Public Service Commission selects auditors to investigate FirstEnergy subsidiaries in WV
The audit comes after MonPower and Potomac Edison filed for a rate increase in March and will look at any lobbying expenses made by the companies in relation to the Ohio bribery scandal
FirstEnergy’s headquarters in Akron, Ohio. (Google Maps)
The West Virginia Public Service Commission is moving forward with an audit into lobbying expenses and activities of Monongahela Power Co. and Potomac Edison Co., tied to a bribery scandal in Ohio involving their parent company that has sent several people to prison.
Both MonPower and Potomac Edison are subsidiaries of FirstEnergy Corp. In a joint staff memorandum filed Monday and reported by The Intelligencer, PSC staff recommended that Van Reen Accounting, LLC be approved to perform the focused management audit.
The firm will be paid up to $122,000, with hourly rates capped at $250, according to PSC filings. The selected firm was the only one to respond to a request for proposals from the companies.
The audit will delve into both companies’ costs related to certain “lobbying and image building activities that result in charges included on the Companies’ books” potentially tied to the passage of House Bill 6 in Ohio in 2019, according to filings. The audit will go as far back as 2015.
HB 6 became law on July 23, 2019 and charged electric customers across Ohio about $1.3 billion for the bailout of two nuclear plants in the state owned by FirstEnergy. It also increased rates from $20 million to $50 million annually for customers.
The bill’s passage — orchestrated by FirstEnergy and public officials secretly on its books — was the result of what David DeVillers, the former U.S. Attorney for the Southern District of Ohio, called “likely the largest bribery, money laundering scheme ever perpetrated against the people of the state of Ohio.”
Through a federal investigation, officials alleged that FirstEnergy paid $60 million to a newly created nonprofit controlled by then-Speaker of the Ohio House of Representatives Larry Householder in return for Householder’s work to pass HB 6. The company also poured millions of dollars into almost two dozen 2018 Ohio House races to help Householder secure the role of House speaker.
FirstEnergy spent at least $94 million on lobbying efforts for HB 6, which went to political candidates, dark money ads and a 21-member lobbying team between all the company’s affiliates, among other things. The audit in West Virginia will attempt to investigate if any of that money came from improper funds held by the companies operating here.
In July 2021, FirstEnergy agreed to a deferred prosecution agreement charging the company with conspiracy and ordering it to pay $230 million as a penalty for the scandal. FirstEnergy admitted in that agreement to giving bribes to Householder as well as Sam Randazzo, head utility regulator in Ohio at the time, through nonprofits in order to hide their existence.
In 2020, Householder and four of his allies and political operatives were criminally charged in relation to the FirstEnergy bribery scheme. Earlier this year, Householder and former Ohio GOP Chair Matt Borges were found guilty of felony racketeering. Two other associates pleaded guilty to the charges and agreed to cooperate with investigators. Another lobbyist initially charged in the case died by suicide in March 2021.
Householder was sentenced to 20 years in prison in June and Borges was sentenced to five years.
‘Please don’t add to our worries’
Back in West Virginia, the audit into MonPower and Potomac Edison is related to a proposed rate case filed by the companies with the PSC in March.
Whenever a base rate increase is filed with the PSC, the commission investigates the requesting utility’s finances to ensure ratepayers aren’t on the hook for expenses outside of the utility’s operations.
In June, the PSC ordered that the proposed rate increase be postponed until at least March 26, 2024. The proposed increases would raise residential rates by 15%, commercial rates by 12.5%, industrial customer rates by 9.4% and rates for public street lighting by 17.2%. The proposed increases would total about $207.5 million for the companies, according to the PSC.
There have been at least 17 formal complaints filed by residents against the proposed rate increases.
A number of those complaints cite being on a fixed income and a difficulty to pay for more expensive utility services. Multiple citizens — including Dee Ulderich in Harrisville and Barbara Marple in Martinsburg — said the increases will impact the elderly more than any other class.
“I am retired and on a fixed income. This will make my life more difficult. Please consider us older people on fixed incomes and don’t increase our rates,” Marple wrote. “Most all of us are hurting financially with the price of everything being raised. I’m asking you please don’t add to our worries.”
While the rate increase will total about $15 to $20 a month for most residential customers, Monongalia County resident Leyna Menefee said in her complaint that it’s just one of a number of utilities her family is struggling to pay for as increases to other utilities are expected to mount. If electricity gets more expensive for those offering water and sewage services, Menefee said, it’s only a matter of time until those utilities increase rates, too.
“[M]y family cannot afford another increase in utility rates. If this rate increase is approved, it will force us to move into our camper and not in our home,” Menefee wrote. “When is enough enough???? West Virginians cannot afford another rate increase. I am asking you to please [consider] what kind of impact this is going to have on your customers. If we’re struggling now to pay our bill with you, how are we able to pay our bill after the increase?”
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