Your browser is not supported. Please update it.

23 July 2020

FirstEnergy is losing so much cash, its bribes are only $61 million

There should be a tax on any economic activity carried out by companies that are 100 years old or greater. Just in case they are cheating.

The trouble with any group of 100 year old businesses is that they feel entitled and they are usually large enough to both have a lobby process to their politicians, and to know how to bribe people – usually without getting caught. They also know how to bring pressure in committees, and in supervisory groups to reverse decisions which have been made by a clear majority, not subject to democracy. That’s why mostly, unless you cannot avoid it, you don’t start a fight with a 100 year old. Hence the our idea.

Here is a brief list of 100 year old companies, Exxon, Duke. PG&E, Shell, BP. But actually the company does not have to be quite that old. Just entrenched and large.

And that’s what we have in Ohio this week when FirstEnergy has been accused of bribing the Ohio House Speaker Larry Householder. First Energy came out of a merger with multiple businesses, Ohio Edison, which is in fact only 90 years old, and the core of the other side of that merger, Cleveland Electric Illuminating, which would be 128 this year, so between them they are well over 100.

And they both, we are sure, have that sense of entitlement that goes with many mature businesses. How do you expect to get away with making a new law that favors nuclear power plants, even when this makes electricity so much more expensive?

Well apparently they did, but for once someone was watching, in this instance the FBI, and now interestingly it is only the Speaker and his colleagues who has been arrested, the “bribee”, not the briber. What about the CEO of FirstEnergy? Surely there must be a chain of evidence leading back to the money.

The crime: Essentially last year a piece of legislation referred to as HB 6. Its aim was to bail out two nuclear plants until 2027, and Ohio ratepayers get a surcharge for this amounting, amounting to around $170 million a year most of which goes to FirstEnergy, totaling around $1 billion – those two plants are Davis-Besse, near Toledo, and Perry, close to Cleveland. They claimed they were losing money so fast that by now they would have been bankrupt.

Money was also set aside to bail out two coal plants, which it turned out where really some of the most polluting plants run by the Ohio Valley Electric Corporation one in Ohio, one in Indiana.

To get this through the Ohio legislature they needed to bypass renewable energy standards and the aim of Ohio to reach 12.5% renewables by 2027, which was reduced to a target of 8.5% by 2026 and then stop. Also there was legislation that Ohio customers should have energy efficiency cuts to electricity of 22% by 2027, also now forgotten. FirstEnergy owns both of the nuclear plants.

This legislation was tantamount to reversing the direction of travel from pro-renewables to pro-fossil fuels, and yet somehow the law was passed and none of the public got a vote.

Charges have now been brought against Larry Householder, the Republican speaker of the Ohio House of Representatives, with the claim that some $61 million in bribes were paid to him to make this happen. It’s unlikely that the FBI would have brought such charges if there was no audit trail for that amount of money.

Somehow I can’t see young renewable energy firms able to pay such bribes out, there is not so much profit in their businesses, but 100 year old privileged financial monsters can always find the money. We’ll see if the suit sticks – but Householder has not even stood down so far, so probably plans to contest it.

The thing is that in the US atmosphere of “ignoring” scientific advice, this is not unique. There have been other states approving aid to nuclear power plants such as in Connecticut, Illinois, New Jersey and New York. Presumably on those occasions no one was bribed.

Householder and a handful of other Ohio Republican Party members and advisers were all taken into custody—and FirstEnergy’s share price has since plummeted from $27.09 to $22.85.