FirstEnergy CEO Steven Strah, who rose through the ranks to replace the company’s previous CEO amid the fallout from federal corruption charges related to FirstEnergy’s efforts to pass a 2019 Ohio law, emailed with company lobbyists that year about an “under the radar” provision of the same legislation that ended up costing Ohio ratepayers millions of dollars.  

Strah was FirstEnergy’s chief financial officer in 2019 when he sent and received the emails. He was promoted to company president in May of 2020 as part of a succession plan for then-CEO Charles Jones eventual retirement.

Jones was terminated by FirstEnergy later that year, after the company received subpoenas as part of the federal criminal investigation that exploded into public view that summer. Strah was announced as the new acting CEO.

When Strah was awarded the top job for the long-term in 2021, he said he would remain focused on “fostering a culture of uncompromising integrity and ethical behavior, starting from the top.” 

Donald T. Misheff, then company chairman, said Strah had already “taken meaningful steps to put FirstEnergy on the right path forward, including ensuring a renewed emphasis on compliance and transparency throughout the company…” 

The internal emails between Strah and company lobbyists who worked on HB 6 were first made public by the Ohio Consumers Counsel earlier this month as part of a motion seeking sign-off from the Public Utilities Commission of Ohio on a subpoena to depose Strah. The emails are excerpted below: 

In its final form, the stealth decoupling provision discussed in Strah’s emails would cost Ohio customers millions of dollars after HB 6 was signed into law by Gov. Mike DeWine later that year. 

FirstEnergy admitted as part of a deferred prosecution agreement with federal prosecutors last summer that it paid approximately $64 million to influence former Ohio House Speaker Larry Householder and ex-Public Utilities Commission of Ohio Chairman Samuel Randazzo to shape and pass HB 6. 

The emails made public by the Ohio Consumers’ Counsel reveal Strah as one of “several other FirstEnergy Corp. executives” described, but not named, in a statement of facts that accompanied the agreement. [A representative of FirstEnergy confirmed during a recent deposition in a related civil lawsuit that Householder is Public Official A, Jones is Executive 1, and FirstEnergy’s former Vice President of external affairs Michael Dowling is Executive 2]:

While House Bill 6 was pending, FirstEnergy Corp. sought from Public Official A specific official action in the form of pressuring and advising other officials to support the “decoupling” provision supported by FirstEnergy Corp. and to support an extension of the term of the nuclear subsidy duration to ten years.

For example, on April 15, 2019, three days after Public Official A  introduced House Bill 6, Executive 2 emailed Executive 1 and several other FirstEnergy Corp. executives and employees about “talking points” for “educating legislators” relating to the “decoupling language which we proposed be included in the recently-introduced Ohio Clean Energy Bill (House Bill 6).” In the same email chain, Executive 2 made clear that the decoupling language in House Bill 6 was the result of coordination with the Speaker’s office. 

Strah signed the detailed statement of facts on behalf of FirstEnergy, affirming the statements found within it as true and accurate.

The quotes in the 2019 email chain included in the statement of facts signed by Strah match lines from the email chain obtained by the Ohio Consumers Counsel and made public earlier this month. 

FirstEnergy agreed to pay a $230 million fine and cooperate with the ongoing federal investigation to avoid the case going to trial. Householder has been indicted on federal racketeering charges and awaits trial next year. Randazzo has not been named or charged in the federal investigation but FirstEnergy has confirmed that Randazzo is Public Official B in the case.

After Strah signed the deferred prosecution agreement in 2021, Jones responded with a public statement in which he denied any wrongdoing

FirstEnergy separately agreed to stop collecting money under the decoupling provision of HB 6 and to refund $27 million already charged to customers as part of a deal with Ohio Attorney General Dave Yost that could ultimately save Ohio ratepayers hundreds of millions of dollars.    

The Ohio Consumers Counsel wants to depose Strah, as well as other current and former FirstEnergy executives and lobbyists, as part of its investigation of FirstEnergy’s misuse of ratepayer money for payments made to influence Householder and Randazzo.

