As Legislators Prop Up Uncompetitive Utilities, Ratepayers are Forced To Pick Up the Tab
Details about the extent of Ohio’s bribery scandal and the weak oversight laws that enabled it continue to emerge, bringing into sharper focus how powerful politicians and lobbyists have worked together to enrich politically generous utilities and stick unwitting customers with the tab.
Below we give details of some of the most important new developments.
A Dayton Daily News report showing that a nonprofit funded by Columbus-based American Electric Power (AEP) gave $700,000 over three years to Generation Now, a dark money group involved in what the FBI has called the largest corruption case in Ohio history.
Using IRS documents, reporter Laura Bischoff showed that the nonprofit affiliated with AEP, Empowering Ohio’s Economy Inc., donated $550,000 in 2019, $50,000 in 2018 and $100,000 in 2017 to Generation Now, which federal prosecutors allege was the primary vehicle for funneling bribes to former Ohio House Speaker Larry Householder. Empowering Ohio’s Economy also gave $200,000 to the Coalition for Growth & Opportunity, another nonprofit group linked to the federal case.
The amount contributed by AEP is much larger than previously reported and prompted energy lawyer and Empowering Ohio Board member J.B. Hadden to say, “Obviously, knowing what we know now, we wouldn’t have made the donations.”
In July, the FBI indicted Householder, four lobbyists, and Generation Now in connection to an alleged $60 million bribery scheme to pass House Bill 6, a bill to provide FirstEnergy’s anti-competitive nuclear power plants with a $1.3 billion bailout and protect the bill from being repealed by voters.
Empowering Ohio gave an additional $200,000 to the Kentucky-based Coalition for Growth & Opportunity, another dark money group that supported the 2018 Ohio House campaigns of candidates who helped Householder become Speaker. In 2018, it gave $200,000 to the Capitol Square Foundation; $300,000 to Ohio Works; $50,000 to Rule of Law Defense Fund which The Columbus Dispatch said provides a national forum for Republican state attorneys general to discuss policy; and $25,000 to the Ohio governor’s residence and office.
Like FirstEnergy, AEP supported HB 6. Along with forcing customers to subsidize FirstEnergy’s anti-competitive nuclear plants, the bill extended monthly surcharges earmarked for coal-fired power plants owned by the Ohio Valley Electricity Corp. OVEC’s owners include AEP, Duke and Dayton Power & Light. For nearly a decade, OVEC’s two 1950s-era coal-fired power plants have been selling electricity for less than it costs to generate it. Ohioans have been forced to pay more than $150 million in subsidies to the plants – including one in Indiana.
Let’s do the math: FirstEnergy paid MILLIONS for a $1.3 billion ratepayer bailout. AEP paid $900,000 for millions in subsidies for their dirty coal plants. And everybody who pays an electric bill is forced to foot the bill.
In addition to Hadden, Empowering Ohio’s Economy is run by a board that includes former Dayton area congressman Dave Hobson, former Ohio House speaker JoAnn Davidson and AEP’s top lobbyist Tom Froehle.
Hadden told reporters that Empowering Ohio was not aware the money was used to help advance the alleged bribery scheme. It is unclear what Hobson and Davidson knew. Neither has commented. Hadden showed the Dispatch paperwork stating that the money was not to be used “in furtherance of any political or campaign intervention activities” but the Dispatch said its biggest expenditure – $750,000 – went to the host committee of the Republican National Convention in Cleveland in 2016.
Also in the news are new questions about Ohio’s system of selecting people to serve on the Public Utilities Commission of Ohio and growing concerns over the outsized influence the utility and fossil fuel interests have on the commission, reported Kathiann Kowalski at Energy News Network.
The questions and concerns follow the abrupt resignation of Sam Randazzo as chair of the five-member panel tasked with helping decide who pays how much for gas, electricity, and phone service. His resignation came just days after the FBI conducted an early morning search of his Columbus condo and less than a day after FirstEnergy revealed in a U.S. Securities and Exchange Commission filing that it paid $4 million in early 2019 to end a six-year consulting contract with a company believed to be linked to Randazzo.
The PUCO will soon have two vacancies because the term of a sitting commissioner is about to end.
Common Cause Ohio has been holding forums with experts who are suggesting a package of reforms – including for lobbyists and the PUCO. Although the recommendations are not complete, Common Cause Executive Director Catherine Turcer asked all commissioners to voluntarily disclose all work done with utilities, consultants and lobbyists – including the specific payments received and the nature of the work performed. Commissioners are not required to provide the information under today’s disclosure laws.
“Only through extraordinary circumstances did the public learn of the extent of Mr. Randazzo’s ties to the industry he has been charged with regulating,’’ Turcer wrote in her letter to the commissioners. His departure, and the circumstances surrounding it, threaten to undermine the public’s faith in the commission’s important work, Turcer said.
No commissioner has responded to her request.
Under Ohio law, the governor appoints PUCO members from applicants recommended by a nominating council.
The same week Common Cause called for PUCO commissioners to disclose the extent of their utility ties, the chair of the nominating council came under fire for his utility ties.
“It’s crazy that Gov. DeWine is represented on the PUCO Nominating Council by Mike Koren, who has lobbied for FirstEnergy,” said Dave Anderson, policy and communications manager for the Energy & Policy Institute. “Plus, [council member] Mark Totman works for a union that gave money to Generation Now,’’ the group indicted alongside former Speaker Householder.
In a similar vein, Michael Watkins, who chairs the Ohio Consumers’ Counsel Governing Board, asked Koren to hold a special meeting of the nominating council to consider “if events related to tainted House Bill 6 warrant any changes for the Council, including changes in its chairpersonship.” The Consumers’ Council is a state entity that fights for residential utility customers and has seen its budget and duties whittled down by pro-utility legislators.
Koren declined. Instead, his response noted that he was unanimously selected as council chair “for the calendar year 2020” and would continue in that role as the council interviews and recommends possible Randazzo successors. Randazzo is a past member of the nominating council.
A prior story by the Associated Press revealed that Randazzo postponed his retirement and applied for a slot on the commission at the urging of Lt. Gov. Jon Husted and DeWine Chief of Staff Laurel Dawson.
Despite the high-profile scandal, two guilty pleas, Randazzo’s resignation, and a chorus of calls for repeal of the bailout bill, it remains on the books.
A key Republican member of the Ohio House has introduced a bill that would delay $150 million in annual subsidies from flowing to the two Ohio nuclear plants. The measure would tie the subsidies to an annual third-party audit, hired by the PUCO.