Firstenergy says it’s transparent but guards secrets
When federal prosecutors pulled back the curtain on a long-running investigation into Firstenergy Corp. and former Ohio House Speaker Larry Householder, it triggered dramatic changes at the Akron-based utility.
The company promised a new era of transparency and ethics. But in regulatory matters and lawsuits, the company has fought against disclosing secrets.
Firstenergy is “fighting disclosure in virtually every setting,” said Todd Snitchler, a former chair of the Public Utilities Commission of Ohio and former state lawmaker.
“I think one has to balance the public statements about transparency with the commitment to transparency in regulatory and legal proceedings,” he said.
Ashley Brown, another former PUCO commissioner, agreed. “If you ask them ‘Are you transparent?’ they say yes. If you ask them anything of substance, they say ‘It’s a secret.’”
Firstenergy spokeswoman Jennifer Young said “Firstenergy is committed to sharing all the information we can, when we are able to share it. However, because of ongoing investigations, audits and litigation, there remain items which we are unable to share or on which we are unable to comment.”
The company fired top executives, made key disclosures to regulators and told investors it was the dawning of an era of transparency, ethical conduct and compliance.
Young said the company strengthened its leadership team in key areas, improved compliance measures, and reviewed its political and lobbying practices.
She added that following the improvements, Firstenergy was named as a “trendsetter” by the Zicklin Center for Political Accountability. The center gave Firstenergy a score of 91.4% in 2021, up from 48.6% in 2020.
‘Who paid the bribe?’
The utility’s reluctance to answer questions caused U.S. District Court
Judge John Adams to boil over in frustration during a March 9 hearing in his Akron courtroom.
“It’s a very direct question. We’d all like to know, who paid the bribe?” Adams said to Firstenergy attorney Jeroen Van Kwawegen.
“Senior executives at Firstenergy,” Van Kwawegen replied.
The judge ended the hearing saying: “You are wasting my time here. You are not here to answer my questions. You are here to duck and avoid and evade.”
Firstenergy later told the court that disclosing the names would violate confidentiality agreements and could be harmful to Firstenergy. It offered to name names if the information were under seal.
That didn’t go over well. Adams got his answer on the record from Firstenergy on March 23: former chief executive Charles Jones and former senior vice president Michael Dowling paid the bribes.
A federal judge isn’t the only public official who wants to see more details about Firstenergy’s political operation.
A year ago, Ohio Attorney General Dave Yost and Firstenergy agreed to pause discovery in a civil lawsuit pending in Franklin County Common Pleas Court. In November, Yost asked the court to let him resume discovery – something Firstenergy is actively fighting.
Yost said the discovery would allow his team to look at Firstenergy emails, correspondence, financial statements and more. That information would reveal the internal timeline, development of the conspiracy and who else may be involved, he said.
“Firstenergy already cut its deal with federal prosecutors. There’s literally no reason for it to object to re-starting the discovery process,” Yost said. “The truth will come out. Now is the time.”
Why is Firstenergy being investigated and sued?
Firstenergy is facing investigations, audits and lawsuits on multiple fronts, including by the Securities & Exchange Commission, Federal Energy Regulatory Commission, U.S. Department of Justice, Ohio Attorney General, state utility regulatory agencies in multiple states and shareholders.
Firstenergy is a publicly-traded utility with 12,000 workers across five states, 6 million customers and 10 regulated subsidiaries.
Firstenergy had long sought a government bailout for two aging nuclear plants in northern Ohio. When federal help didn’t come through, the company invested in getting Householder and his team elected. In 2019, Householder championed a bailout bill worth more than $1 billion to Firstenergy.
Federal prosecutors describe the arrangement as a bribe.
In July 2021, Firstenergy agreed to pay a $230 million fine, cooperate with investigators and admit it bribed Householder and former Public Utilities Commission of Ohio chairman Sam Randazzo.
The agreement requires Firstenergy to disclose all political donations – dark money or otherwise – made during 2021 and for the three years of the agreement. But the company does not need to disclose donations made in 2019 and 2020 while the alleged bribes occurred.
Nearly a year after his arrest, the Ohio House voted to expel Householder.
Householder has pleaded not guilty and Randazzo hasn’t been charged.
Both men say they didn’t do anything wrong. Randazzo resigned days after FBI agents searched his condo in German Village.
Firstenergy’s fight for secrecy stretches across multiple states
While Firstenergy agreed to cooperate with federal prosecutors, the deal didn’t mandate full disclosure in other matters.
The company is pushing back against efforts to review aspects of its operations in Ohio, Maryland and New Jersey.
Maryland: Consumer advocates are trying to determine if Maryland customers were billed for corruption that happened in Ohio. An effort to obtain Firstenergy’s 2020 internal report that led the company to fire top executives has been blocked by the company’s claim that it’s protected by attorney-client privilege.
New Jersey: The state’s consumer advocate, along with Ohio Consumers’ Counsel, is trying to intervene into the next phase of the Federal Energy Regulatory Commission‘s audit of Firstenergy. But the company moved to block their intervention. And the company promised to be forthcoming with facts but not information protected by attorney-client privilege.
Ohio: the PUCO has four probes open, including looking at the utility’s political and charitable spending, how it used special rider money and whether it followed state laws designed to make sure it isn’t giving an unfair advantage to its affiliates.
The Ohio Consumers’ Counsel, which acts as the attorney for residential customers, is fighting to gain access to more Firstenergy documents, including records shared with Federal Energy Regulatory Commission auditors and it wants to question those involved in an audit that was never finished. Firstenergy has opposed these efforts.
Critics say that the PUCO has helped Firstenergy keep its secrets from public view.
The Ohio Consumers’ Counsel has tried to get a copy of the Firstenergy internal report that led to dismissal of key executives in October 2020. The PUCO attorney examiner blocked that request and an appeal to the full PUCO made in September 2021 is still unanswered.
In September 2020, the PUCO said it would conduct a review of Firstenergy’s charitable and political spending. Eighteen months later in March 2022, the commission announced it would hire an auditor to do the review. But the report isn’t due until Dec. 16.
Rob Kelter of the Environmental Law & Policy Center said the PUCO needs to expand its investigation into Firstenergy’s political operations – not just take the company’s word that it is reformed.
“The fundamental problem is the commission has been sitting on the sidelines since the scandal broke,” Kelter said.
While Firstenergy moves on multiple fronts to avoid disclosure, Judge Adams told the company that transparency will be good for the company and the state in the long run.
Adams said: “It is not only the trust of Firstenergy that must be rebuilt. This bribery scheme has undoubtedly shaken whatever trust that Ohioans may have had in the political process used by their elected officials. The public has a right to know how it is that the political process was so easily corrupted.”
Laura Bischoff is a reporter for the USA TODAY Network Ohio Bureau, which serves the Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.