FirstEnergy scandal raising questions
CHARLESTON — A political scandal in Ohio involving a legislative leader and an electric company is shining new light on West Virginia Gov. Jim Justice and a tax break last summer for a power plant.
Kanawha County Commissioner Ben Salango, the Democratic nominee for governor, called for an investigation Wednesday into the circumstances that led to Justice adding a bill to last summer’s special session providing a tax break for the Pleasants Power Station, now owned by Energy Harbor, formerly known as FirstEnergy Solutions.
Justice, speaking during his Wednesday coronavirus briefing, rejected Salango’s call for an investigation and dismissed him as “desperate.”
“You’ve got a desperate candidate who is so far behind in the polls that we’re about to lap him,” Justice said. “You’ve got desperate political tactics and everything from liberal people who love to cast stones. We don’t have time for it.”
Salango said more information is needed.
“The way FirstEnergy has conducted business with elected officials in our neighboring state of Ohio begs questions about their dealings with Governor Justice and the state of West Virginia,” Salango said. “This absolutely warrants more information from Justice.”
House Bill 207 that granted Pleasants Power Station an exemption from state Business and Occupation Taxes was signed into law by Justice on July 30, 2019. HB 207 provides a $12.5 million B&O Tax break for the plant which went into effect Jan. 1.
FirstEnergy Solutions, a spin-off from FirstEnergy Corp. and operators of the Pleasants Power Station, met on July 15 with officials from the governor’s office and legislative leadership. By July 19, Justice had put HB 207 on the special session agenda as lawmakers were dealing with education reform.
Lawmakers were told by FirstEnergy Solution officials, who were being assisted by lobbyists for FirstEnergy Corp., that the tax break was needed to keep the Pleasants Power Plant from shutting down in May 2022. The plant was under the control of a FirstEnergy Corp. subsidiary until FirstEnergy Solutions could emerge from bankruptcy. Lawmakers were also told that the tax break would make FirstEnergy Solutions more appealing as it submitted a bid in the PJM capacity auction in the wholesale energy market.
Justice defended the Pleasants Power tax break, which saved 160 permanent job, as many as 400 part-time and seasonal jobs, and more than $400 million in economic activity generated by the plant.
“From the standpoint of trying to help preserve all the jobs that are associated with the Pleasants Power Plant and everything, for crying out loud I thought it was a terrific decision,” Justice said.
The bill passed the Legislature on July 23, but the next day it was revealed that a company owned by Justice, Bluestone Energy Sales, was being sued by FirstEnergy Solutions for breach of contract.
In the civil complaint, FirstEnergy Solutions alleged that Bluestone owed $3.1 million to the power company for excess coal stockpiles Bluestone agreed to buy back. Attorneys for FirstEnergy are asking the court to turn over the final payment due by Bluestone and declare Bluestone in breach of contract. The case is ongoing with a pre-trial hearing scheduled on Nov. 17.
After pushing the tax break through, Justice received $21,050 in campaign donations in 2019 for his primary and general election races from FirstEnergy’s political action committee and associates of FirstEnergy.
Less than a month before the meeting with FirstEnergy Solutions, Justice received a $2,800 donation from FirstEnergy PAC on June 20, 2019. The Justice campaign returned the donation on Aug. 5, 2019, six days after signing HB 207. FirstEnergy PAC sent Justice a new $2,800 check on Oct. 24, 2019, at a political fundraiser in Clarksburg.
The Clarksburg fundraiser was held at the Wonder Bar Steakhouse, co-owned by Larry Puccio, a former chief of staff to then-governor Joe Manchin, a former chairman of the West Virginia Democratic Party, and campaign advisor and transition chairman for Justice’s 2016 Democratic victory for governor. Puccio is a registered lobbyist for Justice-owned companies, such as the Greenbrier Resort and Southern Coal Corp.
Puccio is also a lobbyist for FirstEnergy Corp., and donated $2,800 at the Wonder Bar fundraiser, along with FirstEnergy Corp. lobbyist Angel Moore. Another FirstEnergy lobbyist, Louis Southworth, donated $250 to Justice’s re-election campaign separate from the fundraiser.
