FirstEnergy to pay $3.9m fine for withholding lobbying info from federal regulators

COLUMBUS, Ohio – FirstEnergy Corp. failed to disclose nearly $94 million in lobbying in support of legislation now at the center of a criminal public corruption scandal and agreed last week to pay a related $3.9 million fine.

In a consent agreement released Friday, the company and the Federal Energy Regulatory Commission said FirstEnergy failed to include material information for a broad audit that included an examination of the company’s lobbying efforts behind House Bill 6 in 2019.

That legislation will be at the center of a public corruption trial set to begin this month for former GOP House Speaker Larry Householder and lobbyist and former state Republican Party chairman Matt Borges. Both have been accused of racketeering and pleaded not guilty.

In 2019 and 2020, FirstEnergy withheld information from FERC about lobbying payments regarding HB6 and millions in payments to Householder and Sam Randazzo, the former chairman of the Public Utility Commission of Ohio, the audit states.

After the arrest of Householder and four allies, FirstEnergy provided regulators with more complete information about its lobbying efforts. Those records indicate it spent nearly $94 million pushing for the bill. That includes nearly $71 million to 501(c)(4) nonprofits – which need not disclose their donors, earning them the nickname “dark money” – and $22.8 million to Randazzo, who has not been charged with a crime and denies wrongdoing.

These figures eclipse those within a statement of facts attached to a deferred prosecution agreement FirstEnergy entered with the U.S. Department of Justice. There, the company admitted to paying nearly $60 million to a nonprofit secretly controlled by Householder and “over $22 million” to Randazzo over the course of roughly a decade, including $4.3 million just before he assumed his perch as a regulator.

On top of three on-site visits and multiple data requests, a “senior FirstEnergy executive” attested to the federal regulators that the company’s original responses were “complete and accurate” to the best of his belief, according to the audit.

Both FERC and FirstEnergy declined to identify the person referenced. FERC declined to explain why the executive was not identified.

The roughly $4 million fine announced Tuesday is a relatively small penalty for FirstEnergy, which earned more than $11 billion in revenue in 2021.

FirstEnergy’s deferred prosecution agreement calls for the company to pay a $230 million penalty and cooperate with the criminal investigation to avert a criminal charge of honest services wire fraud.

None of FirstEnergy’s executives have been criminally accused of wrongdoing, although several have been named as defendants in related civil lawsuits.

A FirstEnergy spokeswoman did not respond to specific questions.

“FirstEnergy has reached a settlement with FERC that fully resolves a previously disclosed investigation into the company’s lobbying and governmental affairs expenditures concerning Ohio’s House Bill 6,” she said.

The legislation provided hundreds of millions in subsidies to nuclear plants owned at the time by a FirstEnergy subsidiary. It also allowed FirstEnergy to charge ratepayers to “decouple” its revenue from electricity sales, which the company’s then CEO said would essentially “recession-proof” a large chunk of the business.

Two allies of Householder – strategist Jeff Longstreth and lobbyist Juan Cespedes – pleaded guilty to racketeering in October 2020. They await sentencing. Another lobbyist, Neil Clark, died in 2021.

Jake Zuckerman covers state politics and policy. Read more of his work here.