ML21115A000

Money Trail First Energy

ML21115A000
Person / Time
Site:	Crane
Issue date:	04/25/2021
From:	Donna Anderson FirstEnergy Corp
To:	Document Control Desk, Office of Nuclear Reactor Regulation
SECY RAS
References
General Proceeding, RAS 56071, Three Mile Island 50-320 LT
Download: ML21115A000 (6)

Text

4/25/2021 Moneytrail inFirstEnergy corruption scandal leads outside Ohio Signupforemail updates FirstEnergy improperly usedmoneycollected fromcustomers infive states topayfor expensesconnected totheongoing corruption scandal inOhio,thecompanyhasconfirmed.

Themoneywascollected fromcustomers ofFirstEnergy's regulated distribution andtransmission utilitiesin

Maryland, NewJersey, Ohio,Pennsylvania, andWestVirginia, according tostatements found inannual Form1reports theutilities recently filed this monthwiththeFederal Energy Regulatory Commission.

FirstEnergy first disclosed inFebruary that itsinternal investigation related tothefederal racketeering case against former OhioHousespeaker Larry Householder had:

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Warren Buffett doesn't want years ormore,including vendor

services, that wereeither improperly classified, misallocated tocertain oftheUtilities andTransmission Companies, https://www.energyandpolicy.org/firstenergy-corruption/

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4/25/2021 Moneytrail inFirstEnergy corruption scandal leads outside Ohio orlacked proper supporting documentation.These transactions resulted in amounts collected from customers that wereimmaterial toFirstEnergy, and theUtilities andTransmission Companies will beworking with the appropriate regulatoryagencies toaddress these amounts.

TheEnergy andPolicy Institute found similar statements inannual Form1reports for2020filed withFERC byfourteen FirstEnergydistribution, generation, andtransmission utilities earlier this month;thestatements indicated that themoneywas collected fromcustomers ofall fourteen subsidiaries.

Onestatement foundintheForm1report filedbyJersey Central Power&Light (JCP&L) reads asfollows (highlights added):

GG inconnection with the internal investigation, FirstEnergy recently identifl certain transactions,

which, insome instances, extended back tenormore

years, including vendor

service, that were either improperly classified, misallocated tocertain FirstEnergy utility and transmission companies, or lacked proper supporting documentation.These transactions resulted in amounts collected from customers that were immaterial toFirstEnergy and JCP&L.These utility andtransmission companies will be working with the appropriate regulatory agencies toaddress these amounts.

Nearly identical statements werefoundinForm1sfiled bythirteen other FirstEnergy utilities, only withthe initials oftheutility filing thereport inserted intheplace ofJCP&L's, including Allegheny Generating

Company, American Transmission

Systems, Cleveland Electric Illuminating

Company, Metropolitan

Edison, MonPower,OhioEdison, Mid-Atlantic Interstate Transmission, PATHAllegheny Transmission

Company, Pennsylvania Electric Company,Pennsylvania PowerCompany, Potomac

Edison, Toledo

Edison, and WestPennPower.

TheEnergy andPolicy Institute askedJennifer

Young, aspokesperson forFirstEnergy, toconfirm thatthe moneywascollected fromcustomers ofthedistribution andtransmission utilities that included those statements intheir Form1s.

"Your interoretation ofthedisclosure iscorrect."

Younaresoonded inanemail.

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Warren Buffett doesn't want toreturn funds toratepayers that wereimproperly included incustomer rates."

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4/25/2021 Moneytrail inFirstEnergy corruption scandal leads outside Ohio "During ourlast

call, wementioned that wewereproactively engaging withourregulators torefund customers forcertain vendor payments,"

FirstEnergy CEOSteven Strah saidduring anearnings call this morning.

"Those conversations areunderway ineachaffected jurisdiction."

"InOhio, atthe PUCO's

request, thescopeofourannual audit ofRider DCRhasbeenexpanded toinclude areview ofthese payments,"

Strah said.

Lastmonth, thePublic Utilities Commission ofOhio(PUCO) directed that theaudit ofFirstEnergy's Delivery Capitalization Rider (DCR) be expanded toinclude to"determine whether anyfunds fromratepayers were usedtopayforthevendors and ifso,whetherfunds associated withthepayments should bereturned to ratepayers through Rider DCRorthrough analternativeproceeding."

FirstEnergy didnotrespond toa request for more information abouthowexactly FirstEnergy isworking to refund themoneytocustomers, andinwhich affected jurisdictions.

Exactly howmuchmoneywasimproperly collected from customers remains aclosely guarded

secret, but somedetails havetrickled outofFirstEnergy andmore may beontheway.

