Pa. Consumer Advocate: FirstEnergy can't recover $60 million alleged bribe from customers

FirstEnergy Corp. would not be able to raise electric rates on its 720,000 West Penn Power Co. customers in an attempt to recoup what federal prosecutors say was $60 million in bribes allegedly paid to Ohio power brokers.

Prosecutors allege the bribes were paid in an effort to secure a $1.3 billion bailout of two failing nuclear power plants a FirstEnergy subsidiary owned in Ohio.

“ ‘Lobbying’ expenses (by a utility) are not recoverable from the ratepayers. It would be disallowed,” Tanya McCloskey, acting Pennsylvania Consumer Advocate, said Wednesday.

“We do a very detailed review of their expenditures and their expenses,” when a utility asks the Pennsylvania Public Utility Commission for a rate hike, McCloskey said.

The state PUC constantly is “closely monitoring recent cases in Ohio and Illinois involving companies that also operate affiliates in Pennsylvania to safeguard consumers in our state,”

said Nils Hagen-Frederiksen, a PUC spokesman. The commission tracks utility-related developments in other states to evaluate their potential impact, Frederiksen noted.

The PUC also conducts a “rigorous management audit” that reviews all expenses of utilities in Pennsylvania, and those audits are available to the Consumer Advocate whenever a utility seeks a rate hike, McCloskey said.

FirstEnergy serves two million customers in the state through Greensburg-based West Penn Power, as well as Met-Ed, Penelec and Penn Power. Todd Meyers, a spokesman for Greensburg-based West Penn Power, could not be reached for comment.

The FBI on Tuesday arrested Ohio Speaker of the House Larry Householder and four others in an elaborate scheme in which a nonprofit, Generation Now, allegedly received payments from FirstEnergy in its efforts to win the bailout in 2019 and defeat an attempt to put a referendum regarding the bailout on the Ohio ballot. FirstEnergy Solutions, which had been a subsidiary of FirstEnergy, was in bankruptcy at the time and operating the nuclear power plants. The company emerged from bankruptcy in February 2020.

FirstEnergy released a brief statement Tuesday saying it received subponeas and was cooperating with federal authorities in the investigation. The federal prosecutors did not name FirstEnergy in the indictment but listed the firm as “Company A.”

FirstEnergy stock was hammered in trading when the bribery scandal allegations were revealed. Shares fell 17% on Tuesday and were down 18% to around $28 a share in mid- afternoon trading Wednesday.