Meet the utility CEO at the center of an alleged $60M bribe

By Benjamin Storrow | 07/24/2020 06:54 AM EDT

Charles Jones, the leader of FirstEnergy, met with President Trump and other administration officials before turning to Ohio lawmakers to secure financial help for his struggling power plants.

FirstEnergy Corp. CEO Charles Jones oversees the electric utility that was linked to a bribery scheme to subsidize its coal and nuclear plants.

FirstEnergy Corp. CEO Charles Jones oversees the electric utility that was linked to a bribery scheme to subsidize its coal and nuclear plants. FirstEnergy

This story was updated at 8:15 a.m. EDT.

Charles Jones had already established himself as one of the most visible utility executives of the Trump era by the time he took the stage at the Edison Electric Institute’s annual conference in San Francisco in late 2018.

The CEO of FirstEnergy Corp. had spent much of the previous two years championing the idea of a federal bailout for struggling coal and nuclear plants. But on this day in November, Jones was downplaying his role in the failed effort by the Department of Energy to subsidize coal and nuclear facilities.


"I got a lot of media attention because I also agree with them," Jones told the financial analysts, utility officials and lobbyists at the conference. "But if anyone thinks a little CEO from Akron, Ohio, can go to Washington, D.C., and tell them what to do, that was just so far out there."

A "little CEO" he is not. Jones met personally with President Trump in an attempt to prevent FirstEnergy’s power plant division from declaring bankruptcy (Energywire, Aug. 23, 2017). He also met with then-Energy Secretary Rick Perry to discuss the agency’s plan in the early days of the administration (Greenwire, Aug. 21, 2018). And he leads a utility with 6 million customers whose political influence in Columbus, the Ohio capital, is legendary.

Today, the speaker of the Ohio House of Representatives stands accused of accepting more than $60 million in FirstEnergy bribes in exchange for passing a measure that could send more than $1 billion to the company’s former power plants.

Jones is at the center of it all, though his exact role is unclear. The FirstEnergy boss is not named in the criminal complaint, but federal investigators point right at him by including long, verbatim statements Jones made in public (Climatewire, July 22). Almost anyone could have identified him with a Google search.

The CEO named in the criminal complaint allegedly had frequent contact with Larry Householder, the House speaker who was arrested Tuesday on racketeering charges. The same CEO also attended a meeting in which Householders’ political advisers were discussing plans to defeat a ballot measure aimed at overturning H.B. 6, which provided $1.5 billion in subsidies to two nuclear plants owned by a former FirstEnergy subsidiary, according to prosecutors.

The complaint alleges that Householder’s team bribed signature collectors to stop them from completing petitions that were needed to put the initiative on the ballot.

In an exchange outlined in the criminal complaint, FirstEnergy lobbyist Matthew Borges described leaving the meeting and taking the CEO to the airport. On the way, they made an unplanned stop at a library to see if they could find a signature gatherer.

"So we stopped and for sure there was one there. … The guy wants to get out and talk to him," the complaint quotes Borges as saying. "It was the CEO of the company."

Jones did not respond to a request for comment. A FirstEnergy spokeswoman declined to comment. Jones is expected to address financial analysts as part of the company’s second-quarter earnings call today.

In a statement announcing the company’s earnings yesterday, Jones said, "We intend to cooperate fully with the Department of Justice investigation involving the Ohio speaker of the House, and we will ensure our company’s involvement in supporting H.B. 6 is understood as accurately as possible."

He added, "I believe that FirstEnergy acted ethically in this matter. At no time did our support for Ohio’s nuclear plants interfere with or supersede our ethical obligations to conduct our business properly. I believe the facts will become clear as the investigation progresses."

Whatever his role might have been in the bribery scandal, Jones has been an outlier among utility executives in recent years. While other utilities like Exelon Corp. have pushed for nuclear subsidies, few have gone to the lengths Jones did to promote coal at a time when many power companies are shuttering uneconomical plants.

Instead, Jones has advanced the argument that a grid reliant on gas and renewables would not be able to withstand extreme weather events.

He often approached the Trump administration with Bob Murray, the coal magnate who was forced out of his company after it declared bankruptcy last year.

"I clearly believe we are making a mistake as a country if we continue to let these fuel-secure assets close as rapidly as they are, both nuclear and fossil," Jones told financial investors in April 2017, as FirstEnergy was lobbying for a federal bailout in Washington.

