FirstEnergy agrees to $37.5 million settlement to resolve ratepayer lawsuits over HB6 scandal

COLUMBUS, Ohio — Last week, FirstEnergy Corp. reached a $37.5 million settlement to resolve four lawsuits filed by ratepayers who sued the Akron-based utility over the House Bill 6 scandal, company’s CEO Steven Strah told investors Friday.

The news is not a big surprise, as FirstEnergy told federal regulators months ago that it set aside the money to settle the suits — three in federal court, one in Cuyahoga County Common Pleas court — that alleged the company committed civil federal and state anti-racketeering violations.

It’s unclear whether the money will get spread out among the individual plaintiffs in the four cases or among FirstEnergy’s approximately 2 million Ohio customers. As of Friday, no settlement documents had been filed in the online court dockets of any of the four lawsuits.

FirstEnergy spokeswoman Jennifer Young confirmed the settlement was agreed to on April 11. However, she said she didn’t know the terms of the deal and declined to provide a copy of the settlement to cleveland.com on the grounds that it wasn’t filed yet in court.

FirstEnergy is still involved in a number of other lawsuits related to HB6, which federal authorities say was passed thanks to $60 million in FirstEnergy bribe money distributed via a network overseen by then-Ohio House Speaker Larry Householder.

The energy law provided massive benefits for FirstEnergy, including a $1 billion-plus bailout to two nuclear power plants owned by a then-subsidiary of FirstEnergy, as well a so-called “decoupling” provision that allowed FirstEnergy to collect millions of dollars more from ratepayers than it would otherwise be permitted to.

Last year, FirstEnergy agreed to a deferred prosecution agreement with federal prosecutors in which it agreed to pay a $230 million fine for bribing top state officials to secure policies that helped the company. Householder, who says he’s innocent, is set to stand trial next year.

State lawmakers repealed the bailout and some other parts of HB6 last year amid public pressure and after federal regulators set up disincentives for electric generation companies to receive state subsidies. FirstEnergy also agreed to drop its “decoupling” policy in a deal with Attorney General Dave Yost.

The Cuyahoga County lawsuit, filed by FirstEnergy customer Michael Emmons of Mahoning County shortly after Householder’s arrest in the summer of 2020, claimed that he and other ratepayers “should not bear the brunt of a utility’s poor-decision making.”

The settlement also resolves three federal lawsuits filed in U.S. District Court for the Southern District of Ohio: Smith v. FirstEnergy Corp. et al., Buldas v. FirstEnergy Corp. et al., and Hudock and Cameo Countertops, Inc. v. FirstEnergy Corp. et al.

The $37.5 million settlement is separate from a proposed $180 million settlement agreement to resolve a lawsuit filed by FirstEnergy investors against company leaders. The insurer for those leaders would pay the money to the company to help the investors.

Six FirstEnergy board members will also step down as part of the proposed settlement. On Friday, Strah said two of the nominees to replace the departing board members are Sean Klimczak, a senior managing director at the Blackstone investment firm, and Jana Croom, chief financial officer for Indiana-based Kimball Electronics.

However, U.S. District Court Judge John Adams has shown reluctance to approve the proposed settlement, asking why it was reached so quickly when so much information about the scandal remains unknown.

Adams famously demanded last month that a lawyer for the investors give him the names of “Who paid the bribes.” The lawyer later answered with two names: ex-FirstEnergy CEO Chuck Jones and Michael Dowling, who led the company’s lobbying efforts.

Both were fired by FirstEnergy in the fall of 2020, through neither Jones nor Dowling have been accused of any wrongdoing to date in the ongoing investigation.

In addition, Yost has filed a civil lawsuit in Franklin County Common Pleas Court against (among others) FirstEnergy, Jones, Dowling, and ex-Public Utilities Commission of Ohio Chair Sam Randazzo, whom FirstEnergy also admitted to bribing.