FirstEnergy improperly used money collected from customers in five states to pay for expenses connected to the ongoing corruption scandal in Ohio, the company has confirmed.
The money was collected from customers of FirstEnergy’s regulated distribution and transmission utilities in Maryland, New Jersey, Ohio, Pennsylvania, and West Virginia, according to statements found in annual Form 1 reports the utilities recently filed this month with the Federal Energy Regulatory Commission.
FirstEnergy first disclosed in February that its internal investigation related to the federal racketeering case against former Ohio House speaker Larry Householder had:
… identified certain transactions, which, in some instances, extended back ten years or more, including vendor services, that were either improperly classified, misallocated to certain of the Utilities and Transmission Companies, or lacked proper supporting documentation. These transactions resulted in amounts collected from customers that were immaterial to FirstEnergy, and the Utilities and Transmission Companies will be working with the appropriate regulatory agencies to address these amounts.
The Energy and Policy Institute found similar statements in annual Form 1 reports for 2020 filed with FERC by fourteen FirstEnergy distribution and transmission utilities earlier this month; the statements indicated that the money was collected from customers of all thirteen subsidiaries.
… in connection with the internal investigation, FirstEnergy recently identified certain transactions, which, in some instances, extended back ten or more years, including vendor service, that were either improperly classified, misallocated to certain FirstEnergy utility and transmission companies, or lacked proper supporting documentation. These transactions resulted in amounts collected from customers that were immaterial to FirstEnergy and JCP&L. These utility and transmission companies will be working with the appropriate regulatory agencies to address these amounts.
The Energy and Policy Institute asked Jennifer Young, a spokesperson for FirstEnergy, to confirm that the money was collected from customers of the distribution and transmission utilities that included those statements in their Form 1s.
“Your interpretation of the disclosure is correct,” Young responded in an email.
Exactly how much money was improperly collected from customers remains a closely guarded secret, but some details have trickled out of FirstEnergy and more may be on the way.
Company officials said on an earnings call in February that the “transactions” included a $4.3 million payment to an individual who fit the description of former Public Utilities Commission of Ohio chairman Samuel Randazzo, who resigned last year after the FBI raided his townhouse in Columbus. The transactions “could” have also included money spent on lobbying and political efforts, company officials said on the call.
Generation Now is one of three defendants that have pleaded guilty to racketeering conspiracy charges in the Householder case, in connection with a $60 million bribery scheme that resulted in a $1 billion nuclear power plant bailout included in Ohio’s 2019 energy law House Bill 6, as well as coal bailouts and a gutting of clean energy laws.
FirstEnergy disclosed today in a quarterly financial report that it is discussing the possibility of a deferred prosecution agreement with federal prosecutors. The company also said that it “believes it is probable that it will incur a loss in connection with the investigation.”
