State regulators have made ‘utility-friendly’ changes to audit of coal-fired power plant bailout, emails say

Documents show that state utility regulators requested changes to drafts of an audit they commissioned, leading to the removal of claims that a taxpayer-funded bailout of two power plants in the unprofitable coal was a bad deal for Ohio electric customers.

Staff at the Ohio Utilities Board, which sets water and electricity rates for customers, asked a listener she hired to use a “softer tone and intensity” to Describe bailouts of coal-fired power plants funded by residential and industrial electricity users.

After reviewing a non-public draft of the audit, Mahila Christopher, a PUCO employee, cited a few specific areas of concern in a September 2020 email to auditors, obtained through a request for public documents. She specifically pointed to language that said, “keeping factories running does not appear to be in the best interest of taxpayers.”

The sentence does not appear in the public version of the audit.

Screenshot of an email sent by a staff member at the Ohio Public Services Commission to external auditors asking them to tone down the language. The email was obtained via a public documents request from the Ohio Consumers Council.

Starting in 2014, PUCO began the process of approving requests from three utility companies – American Electric Power, Duke Energy, and Dayton Power and Light Co. (now known as AES) – to bill their customers. “Passengers” on monthly bills payable for coal-fired power station bailouts through 2024. Utilities are among the largest shareholders in a co-op called Ohio Valley Electric Corp., which owns the power plants. PUCO ordered the audit, a monitoring mechanism, as part of the deal.

In 2019, Ohio lawmakers codified the bailouts, extended them to all state residential and industrial utility customers, and extended them until 2030 in Bill 6. This legislation is now at the center of a federal corruption case that resulted in guilty pleas by a lobbyist. , a powerful political agent, nonprofit, nonprofit, and utility company FirstEnergy Corp. The former Speaker of the House has been charged with one count of racketeering, although he claims his innocence. The facts put forward by FirstEnergy in his guilty plea also implicate the former PUCO chairman of corruption, although he has not been charged with a crime and claims his innocence.

Since the implementation of HB 6 in January 2020, Ohio taxpayers have spent $ 166 million to bail out factories, one of which is in Madison, Indiana, the other in Cheshire, Ohio. The audit commissioned by PUCO ultimately concluded that power plants “cost customers more than the cost of energy and capacity”.

In another email, one of the auditors tells PUCO that it will delete another sentence referring to the conclusion that “the OVEC contract as a whole is not in the best interest of AEP taxpayers. Ohio”.

In the public version of the audit, no such phrase appears, although the stated purpose of the audit is to “investigate whether the actions of the Ohio AEP were in the best interest. of its retail payers ”.

AEP is by far the largest shareholder of OVEC, holding around 43% of its capital. Duke owns 9%. AES owns 4.9%.

The email says staff need “PUCO administrator’s final assent” on the “overall tone” of the report. A spokesperson for the commission said it was the employee’s supervisor.

The PUCO email was sent after the initial arrests in House Bill 6 but before the guilty pleas (October 2020) and public disclosures linking the PUCO president to the scandal (November 2020).

To that end, Christopher called for another change, asking listeners to reduce their “level of detail / specifics” on the scandal. Specifically, she asked them to remove a reference to FirstEnergy, Generation Now (the FirstEnergy-funded nonprofit that pleaded guilty) and the charges against former House Speaker Larry Householder.

The request has apparently been heeded. The public audit makes no reference to Householder, Generation Now or FirstEnergy (regarding the company’s role in the scandal).

When FirstEnergy agreed to plead guilty to a lesser charge in July, it said in court documents that it paid PUCO chairman Sam Randazzo $ 4.3 million shortly before he took office in exchange. regulatory favors. Randazzo denied this, saying the payment was legal and stemmed from his work as a consultant for the company.

AEP has been linked to the scandal by Generation Now, the nonprofit that pleaded guilty. Generation Now received $ 700,000 from Empowering Ohio’s Economy, a nonprofit organization funded solely by the AEP. Earlier this summer, the company revealed that it had received a subpoena from federal regulators “regarding the societal benefits of adopting HB 6.”

Emails reflect a trend of what’s known as “regulatory capture,” where regulators created to act in the public interest end up acting in the best interests of the industries they are supposed to regulate. Governor Mike DeWine has named Sam Randazzo president of PUCO, despite public outcry from conservationists over his years of working against renewables on multiple fronts.

The Ohio Consumers Council, an independent but state-funded agency that represents residential taxpayers before the PUCO, obtained the emails in a public registration request. An OCC official cited them as evidence of PUCO’s “utility-friendly regulation” when testifying to lawmakers in support of legislation to repeal OVEC bailouts.

OCC spokesperson Merrilee Embs expressed outrage at the implications of the emails.

“As an advocate for the consumer state, we are appalled by the emails from PUCO to Utility (AEP) as part of the audit of the coal-fired power plant subsidies that have been billed to residents of Ohio, ”she said. “This situation at the PUCO requires reform, and reform should start with the appointment of commissioners. It is time to appoint consumer representatives to the PUCO.

Matt Schilling, a spokesperson for PUCO, declined specific questions about the case, citing ongoing litigation and pending action by PUCO on the audit report.

“There are pending requests for this case to go to an evidentiary hearing, which I expect the administrative judge in charge of the case to rule on soon,” he said.

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