Ohio HB 6 Updates: FirstEnergy riders approved, with changes

FirstEnergy's headquarters in Akron. (Photo from Google Maps.)

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Regulators cut most of FirstEnergy’s energy efficiency proposal when they modified and approved the company’s latest rider plan on May 15. The plan would have been the first time FirstEnergy offered energy efficiency programs to most residential ratepayers after 2019, when lawmakers passed House Bill 6. The nuclear and coal bailout law at the heart of Ohio’s ongoing corruption scandal gutted the state’s energy efficiency and renewable energy standards.

Other new developments include:

• Ohio regulators’ approvals also include an extension and increases to one of the riders at issue in cases linked to HB 6.

• FirstEnergy must produce its internal investigation about the HB 6 corruption scandal to plaintiffs in shareholder cases, a federal court ruled. Yet the company still won’t give the reports to the Ohio Consumers’ Counsel and others in cases before the Public Utilities Commission of Ohio.

• Recently produced documents revealed more information about money flowing from FirstEnergy to dark money groups that supported Gov. Mike DeWine and Ohio Senate President Matt Huffman.

• State criminal cases against two former FirstEnergy executives are moving ahead, while government briefs are expected soon in the federal court appeals for former Ohio House speaker Larry Householder and lobbyist Matt Borges.

Efficiency proposal limited

Ever since the state’s infamous 2019 energy law gutted utility-run energy efficiency programs, Ohioans have been on their own when it comes to finding ways to conserve energy.

In a significant test of state regulators’ interpretation of that law, FirstEnergy recently proposed collecting money from ratepayers for a portfolio of energy efficiency programs, including rebates, energy audits, and educational campaigns to help residential and some business customers lower their energy use and monthly bills.

The Public Utilities Commission of Ohio last week mostly rejected the proposal, approving education programs plus financial incentives for low-income customers. Yet the order also concluded that HB 6 does not prohibit utilities from voluntarily offering such programs — a reversal from its position in a 2020 Duke Energy case under former PUCO chair Sam Randazzo.

“[T]he repeal eliminated the mandate that utilities run energy efficiency programs,” the May 15 order says, “leaving intact other important statutory provisions that allow for voluntary programming, if approved by the Commission.”

Energy efficiency programs can save money on customers’ energy bills because it reduces the need for electricity. The need for less electricity also cuts greenhouse gas emissions that drive human-caused climate change. And lower demand reduces strain on the electric grid, which can bolster resilience and reduce capacity market costs.

Nonetheless, the regulators accepted arguments by the Office of the Ohio Consumers’ Counsel, the Retail Energy Supply Association and others that FirstEnergy’s broad program isn’t needed because competitive markets offer opportunities for energy efficiency. The Environmental Law & Policy Center, Ohio Environmental Council and Citizens Utility Board of Ohio had argued that utility-sponsored programs are cost-effective and allow for hassle-free energy savings.

Supporters hope a bipartisan bill to allow utility-run energy efficiency programs on a broader, voluntary basis will soon be back on track and get a vote by the full Ohio House of Representatives. Last-minute objections by a Koch-linked group delayed a vote last fall.

Read more:

• How a Koch-linked group stalled a bipartisan Ohio energy efficiency bill at the last minute (Energy News Network)

• Ohio ratemaking reform bill would give more favors to utilities, critics say (Energy News Network)

Rider renewed

The PUCO’s other rider approvals with changes include a charge for called a  Delivery Capital Recovery rider. The charge is meant to spur the utility to make capital investments in its infrastructure beyond charges that are already covered in its regular distribution rates. The PUCO’s modifications exclude charges for equipment which isn’t in service yet. Regulators also limited charges to particular categories used for federal regulatory reporting.

The ruling approves higher caps for annual increases. At the same time, the order also states charges for the DCR rider will be set back to zero once FirstEnergy’s new distribution rates take effect. The commission can consider the rider on “a more holistic basis,” the 163-page order said.

Earlier years’ charges for the DCR rider are at issue in one of the PUCO’s four HB 6-linked cases. The PUCO’s May 15 order refused to hold off on new charges until that case is resolved.

A 2021 audit report in that case found roughly a quarter of the DCR rider charges for earlier years were improper. Those charges include some linked to Cleveland entrepreneur Tony George, whose name came up multiple times in exhibits introduced at last year’s criminal trial of former Ohio House Speaker Larry Householder and lobbyist Matt Borges.

It’s unclear yet whether any parties to the newer rider case will ask for rehearing or file an eventual appeal.

Read more:

• New FirstEnergy rate plan starts June 1. How are customers affected? (Akron Beacon Journal)

New rate case

FirstEnergy plans to apply for new distribution rates on May 31, said spokesperson Lauren Siburkis. Standard rates for households using 1,000 kilowatts per month could increase nearly $6 for customers served by FirstEnergy’s Cleveland Electric Illuminating Company, according to a May 1 filing. Projected increases would be lower for customers in the Ohio Edison and Toledo Edison territories.

