergy Solutions. The company filed for bankruptcy in March 2018 and had plans to shut down both plants by 2021 if it did not receive subsidies. FirstEnergy Solutions emerged from Chapter 11 bankruptcy on Feb. 27, 2020, under its new name.