Having admitted to participating in the largest energy-involved bribery scandal in Ohio history, provider FirstEnergy Corp., based in Akron, has agreed to pay a $3.9-million fine for withholding lobbying and accounting information from the Federal Energy Regulatory Commission’s enforcement office.
The fine and an admission by the company that it violated FERC's Duty of Candor rule were part of a settlement approved on Dec. 30. In late July 2020, FirstEnergy admitted it was involved in allegations of a racketeering conspiracy related to Ohio House Bill 6, which was signed into law on July 23, 2019 and provided a $1-billion subsidy to keep FirstEnergy’s Davis-Besse and Perry nuclear power plants in Ohio from closing. FirstEnergy was the main contributor that funneled money through a political action committee known as Generation Now that was connected to former Ohio House Speaker Larry Householder. Householder and four others were indicted by the U.S. Attorney for southern Ohio over illegal contributions from Generation Now.
“FirstEnergy has reached a settlement with FERC that fully resolves a previously disclosed investigation into the company’s lobbying and governmental affairs expenditures concerning Ohio’s House Bill 6,” the company said in a statement.
The order also requires FirstEnergy to submit annual compliance monitoring reports for two years.
The settlement stems from an audit by the commission that looked into whether the company had followed its accounting and reporting rules during a period from Jan. 1, 2015 to Sept. 30, 2021.
FERC states it asked FirstEnergy throughout 2019 and early 2020 for information about its lobbying and governmental affairs expenses and accounting and that the company claimed it had responded fully to those requests.
A year later, the U.S. Attorney's office filed a deferred prosecution agreement with FirstEnergy in U.S. District Court in Cincinnati. The company, which was charged with conspiracy to commit honest services fraud, admitted it had paid more than $59 million to Generation Now, the 501(c)(4) organization created by the then-Speaker Householder and his allies. Over $22 million was paid to companies owned by an individual who became the chairman of the Public Utilities Commission of Ohio, including a payment of $4.3 million on or about Jan. 2.
Sam Randazzo, former chairman of the public utilities commission, has not to date been charged with any crime, says Jennifer Thornton, a spokesperson for the U.S. Attorney's Office Southern District of Ohio.
A call to his attorney was not immediately returned.
FirstEnergy also agreed to pay a $230-million fine for its role in bankrolling the bailout of its own nuclear and coal plants. The fraud charge will be dismissed pending FirstEnergy's cooperation under the terms of the deferred prosecution agreement.
Among Householders political allies also charged in the conspiracy are two lobbyists and former Republican Party Chairman Matthew Borges. Only Householder and Borges are fighting the bribery and conspiracy charges. The others have agreed to cooperate with the government.
Householder’s trial is expected to start later this month, Thornton said.
Catherine Turcer, executive director of Common Cause Ohio, says reporting requirements such as FERC's "are essential so that investors and the public can understand how companies are attempting to influence regulations and policy-making."
The fine of $3.9 million "sounds like a lot of money but is not an onerous fine for FirstEnergy and the company executives to learn from their mistakes if they don't face serious consequences," she adds. "We need greater accountability and penalties that are truly meaningful."
FirstEnergy said in a statement that it has taken several actions over the past two years to ensure “a culture of strong ethics, integrity and accountability at the company." These actions include employment consequences for executives and employees who engage in misconduct, hiring new senior leaders, including a chief legal officer, a chief ethics and compliance officer and a vice president of rates and regulatory affairs, and refreshing its board of directors.
The two nuclear plants that were saved by House Bill 6 are still in operation today and are no longer owned by FirstEnergy, which spun them off in the Chapter 11 bankruptcy of its former subsidiary, First Energy Solutions, into a separate company now known as Energy Harbor Corp.