The Deal
On a “dollar for dollar” basis, the First Energy Corporation made the right move. They spent $60 million in order to secure $1.3 trillion, a “good” investment in anyone’s books. The problem: the $60 million was a bribe to public officials, and the $1.3 trillion was supposed to come from the pockets of the citizens of Ohio.
Not surprisingly, First Energy didn’t think of it as a “bribe”. They considered it a donation to the legislators that backed their financing plan. The sum was managed by one legislator, Republican House Speaker Larry Householder. And that is an issue in American politics today. Campaign success is absolutely based on how much money a candidate can raise. To run for the US House of Representatives costs millions, and while state Legislature campaigns are less than that; success requires hundreds of thousands of dollars.
So are campaign donations simply a show of support, or are they a “quid pro quo”, payment for some specific action? Showing support is perfectly legal. But a quid pro quo payment like the First Energy “pay to play” is the felony of bribery.
The Story
First Energy Corporation ran two nuclear power plants in Ohio, the Davis-Bessie reactor near Toledo and the Perry reactor outside of Cleveland. Both plants were over thirty years old, and maintenance costs continued to grow. First Energy also had several coal-fired plants in Ohio. But other forms of energy generation were more cost efficient, and the nuclear and coal plants struggled to compete.
In order to operate profitably, First Energy asked the Ohio State Legislature to pass a bill that would give them a $150 million a year subsidy for nuclear and coal fired plants. The bill would also reduce subsidies for other forms of more energy efficient production, raising their costs, to make coal and nuclear energy competitive. All of this was paid for by increasing consumer electric rates in Ohio. The bill was passed by the Republican controlled legislature, led by Speaker Larry Householder, in July of 2019. The next day Republican Governor Mike DeWine signed the bill into law.
The Takeover
In order for Householder to gain control of the Ohio House, he accepted $60 million from First Energy through their political action committee, “Generation Now”. Householder used some of that money to finance twenty-one successful legislative campaigns for those who were willing to vote for his Speakership and the subsidy bill, and won enough seats in the House to get elected as Speaker. It is against the law for a legislator like Householder to direct an independent political action committee’s funds.
After gaining control of the House, Householder brought the bill, called House Bill 6, up for debate. The legislation was widely unpopular, as it promised consumers increased electric rates. Householder then orchestrated a public media campaign with Generation Now money, estimated to cost $9.5 million to get the bill through the House and another $7.3 million to get through the State Senate. The campaign claimed the rate increase would “save jobs” at the nuclear plants, and improve “green” energy (except at the coal plants). It served as “cover” for the legislators who voted for the bill.
Response
After the bill passed, an awkward coalition of Democrats, the natural gas industry, renewable energy and consumer advocates tried to put the bill up for statewide referendum in order to repeal it. “Generation Now”, under the direction of Householder and Republican State Party Chairman Matt Borges, spent another $38 million on an incredibly ugly media campaign to prevent the referendum from even getting the required 6% of voter signatures to get on the ballot. Their claim was that passage of the referendum would put “Ohio’s energy in Chinese Communist control”, and raised the specter of Chinese “spies” coming to get your signature.
Ohioans never got to vote on House Bill 6. And Larry Householder used part of the “Generation Now” funds to buy a $500,000 house in Florida, pay for his own personal campaign expenses, and pay off a personal lawsuit he was involved in.
The scandal broke in July of 2020, when Householder was arrested by the FBI. Ultimately the Ohio House and Senate along with Governor DeWine voided the legislation. Householder is still awaiting trial on charges of accepting bribes and abuse of office. His trial, in conjunction with the trial of Matt Borges, is expected to begin with jury selection after the election in November of 2022. First Energy Corporation has already admitted to bribing public officials, and is paying a $230 million fine to avoid further prosecution. The Chief Executive Officer of First Energy, Chuck Jones, was removed by its board, and the Board demanded that he return his $56 million salary.
Gone Away
Other leading Republicans in the state, including DeWine and Lieutenant Governor John Husted, have been implicated in parts of the scandal. First Energy “remade itself” through bankruptcy, and is now called Energy Harbor. They still own the two nuclear plants, as well as the several coal fired plants. Federal funds are keeping the company profitable.
And, oddly, the scandal has “gone away”. While Democratic candidates like Nan Whaley raise the general concept of “corruption”, the fact that the entire state Republican Party establishment was complicit in taking bribes and passing laws to protect the profits of First Energy, just doesn’t seem to be a concern to Ohio voters.
It’s hard to imagine a bribe so large. $60 million: at least no one can accuse Ohio Republicans of selling out “cheap”.
