2024-10-11

The Aug. 21 Public Utilities Commission of Ohio ruling in favor of the subsidies to utilities authorized by the state’s HB 6 law showed just how closely the commission’s staff and the companies work together.

In five separate parts of the ruling, the commission cites how “staff and the companies” agreed to either strike testimony challenging the law that justified the ratepayer bailout of the money-losing coal plants examined by auditors, rule against challenges to payments to the companies or to justify above-market fuel costs subsidized by HB 6.

Ohio legislators passed HB 6 in 2019 after officials from FirstEnergy Corp. engineered a $61 million bribery campaign with former Ohio House speaker Larry Householder, who is now serving a 20-year sentence in federal prison. Another conspirator is serving five years in federal prison, while two others indicted in the scandal, lobbyist Neil Clark and former PUCO chairman Sam Randazzo, committed suicide before they could be charged.

HB 6 required PUCO to conduct periodic audits of the law to determine if the payments made to the Ohio Valley Electric Corp. and the consortium of utilities that share ownership of it were reasonable. 

While auditors for London Economics International (LEI) found that OVEC’s two coal-fired plants had higher costs than other plants and that OVEC was overpaying for coal from one of its main suppliers, Resource Fuels, PUCO commissioners ruled that the law’s costs were reasonable.

Following staff’s lead

Commission staffers recommended that testimony by utility analyst John Seryak that called HB 6 a corrupt law that was the result of bribery be stricken from the audit record. In October 2023, Seryak called the riders that paid OVEC’s owners “part and parcel of the corrupt House Bill 6 (HB6), which remains under investigation.”

Multiple court records show that HB 6 was the result of a massive bribery scheme that involved the former PUCO chairman, Randazzo, writing parts of the law to benefit FirstEnergy while Randazzo was supposed to be acting as a neutral energy industry regulator. 

FirstEnergy also paid a $231 million fine and signed a federal deferred prosecution agreement acknowledging the role of its former CEO and his top deputy in the scheme to bribe Householder.

The PUCO ruling only refers to HB 6 by its title in the Ohio code – R.C. 4928.148, which means the casual reader has no sign that the corrupt law is part of the audit case.

Whitewashing excessive coal costs

PUCO staffers and the utilities also agreed to excuse OVEC’s excessive payments for coal from Resource Fuels, whose owner Wayne Boich was one of the first donors to the fund used to bribe Householder.

“Staff argues that, in a prior case concerning Duke’s pre-LGR Rider mechanism, we rejected similar arguments concerning the very same Resource Fuels contract, finding that the differences in prices were attributable to higher quality coal and existing obligations, among other factors,” PUCO ruled.

However, federal records show that the coal OVEC bought from Resource Fuels came from the mine as another OVEC contract, which renders implausible claims that Resource Fuels’ coal was of higher quality.

Checks & Balances Project reported last year that federal contract records show that Resource Fuels made $12.6 million more for the coal it sold OVEC in 2020 than another company, Alliance Coal, made for selling coal from the same mine.

Resource Fuels’ identity was redacted from the original public version of the LEI audit at the request of the utilities, even though records kept by the federal Energy Information Administration showed the company’s name and how much OVEC paid it for coal.

PUCO staff recommended the commission grant a sweeping protective order that hid information in the audit, even though much of that information was already public.

The utilities that share ownership of OVEC, also known as the sponsoring companies, had claimed they needed the order to protect trade secrets. After C&BP sought the names of the staff members who recommended approving the order, PUCO refused to disclose them and claimed no communications existed about the recommendation.

Ray Locker is the executive director for Checks & Balances Project, an investigative watchdog blog holding government officials, lobbyists, and corporate management accountable to the public. Funding for C&BP is provided by Renew American Prosperity and individual donors.

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