Ohio corruption scandal looms over FirstEnergy rate case

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09-04-2025

This article comes from Canary Media's Ohio Utility Watch newsletter, a monthly update on Ohio's HB6 power plant bailout scandal. Visit our newsletter page to sign up.
Welcome to Ohio Utility Watch, a newsletter tracking Ohio's ongoing public-corruption saga, often referred to as the House Bill 6 or HB 6 scandal. If you're new to the story, it revolves around the use of dark money by utility companies and others to pass roughly $60 million in bribes to secure more than $1.5 billion in ratepayer subsidies for aging, uneconomical coal and nuclear power plants.
Here are some developments from the last few weeks:
The state's consumer advocate wants regulators to reduce FirstEnergy's rate of return to reflect poor management practices that enabled bribes and corruption.
Environmental advocates say FirstEnergy's ratemaking case should consider grid disparities in disadvantaged communities.
Legislation that would remove HB 6's coal plant subsidies is moving full-speed ahead, along with incentives for more in-state power plants.
At a March 13 hearing, former FirstEnergy executives again declined to answer questions, citing their Fifth Amendment rights.
Ohio's state consumer advocate and others say FirstEnergy should be penalized with a lower rate of return in its rate case due to the company's 'egregious violation of laws and norms' in connection with the HB 6 scandal.
The Office of the Ohio Consumers' Counsel filed testimony on March 24 arguing, among other things, that the Public Utilities Commission should cut the company's requested rate of return on capital investments by at least half a percent. All told, the consumers' counsel says Ohio customers should pay FirstEnergy roughly $132 million less for annual distribution charges.
FirstEnergy responded on March 31, arguing the corruption scandal has no bearing on its first ratemaking case since 2007. Although the company expected five years ago that it would need to reduce rates when a new ratemaking process began, it now wants $183 million more per year from Ohio ratepayers.
The company has proposed that it earn a 10.8% rate of return on equity. That income generally functions as a reward to the firm for capital investments. An auditor hired by the commission suggested 9.63% based on its market analysis.
Ashley Brown, a former PUCO commissioner and past executive director of the Harvard Electricity Policy Group, said the company's 'abysmal' management should be a factor, regardless of whether it's also addressed in other regulatory cases.
'I've never seen a better case for arguing performance should play a huge role in determining the rate of return,' Brown said.
Read more:
FirstEnergy asks regulators to raise rates by $183 million. Auditors say $8.5 million (Cleveland.com)
FirstEnergy wants to raise prices following repeal of scandal-tainted legislation (Ohio Capital Journal)
Ohio environmental advocates say FirstEnergy's ratemaking case needs to address grid disparities for disadvantaged communities compared to elsewhere in the company's service area.
The Ohio Environmental Council filed testimony last month criticizing the utility's efforts to maintain and improve infrastructure for lower-income areas. The environmental group's filings include testimony by Shay Banton, a regulatory program engineer and energy justice policy advocate for the Interstate Renewable Energy Council.
'When utilities are requesting a return on investment, I think it's prudent for customers to know why those investments are being made and to make sure those investments are being made in an equitable way,' Banton told Canary Media.
FirstEnergy's March 31 response argued that its ratemaking case is unrelated to the equity issues raised by the Ohio Environmental Council. However, company testimony filed on March 24 talks about various investments to maintain and improve reliability.
Read more:
Lots of demand, too little grid: The state of the US power sector (Canary Media)
Mapping tools help Ohio cities chart course for environmental justice (Canary Media)
Both houses of the General Assembly have passed bills to end HB 6's coal subsidies. Customers have paid roughly $460 million for two 1950s-era coal plants since the law's subsidy mandate began in January 2020, according to the Office of the Ohio Consumers' Counsel. The consumers' counsel also estimates the plants have emitted almost 60 million tons of carbon dioxide, plus other pollutants, since then.
Ohio utilities oppose the bills, especially after lawmakers dropped language that would have let some charges continue as late as 2028. AEP Ohio 'will continue to advocate for a reasonable timeline for transitioning the cost recovery,' along with other changes, said spokesperson Scott Blake.
More broadly, the bills aim to attract new in-state electricity generation, primarily through tax incentives and regulatory changes. The Ohio House and Senate are now considering versions of each other's bills. Changes are likely before either becomes law.
Read more:
Ohio's big utilities fight repeal of scandal-tainted bill riders that cost customers billions of dollars (Energy and Policy Institute)
Ohio House passes bills to ax coal fees, attract new energy to the state (Cincinnati Enquirer)
Ohio lawmakers vote to repeal coal subsidies from scandal-ridden FirstEnergy bill (News 5 Cleveland)
Former FirstEnergy lobbyists and executives again asserted their Fifth Amendment rights and refused to answer questions under oath about issues related to HB 6 during a March 13 hearing at the Public Utilities Commission of Ohio.
Administrative Law Judges Megan Addison and Jacky Werman St. John told lawyers for the Ohio Attorney General to secure a court order for Joel Bailey, Ty Pine, Dennis Chack, and Justin Biltz to answer questions in subsequent depositions, for which Ohio law would grant them immunity from criminal prosecution.
The PUCO first directed the Ohio Attorney General to get judicial orders compelling the testimony in early December. What's different now is the witnesses' lawyers appear inclined to accept a court order and grant of immunity within boundaries to be outlined in that order. The terms are not yet known.
Meanwhile, an evidentiary hearing for three of the HB 6–related regulatory cases is scheduled to start on May 13. One case deals with corporate separation issues that were split off from another evidentiary hearing last year. The other two cases involve riders, including one that was ultimately found unlawful but for which customers paid roughly $450,000.
In a separate proceeding, the Ohio Consumers' Counsel and Northwest Ohio Aggregation Coalition have appealed to the Ohio Supreme Court PUCO's decision to let FirstEnergy revert to a package of added bill charges while its new 'electric security plan' case makes its way through the commission.
Read more:
Six years after bribery scandal, ousted FirstEnergy lobbyists still aren't' talking to the PUCO (Cleveland.com)