Current $61M bribery allegation opens old wounds for FirstEnergy
The $61 million alleged bribery scheme wrapped around FirstEnergy Corp. has opened old wounds for the Ohio utility giant, and convinced FirstEnergy’s harshest critics the corporation never learned its lesson from the company’s last colossal public relations failure.
FirstEnergy Corp. was fined a record $28 million more than 14 years ago to avoid criminal prosecution for lying to the government about the dangerous condition of the Davis-Besse nuclear power plant’s original reactor head.
The government at the time said it was lowering the boom on FirstEnergy because it had shown “brazen arrogance” and had “breached the public trust.”
Evidence showed loose acid FirstEnergy knew about for at least six years had melted away much of the reactor’s protective cap, so much so it was two-tenths of an inch away from bursting. That could have caused a crisis at Ohio’s Davis-Besse akin to Pennsylvania’s high-profile Three Mile Island Unit 2 accident in March 1979, the worst nuclear accident on U.S. soil.
That was then and this is now: The same corporation, which owns Penn Power and West Penn Power, is believed to be the one federal prosecutors refer to merely as “Company A” in an affidavit filed in support of the criminal complaint.
“The consistency of brazen arrogance continues,” said Dick Munson, Chicagobased Midwest Clean Energy director for the national Environmental Defense Fund.
An affidavit filed in federal court outlines what authorities contend was a $61 million bribery scandal masterminded by Ohio House Speaker Larry Householder and four others.
Experts believe if Company A doesn’t refer directly to FirstEnergy, then it refers to a subsidiary, FirstEnergy
Solutions or FirstEnergy Nuclear Operating Co. Both oversaw the Davis-Besse plant east of Toledo and the Perry plant east of Cleveland from November 2016 until FES and FENOC filed for bankruptcy in March 2018. The plants are now owned by an FES offshoot, Energy Harbor.
Prosecutors claim Company A funneled money through nonprofit entities to help with the election of lawmakers loyal to Mr. Householder. Those lawmakers were then expected to pass the $1 billion nuclear-plant bailout and quash a citizens’ group’s attempt to repeal the bailout through a voter referendum.
Over the past 14 years, FirstEnergy has engaged in a massive public relations campaign, stating at innumerable public hearings it is not the same corporation it was when the Davis-Besse reactor scandal — and evidence of an attempted coverup — rocked the nuclear industry in 2002. In addition to the $28 million criminal fine, FirstEnergy paid a $5.45 million civil penalty imposed by the U.S. Nuclear Regulatory Commission.
Mr. Munson and Howard Learner, executive director of the Chicago-based Environmental Law & Policy Center, said they believe FirstEnergy and/or FES are not identified by name yet because the investigation is still in its early stages.
Prosecutors are likely cutting deals with key witnesses, whose testimony could be used to get convictions against high-level personnel both within the FirstEnergy system and state government, according to both men, who closely followed the FirstEnergy bankruptcy proceedings.
“The indictments are clearly a beginning and not necessarily the end of the investigation. There’s going to be a lot of pressure on the people indicted to tell the U.S. attorney [David DeVillers] what they know,” Mr. Learner said.
In his report to investors last week and in a follow-up news release Monday, FirstEnergy Chief Executive Officer Chuck Jones denied wrongdoing and said the corporation has high ethical standards. FirstEnergy spokesman Jennifer Young told The Blade the corporation had nothing to add to those remarks Wednesday.
Bank of America Global Research said in a 10-page synopsis of the meeting that FirstEnergy “came out confident in its outlook for investigation success,” and predicted the company’s recent volatility in stock prices should become a little more stable as prosecutors sort out their case’s timeline in the coming weeks. Bank of America also said the details surrounding the spinning off of subsidiary companies in November 2016 will be important for the investigation going forward.
Mr. Jones during that conference said 25% — or $15 million — of the $60-some million war chest in question came from FirstEnergy.
Mr. DeVillers did not respond to a request for an interview. His spokesman, Jennifer Thornton, said federal prosecutors as a matter of practice “don’t name any individuals or entities in our charging documents unless they are charged in the document.”
“We have no further comment at this time,” Ms. Thornton said.
The bailout bill Mr. Householder narrowly got past the Ohio General Assembly and was signed into law by Gov. Mike DeWine at the end of 2019, known as House Bill 6, also gave FirstEnergy and its subsidiaries something else they had long coveted: an end to a 2008 Ohio law forcing utilities to progressively invest more in renewable energy each year, either through projects of their own or by purchasing credits.
FirstEnergy got a firstyear exemption from that requirement.
But when he was Ohio’s attorney general, Mr. DeWine led an inquiry into why the utility had sought a secondyear exemption. His office concluded FirstEnergy had sufficient opportunities to buy credits if it didn’t want to develop clean power sources of its own.
After FirstEnergy’s insistence on repealing that law went to then-Gov. John Kasich, who in 2014 became the nation’s first and only governor to impose a three-year freeze on such mandates. Mr. Kasich, over FirstEnergy’s objections, allowed the law to resume once the freeze thawed in 2017.