COLUMBUS, Ohio -- A new federal filing from FirstEnergy offers additional details on why the Akron-based utility company abruptly fired three senior executives last month, including former CEO Chuck Jones.
In the Thursday filing with the U.S. Securities and Exchange Commission, company officials described a questionable $4 million payment the company made in early 2019 to an entity associated with someone who subsequently was hired as a state government official.
The filing says the payment was made to terminate a consulting agreement dating back to 2013 with “an entity associated with an individual who subsequently was appointed to a full-time role as an Ohio government official directly involved in regulating the Ohio Companies, including with respect to distribution rates.”
“At this time, it has not been determined if the payments were for the purposes represented within the consulting agreement,” the filing reads.
The filing says that the former senior executives “did not reasonably ensure that relevant information was communicated within our organization and not withheld from our independent directors, our Audit Committee, and our independent auditor.”
The filing did not identify the government official by name, but the Public Utilities Commission of Ohio regulates energy distribution rates for FirstEnergy and other utilities. Company spokeswoman Jennifer Young declined to elaborate, and a PUCO spokesman didn’t immediately return a message.
“We take violations of Company policies and FirstEnergy’s code of conduct very seriously,” Young said in an email. “The Board will continue to take decisive action to address this matter and ensure we have effective processes and procedures in place to uphold our standards and values going forward.”
Dan Tierney, a spokesman for Gov. Mike DeWine, said the governor’s office hadn’t previously seen the filing, and declined to comment, since it doesn’t identify the government official.
FirstEnergy fired Jones and two other senior executives on Oct. 29 due to what the company said were unspecified violations of company policy. The company had declined to comment on the specific reasons, citing an ongoing federal investigation into House Bill 6, a nuclear bailout bill that’s at the center of an ongoing corruption investigation.
But company officials said FirstEnergy launched an internal review as a result of the HB6 investigation, and now says it’s trying to strengthen its internal controls.
The company has said it could face criminal liability from the probe, which led to the July arrest of Larry Householder, who at the time was the speaker of the Ohio House of Representatives and one of Ohio’s most powerful politicians.
Two others arrested in July, Jeff Longstreth, Householder’s top political aide, and Juan Cespedes, a lobbyist for the company formerly known as FirstEnergy Solutions, have pleaded guilty to federal charges in connection with the probe.
They admitted to participating in what federal prosecutors have described as a complex $61 million bribery scheme through which Householder helped deliver HB6, a $1 billion bailout to two nuclear plants formerly owned by FirstEnergy. FirstEnergy and its affiliates gave the $61 million to a network of political groups that helped Householder gain his legislative leadership position, pressure state lawmakers to pass HB6, and then to defend the bill against a repeal effort, according to prosecutors.
Householder has pleaded not guilty, and denied wrongdoing.
In another sign of federal officials investigating energy regulation in Ohio, FBI agents on Monday searched the home of PUCO Chairman Sam Randazzo, carrying out boxes and bags of records and other items. DeWine on Tuesday told reporters he had no indication Randazzo was under investigation. The FBI has declined to comment on what they were investigating.
DeWine hired Randazzo, a former attorney and lobbyist for the Industrial Energy Users trade group, to run the PUCO in Feb. 2019.
Randazzo hasn’t commented on the search, nor have officials at the PUCO. Randazzo did not attend a Thursday commission meeting.
Thursday’s filing from FirstEnergy says the company made $3 billion in revenue in the third quarter of 2020, good for $454 million in profit.
While FirstEnergy asserted in the filing it is “unable to predict” whether the legislature will repeal and/or replace HB6 (a decision that’s still up in the air), the document states it’s “reasonably possible” that legislators will repeal a controversial provision known as “decoupling.” It allows FirstEnergy to lock in a guaranteed yearly revenue from residential and commercial customers.
At least one lawmaker says there has been talk of making the decoupling language in HB6 less “lucrative” for FirstEnergy.
Cleveland.com politics reporter Jeremy Pelzer contributed to this story.