FirstEnergy fires CEO amid bribery scandal

Source: By Jeffrey Tomich, E&E News reporter • Posted: Sunday, November 1, 2020

FirstEnergy Corp., the Ohio utility at the center of a $60 million federal bribery case, fired CEO Chuck Jones and two other top executives yesterday, saying they violated company policies and its code of conduct.

The Akron-based utility said the action followed findings by an independent board formed to conduct an internal review of ongoing government investigations. The company provided no further details.

Jones’ termination comes amid a swirl of investigations and lawsuits involving FirstEnergy and its role in the case against former Ohio House Speaker Larry Householder (R) and four associates.

Householder and the others, two of whom pleaded guilty yesterday, face charges that they orchestrated a racketeering scheme to pass energy legislation that provides $150 million a year in subsidies for two Ohio nuclear plants owned by a former FirstEnergy subsidiary (see related story).

Federal investigators have served the utility and its former subsidiary, now called Energy Harbor, with subpoenas for records related to the investigation.

Jones, however, has maintained that FirstEnergy did nothing inappropriate and continued to defend the energy law at the center of the scandal, known as H.B. 6, even though he said the company didn’t benefit financially from it.

The CEO also defended the $60 million the company gave to Generation Now, a dark money group run by Householder to help enact the law.

Two senior vice presidents who oversaw marketing and external affairs at FirstEnergy were also fired yesterday.

To replace Jones, Steven Strah, the company’s president, was named acting CEO. Christopher Pappas, a FirstEnergy board member, was named executive director of the board and will report to Donald Misheff, the nonexecutive chairman.

“We as a board have strong confidence that this leadership transition and Steve’s appointment as acting CEO will position FirstEnergy to move forward with positive momentum and drive long-term shareholder value creation,” Misheff said in a statement.

Jones’ termination and the executive shuffling does little, however, to lift the cloud hanging over FirstEnergy given various investigations, lawsuits and unanswered questions about the company’s role in efforts to pass H.B. 6, said Paul Patterson, a utility analyst at Glenrock Associates LLC.

“Unfortunately, there isn’t a complete picture of what FirstEnergy’s role was,” Patterson said. “It raises a lot of questions about what happened. We don’t know what else is lurking.”

He added that “it’s unclear what the legal repercussions might be, much less the political ones.”

FirstEnergy executives are certain to face questions from analysts and investors when the company hosts its third-quarter conference call Monday morning.

Jones had presided over those quarterly calls since being named CEO in 2015. Overall, he spent 42 years at FirstEnergy, starting as a substation engineer at its Ohio Edison subsidiary in 1978.

His tenure as CEO was marked with years of turmoil involving the company’s competitive generation subsidiary, FirstEnergy Solutions, and the unit’s nuclear and coal plants, which faced mounting pressure from less expensive natural gas-fired generation, renewable energy and flatlining electricity demand.

Jones met with President Trump and unsuccessfully pushed for federal and state aid to keep the company’s power plants in the black, saying government subsidies were justified to maintain grid reliability and resilience.

Ultimately, FirstEnergy closed or sold some of the troubled coal plants, and FirstEnergy Solutions sought Chapter 11 bankruptcy protection in the spring of 2018. And Householder, who had just won election as House speaker, introduced H.B. 6 almost exactly a year later.