Yesterday, the PUCO stayed four cases involving FirstEnergy and the HB 6 scheme after FirstEnergy and the Department of Justice raised concerns that discovery and depositions in those cases could interfere with the federal investigation. The pause in the cases comes after several weeks of new revelations based on text messages and other records made public by the Ohio Consumers Counsel. 

Strah was on board with the “under the radar” approach to the decoupling provision of House Bill 6 

Several days after legislators introduced HB 6 at a press conference Strah was included on an email with the subject line “Ohio HB 6 – Decoupling Talking Points.docx” sent by Michael Dowling, then FirstEnergy’s senior vice president of external affairs, on April 15, 2019. 

At the time, Strah was still FirstEnergy’s chief financial officer. 

In the email, Dowling said: 

Attached are talking points prepared by our Corp. Comm. team with help from Rates, Legal and External Affairs on decoupling language which we proposed be included in the recently introduced Ohio Clean Energy Bill (House Bill 6). The bill is also attached and the decoupling language appears on lies 517-557. To date, we haven’t seen any media articles that have referenced the language. We’d like it to remain “under the radar” as long as possible, but we know the language will inevitably be questioned and discussed. We are educating legislators and others using the attached talking points. Considering the interest in this legislation, the varying degrees of support for the decoupling language from Ohio’s other EDUs, and the upcoming earnings call, we wanted you to be aware of the language and have the talking points. Please let me know if you have any questions.

Strah responded to Dowling on April 19 and included Eileen Mikkelsen, then FirstEnergy’s director of rates and regulatory affairs, in his email. 

“I greatly appreciate the attached update and completely understand the ‘under the radar’ aspect,” Strah said in his email, in which he posed questions about how the new decoupling provision in HB 6 would affect FirstEnergy’s financial situation. “I also understand the approach we [sic] be a good thing for customers and the company.”

“I did discuss this with Jason Lisowski and Jon Taylor prior to the external affairs folks work to include this language in the bill,” Mikkelsen responded to Strah on April 19. “Both Jason and Jon supported the idea.”

Jon Taylor is currently FirstEnergy’s chief financial officer. Jason Lisowski is vice president, controller and chief accounting officer for the company. 

“Importantly, the bill was moving and we were faced with losing collection of lost distribution revenue in the future and were looking for a solution that we could tuck into the bill that wouldn’t raise a lot of attention but would protect us financially,” Mikkelsen also wrote to Strah. 

Dowling then responded to Strah and Mikkelsen:

Steve, I know you want the financials, but a little more background on how we got to where we are. Shortly after all the Ohio utilities met with Speaker Householder, we received a draft copy of the legislation. The draft legislation (and ultimately the as-introduced legislation) eliminated Ohio’s energy efficiency mandate, creating a significant annual financial hole for us by foreclosing our ability to continue recovery of Lost Distribution Revenue (LDR). Before the bill was introduced, we developed various ways to address the problem that would ensure our ability to continue [sic] recover LDR. Some of our LDR fixes were considered to be politically problematic (by the Speaker’s office) because the solutions made it clear we would continue to recover LDR . After some back and forth with the Speaker’s office, we landed on the decoupling language that was included in the as-introduced bill.

The “under the radar” approach worked and the decoupling provision went largely unnoticed by the public in 2019 compared to the bill’s more contentious ratepayer bailouts for nuclear and coal power plants and rollback of Ohio’s clean energy standards for electric utilities.

The scrutiny predicted by Dowling began in early 2020 after Jones, months before he was fired, highlighted on a call with investor analysts how FirstEnergy’s decoupled rates in Ohio helped to insulate the company from the economic downturn spurred by the Covid-19 pandemic in 2020. 

Householder’s arrest that summer led to renewed scrutiny of HB 6, but it wouldn’t be until 2021 that the nuclear bailout and decoupling parts of the law that prosecutors attributed to FirstEnergy were finally repealed. 