Aside from FirstEnergy PAC, Justice also received $2,800 from Kimberly Jones, wife of FirstEnergy Corp. CEO Charles Jones; and $2,800 from Cynthia Boich, wife of Wayne Boich of Boich Cos. Boich’s company owned a stake in a coal mine in Montana with FirstEnergy Corp.
The largest amount came from Anthony Alexander, the former CEO of FirstEnergy Corp. On Oct. 17, Alexander donated $2,800 for Justice’s primary and $1,200 for the general election. On Oct. 24, Alexander donated $1,200 to the primary and $1,600 to the general. According to the Secretary of State’s Office, individuals can only donate $2,800 for the primary and the general each. Any donation above the $2,800 limit must be returned to the donor.
A request for clarification from the Justice campaign on the $4,000 primary donation to Justice from Alexander was not returned. During his briefing Wednesday, Justice said the idea of his campaign taking inappropriate donations was “ridiculous.” Justice raised $700,625 in campaign donations election year-to-date. The FirstEnergy-associated donations make up 3 percent of that number. Justice has loaned his campaign $1.8 million of his own money.
“From the standpoint of hinting that I would take a campaign donation and everything and do it inappropriately is just ridiculous. It’s off the chart,” Justice said. “There’s no chance in all the world I would do such a thing.”
“I self-fund an incredible amount of my campaign,” Justice continued. “If anybody doesn’t think we fully vet with all the lawyers every single donation that comes in, you’re just absolutely whistling through the whatever.”
At the same time Justice was adding a bill to the ongoing special session last summer to give a tax break to the Pleasants Power station for a FirstEnergy spin-off, FirstEnergy Corp. was allegedly funneling millions of dollars into an effort to bail out two nuclear power plants.
On Tuesday, Republican Ohio House Speaker Larry Householder, four associates, and a non-profit through which funds were allegedly funneled to by FirstEnergy Corp., were charged with participating in a racketeering enterprise that financially benefited Householder and his associates. They were also accused of bribery in trying to defeat a ballot measure.
Householder served in the Ohio House of Representatives from 1997 to 2004, and as House Speaker from 2001 to 2004, having left office after coming under federal investigation for alleged money laundering activities, though he was never charged. He returned to the House in 2016 from a different district.
According to the criminal complaint filed in the U.S. District Court for the Southern District of Ohio Tuesday, FirstEnergy Corp., identified in the indictment as Company A – spent more than $60 million between 2018 and 2020. FirstEnergy Corp. funneled the money through Generation Now, a 501(c)(4) which doesn’t have to disclose its donors. Generation Now was controlled by Householder and his alleged conspirators.
At first, according to court documents, money funneled into Generation Now by FirstEnergy Corp. to benefit Householder’s effort to regain his gavel as House Speaker and to benefit a slate of 21 political candidates in 2018 who would support Householder as House Speaker. All candidates who won their general elections voted for Householder for Speaker of the House.
Next, federal prosecutors accused Householder and associates of using Generation Now and the millions being pumped into it by FirstEnergy Corp. to pass House Bill 6.
The law, passed July 17, 2019, will impose an 85-cent fee every month on most residential ratepayers in Ohio starting in 2021. HB 6 is estimated to bring in $170 million per year, with $150 million going to keep the Davis-Besse and Perry nuclear plants operating.
Investigators accused Householder and the conspirators of using part of the $60 million slush fund to bribe people part of a ballot initiative to reverse HB 6, bribing ballot collectors to not collect ballots, and bribing ballot services companies to not assist with the ballot initiative, which failed. Householder himself is believed to have received as much as $500,000 directly from the slush fund.
Federal investigators said Tuesday that the Ohio investigation is ongoing, with subpoenas and search warrants being issues for other individuals and entities, including FirstEnergy Corp.
“(Tuesday) afternoon, FirstEnergy Corp. received subpoenas in connection with the investigation surrounding Ohio House Bill 6,” the company said in a statement. “We are reviewing the details of the investigation and we intend to fully cooperate.”