Companyofficials saidonanearnings call inFebruary thatthe "transactions" included a$4.3 million payment toanindividual whofit thedescription offormer PublicUtilities Commission ofOhiochairman SamuelRandazzo, whoresigned last yearafter theFBIraided his townhouse inColumbus.The transactions "could" havealsoincluded moneyspentonlobbying andpolitical efforts, company officials said onthecall.

Santino

Fanelli, FirstEnergy's director ofrates andregulatory

affairs, revealed during a March depositionled bytheOhioConsumers Counsel that atleast someofthe$56.6 million that wassecretly routed fromthe FirstEnergy Service Company toGeneration Nowwasmisallocated toFirstEnergy's Ohio utilities, which include OhioEdison, CEI,andToledo Edison.

Generation Nowisoneofthree defendants that havepleaded guilty toracketeering conspiracy charges in theHouseholder case,inconnection witha$60million bribery schemethat resulted ina$1billion nuclear powerplant bailout included inOhio's 2019energy lawHouseBill 6,aswellascoalbailouts andagutting ofclean energy laws.

FirstEnergy disclosed today inaquarterly financial report that itisdiscussing thepossibility ofadeferred prosecution agreement withfederal prosecutors.

Thecompany alsosaidthat it"believes itisprobable thatit will incur alossinconnection withtheinvestigation."

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Warren Buffett doesn't want transmission utilities maybeonthehookforasmuchas$137 million inmoneypaidtotheFirstEnergy Service Companyin2017to2019forexternal affairs support thatincluded lobbying andgovernment affairs.

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4/25/2021 Moneytrail inFirstEnergy corruption scandal leads outside Ohio Below isanexcerpt fromJCP&L's annual Form1report for2020.

Page 51 of Jersey Central Power&Light FERCForm1Annual 2020 i

i

/

/

NameofRespondent ThisReport is:

DateofReportYear/Period ofReport (1)

XAnOriginal (Mo,Da,Yr) ese Cea oe &

Coa (2)A Resubmission

/ /

2020/o ie CorrupAciviy Ac andcivil conspiracy againsFE.FESCandFES, Te plainiffs ineac ofheabovecases.

seek, among oer hings.

orecover anunspecified amounofdamages(unless oerwise noed).

inaddition onAugust10.2020,the United Staes SecuritiesandExchange Commission,trougitsDivision ofEnforcement.

issued anorder directing aninvestigaion ofpossible securities lawsviolaions byFE.andonSeptember 1.2020.

issued subpoenas to FEandcerainFEofficers.

Furher.

inleters daed January 26andFebruary 22.2021.

saffofFERC'sDivision ofInvesigations noified FirsEnergy ta theDivision isconductingan investigation ofFirstEnergy's obbying andgovernmental affairs activiies concerning HB6,andsaffdirecedFirsEnergy o preserve and mainain alldocumensandinformaion relaedo hesameassuch avebeendeveopedaspartofanongoing auditatisbeing conducted byFERC'sDivision ofAudits andAccouning, Theoutcome ofanyoftheselawsuits investigations andaudit areuncertain and coudhaveamaterial adverse effect onFE'soritssubsidiaries financial condiion resulsofoperaions andcashflows,No coningency hasbeenrefleced inFirsEnergy's consolidaed financial statements asalossisneither probable norisalossorrangeofa oss reasonably esimabe inernal Invesigaion RelaingoUniedSaesv.Larry Householder e al.

Aspreviously disclosed.

a commieeofindependen membersofheFE Board ofDirectors(FEBoard) isdirecing an inernal invesigaion related toongoing governmen invesigaions.

Inconnecion wih FirstEnergy's inernal investigation suchcommitee deermined onOctober 29.2020,toterminae FirstEnergy's CiefExecutiveOfficer Charles E.Jones,together withtwooher execuives:

Dennis M.Chack,Senior VicePresiden ofProducDevelopmen Markeing.

andBranding:

andMichael J.Dowling, Senior VicePresiden ofExemalAffairs.

Eachofheseerminaedexecuives violaed cerain FirsEnergy poicies andiscodeof conduc.

Theseexecutives wereterminated asofOctober 29.2020.Suchformer members ofseniormanagementdidno mainain andpromoeaconrol environmen withanappropriae oneofcompliance incerain areasof FirsEnergy's business norsufficienly promotemonitor orenforce aderenceocerainFirstEnergy policies andiscodeofconduc. Furermore.

certain former members ofsenior managemendidno reasonably ensureha relevan informaion wascommunicaed wihin our organizaion andnowihheld fromourindependent direcors ourAudiCommiee,andourindependen audior.