HB 6 “decoupling” was a ploy for higher profits for FirstEnergy

A well-designed decoupling policy aims to remove utilities’ disincentive to help their customers to use less electricity by severing the link between the amount of electricity that the utility sells and the amount of revenue that it collects to cover the costs of serving customers. That can create a “win-win” for ratepayers and utilities since it helps ratepayers save money without harming the utility financially, the National Renewable Energy Laboratory has said. More than half of states have decoupling policies in place, according to the National Conference of State Legislatures

But since House Bill 6 rolled back Ohio’s energy efficiency standards for electric utilities, standards that FirstEnergy had long fought to eliminate, the bill allowed FirstEnergy to enjoy the revenue-saving benefits of decoupling without having to offer customers the money-saving energy efficiency programs. State lawmakers have yet to restore the energy efficiency standards or Ohio’s renewable energy standards; the law’s ratepayer-funded bailout of two-coal power plants largely owned by other utilities like AEP also remains in place today

One month before House Bill 6 passed and was signed into law in 2019, the Ohio Environmental Council pointed to analyses that showed that Ohioans who took advantage of energy efficiency programs saved approximately $8-10 per month on their electricity bills.

FirstEnergy customers who today click on a link for info on programs and incentives in Ohio that can help them save energy and money will see the following message on the company’s website

Our energy efficiency programs are no longer available… 

“In Ohio’s case, what they’re calling decoupling I wouldn’t call decoupling at all,” Martin Kushler, a senior fellow at the American Council for an Energy-Efficient Economy, told the Energy News Network in 2021. “It’s basically a guaranteed set of revenues based on a very high revenue year in perpetuity, which makes no sense at all. It’s not connected to anything tangible that I can see, other than guaranteed revenues for the companies.”

“It’s just a giveaway of consumers’ money, to make them subsidize FirstEnergy year after year to keep its revenues at the level of 2018,” Jeff Jacobson of the Strategic Insight Group said during testimony that year on behalf of the Ohio Consumers Counsel. “Not coincidentally, 2018 is when FirstEnergy had one of the highest sales levels in its history due in part to hot weather.” 

While HB 6 went through revisions as it moved through the legislative process in 2019, both the initial and final versions of the bill included decoupling language that locked in FirstEnergy’s revenues in Ohio at their 2018 high, to the detriment of Ohio ratepayers. 

Most of the “other FirstEnergy Corp. executives and employees” included in Dowling’s emails have since been terminated or separated by FirstEnergy in connection with the HB 6 scheme 

Strah was one of a dozen FirstEnergy executives and lobbyists to whom Dowling sent his April 15, 2019 email with the HB 6 decoupling talking points. 

Of that dozen, five are still employed by FirstEnergy: Strah, Jon Taylor, treasurer Steven Straub, vice president of investor relations Irene Prezelj, and attorney Brian Knipe. 

Dowling and the other seven recipients of his email were either fired or “separated” by FirstEnergy, in the company’s phrasing, during the fallout from the federal criminal investigation. They were: 

FirstEnergy’s response to the emails being made public

The Energy and Policy Institute emailed FirstEnergy to comment on the HB 6 emails involving Strah, and received the following response from spokesperson Will Boye: 

As this involves ongoing litigation, we are not going to comment beyond noting that the documents involving Steve Strah reflect routine activities and communications about the company’s business affairs. As reflected in the deferred prosecution agreement, Steve Strah was not involved in the improper activities regarding HB6 and the former PUCO Chairman. Any suggestion that current FirstEnergy employees played a role in any alleged improper activities at issue is false. 

In a follow up email, the Energy and Policy Institute pointed out that Strah and other current FirstEnergy C-Suite executives are currently the subject of an ongoing internal review as part of a tentative legal settlement of several civil derivatives actions filed by shareholders in response to the HB 6 scandal. 

