Political Contributions, Super PACs and Political Campaign Donations
Has FirstEnergy Corp. learned anything from its nuclear energy scandal and criminal probe? Prosecutors say that if the company fully cooperates then it will drop the charges against it in three years. But the utility is still giving millions to lobby lawmakers — a bit cringeworthy, given the events.
It’s legal. But the company’s chief executive since March, Steven Strah, has said that FirstEnergy
FirstEnergy is sticking to “the way they did business 50 years ago,“ said Ashley Brown, a former Ohio public utilities commissioner, who now leads the Harvard Electricity Policy Group. “That’s part of why they’re just a lobbying firm with a utility sideline.”
Brown’s comments appeared in a story by Eye on Ohio, which joined with Energy News Network in the endeavor. Eye on Ohio is a division of the Ohio Center for Journalism.
In a deferred prosecution agreement reached over the summer between FirstEnergy and federal prosecutors, the utility admitted that it conspired with and subsequently bribed public officials: $60 million, which was used to secure a $1.3 billion bailout package for its nuclear units and to also help defeat a voter initiative that would have thrown out that law.
The company was penalized $230 million — money to be split equally between the federal and state government. In Ohio, it will be used to help low-income citizens pay their utility bills. It is the largest fine ever imposed by the U.S. Attorney’s Office for the Southern District of Ohio. But it is a pittance when compared to the earnings it brought in last year: $1.1 billion. For that reason, the company’s stock has a 52-week range of between $26 and its current high of $39 a share.
Prosecutors said that they wanted the penalty to “sting” but they did not want to disrupt the company’s business. They filed one charge: conspiracy to commit honest services and wire fraud, which will be dismissed if FirstEnergy continues to cooperate.
“Our activity in this space will be much more limited than it has been in the past, with closer alignment to our strategic goals and with additional oversight and significantly more robust disclosure,” says CEO Strah, before investors. “These efforts, together with enhanced policies and procedures, will help to bring additional clarity around appropriate behaviors at FirstEnergy.”
A New Track
Steam rises out of the nuclear plant on Three Mile Island, with the operational plant run by Exelon ... [+]
The bargain between prosecutors and the utility examines how FirstEnergy took monies from its regulated units and then paid off public officials. Former Ohio House Speaker Larry Householder has already been charged. Former Ohio Public Utilities Commission Chairman Sam Randazzo has resigned his position. The power company used a dark money group called Generation Now to hide its efforts. A lobbyist has pleaded guilty along with a staffer for Householder, who set up the shady organization to receive the dirty money.
Subsequent to this criminal settlement, Ohio’s Attorney General Dave Yost added FirstEnergy’s former CEO Charles Jones to a list of defendants his office is suing. (Prosecutors would not comment on whether Jones is also in criminal trouble.) The civil complaint also includes ex-FirstEnergy senior vice president Michael Dowling and Sam Randazzo.
The “corruption was more cancerous than previously thought––necessitating adding additional defendants and giving rise to additional claims,” the lawsuit says. Ohio’s legislature, meantime, has revoked the $1.3 billion bailout.
According to data from Sustainalytics — now owned by Morningstar
FirstEnergy has pledged carbon neutrality by 2050. It has also set an interim goal for a 30% reduction in greenhouse gases by 2030, based on 2019 levels.
“So far, we think the new management team has taken the right steps to move past the Ohio bribery scandal,” says Morningstar’s Andrew Bischof. “We expect the company to invest nearly $15 billion of capital through 2025, supporting our 5% annual earnings growth rate” — paid for in part by selling a stake in FirstEnergy Transmission to infrastructure investors Brookfield.
Ohio’s lawmakers, like those from Connecticut, Illinois, New York, and New Jersey, voted to save their nuclear power plants not just because they are reliable and clean but also because they employ thousands of people. In Ohio, the $1.3 billion bailout package was intended to help the nuclear subsidiary FirstEnergy Solutions, now known as Energy Harbor.
FirstEnergy has a First Amendment right to petition its government. Under the circumstances, this year’s contributions might be ill-timed. But the utility’s new CEO, Steven Strah, says that the company is now on the right track — one that leads to “integrity and transparency.”
Editor’s Note: FirstEnergy response to the story is below.
Good morning, Ken.
I’d like to clarify some facts and request an update to the story “Paying Bribes Got FirstEnergy In Trouble, But It Is Still Making Political Donations — And Amends.” The article contains a number of incorrect or misleading statements, particularly regarding “campaign” spending and ownership of nuclear and fossil plants.
The $1.5 million cited in your article and in the piece from Eye on Ohio represent a variety of items, including salaries for FirstEnergy employees that are registered lobbyists, leases for company offices in Washington, expenditures for outside firms and travel. Our quote conveying that fact did appear from the company in the Eye on Ohio story, though the information was presented in a misleading way in that article as well. We’ve not made political contributions this year. To state that the money was campaign spending is simply false.
With regard to plants, references to “its nuclear plants” are misleading since FirstEnergy Corp. does not own the nuclear units, nor would it have received any funding for the nuclear plants under HB 6. The plants are owned and operated by Energy Harbor, which is completely separate and unaffiliated with FirstEnergy. While Energy Harbor was previously known as FirstEnergy Solutions, a formersubsidiary of FirstEnergy Corp., the separation of the two companies began in late 2016 when FirstEnergy Solutions elected its own, independent board of directors. The companies were separated financially when FirstEnergy Solutions – not FirstEnergy Corp. – filed for bankruptcy, and the separation was fully completed in early 2020 when FirstEnergy Solutions emerged from bankruptcy as Energy Harbor.
The fossil plants referenced in the article also are Energy Harbor plants and not affiliated with FirstEnergy Corp.
We are always happy to answer questions regarding FirstEnergy Corp. if you reach out.
Best regards,
Jennifer Young
Mgr, External Communications
Reporter’s questions:
— What are the lobbyists paid to do?
— Do they try and influence public policy?
— Are the officeholders influenced by previous donations?
— If the contributions are in line with the last 10 years, what does that say about lobbyists’ salaries, office expenses, and so forth in year’s past? What is their job if it is not to influence lawmakers and legislators? Is there any money left over to donate?
— If the nuclear units are not part of the parent company — they once were — why agree to a deferred prosecution agreement acknowledging FE’s role in the scandal? How does FE benefit from the survival of these nuclear plants?
— Is FE trying to “walk back” its culpability? If not, please state exactly what you told federal prosecutors about the company’s involvement in the scandal?
