By John Stang
While its first-quarter financial numbers were up, Akron, Ohio-based FirstEnergy Corp. said Thursday it is discussing a potential deal with the U.S. Attorney’s Office over its role in a $60 million bribery investigation involving the former Ohio Speaker of the House.
To date, neither FirstEnergy nor its current or former top officers have been charged in the probe, which otherwise led to federal charges in 2020 against former Speaker Larry Householder and four allies. However, FirstEnergy president Charles Jones and two other officials were fired last October.
“Discussions have begun with the U.S. Attorney’s Office regarding the resolution of this matter, including the possibility of FirstEnergy entering into a deferred prosecution agreement. As these discussions are preliminary, FirstEnergy cannot currently predict the timing, the outcome, or the impact of a possible resolution of this ongoing investigation,” the corporation said in its quarterly filing Thursday with the U.S. Securities and Exchange Commission
While nothing is certain, “FirstEnergy believes that it is probable that it will incur a loss in connection with the resolution of this investigation. … [that] could have a material adverse effect on FirstEnergy’s reputation, business, financial condition, results of operations, liquidity, or cash flows,” the company said in the earnings report.
In the summer of 2020, then-Ohio House Speaker Householder (R), three lobbyists, and another political operator were charged in federal court for an alleged scheme to funnel and launder $60 million from FirstEnergy to pass House Bill 6 to prevent planned closures by May 2021 of the financially troubled Davis-Besse and Perry nuclear power plants. The plants were owned by a bankrupt FirstEnergy subsidiary FirstEnergy Solutions, which has since become the stand-alone company Energy Harbor.
House Bill 6 set up a $150 million annual subsidy to the two reactors that would have been paid with a rate hike for all Ohio ratepayers, regardless of whether they are FirstEnergy Corp. customers. In late March 2021, the Ohio General Assembly unanimously revoked that subsidy.
So far, two of the five —lobbyist Juan Cespedes and Householder’s campaign and political strategist Jeff Longstreth— have pleaded guilty to the charges. Householder is no longer the speaker of the Ohio House, but his constituents reelected him in November, when he ran unopposed.
Sixteen lawsuits have been filed against FirstEnergy due to this scandal, including one by the Ohio Attorney General, according to Thursday’s SEC filing.
During an earnings call Friday morning, Eileen Mikkelsen, vice president for rates and regulatory affairs said FirstEnergy is informally meeting with many of the litigants and other stakeholders to open lines of communications. “We’re engaged in a listening exercise. … It’s a little early to call what the outcome will be,” Mikkelsen said.
FirstEnergy reported $2.726 billion in revenue for a profit of $335 million for the first quarter of 2021, according to its SEC filing on Thursday. By comparison, it reported $2.709 billion in revenue for a net income of $74 million in the same period in 2020.
In a press release, FirstEnergy president Steven Strah said: “Our solid first quarter results reflect the continued success of our strategies to modernize and enhance our distribution and transmission systems for the benefit of our customers and communities.”
For the second quarter of 2021, FirstEnergy predicts an income of $260 million to $315 million.