“… pursuant to the Settlement, FirstEnergy’s new Board will be required to perform an in-depth review of FirstEnergy’s entire senior executive team to determine whether those executives should be permitted to remain,” according to a motion filed by the shareholder plaintiffs involved in the settlement in June. 

“Specifically, the Settlement requires a special committee of independent directors to promptly review the Company’s entire C-Suite and make recommendations concerning the performance of each C-Suite executive, including as to their potential involvement in the bribery scheme,” the same motion said. 

The internal review is expected to conclude in September

Boye responded that “we have no additional comment.” 

FirstEnergy assistant controller Tracy Ashton was asked about the April 2019 email exchange during a deposition in a separate class action civil lawsuit by shareholders seeking to recoup losses sustained during the fallout from HB 6 by the company. The Ohio Consumers’ Counsel made a redacted transcript of the deposition public last week in one of the PUCO’s HB 6-related FirstEnergy cases.

Carole Rendon, one of Jones’ defense attorneys, introduced an April 2019 email chain as an exhibit during to Ashton deposition, and said “if you look at the oldest email in the email chain, it’s directed to Steven Strah amongst others and it’s entitled: ‘Ohio House Bill 6 – Decoupling Talking Points.”   

“Does that help refresh your recollection as to the list of people at FirstEnergy who were working on efforts to try to get House Bill 6 passed and in a manner that was favorable to FirstEnergy?” Rendon asked Ashton, whom FirstEnergy designated as its official representative to discuss the deferred prosecution agreement during the deposition.

“No. Just because they received talking points, I guess I’m not sure that would constitute them working on it,” Ashton responded. 

“Well, they were receiving talking points,” said Rendon. “What were they supposed to do with the talking points? Just read them at bedtime?”

“I don’t know what they were going to do with the talking points,” Ashton said. 

Jones’ attorneys have also alleged that while still CEO, Jones disclosed a $4.3 million payment to Samuel Randazzo’s consulting firm during a December 2018 meeting of FirstEnergy’s Executive Council. FirstEnergy later admitted that a $4.3 million payment made shortly before Randazzo’s appointment as PUCO chairman by Gov. DeWine influenced Randazzo’s official actions as PUCO chairman.

Strah and Lisowski were members of the Executive Council in 2018. FirstEnergy has declined to comment on whether Strah attended the December 2018 meeting described by Jones’ attorneys, but maintains that Strah did not know about the $4.3 million payment in 2018.   

To date, no current or former employees of FirstEnergy have been charged in the federal investigation. 

Jones and Dowling are defendants in a civil lawsuit filed by Yost

Jones, Strah and Dowling are also among the defendants in multiple other civil lawsuits and derivatives actions filed in response to the HB 6 scheme.

Posted by Dave Anderson

Dave Anderson is the policy and communications manager for the Energy and Policy Institute. Dave has been working at the nexus of clean energy and public policy since 2008. Prior to joining the Energy and Policy Institute, he was an outreach coordinator for the climate and energy program at the Union of Concerned Scientists. He is also an alumnus of the Sierra Club and the Alliance for Climate Protection (now the Climate Reality Project). Dave’s research has helped to spur public scrutiny of political attacks on clean energy and climate science by powerful special interests, such as ExxonMobil and the American Legislative Exchange Council (ALEC). His work has been cited by major media outlets, such as CBS News and the Wall Street Journal, and he has served as a speaker on panels at national solar industry conferences. Dave holds a MA in Political Science from the University of New Hampshire, where he also received a BA in Humanities.

2 Comments

  1. […] serving as chief financial officer in 2019, current FirstEnergy CEO Steven Strah acknowledged an “under the radar” decoupling provision in HB 6 that ended up costing ratepayers millions of dollars. (Energy and […]

  2. […] has not been accused of any wrongdoing. However, last month emails from 2019 became public between Strah and two other (since-fired) FirstEnergy executives regarding plans to pass a […]

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