FirstEnergy’s pursuit of a bailout came after a series of large bets that saddled it with debt and left it ill prepared for the wave of cheap natural gas that was unlocked by the shale revolution, according to longtime observers of the company.

FirstEnergy championed deregulation of Ohio’s electricity market in the late 1990s. The move ostensibly divided the utility business into two units, separating power plant owners from transmission and distribution utilities. The theory was that competition among power plant owners would drive down electricity costs.

The separation was hardly complete, however. FirstEnergy, whose transmission and distribution business remains a regulated monopoly, bought power plants and placed them under the management of a subsidiary, FirstEnergy Solutions.

The company then made a series of costly mistakes, said Ned Hill, a professor of economic development at Ohio State University and a longtime observer of the state’s power market.

First, it decided to refurbish the Davis-Besse nuclear power plant after a hole was found in the reactor in 2002. Then it purchased coal-heavy Allegheny Energy for $4.7 billion in 2011. That deal heaped debt on the company just as an influx of cheap natural gas was about to erode coal and nuclear’s position in the region’s power market, Hill said.

"FirstEnergy has been acting like a cornered junkyard dog because their finances are a mess," he said.

The company has long been hostile to renewable energy and climate policy. Tony Alexander, FirstEnergy’s former CEO, vocally opposed the Clean Power Plan, a regulation approved under President Obama to cap carbon dioxide emissions from power plants.

In a 2014 speech at the U.S. Chamber of Commerce, Alexander declared that "electricity is under attack in our country," and he argued that "the government interference is now aimed at stifling the growth and use of electricity — and picking winners and losers in the competitive marketplace" (Energywire, April 9, 2014).

Soon after taking over in 2015, Jones blamed EPA regulations for the retirement of several old and lesser-used coal plants.

FirstEnergy also pushed to freeze the Ohio renewable portfolio standard in 2014. The bailout bill that passed last year did away with the RPS altogether. At the same time, the company has consistently sought public money to bolster its balance sheet.

In 2016, Ohio regulators approved a deal that would have allowed FirstEnergy to contract for power from FirstEnergy Solutions, essentially guaranteeing income to seven coal plants and one nuclear plant, only to see the arrangement rejected by the Federal Energy Regulatory Commission.

The company then started putting its weight behind a legislative push to receive state subsidies for its two nuclear plants. That push was unsuccessful until Householder guided H.B. 6 across the finish line last year.

The bill also included financial support for a pair of coal plants owned by a consortium of power companies, including FirstEnergy. And soon after its passage, the company reversed its plans to close its W.H. Sammis coal plant. By the time the bill passed last year, FirstEnergy Solutions had declared bankruptcy. It emerged as a new company named Energy Harbor Corp. in February.

Todd Snitchler, a former Ohio lawmaker and former head of the Public Utilities Commission of Ohio, called FirstEnergy’s presence at the Statehouse "pervasive."

He said the company had a long history of looking for public money in Columbus and Washington to prop up its plants.

"It strikes me that if an entity worked as hard on business operations as they did trying to force through government support for their business, they probably would have been able to compete with other entities that were spending their time and energy working on being more efficient and competitive instead of seeking bailouts from taxpayers or ratepayers," said Snitchler, who now leads the Electric Power Supply Association, a trade group representing merchant power plant owners.

EPSA, as the group is often known, fiercely opposed the Ohio bailouts and DOE’s subsidy plan.

Proponents of Ohio’s bailout law have sought to cast it as a clean energy initiative, saying it supports low-carbon electricity generated by Energy Harbor’s two nuclear plants. But even nuclear supporters would like to see the law repealed.

Third Way, a center-left think tank in Washington, has advocated for measures to save nuclear plants in recent years, arguing that they are likely to be replaced by natural gas facilities if they are retired. The group nevertheless announced its opposition to the law last year.

"The idea that a policy that guts renewables and energy efficiency and links the fate of zero-carbon nuclear to coal could masquerade as a clean energy bill shows how bankrupt the policy was," said Josh Freed, who leads Third Way’s energy program.

Renewable interests were even more blunt.

"We knew we were in an unfair fight all along, and you never take pleasure in someone else’s pain, but there’s a bit of a relief in knowing that everyone else now knows what we’ve long suspected," said J.R. Tolbert, who oversees state policy for Advanced Energy Economy, a trade group representing green businesses.

"If the interests of dirty coal and uneconomic nuclear power is going to win, they can’t win a fair fight anymore."