Dive Brief:

• Ohio Attorney General Dave Yost is seeking a court order to block FirstEnergy's former power plant subsidiary FirstEnergy Solutions, doing business today as Energy Harbor, from receiving any of the $1.3 billion in new customer charges imposed by a state law now at the center of a federal racketeering probe. 
• In a civil suit filed Wednesday in state court under state racketeering and corruption laws, Yost is also asking the court to remove any FirstEnergy employees and those of its subsidiaries alleged to have funneled more than $60 million to a web of dark money campaign organizations that worked to win passage last year of the bailout law, House Bill (HB) 6.
• The suit follows Yost's efforts in federal bankruptcy court to indefinitely delay the final payments from the estate of the former FirstEnergy Solutions to its lawyers and lobbying consultants while the federal racketeering investigation continues. The bankruptcy court has several times delayed its ruling on the payments and set another hearing for November.

Dive Insight:

The state attorney general's suit and request for a restraining order comes as Ohio lawmakers hold hearings on competing bills to replace HB 6 with a new bailout bill, or simply repeal it. Some lawmakers are rankled that the board of directors of Energy Harbor earlier this year authorized the company to repurchase up to $800 million of its shares. The stock, currently stable at about $23, is closely held and traded on a limited basis.

The suit is not seeking to eliminate the new charges on the electric bills of customers starting Jan. 1. Only the legislature could do that. Rather, it seeks to block the disbursement of the funds to Energy Harbor while the court considers the suit's broader demands.

Additionally, the suit is not an effort to block the legislation's new customer charges earmarked for two old coal-fired plants on the Ohio River owned by all of the state's utilities. Nor does it attempt to block new funding created by HB 6 for about half dozen utility-scale solar farms in southern Ohio.

Yost is asking the court to immediately control campaign spending by former Ohio House Speaker Larry Householder, who allegedly created the scheme to funnel the more than $60 million in corporate dark money to the campaigns of lawmakers supporting the bailout of the nuclear plants. Stripped of his position as speaker, Householder is still seeking re-election to another two-year term in the House and controls a campaign fund of more than $1 million, according to the suit.

The suit also asks the court to dissolve all of the several non-profit organizations created by Householder and his associates to funnel the corporate money ultimately to candidates for the Ohio House and Senate willing to support the bailout legislation. And it asks the court to prohibit any of the lobbyists who are proven to have been involved in the alleged scheme from practicing their trade for eight years.

And while Yost is not trying to dissolve FirstEnergy, his comments made it clear that he thinks the court ought to remove FirstEnergy employees if the federal investigation proves they were involved in the alleged scheme created by Householder to create HB 6.

"Whoever was responsible at FirstEnergy, we think the court should remove them from their position, that they shouldn't be, because of this wrong-doing, ... in a position to continue," he said during a press conference following the filing of the suit. "It could go farther than that. There might be a reorganization [of the company] that the court would find appropriate."

FirstEnergy had been seeking a bailout since at least 2014 for FirstEnergy Solutions, first before the Public Utilities Commission of Ohio, later through the state legislature as well as from the federal government. FES sought bankruptcy protection in March 2018, emerging as Energy Harbor this past February.

FirstEnergy, which earlier acknowledged receiving a federal subpoena in the criminal investigation, issued a strong rebuttal to the attorney general's suit. 

"The lawsuit unjustly targets the company for lawfully participating in the political process and advocating for policy that is consistent with our interests. Like most public companies, we support policy initiatives that matter to our customers, employees, communities and shareholders. The Attorney General's complaint is without legal merit, and the company intends to vigorously defend itself," the company said in a statement.

FirstEnergy's share price, already damaged by the announcement in July of the federal probe, initially fell further following news of the suit but recovered slightly, closing Thursday at $28.16.

Energy Harbor said it would have no comment on the suit.

Yost said efforts raised by the Ohio Consumers' Counsel in its effort to have the Public Utilities Commission of Ohio order an independent management audit of FirstEnergy to determine whether ratepayer funds were used to support the scheme created by Householder "is a question that ought to be answered." 

The PUCO has indicated only that it intends only to review the company's political and charitable contributions.