The company’s last full rate case was in 2007. The new case results from a PUCO order issued soon after Randazzo’s connections to the HB 6 scandal became public and he resigned from the agency in late 2020. A 2019 order while he was still chair would have let FirstEnergy avoid filing a rate case by any certain date.

Pending legislation calls for utilities to file full rate cases at least once every five years. Yet the House and Senate bills would still let utilities add extra charges between rate cases, while limiting fact-finding in matters before the PUCO. Other provisions in HB 260 cut back on requirements for notices about rate cases and could more generally limit groups’ ability to participate in those proceedings.

Read more:

• Ohio ratemaking reform bill would give more favors to utilities, critics say (Energy News Network)

What did the investigation find?

FirstEnergy should produce its internal investigation to plaintiffs in shareholder litigation, U.S. District Court Judge Algenon Marbley held on May 6. FirstEnergy hadn’t met its burden to show the two reports were protected by either attorney-client privilege or a doctrine to protect attorneys’ work product. The judge also agreed there was a substantial business reason for the reports, which weighs against a finding of privilege.

The Office of the Ohio Consumers’ Counsel has since repeated its request for FirstEnergy to produce the internal investigation in pending regulatory cases. The company refused, based on a PUCO ruling from three years ago. A hearing officer refused to allow a mid-case appeal of that ruling to the full PUCO on April 25.

“It is disappointing (but not surprising) that FirstEnergy continues its lawyered-up efforts to block public scrutiny of information that could provide much needed answers to consumers about the HB 6 scandal,” said spokesperson Merrilee Embs at the Office of the Ohio Consumers’ Counsel.

Read more:

• Judge rules FirstEnergy must share HB 6 probe OCC has been pushing to gain access for years (Akron Beacon Journal)

More dark money

Recently produced documents continue to shed light on FirstEnergy’s spending on dark money groups, consultants and more. Materials produced to Floodlight, the USA TODAY Network Ohio Bureau, the Ohio Capital Journal and the Energy News Network show an additional $2.5 million went from FirstEnergy to dark money groups that supported Gov. Mike DeWine.

DeWine’s office has denied knowing about the donations. The funding was in addition to more than $1 million of spending reported back in 2021.

Other recently produced documents show $300,000 went from FirstEnergy to a dark money group called Liberty Ohio in 2019 and 2020, Cleveland.com reported. Emails and text messages suggest the payments were meant to help Ohio Senate President Matt Huffman, who denied knowledge about the funding. As Senate President, Huffman has substantial control over which bills make it to the floor for a full vote.

Additional materials suggest some bills submitted to FirstEnergy in 2018 for a company called Jobob, Inc. were meant to secure payments for Dennis Kucinich, Cleveland.com reported. The time period coincides with when FirstEnergy was making separate payments through dark money groups to entities controlled by Householder.

Kucinich, a former Cleveland mayor and congressional representative, had recently lost a bid for the Democratic gubernatorial nomination. Earlier this year, he broke with his former party, attended the Conservative Political Action Conference and is now running as an independent congressional candidate. Kucinich has denied any financial relationship with FirstEnergy, including statements in a lawsuit against the Plain Dealer and Cleveland.com.

The invoices purport to be for consulting on blockchain technology. FirstEnergy spokesperson Jennifer Young said she could not comment on past consulting contracts due to ongoing litigation.

Read more:

• FirstEnergy gave $2.5M to GOP governors’ dark money group backing DeWine’s 2018 bid (Columbus Dispatch)

• Ohio Gov. DeWine said he didn’t know of millions in FirstEnergy support. Is it plausible? (Ohio Capital Journal)

• FirstEnergy was billed $5,000 a month for bitcoin consulting that emails say came from Dennis Kucinich (Cleveland.com)

• FirstEnergy paid $2.5 million secret payment to nonprofit backing DeWine in 2018, new records show (Cleveland.com)

• Huffman denies raising dark money, despite claims from FirstEnergy lobbyists (Cleveland.com)

Criminal case updates

The federal government’s briefs in Householder’s and Borge’s appeals are currently due May 28 and May 22, respectively, unless further extensions are granted.

Householder’s arraignment on state court charges has been postponed until May 23. Technical glitches prevented Householder, who is at a federal prison in eastern Ohio, from participating remotely on May 13 to hear the charges against him and enter a plea.

The state’s other criminal case is also moving ahead against former FirstEnergy executives Chuck Jones and Michael Dowling, despite co-defendant Randazzo’s death last month.

State prosecutors have opposed Jones and Dowling’s motion to find that FirstEnergy was not a victim of their alleged crimes. In addition to its May 2 brief, a May 10 filing provided additional details about their alleged theft from FirstEnergy.

Lawyers from the office of Ohio Attorney General David Yost are working with local prosecutors on the case. Yost had been identified as a possible government witness in the criminal case against Householder and Borges last year.

Read more: Ohio AG Yost is prosecuting others in utility scandal, but he won’t discuss his own involvement(Ohio Capital Journal)

This article first appeared on Energy News Network and is republished here under a Creative Commons license.

The post Ohio HB 6 Updates: FirstEnergy riders approved, with changes appeared first on Ohio Capital Journal.