FirstEnergy in the spotlight after Larry Householder investigation

When federal prosecutors announced charges Tuesday against Ohio House Speaker Larry Householder and other political operatives in an alleged $60 million bribery scheme, one party was left unnamed.

“Everyone in this room knows who ‘Company A’ is,” U.S. Attorney David DeVillers told reporters at a news conference. “They have not, and no one from that company has of yet been charged, so I will be referring to this as ‘Company A.’ “

The unnamed company is FirstEnergy Corp., and the emerging scandal that is engulfing Capitol Square is tied to the Akron utility’s efforts to secure a billion-dollar bailout of two of its failing nuclear power plants.

An 82-page complaint accuses Company A of bankrolling the bribery scheme that “actively sought a ‘legislative solution’ for its two, affiliated nuclear power plants in Ohio.”

The affidavit details dozens of calls between FirstEnergy’s CEO and Householder related to what became a Statehouse-approved, $1.3 billion bailout for two Ohio nuclear plants owned by FirstEnergy Solutions, a FirstEnergy affilliate later spun off and renamed Energy Harbor when the business emerged from a bankruptcy reorganization in February.

On Tuesday, FirstEnergy Corp. acknowledged that it has received subpoenas in connection with the investigation. “We are reviewing the details of the investigation and we intend to fully cooperate,” it said in a short statement.

Its stock (NYSE: FE) endured a two-day free fall – 17% Tuesday and 35% by Wednesday’s market open, triggering a trading halt. Energy Harbor’s stock (OTCMKTS: ENGH) at one point was down 42% for the week.

FirstEnergy has 10 regulated distribution companies that serve 6 million customers across five states, with 12,000 employees, and is one of Akron’s largest employers. Its nuclear plants employ hundreds. But it has struggled in recent years. FirstEnergy Solutions filed for bankruptcy in 2018, and announced the closure of three nuclear power plants as part of its proposed financial restructuring.

The two plants in Ohio – Perry Nuclear Generating Station and Davis-Besse Nuclear Power Station, both along Lake Erie – became the subject of House Bill 6, a ratepayer-funded bailout to subsidize their continued operation. Once that legislation was passed, the company said the estimated $150 million to $170 million from Ohio ratepayers from 2021 to 2027 will keep them open.

The third plant, Pennsylvania’s Beaver Valley Nuclear Power Station, was slated to shut down next year, but the company reversed that decision after the state changed its energy policy.

The affidavit says that beginning in 2017, FirstEnergy began making regular wire payments of $250,000 to Generation Now, an entity set up by Householder and his allies as a 501(c)4 “social welfare organization.” Such entities don’t have to report donors and Householder used Generation Now to build up a war chest of $2.9 million in “dark money,” prosecutors allege, with none of the money going to social welfare causes and instead funding political activities and campaigns.

The affidavit also says there was “close coordination” between Householder’s enterprise and FirstEnergy during the 2018 primary, when it pumped money into Generation Now to support Householder’s rise to Speaker of the House, followed by more support during primary and general elections to put candidates into other state districts that Householder and his cohorts believed would help him win.

Once Householder was elected Speaker by his peers, Generation Now “transitioned quickly to fulfilling its end of the corrupt bargain with Company A – passing nuclear bailout legislation.” That was House Bill 6, which was introduced in April 2019 and “essentially was created to prevent the shutdown of (FirstEnergy)’s nuclear plants,” the complaint says.

Generation Now’s efforts to pass House Bill 6 and defend it against a ballot initiative challenge “were funded entirely by (FirstEnergy)” with the company donating $9.5 million while the legislation was pending in the House, $7.3 million while pending in the Ohio Senate and another $38 million to defeat the ballot campaign. Generation Now supported advertising and campaign strategy during the contentious fight.

FirstEnergy has a long history of political financial support. Data from the Federal Elections Commission and the Ohio Secretary of State show it has made extensive political contributions to numerous causes statewide. FirstEnergy’s PAC raised $6.32 million from 2015 to June 30 of this year and disbursed $5.3 million.

Those contributions, however, are separate from the under-the-table payments the federal investigation says it made. The PAC contribution numbers don’t implicate any contributor, any recipient, or any employee in the scheme. But DeVillers said the investigation is ongoing and could implicate more people.


About the author: Sarah Thompson

Sarah Thompson is a seasoned cybersecurity analyst with over a decade of experience in deciphering digital threats and vulnerabilities.

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