Ohio: FirstEnergy opposition to solar at heart of massive bribery scandal

Utilities and powerful special interests are working – often out of public view – to undermine rooftop solar power across America. In this series, excerpted from our report Blocking Rooftop Solar, we tell the stories of five utility attacks on rooftop solar, shining sunlight on the tactics utilities are using to limit the growth of local renewable energy.

Ohio has emerged as a disturbing example of how aggressive utility anti-solar campaigns and spending have resulted in policy changes that undermine rooftop solar power. Despite having respectable solar potential, as of late 2020, Ohio hosted only 361 MW of installed solar capacity, which generated less than 0.5% of the state’s electricity. This puts Ohio in 28^th place nationally in solar energy generation.

Anti-solar efforts by Ohio utilities are largely responsible for the state’s slow adoption of solar power. While the state allows net metering and other solar benefits, state utilities have repeatedly attacked these and other policies that support rooftop solar.

First, the utilities succeeded in convincing Ohio lawmakers to weaken the state renewable energy standard, a rare occurrence nationally. Ohio passed a Renewable Electricity Standard (RES) law (called a Renewable Portfolio Standard – RPS – in Ohio) in 2008, requiring utilities to obtain 12.5% of their energy from renewable power sources by 2025 and to implement energy use reduction and energy efficiency programs. In 2014, however, a collection of utilities and business groups – which included the Industrial Energy Users of Ohio, a lobby group for energy-intensive state manufacturers – convinced the legislature to pass S.B. 310, which froze RES implementation for two years and pushed the deadline to 2026. The law was further weakened in 2019.

The utilities have also battled net metering for years. The Ohio affiliates of giant utilities FirstEnergy and American Electric Power (AEP), plus Dayton Power & Light and Duke Energy, fought a 2014 ruling by the Public Utilities Commission of Ohio (PUCO) affirming retail rates for net metering for years. In October 2019, PUCO issued updated state net metering rules that removed uncertainty by preserving most net metering benefits for rooftop solar owners, and a year later the Ohio Supreme Court dismissed the utilities’ appeal of net metering legislation in Ohio.

The saga of Ohio House Bill 6 (H.B. 6), however, is a particularly egregious case of utility efforts to block solar energy in the state. FirstEnergy was the principal backer of this bill, passed by the state legislature in July 2019, which clean energy expert David Roberts called “the worst piece of energy legislation in the 21^st century” and “the most counterproductive and corrupt piece of state energy legislation” he had seen. H.B. 6, which took effect in October 2019, cut the renewable energy standard target to 8.5% by 2026 and eliminated the standard altogether after 2026. The law also cut utilities’ required savings from energy efficiency from 22% below 2008 levels by 2027 to 17.5% (which most utilities had already achieved), and then allowed them to end their efficiency programs.

Finally, H.B. 6 imposed surcharges on ratepayers to bail out two nuclear power plants, which FirstEnergy claimed were losing money, and two old, dirty coal plants, one in Ohio and one in Indiana, owned by a utility-controlled collective. The effect of the new law was to remove incentives for further renewable energy development and energy efficiency increases in the state while providing over $1 billion to subsidize four uncompetitive power plants.

H.B. 6 was opposed by ratepayers, environmentalists, and even some business groups. So how did the bill pass? Details emerged in July 2020, when U.S. prosecutors announced that the push to pass the law was the central element of a $60+ million alleged bribery scheme, the largest in Ohio history. Federal prosecutors arrested Republican Speaker of the Ohio House Larry Householder, aide Jeff Longstreth, lobbyist and former Ohio state Republican Party chair Matt Borges, lobbyist Neil Clark, and FirstEnergy Solutions (a then-subsidiary of FirstEnergy now known as Energy Harbor) lobbyist Juan Cespedes, on charges of alleged racketeering. U.S. attorneys also charged officials of a dark money group, Generation Now, for being a central part of the scheme.

FirstEnergy was unsuccessful in convincing the state legislature and governor to approve a nuclear bailout plan in 2017 and early 2018. The FirstEnergy subsidiary controlling its two Ohio nuclear plants, FirstEnergy Solutions, then declared bankruptcy in 2018.

The federal complaint describes how Householder’s associates established Generation Now in 2017 and funneled money through the entity, away from public scrutiny, to candidates in the 2018 Republican primary elections who would back Householder’s effort to become Ohio House Speaker and vote in favor of the nuclear and coal bailout. The complaint states that FirstEnergy (referred to in the complaint as “Company A”) was the principal funder of this effort. At least nine candidates backed by Householder won seats.

After the 2018 election, Householder still lacked enough Republican support to gain the speakership, so he made a deal with some Ohio House Democrats to support his bid in return for not introducing legislation to curb unions, plus other concessions. He then won the speakership and helped engineer the passage of H.B. 6. The bill passed and was signed into law by Governor Mike DeWine in 2019. The federal complaint alleges that Householder and his associates then worked “corruptly,” using money funneled from FirstEnergy-controlled accounts through Generation Now, to stop a ballot initiative that would have blocked H.B. 6 from taking effect. In all, the complaint charges, FirstEnergy and its subsidiaries paid Householder’s group about $60 million between March 2017 and March 2020.

After the arrests, Householder was swiftly replaced as speaker, and a number of legislators signed onto bills to repeal H.B. 6. Two defendants pleaded guilty to racketeering charges. Despite the scandal, however, Householder won reelection in November 2020, and legislators wavered on repeal of the bill. The Ohio House and Senate met in lame duck sessions to consider repeal, but the legislative session ended in late December 2020 with the law still in place.

On March 31, 2021, Governor Mike DeWine signed a bill passed unanimously by the state Senate which revoked H.B. 6’s nuclear subsidies, as well as another provision benefiting FirstEnergy, while keeping subsidies for the coal plants and maintaining the renewable energy and energy efficiency rollbacks.

To learn more about the efforts of special interest groups to undermine rooftop solar, and about how the public and policymakers can support the continued growth of local renewable energy, read our report: Blocking Rooftop Solar.

Image: Annual average daily solar energy resources in Ohio. Lighter shades indicate less solar energy available, darker shades indicate more. Map courtesy of the National Renewable Energy Laboratory.