Amonghemaers considered wihrespeco he deerminaion byte commieeofindependen membersofheFEBoardthacerainformer members of senior managemen vioaed certain FirsEnergy policies andiscodeofconducrelaed toapaymenofapproximaely

$4million made in early 2019inconnecion wih he erminaion ofapurpored consuling agreemenasamendedwhichhadbeeninplace since 2013. The counerpary osuch agreement wasanentity associated witanindividua wo subsequently wasappointed toa ful-time roeas an Ohiogovernment official direcly involved inregulating heOhioCompanies, including wihrespeco disribuion raes.

FirstEnergy believes ha paymensundereconsuling agreemen mayhavebeenforpurposes oherhanhoserepresened wihinheconsuling agreemen.

Immediately folowing these terminations, te independent membersofisBoardappoined Mr.Steven E.Strahto te position of AcingChief ExecuiveOfficer andMr.Chrisopher D.Pappasacurren memberofheBoard,o he emporary posiion of Execuive Direcor.

eacheffecive asofOcober29.2020,Mr.Donald T Misheff wi coninueoserve asNon-Execuive Chairman of he Boad.

Additionally, on November8.2020,RobertP. Reffner,SeniorVicePresident andChiefLegalOfficer, and Ebony L.

Yeboah-Amankwah, VicePresiden.

General Counsel.

andChief Ethics

Officer, wereseparaed fromFirsEnergy dueo inacion and conducta theBoarddeermined wasinfluenced byte improperonea te top.Te matter isa subjecof e ongoing interna investigation asitrelates tote government investigations.

Additionaly, onFebruary 17.202, theFEBoardappointed Mr.John Somerhalder o heposiions ofViceChairperson ofheFEBoardandExecuive Direcor ofFE.eacheffecive asofMarch1.2021.

Mr.Misheff will coninuetoserve asNon-Executive Chairman ofheFEBoardandMr.Pappas will coninueoserve on heFEBoard asanindependen director.

Mr.Somerhalder willhelpleadeffors o enhance FirsEnergy's repuaion.

OnMarch7,2021.heFE Boardappoined Mr.SevenE.Sraho heposiion ofChief Execuive Officer ofFirsEnergy, effecive asofMarch8,2021.

OnMarch 7,202, attherecommendation oftheFirstEnergy Corporate Governance andCorporate Responsibility Committee,theFEBoardalso elecedMr.Strah asa Direcor ofFirsEnergy, effecive asofMarch8,2021increasing hesizeofheFE Boardfrom11to12 i i i

i i

n OherLegalMaers Therearevarious

lawsuis, claims(including claimsforasbesosexposure) andproceedings relaedo JCP&L's normalbusiness operations pending against JCP&Landitssubsidiaries.

Te ossorrangeoflossinthesemaersisno expecedo bemateria o

JCP&Lorissubsidiaries.

Theoherpoenially maerial iemsno oherwise discussed abovearedescribed underNoe5,"Regulaory Maers."

JCP&Laccrues legal liabiliies onlywhenitconcludes ha iisprobable thaithasanobligaion forsuchcostsandcanreasonably esimae eamounofsuchcoss.IncaseswhereJCP&Ldeerminesha i isno probabe, butreasonaby possibeha i hasa Contributed toDocumentCloud byDaveAnderson (Energy andPolicy Institute)

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4/25/2021 Moneytrail inFirstEnergy corruption scandal leads outside Ohio Updated onApril 23,2021withadditional information disclosed during FirstEnergy earnings call andin related investors materials posted onFirstEnergy's website.

Postedin:

FirstEnergy Taggedin:FirstEnergy, GenerationNow,housebill 6,Larry Housholder, ohiobribery, ohio corruption Posted byDave Anderson DaveAnderson isthe policy andcommunications manager fortheEnergy and Policy Institute.

Davehas been working atthenexusofclean energy andpublic policy since 2008.Prior tojoining theEnergyandPolicy Institute, hewasan outreach coordinator forthe climate and energyprogram attheUnionof Concerned Scientists.

Heisalsoanalumnus oftheSierra ClubandtheAlliance for Climate Protection (now theClimate Reality Project).

Dave's research hashelped tospurpublic scrutiny ofpolitical attacks onclean energy andclimate science by powerful special interests, suchasExxonMobiland theAmerican Legislative Exchange Council (ALEC).

Hisworkhasbeen cited by major mediaoutlets, such asCBSNewsandtheWallStreet

Journal, andhehasserved asaspeaker on panels atnational solar industry conferences.

Daveholdsa MA inPolitical Science fromtheUniversity ofNewHampshire, wherehealso received a BA inHumanities.

GAllPostsGWebsite Searchhere.

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