Energy Harbor, the principal recipient of the $150 million in annual subsidies awarded by 2019's now-tainted House Bill 6, might have inadvertently given those who now want to repeal that law some potent ammunition.
The company's $300 million increase in its stock buyback authorization in May now has Columbus politicians rankled — and using it to support repeal.
"I reject the whole premise of a bailout at this point. After we handed FirstEnergy a billion-dollar-plus bailout … they want to spend $300 million on a stock buyback?" said state Rep. Casey Weinstein, D-Hudson, one of the lawmakers now on a death stalk of the law.
HB 6 was enacted to prop up Ohio's two nuclear power plants, Davis-Besse near Toledo and the Perry Nuclear Power Plant in Lake County.
It also gives some support to a coal-fired plant in Ohio and another in Indiana that were part of FirstEnergy Solutions before it separated from FirstEnergy Corp. via bankruptcy in February of this year, but far and away most of the subsidies go to the nuclear plants.
FirstEnergy Solutions, FirstEnergy's then-subsidiary, came out of that bankruptcy as the standalone independent company Energy Harbor, with ownership of the affected plants. At the time, their subsides seemed secure.
Less than two months later, Energy Harbor made headlines when it increased its own authorization to buy back shares from investors by $300 million — from $500 million to $800 million.
That had eyes rolling in the shaking heads of longtime opponents of HB 6 and others, who saw it as evidence the company never really needed the $150 million in subsidies, even though FirstEnergy Solutions had said it would have to shutter the nuclear plants without the bill's extra support, paid for by electricity users statewide.
But with disgraced former GOP House Speaker Larry Householder indicted in what federal prosecutors say was a $60 million scam in which he and others solicited bribes from FirstEnergy to pass HB 6, the move to increase the buyback authorization appears to have become unpalatable to a broad swathe of Columbus lawmakers, including Republicans who are now supporting the repeal of HB 6.
One is Rep. Mark Romanchuk, R-Ontario, who sent an email to his House colleagues on July 27 with the header "To all policy makers who supported or voted for HB 6." Romanchuk declined to comment, but Crain's obtained a copy of his email, which went to all House members. In it, he makes two arguments in support of a repeal.
Romanchuk wrote to his colleagues: "First is the announcement on May 12, 2020, that Energy Harbor would be using excess cash to buy back an additional $300 million worth of stock. In simple terms, it would appear that if they did need a bailout, then the one provided by Ohio was at least $300 million more than they required. This was a direct payment back to the corporate owners of Energy Harbor stock. This is something that opponents (of HB 6) testified might occur. Again, I am not saying they didn't need the money. But it appears they didn't need as much as they said they did — if they needed any at all."
Romanchuk then referenced an investigation of FirstEnergy by the Milwaukee law firm Ademi & O'Reilly, which specializes in securities law and said the company may have "issued false and misleading statements regarding its business practices" with regard to its support of Householder.
"Specifically, FirstEnergy allegedly spent approximately $2.9 million on Larry Householder's 2017 campaign. Householder became Ohio House Speaker in 2019 and allegedly returned the favor by enacting laws to support FirstEnergy's nuclear plants as well as a pair of coal plants. In total, political donations and bribes by FirstEnergy and other parties involved may have totaled as much as $60 million," the firm said shortly after Householder was arrested on July 22.
"In short, it is being argued that they provided false or misleading information that could impact stock prices or people's decision to invest in the company. If this is being pursued, should we not also be looking into that data? Isn't HB 6 just another form of 'investment' in that company?" Romanchuk wrote.
Others are also latching onto the reasoning that Energy Harbor doesn't need subsidies for its plants if it's planning a buyback — and they're also resurrecting complaints about the lack of transparency with regard to the plants' and the company's financial position. Many legislators were bitter that they could not see such information when HB 6 was passed, and are only more so now.
"We don't even know what the numbers were. We kept saying, 'Show us your bottom line, show us the numbers.' And we just weren't getting that," said Sen. Nickie Antonio, D-Lakewood.
That's still largely the case. Lawmakers don't even know if the company ever did buy back $800 million worth of its stock, and Energy Harbor isn't saying.
"We have nothing further to disclose at this time," was the only statement Energy Harbor would release when asked about the matter.
Meanwhile, support to repeal HB 6 seems to be growing, and many predict it's headed to the bin. What's being argued now, legislators say, is whether to do a clean repeal that wipes out the bill in its entirety, or one that would effectively just eliminate the bill's tainted subsidies.
That's a big stakes game, because a clean and total repeal would replace the nuclear and coal subsidies with the state's former subsidies for renewable energies, which HB 6 removed. Members of the two parties are already putting out competing and conflicting information about which, if either, sort of subsidies are needed, and which costs ratepayers more.
Given the chance, many Democrats also want to change laws pertaining to things like wind-energy setback requirements, which they and renewable energy advocates have said killed many wind projects that would otherwise be built in Ohio.
"Our future is in renewable energy," Antonio said. "There could be a plan to evolve those jobs from nuclear today to renewable energy tomorrow. Why aren't we addressing that in this bill as well?"
Some Republicans are pushing for a partial repeal, while Democrats want more.
"Democrats, and I can certainly speak for myself, want a clean-slate repeal now," Weinstein said.
That would be followed by the chance to rewrite the state's energy policies later with a replacement bill after the 2020 election, he and Antonio said.
The partisan strategies should surprise no one, since Republicans hold a strong majority in the statehouse now and Democrats are hoping to whittle away at it in November — possibly with added momentum from the Householder scandal.
Expect to see that fight over the coming weeks, legislators said.
Antonio, who is a co-sponsor of legislation along with, at last count, 33 other state legislators, said she's backing an effort toward a clean repeal that she thinks will get passed.
"This is the bipartisan bill," Antonio said. "I think we have an equal number of Democrats and Republicans co-sponsoring this bill, and that's very unusual."
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