Ohio-based investor-owned utility holding company FirstEnergy Sept. 12 agreed to pay the Securities and Exchange Commission a $100 million settlement in the long-running nuclear bribery scandal that has seen prominent Ohio politicians and political players jailed. At the same time, Ohio’s attorney general indicted two former top company executives on further bribery charges in the HB-6 case.
FirstEnergy has already agreed to pay Uncle Sam $230 million to settle the case, in which the company used $60 million to lobby for and bribe Republican legislative leaders to pass a bill in 2019, HB-6, that would charge customers subsidies to keep two of the company’s uneconomic nuclear plants, plus two coal-fired stations, in service. When the conspiracy collapsed, it resulted in the criminal conviction of the Republican Ohio House Speaker Larry Householder, who is now serving a 20-year prison sentence.
Former Public Utilities Commission Chairman Samuel Randazzo was also convicted as a key player in the criminal enterprise. Randazzo committed suicide in April.
FirstEnergy CEO Brian Tierney said, “We are pleased to have reached a resolution with the SEC as we continue to turn a new chapter. Our focus today is investing in our regulated electric companies to improve the customer experience and support the energy transition.” The company in July took a $120 million reserve in anticipation of the SEC settlement and other pending cases. In August, USA TODAY reported that the company agreed to pay $19.5 million to the Ohio Attorney General’s office and $500,000 to an independent consultant to review FirstEnergy’s ethics policies.
At the same time as the utility and the SEC were announcing the $100 million settlement, a state court indicted former FirstEnergy CEO Chuck Jones and former Senior Vice President of External Affairs Michael Dowling on new bribery and corrupt activity charges. Both entered not guilty pleas. As the state indictments were coming down, the Akron Beacon Journal reported that the SEC in a separate lawsuit “filed a complaint against Jones, alleging he misled investors about the utility’s payments to former Ohio House Speaker Larry Householder in a pay-to-play scheme.”
Akron-based FirstEnergy owns 10 regulated electric distribution companies in five states — Ohio, Pennsylvania, New Jersey, Maryland, and West Virginia — serving some 6 million customers. The company controls some 3,599 MW of coal, solar, and hydro generation, having sold off around 10 GW of coal, nuclear, and gas from 2016 to 2020.
The company reported first half 2024 revenue of $6.6 billion, with profits of $298 million (52 cents/share), compared to first half 2023 revenue of $6.2 billion and a $527million profit (92 cents/share). Commenting on the first half financial results at the end of July, Tierney said the company “reached an agreement in principle with SEC staff, which remains subject to the SEC’s approval, and we are close to resolving legacy issues with the Ohio Attorney General’s office. We are proud of the progress we’ve made and are committed to driving results through a culture focused on performance excellence and continuous improvement.”
FirstEnergy’s stock (NYSE:FE) has been slowly but steadily rising over the past year, from $36.89/share on Sept. 14, 2023 to $44.47/share on Sept. 13, 2024. The company’s current market capitalization is $25.6 billion. The company’s credit ratings are investment grade: BBB from S&P, Baa3 from Moody’s, and BBB- from Fitch.
First Energy was born in 1997 with the merger of Ohio Edison in the northeast of the state outside of Cleveland and Centerior Energy, which was created in 1986 with the merger of Cleveland Electric Illuminating Co. and Toledo Edison. Serving northwestern Ohio.
–Kennedy Maize