There's a new bill in the Ohio House designed to require more transparency from utility companies.
It's an effort to unravel the complicated factors that allowed the House Bill 6 corruption scandal to unfold, said Rep. Lauren McNally (D-Youngstown).
She introduced the bill and testified in support of the legislation last week before the House Government Oversight Committee.
The bill would ban public utilities from recouping their costs for political expenditures from utility customers, require utility companies to report their political expenditures and fine utility companies that don't follow the rules.
"The bill itself is pretty simple. It's going to do three things: the first being to ban utilities from using ratepayer money to lobby, donate to political groups and non-profits or public relation campaigns relating to lobbying and politics," McNally said during an interview Thursday. "Then it'll have a disclosure piece requiring utilities to disclose an itemized list of their political expenditures. And then the enforcement piece is that it will levy fines against the utilities if they engage in politics with ratepayer funds."
Those fines would be placed in a fund to help people who need assistance with their utility bills.
This wouldn't be the first bill that has sought legislative changes in the wake of 2019’s House Bill 6.
While the $1 billion in nuclear subsidies promised to FirstEnergy were reversed after the $61 million-bribery scandal came to light, the structure that allowed the scandal to take root remains in place, and so do parts of the bill.
That includes subsidies for coal power plants in Ohio and Indiana that are expected to total $1 billion by 2020. Twelve utility companies own a share of those plants. American Electric Power Company owns the largest share at 40%.
Evidence during the trial of former Ohio House Speaker Larry Householder revealed that AEP lobbied for the coal plant subsidies to be put into House Bill 6 after the company learned of the subsidies FirstEnergy's nuclear plants were getting.
A bill to repeal those subsidies was introduced in March 2023 by Democratic lawmakers Reps. Casey Weinstein and Sean Brennan. The legislation was referred to the Rules and Reference Committee, but hasn't had a hearing.
McNally said she's more optimistic for her utility accountability bill, because it isn't seeking to undo something that other lawmakers don't want to undo. Instead, it introduces new accountability measures.
The bill adds in checks that could have prevented, or at least alerted the public to House Bill 6, McNally said.
The scandal was only uncovered after federal investigators who were looking into corruption in Cincinnati city government heard something that sparked their interest in FirstEnergy, Householder and House Bill 6.
The fallout still hasn't been completely sorted out. Civil and criminal cases are ongoing. Householder is appealing his 20-year sentence. The lobbyist indicted in the case, Neil Clark, died by suicide. The former top utility regulator Sam Randazzo died by an apparent suicide while he faced a slew of state and federal charges.
McNally said the gravity of the situation calls for meaningful change to state law.
"I don't see how anybody on either side of the aisle can sit by and not take action in some manner," McNally said.
The bill was granted a hearing in the Government Oversight Committee, another cause for her positive outlook.
"This was just introduced maybe a month ago, and it's already gotten its first hearing. So that tells me that they are motivated to take that action and to move a bill. This is the only bill on the table that's addressing this issue so far," McNally said.
But, not everyone is on board.
Rep. Bill Seitz (R-Cincinnati) helped pass House Bill 6. He said HB 444 is "excessive" and called elements of the legislation "silly."
"What Rep. McNally is trying to accomplish in this bill is already done in part of the law that PUCO (Public Utilities Commission of Ohio) follows anyway," Seitz said.
That commission was also caught up in the scandal. FirstEnergy admitted to federal investigators that they bribed Randazzo just before he became chairman of the PUCO. They said he made decisions outside of HB 6 in favor of the utility companies. The PUCO’s investigations were paused in deference to federal investigations.
McNally said the existing rules are weak and haven't been enforced.
“There is no law regarding this. Only a long standing practice by PUCO that clearly doesn’t work because First Energy was able to come up with $61M to bribe officials,” she said.
She said if the rules had been enforced, First Energy wouldn't have had $61 million lying around for bribes.
"These people who are in trouble for House Bill 6 are in trouble because they bribed. They're not in trouble for violating a PUCO standard or PUCO rule or a state law. And this law, that's HB 444, would change that. It would have allowed us to uncover this and charge them under a state law,” McNally said.
McNally said it’s justified to make utility companies disclose their political spending, because HB 6 has shown what happens when it goes unchecked in dark money channels. And, she said the public really is paying for it, one way or another.
"It is money directly coming out of their pockets to pay for all of it, because there's no other way for an electric company to make money than then to pass on those fees to ratepayers,” McNally said.
Seitz said the public disclosure requirement is a bad idea and it won't gain traction in Ohio.
Fines
Seitz said the PUCO can already fine utility companies, and that the state doesn’t need higher fines.
"I think the penalties prescribed in the bill are excessive," Seitz said.
McNally said utility companies can handle the fines, or they could just follow the rules. She said she's more worried about the electric company consumers propping up utility company profits. And, she said fines are the best enforcement tool available to regulators.
The bill prioritizes Ohio’s electric consumers over utility companies that have already benefited from the OVEC subsidies and other increases over the years, McNally said.
“I think the $500,000 a day Ohioans are still paying through increased electric bills and fee hikes are excessive,” she said.
Silly
Seitz’ other complaint with the bill is that it applies to “all public utilities, not just electric utilities.”
“And that's a very long list. Telephone companies, private water companies, pipeline companies, etc.. So it's pretty silly,” Seitz said.
McNally said to call “silly” any effort to correct the wrongs that allowed HB 6 to happen, “is a slap in the face to Ohioans.”
The bill defines a “public utility" as “an electric light company, gas company, or natural gas company.”
McNally said all of those companies “should have to play by the same regulatory rules and no business, whether a utility or not, should be allowed to force consumers to pay for lobbying and politicking, especially without the consumer even knowing they are paying for it.”
“We already force public entities like municipal owned water to abide by rules like this, so why shouldn’t private owned water companies have to? What makes the private companies so different that they get to play by different rules?”
Accountability
McNally said the bill opens up new avenues of accountability and that other states have learned lessons from House Bill 6 but Ohio hasn’t.
"There have been so far three other states who have taken action in this manner of getting politics out of our utility bills. We unfortunately are not one of them, even though we in Ohio are the reason this conversation is even taking place nationwide,” McNally said.
McNally said the bill should be the start of a shift in Ohio law.
"It is not meant to solve all of the complexities of utility, oversight and utility costs and regulations. And what happened, all of the ins and outs that happened with HB 6. This is like a block, right? This is one brick to start to build us back and build back consumer trust and built in protections and build back state legislature trust,” McNally said.
