FirstEnergy is proposing to refund $13.6 million to Pennsylvania customers who the company mischarged for payments related to the utility’s bribery schemes in Ohio, as well as advertising, lobbying, sports sponsorships and other expenses that are supposed to be excluded from the rates of publicly regulated utilities.
The utility is proposing the refund as part of a newly filed rate case in which FirstEnergy is seeking to increase the rates paid by its Pennsylvania customers by $502 million, or nearly thirty-seven times the proposed refund. Most residential ratepayers would receive a one-time monthly bill credit for $4 to $6 in January of next year from the refund, while their monthly bills would rise by more than $16 to $21 if FirstEnergy gets its way on the rate hike.
First, the Pennsylvania Public Utilities Commission (PUC) will have to review the rate request. Pennsylvania law requires that the PUC ensure the lowest rates for customers while allowing utilities to recover reasonably incurred expenses and a fair return on investment. Customers can participate in the rate case by filing a complaint, providing comments, or speaking at a public hearing.
FirstEnergy’s assistant comptroller Tracy Ashton and Directors of Rates and Regulatory Affairs for Pennsylvania Joanne Savage described how the proposed $13.6 million refund is the result of a string of criminal investigations and regulatory audits spurred by the utility company’s bribery schemes in Ohio.
“First, following the investigation of Ohio HB 6 activities, FirstEnergy’s Board of Directors discovered and reported that certain costs may have lacked proper documentation or may have been improperly classified or misallocated to FirstEnergy’s distribution utilities, including to FE PA,” Ashton said.
House Bill 6 is the Ohio law at the center of multiplestate and federalcriminal cases. Enacted in 2019, HB 6 provided FirstEnergy and a bankrupt subsidiary with over a billion dollars in since repealed ratepayer bailouts. FirstEnergy has admitted it paid over $64 million in bribes to convicted former Ohio House Speaker Larry Householder and indicted ex-Public Utilities Commission of Ohio Chairman Samuel Randazzo to secure the bailouts, as well other regulatory favors from Randazzo.
At least part of the $13.6 million refund proposed by FirstEnergy stems from “approximately $2.4 million in inappropriate costs” related to the HB 6 schemes flagged earlier by a 2022 audit by the Pennsylvania PUC.
Ashton and Savage explained how a Federal Energy Regulatory Commission audit then led FirstEnergy to identify millions more in mischarges to Pennsylvania customers. FirstEnergy then brought in an outside auditing firm, Craig Energy and Financial Services, which identified still more mischarges. As a result, the refunds owed by FirstEnergy ballooned from $2.4 million to $13.6 million.
Savage broke down the costs that FirstEnergy began to include in Pennsylvania rates during earlier rate cases in 2006, 2014, and 2016:
She then detailed how the mischarges have continued to pile up in rates since 2007 and continue to be paid by customers in 2024, adding up to the $13.6 million total refund proposed by FirstEnergy when interest is applied:
The “Sustainability Funding Alliance” listed in Savage’s exhibit is Randazzo’s consulting firm, to which FirstEnergy secretly paid the $4.3 million shortly before Randazzo’s appointment as PUCO chairman in early 2019 that prosecutors have cited in the bribery charges against Randazzo.
The “Vendor Payments-16 Entities” mentioned by Savage were first flagged by the FERC audit as part of $28.8 million in payments related to the federal criminal investigation in Ohio to “entities associated with an individual identified by FirstEnergy.” Cleveland.com previously reported that the individual is believed to be George, though George denied that he personally received $28 million from anyone. FirstEnergy said it was unable to comment when previously asked by EPI.
FirstEnergy admitted in its 2021 presentation to the PUC that it used money from Pennsylvania customers to cover the cost of some payments to George’s Ohio Outdoor Advertising:
State lawmakers in Maryland, Ohio and Pennsylvania have introduced legislation aimed at preventing publicly regulated utilities from forcing customers to pay for corporate lobbying and political spending. Similar legislation has also been introduced in at least seven other states this year, and passed in Colorado, Connecticut and Maine in 2023.
