An audit of FirstEnergy Corp.’s additional charges to Ohio customers from 2017 to 2019 could not confirm that the money was used to improve the state’s power grid, as intended.
Nor could the audit prove that the money went to bribe the Ohio House’s former speaker and other state lawmakers, who rammed a controversial nuclear-related bill through the state general assembly in 2019.
All the audit, released Jan. 14, could confirm is that FirstEnergy Corp. employees and employees of three subsidiaries did not know they were supposed to route roughly $400 million toward grid improvements. Consequently, they did not adequately track the money internally and the money ended up in a general pool, according to the audit by Daymark Energy Advisors.
“Once funds enter the money pool, they lose their identity and can no longer be traced back to any specific rider or tied to specific spending,” the audit report said.
From January 2017 to July 2019, the Public Utilities Commission of Ohio allowed three subsidiaries of FirstEnergy — Cleveland Electric Illuminating Company, Ohio Edison and Toledo Edison — to charge customers extra for the grid improvements. The extra charges were called the “Distribution Modernization Rider.”
FirstEnergy and its subsidiaries were allowed to collect at least $168 million annually with the Distribution Modernization Rider. Neither PUCO nor FirstEnergy had a definition written down for a Distribution Modernization Rider, the audit report said. FirstEnergy’s subsidiaries had no significant capital expenditures that could be linked to improving the power grid.
In a written statement, FirstEnergy said: “We continue to review the audit report. We believe we have followed the rules established by the PUCO regarding the Distribution Modernization Rider (Rider DMR) implementation. While we respectfully disagree with some of the conclusions in the report, we intend to address our concerns when we file comments with the PUCO in this matter.”
The Office of the Ohio Consumers’ Counsel, which is the Ohio government’s utility residential customers’ watchdog, requested the audit in late 2020.
In 2019, the U.S. justice department charged former Ohio House Speaker Larry Householder (R) and four power-broker and lobbyist allies with masterminding $60 million in bribes and illegal contributions to elect Householder as House speaker and to pass House Bill 6, which raised customers’ monthly electric bills, and to provide $150 million in annual subsidiaries to keep the financially struggling Davis-Besse and Perry reactors afloat.
First Energy has paid hundreds of millions of dollars in fines in connection with the scandal.
Later the Ohio House expelled Householder and rescinded House Bill 6.Two of Householder’s associates have pleaded guilty to the charges. Householder and one other maintain their innocence. A fifth killed himself.
