Energy

FirstEnergy Scandal Could Do Irreparable Harm To Nuclear Power


Ohio’s Republican-dominated state legislature stood firm against its former speaker of the house: Rep. Larry Householder, who was indicted last July along with others for allegedly taking bribes to protect the state’s nuclear power industry. Two of the accused have already pled guilty. The beneficiary of the $1 billion state bailout, FirstEnergy

FE
Corp., is reportedly in talks with prosecutors. 

Unfortunately for the nuclear industry, this event cannot be viewed in isolation: it will have a rippling effect that will no doubt jar an industry that is perpetually trying to regain its balance. Once the case fully comes to light, the fallout from it could be much worse than any preceding event — a reference to Three Mile Island and the San Onofre Nuclear Station in Southern California, which were more PR failures than threats to public safety.

“FirstEnergy also admits it paid $250,000 to Generation Now in March of 2017” when the alleged scheme began, says the Energy and Policy Institute. Altogether, the utility admits to paying $56.6 million.Longstreth and Generation Now were both indicted alongside Householder last year, and have since pleaded guilty to participating in a racketeering conspiracy.”

Prosecutors allege that “Company A” is at the heart of the matter — an entity that everyone knows: FirstEnergy. It is now alleged to have taken monies from its regulated transmission and distribution units in multiple states and to have given it to this shadowy group called Generation Now. The Energy and Policy Institute got confirmation from FirstEnergy that the money came from customers of the distribution and transmission utilities. 

Former Speaker Householder is alleged to have gotten a piece of that $60 million — charges that he vehemently denies. He likens his expulsion to a political exercise and similar to what former President Donald Trump experienced after being twice impeached. But unlike congressional Republicans, Ohio’s Republican-controlled House voted overwhelmingly to expel the legislator: 75 to 21, with the minority arguing that any expulsion should come if the man is convicted. 

At issue is an Ohio law calling for a $1.3 billion rescue package — a measure that essentially taxes every electricity consumer and then directs that money to bail out FirstEnergy’s nuclear operations. The $60 million alleged bribes also helped beat back a voter initiative that would have thrown out that law. 

The Damage Done

FirstEnergy, realizing this event has soiled its reputation, fired some key executives — ranging from the ethics officer to the chief executive officer, Charles Jones. Prosecutors alleged that Jones and Householder had 84 phone contacts between 2017 and 2019. While both men deny wrongdoing, FirstEnergy annual financial filings said that it was discussing a “deferred prosecution” — an agreement in which prosecutors grant amnesty if the defendant meets certain requirements. For starters, it would have to pay back customers for the monies it took from them and then misappropriated. 

“This is likely the largest bribery, money laundering scheme ever perpetrated against the people of the state of Ohio,” said then-U.S. Attorney David DeVillers, at the time of the indictments. “This was bribery, plain and simple. This was a quid pro quo. This was pay to play.” The prosecution alleges that the payments were tantamount to “bags of cash” that went unregulated and unreported. 

Ohio’s lawmakers, like those from Connecticut, Illinois, New York, and New Jersey, voted to save their nuclear power plants not just because they are reliable and clean but also because they employ thousands of people. In Ohio, the $1.3 billion bailout package was intended to help the nuclear subsidiary FirstEnergy Solutions, now known as Energy Harbor. 

But Ohio’s residents could not have possibly known this legislation was scandalous — an act of alleged public corruption that could cripple an already battered nuclear industry. According to the Nuclear Energy Institute, there are 96 nuclear reactors in 29 states. Altogether, they supply about 20% of the country’s electricity and about 55% of its carbon-free power. 

But those nuclear reactors have trouble competing with plants running on shale gas, which is much cheaper. This fact, along with the high capital costs it takes to construct those plants, has severely curtailed nuclear development in this country. 

As a result, several nuclear plants have closed down since 2013 and others are on the chopping block. The practical implications of moving away from nuclear and into natural gas have been greater CO2 emissions. When Southern California Edison closed its San Onofre Nuclear Station in 2013, CO2 emissions jump by 35% — the key rationale to keep nuclear units in operation. 

“No matter how good this policy is … the process has forever tainted the bill and now the law itself,” Ohio’s Governor Mike Dewine said. 

The American nuclear energy sector has never learned the most basic lesson of Three Mile Island, which suffered a partial meltdown of its core in 1979: release accurate information and do that as soon as the facts are known. Secrecy does not work. That is what took down the San Onofre Generating Station, which covered up a small radiation leak. It then lost all credibility with regulators and the public. FirstEnergy could suffer similar consequences, none of which is good for the already bruised nuclear power sector.



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