FirstEnergy audit report now available

PUCO

COLUMBUS – A third-party audit report examining FirstEnergy’s Ohio utilities’ rates related to the political and charitable spending in connection to House Bill 6 during the 133rd General Assembly is now available.

This audit report is a part of the PUCO’s four ongoing proceedings to investigate issues related to FirstEnergy and the passage of House Bill 6 during the 133rd General Assembly.

The audit, performed by Marcum, LLP, examined 53 payments totaling $75,324,603 made in support of the passage of HB 6 and subsequent referendum efforts, as well as lobbying and charitable expenses.

• According to the audit, House Bill 6 introduced, among other things: a nuclear generation fund financed by Ohio ratepayers that would have provided more than $1.0 billion in subsidies for FirstEnergy’s Ohio nuclear power plants and a “decoupling” provision that allowed the Ohio Companies to receive a fixed amount of distribution- related revenue from residential and commercial customers based on the 2018 collection period, which was a year of high electricity sales for FirstEnergy.

H.B. 6 was introduced in the House on April 12, 2019 and, after passing through a series of House committees and undergoing a variety of amendments, was passed by the House by a 53-43 vote on May 29, 2019.40 H.B. 6 was introduced in the Ohio Senate (the “Senate”) on May 30, 2019 and was passed by a 19-12 vote on July 17, 2019 and sent back to the House with additional amendments.41 The House concurred with the Senate’s amendments and sent H.B. 6 to Ohio Governor Mike DeWine (“Gov. DeWine”) on July 23, 2019. Gov. DeWine signed the bill into law and filed it with the office of the Ohio Secretary of State later that same day.42 H.B. 6 was scheduled to become effective on October 22, 2019, ninety days after its filing.

On July 29, 2019, six days after its passage, a petition calling for a referendum on H.B. 6 was submitted to the Office of the Ohio Attorney General (the “OAG”).43 After a series of rejections and resubmissions, the petition was certified by the OAG on August 29, 2019.44 Following the OAG’s certification, the petitioners had until October 21, 2019 (ninety days following the filing of H.B. 6 with the Ohio Secretary of State) to collect the requisite number of signatures to place a referendum on the ballot at the next election for a popular vote by Ohio residents, in accordance with the Ohio Constitution.45 This effort to initiate a ballot referendum on H.B. 6 is hereafter referred to as the “Ballot Campaign.”

Householder worked to defeat the Ballot Campaign by various methods, including efforts to have H.B. 6 interpreted as a tax so that it could not be challenged through a ballot referendum under law and making preparations to advance alternate legislation should the Ballot Campaign amass enough signatures to get the referendum on the ballot.46 The Criminal Complaint further alleged that money was funneled to various entities and accounts controlled by Householder or his close associates to enable the purchase of advertisements and mailers, conflict out signature-collection firms, and pay off and/or bribe signature collectors working in support of the Ballot Campaign. This wide-ranging endeavor to defeat the Ballot Campaign through the summer and fall of 2019 is hereafter referred to as the “Referendum Effort.”

Read the audit at: https://dis.puc.state.oh.us/ViewImage.aspx?CMID=A1001001A24I30B45611F02…

Impact to Ohio utilities

Of the 53 payments, parts of six payments by FirstEnergy Service Corp. and FirstEnergy Solutions totaling $5,833,333 impacted FirstEnergy’s three Ohio electric distribution utilities, Cleveland Electric Illuminating Company, Ohio Edison, and Toledo Edison. From these six payments, $4,866,233 was allocated to FirstEnergy’s three Ohio utilities. Of that amount, $14,534 was charged to the utilities’ customers in pole attachment rates. Pole attachment rates are generally only paid by other utilities, telecom providers and municipal corporations.

The remainder of these six payments allocated to the Ohio utilities were booked to the utilities’ delivery capital recovery or demand side management riders; however, the audit report describes there was no impact to customer rates as the utilities had already reached PUCO-established limits on expenses that could be recovered from customers through rates.

These findings are consistent with a 2021 PUCO audit of the utilities’ delivery capital recovery rider.

The remaining 47 payments were booked to accounts for FirstEnergy Corporation, FirstEnergy Solutions, or other affiliates, meaning they were not expenses of and had no impact to the Ohio utilities.

Audits and ongoing proceeding next steps

The PUCO opened four investigations related to FirstEnergy and House Bill 6.

A PUCO administrative law judge will issue an entry in the near future seeking comments on the audit report issued today.

An evidentiary hearing on the Ohio utilities’ compliance with corporate separation regulations begins on Oct. 9, 2024.

An evidentiary hearing regarding the PUCO’s review of the utilities’ delivery capital recovery rider and distribution modernization rider is scheduled to begin Feb. 3, 2025.

A copy of today’s audit report (https://dis.puc.state.oh.us/DocumentRecord.aspx?DocID=53f681f0-d2cf-460…) is available on the PUCO website at www.PUCO.ohio.gov by clicking the link to “Docket Information System” and searching for case 20-1502-EL-UNC.

The Public Utilities Commission of Ohio (PUCO) is the sole agency charged with regulating public utility service. The role of the PUCO is to assure all residential, business and industrial consumers have access to adequate, safe and reliable utility services at fair prices while facilitating an environment that provides competitive choices. Consumers with utility-related questions or concerns can call the PUCO Call Center at (800) 686-PUCO (7826) and speak with a representative. 

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