COLUMBUS – State Representatives Michael J. Skindell (D-Lakewood) and Sedrick Denson (D-Cincinnati) Tuesday introduced House Bill (HB) 740 to repeal a provision in state law allowing First Energy to keep excessive profits rather than returning the money to electric customers through a rate adjustment. The pricing provision was added to the state two-year budget, House Bill 166, which was signed into law in July 2019.
In Ohio, electric distribution utilities are entitled to earn monopoly profits from the electric services they provide to customers. Ohio's allowance for profits is larger than most other states. Prior to the HB 166 amendment, electric utilities were allowed to earn excessive profits but "significantly excessive profits" were required to be returned to customers through an adjustment in prospective rates. HB 166 changed how "significantly excessive profits" are calculated, benefiting FirstEnergy by amending Revised Code Section 4928.143.
Under the language adopted in HB 166, FirstEnergy would be allowed to treat its three distribution utilities (Ohio Edison, Toledo Edison and Cleveland Electric Illuminating Company) as one, so if one utility had significantly excessive profits, those profits could be spread out among all three utilities. The practical impact of the amendment allowed Ohio Edison's higher profits to be combined with Toledo Edison and Cleveland Electric Illuminating Company, thus allowing FirstEnergy to keep Ohio Edison's excess profits rather than adjusting consumer rates. All three distribution electric utilities are subsidiaries of First Energy.
The Ohio Manufacturers Association and the Ohio Consumers Counsel, among others, opposed this language being added to the budget. In a May 2019 report, entitled “Connecting the Dots: FirstEnergy Political $$$, Profits, and Utility Policy,” Common Cause of Ohio suggested a link to political contribution and the passage of energy policy.
“If we want to restore public trust and confidence, the Republican pay-to-play mentality has to come to an end in Ohio government,” said Rep. Skindell. “We must act quickly to repeal the harmful consumer legislation adopted to benefit monopolistic electric utilities like FirstEnergy.”
“Ohioans have put a great deal of trust in elected officials to represent them. The rate payers of Ohio deserve to have integrity restored, and this bill is a step in that direction,” said Rep. Denson.
On July 21, 2020, federal prosecutors charged Ohio House Speaker Larry Householder and others with corruption and racketeering. The indictment alleges that First Energy, believed to be Company A in the charges, bankrolled Householder’s campaign for Speaker and the campaign to pass favorable legislation for the electric utility. In addition to the budget amendment, Householder ushered the passage of HB 6, which provided for more than a billion dollar bailout of two First Energy nuclear power plants.