FirstEnergy customer files potential class-action lawsuit seeking refund of rate hike due to ‘ill-gotten gains’ of House Bill 6

Source: By Cory Shaffer, The Plain Dealer • Posted: Tuesday, July 28, 2020

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First Energy Corporation, at the corner of Main St. and Mill St., in Akron.The Plain Dealer

COLUMBUS, Ohio — A FirstEnergy customer on Monday filed what could become a class-action lawsuit in an effort to make the electricity company refund customers for rate hikes that resulted from a billion-dollar nuclear bailout now at the center of a corruption scandal.

The lawsuit filed by Jacob Smith, a North Royalton homeowner, accuses the Akron-based utility of committing civil racketeering by bribing law Ohio House Speaker Larry Householder to introduce House Bill 6 and then illegally bankrolling a dark-money campaign to pressure legislators into supporting the bill and fending off a ballot initiative to repeal it.

The goal of the scheme was to deprive ratepayers of money through the law that required them to pay a monthly surcharge on power the company delivered, the lawsuit says.

The 34-page complaint filed in U.S. District Court in Columbus also asks a federal judge to grant class-action status, a move that would allow hundreds of thousands of customers from across the state to join as plaintiffs and seek refunds.

House Bill 6 required every Ohio customer to pay a new monthly surcharge that ranged from 85 cents for residential customers to $2,400 for operators of large industrial plants. It also stripped requirements that traditional utility companies generate a certain percentage of the power they provide from renewable energy, which supporters said would result in a net savings for consumers.

Sandusky-based attorney Dennis Murray Jr., a former Democratic state representative who represented what was then District 80 from 2009 to 2013, filed the suit on Smith’s behalf. He said that lawmakers’ plans to repeal the bailout law and pass new legislation in its place are not enough.

“[FirstEnergy] hijacked Ohio’s democracy,” Murray Jr. told Monday. “Repeal and replace is likely, but they’re not entitled to keep the change in the meantime. They have to give it back.”

FirstEnergy was referred to as Company A in the 81-page FBI affidavit that charged Householder, an aide and three lobbyists, two of whom had been hired by FirstEnergy to work on the nuclear bailout legislation. No FirstEnergy executives or employees have been accused of any wrongdoing, and company CEO Charles Jones said last week that he believed the company acted ethically.

A FirstEnergy spokeswoman said Monday that she could not comment on the lawsuit, but noted that FirstEnergy Corp., which is named as a defendant in the suit, receives no money from the bailout legislation. The nuclear plants are owned by Energy Harbor, the company that emerged from bankruptcy court proceedings earlier this year after the former FirstEnergy Corp. subsidiary FirstEnergy Solutions filed for Chapter 11 bankruptcy.

The lawsuit seeks damages equal to the amount of money FirstEnergy’s ratepayers have already paid, plus interest, as well as treble damages equal to three times that amount. It also asks a judge to order the company to pay Smith’s attorney’s fees.

Rate disputes generally fall under the jurisdiction of the Ohio Public Utilities Commission, but Murray said he believes ratepayers can bring the action in federal court on the grounds that the scheme laid out in the FBI affidavit amounted to a violation of the ratepayers’ rights that is enforceable in federal court.

Federal investigators say FirstEnergy, identified only as “Company A” in court records unsealed last week, agreed to back Householder’s 2016 election campaign to the state legislature and resume the house speaker role,l in exchange for the passage of a bill to make the company’s nuclear power plants outside Cleveland and Toledo solvent.

Investigators say lobbyists working for FirstEnergy helped the company passed more than $60 million through a 501(c)(4) nonprofit organization called Generation Now to secretly support the campaigns of Householder and those who would vote for him to become speaker in 2018, as well as the efforts to pass the bill and defeat a contentious referendum.

The announcement of the arrests on Tuesday caused a sharp drop in FirstEnergy stock that legal experts told is likely to lead to lawsuits filed against FirstEnergy on behalf of some of its shareholders.