Federal agents have arrested Ohio House Speaker Larry Householder on charges of organizing a years-long criminal conspiracy to pass a controversial law that offered billions of dollars in taxpayer subsidies to keep bankrupt utility FirstEnergy Solutions from closing down its nuclear power plants.
Investigators haven’t charged FirstEnergy or any of its executives directly, but they made clear that the utility was the source of $61 million funneled through a nonprofit group to maintain the alleged criminal conspiracy.
The arrests on Tuesday of Householder and four other men were the result of a year-long investigation that revealed “a conspiracy to pass and maintain a $1.6 billion bailout in exchange for $61 million in dark money,” U.S. Attorney David M. DeVillers said in a Tuesday press conference. That money was used “to line the pockets of defendants, to build a power base for Larry Householder and to pass and maintain House Bill 6.”
HB 6, passed last year by the state’s Republican-controlled legislature and signed into law by Republican Gov. Mike DeWine, provides ratepayer subsidies to FirstEnergy Solutions, the power plant unit of Ohio-based FirstEnergy Corp., to keep it from closing its Davis-Besse and Perry nuclear power plants.
FirstEnergy Solutions filed for Chapter 11 bankruptcy protection in 2018 and emerged from bankruptcy this February under the new name Energy Harbor Corp. While the total cost of the bailouts will depend on future shifts in costs and other yet-to-be-determined calculations, the overall level of funding expected to flow to the company is $1.2 billion, with the remaining $400 million or so in subsidies going to support coal-fired power plants serving the state.
The bill has come under withering attack from the Union of Concerned Scientists, the Sierra Club and other environmental groups for slashing Ohio’s existing energy efficiency and renewable energy incentives and replacing them with a ratepayer subsidy for money-losing nuclear plants. It was passed despite strong public opposition, according to multiple polls.
An effort to repeal it via popular referendum failed to garner the required number of signatures necessary to advance in October after the groups working on the repeal accused unknown parties of bribing signature-takers to stop working and hiring “blockers” to prevent signatures from being gathered.
In its 81-page affidavit, the U.S. Attorney’s Office of the Southern District of Ohio alleges that 501(c)(4) nonprofit group Generation Now received $61 million from “Company A” through various pass-through organizations. DeVillers did not name FirstEnergy or Energy Harbor directly in Tuesday’s press conference, as neither company has been charged with a crime at present. But, he added, “Everyone in this room knows who Company A is."
DeVillers said that money channeled to Generation Now “through this filter system” was used to give millions of dollars to 21 candidates for Ohio’s state legislature to “get them elected.” Of those candidates, “all voted for Larry Householder to be speaker of the house” in 2018, and “only one voted against House Bill 6.” The candidates in question have not been charged with a crime as of today, he said.
In 2019, “millions of dollars were filtered from Company A to Generation Now through all these entities to pass House Bill 6,” including television and radio commercials, mailers and flyers. After it was passed, the nonprofit used more money from Company A to “bribe individuals working on the ballot initiative” to “do nothing,” or to “give them thousands of dollars and a flight out of town,” he said.
At least $500,000 of the $61 million went to Householder himself, DeVillers said, including $300,000 to pay for legal fees associated with a lawsuit and about $100,000 for a home in Florida.
The FBI is continuing to investigate the case, and more individuals or companies could be charged in the future, DeVillers said. “This is by no means over.”
How Tuesday’s explosive charges could affect the future of HB 6 remains unclear, Rob Rains, an analyst with Washington Analysis, said in a Tuesday note. While the bill’s costs to ratepayers and its weakening of clean-energy provisions angered many voters, Rains said the threat of losing about 3,000 jobs at the nuclear power plants supported by its subsidies may outweigh those considerations.
Republicans hold the governor’s office and supermajorities in both houses of Ohio’s legislature, giving the party a strong position to hold off against future legislative or ballot initiative challenges, he added.
But HB 6 opponents rallied behind Tuesday’s charges to demand that Ohio lawmakers repeal the law. “The whole process around HB 6, from its passage through the legislature to the attempted referendum campaign, was riddled with red flags,” Neil Waggoner, of the Sierra Club’s Beyond Coal Campaign in Ohio, said in a statement. "The Ohio legislature must take steps to rebuild public trust, and an immediate necessary first step is to repeal HB 6."