OH AG Files 2nd Lawsuit to Block FirstEnergy $150M Nuke Payments

We have a couple of important updates in the neverending saga of the biggest corruption scandal ever to hit Ohio. In July, then-Ohio House Speaker Larry Householder and four of his associates were indicted for felonies related to an alleged $60 million bribery scandal in passing the hugely unpopular House Bill 6 (see FirstEnergy Involved in Bribery Scheme to Pass $1B Nuke Bailout Law). Ohio’s Attorney General, Dave Yost, has just filed a second lawsuit to stop the collection of money from ratepayers that funds $150 million annual payments to FirstEnergy provided for under HB 6. We also have news about a potential sixth person being investigated for involvement in the scandal.

HB 6 gives Energy Harbor, a FirstEnergy subsidiary, $150 million per year for seven years ($1.1 billion) in ratepayer funds to prop up the company’s uneconomic nuclear power plants. Natural gas-fired electric power plants can’t compete with this huge (unfair) subsidy to a direct competitor, so a number of gas plants scheduled to get built got canceled. HB 6 harms the Utica Shale industry–directly (see Ohio Nuke Bailout Law Means Fewer Natgas-Fired Electric Plant).

In August, Yost filed a lawsuit to block payments to Energy Harbor (FirstEnergy), a lawsuit that hasn’t (so far) panned out (see Ohio AG Asks Court to Stop Payments to FirstEnergy Nuke Plants). In September Yost filed racketeering charges against Householder and the others involved, including an indictment of FirstEnergy (see Ohio AG Files Charges Against FirstEnergy in Nuke Bribery Case).

Earlier this month two of Ohio’s three largest cities also sued FirstEnergy over the scandal (see FirstEnergy Fires CEO, OH Cities Sue to Block Nuke Bailout Pymts).

Now Yost has filed a second lawsuit–this one aimed at stopping the collection of $2.35 tacked on to every single ratepayer’s bill every single month across the state. The fee raises that $150 million each year which is then forked over to FirstEnergy.

There are only a few weeks until Ohio’s controversial nuclear bailout law is set to add new charges to residents’ electric bills. With no repeal yet of HB6, Ohio Attorney General Dave Yost has filed a second lawsuit seeking to stop those rate increases.

Yost’s suit seeks to immediately stop the collection of $2.35 in monthly charges on all Ohio electric bills. Those charges would start January 1 and total $150 million a year statewide – with the money bound for Ohio’s two nuclear power plants, as well as coal and solar subsidies.

A lawsuit Yost filed in September sought to stop the money from going to Energy Harbor, the former FirstEnergy subsidiary that now owns the nuclear plants. However, even if the suit were successful, it would not prevent the charges from being collected in the first place.

FirstEnergy said at the time it would “vigorously” defend itself and that the case had no merit.

The cities of Columbus and Cincinnati have filed a civil lawsuit to halt the bailout fee and strike down HB6, claiming that the law is an unconstitutional lending of state credit to a private enterprise.

There are currently four bills under consideration at the Ohio Statehouse that would repeal HB6. Three would seek a full repeal, while the fourth would eliminate the ratepayer subsidies but retain the law’s cuts to renewable energy standards and elimination of energy efficiency standards.

Federal investigators say HB6 became law as part of a $61 million bribery scheme involving Republican former House Speaker Larry Householder, four associates, the dark money group Generation Now, and a utility believed to be FirstEnergy. Two people have so far pleaded guilty to the racketeering charges.

While FirstEnergy is not charged yet in the federal case and has defended itself against any allegations of misconduct, several executives – including CEO Chuck Jones – have been fired for violating company policy. (1)

We also spotted an article about FBI agents raiding the home of Sam Randazzo, chairman of the Public Utilities Commission of Ohio, the state’s top utilities regulator. Randazzo has ties to FirstEnergy, ergo there is speculation the raid is somehow related to the scandal. Time will tell.

FBI agents removed boxes of materials Monday from the Columbus home of Sam Randazzo, chairman of the Public Utilities Commission of Ohio, the state’s top utilities regulator.

What they were after wasn’t immediately clear.

Randazzo, who was appointed PUCO chairman by Gov. Mike DeWine in 2019, has connections to Akron-based FirstEnergy, the power company at the heart of the state’s nuclear bailout scandal.

Agents could be seen carrying boxes out of the condominium in the 600 block of Grant Avenue in German Village, which is owned by Randazzo, according to Franklin County auditor records.

“FBI agents are conducting court-authorized law enforcement activity in that area in relation to a sealed federal search warrant,” FBI spokesman Todd Lindgren said. “Due to this matter being sealed, no further details can be released at this time.”

“We are aware of the search warrant,” DeWine spokesman Dan Tierney said. “We are monitoring this as it progresses.”

The PUCO declined comment. The regulatory agency recently initiated an audit of FirstEnergy.

Before leading the commission, Randazzo was a lobbyist and an attorney for energy companies and Industrial Energy Users-Ohio, which represents some of the state’s largest industries.

Randazzo’s company, Sustainability Funding Alliance of Ohio, was listed as a company used by former FirstEnergy subsidiary FirstEnergy Solutions, now called Energy Harbor, on the company’s December 2018 bankruptcy report.

Randazzo testified in the Ohio House in May 2019 as an interested party on House Bill 6, the legislation that passed that summer that bails out the state’s two nuclear power plants, shores up two coal-fired power plants and guts requirements for energy efficiency and renewable energy.

Randazzo’s testimony focused on the history of Ohio’s energy mandates, including a requirement that 25% of electricity in Ohio come from renewable sources by 2025.

He was critical of the renewable energy requirement, saying it isn’t reflective of today’s reality where cheap, abundant supplies of natural gas have resulted in big changes in Ohio’s energy market. Randazzo has previously made negative comments about renewable energy.

HB6 imposed an 85-cent monthly fee on electric utility customers to bail out the state’s two nuclear power plants owned by Energy Harbor. The fee goes into effect in 2021, although legislators are debating bills that would repeal the bailout after the scandal blew up this summer.

The fee will raise about $150 million a year for the plants, or nearly $1 billion over the life of the bailout.

In July, then-House Speaker Larry Householder, former Ohio Republican Party leader Matt Borges, political strategist Jeff Longstreth and two lobbyists, Neil Clark and Juan Cespedes, were arrested and later indicted as part of a $61 million bribery and racketeering scandal to get HB6 passed and then block an effort to put the issue on a state ballot. Longstreth and Cespedes pleaded guilty shortly before the election.

Last month, Akron-based FirstEnergy fired its CEO and two other executives after a review by an independent committee of the company’s board found the executives violated FirstEnergy policies and code of conduct.

Recently, a group called the Ohio Consumers Power Alliance, which describes itself as an advocate for renewable energy, created a campaign to push for Randazzo’s removal as PUCO chairman, citing his longstanding opposition to renewable energy. (2)

(1) Columbus (OH) WOSU PBS (Nov 16, 2020) – Ohio Attorney General Sues To Stop New Charges For Nuclear Bailout

(2) Cincinnati (OH) Enquirer (Nov 17, 2020) – FBI searches home of Ohio’s top utilities regulator