Columbus And Cincinnati Sue To Stop Consumer Fees For Nuclear Bailout

Oct 27, 2020

Columbus and Cincinnati have filed a lawsuit to halt increased electricity fees tied to HB6, the nuclear power plant bailout at the center of a federal racketeering probe.

The lawsuit was filed in Franklin County’s Court of Common Pleas on Tuesday. In an emailed statement, City Attorney Zach Klein wrote that Columbus residents would be responsible for $25 million of fees.

“Columbus and Cincinnati are suing to make sure Ohioans get to keep their hard-earned money, especially as we head into the winter months during a pandemic,” he writes.

HB6 bails out two nuclear plants owned by FirstEnergy's former subsidiary Energy Harbor with $150 million per year in ratepayer subsidies. The law also provides subsidies for two coal plants and eliminates Ohio's green energy mandates.

To pay for the nuclear power plant subsidy, residential ratepayers will see a new $0.85 charge on monthly electric bills. An additional $20 million a year will be generated through that charge for solar farms.

Tuesday's lawsuit claims that HB6 amounts to unconstitutional lending of state credit to a private enterprise. It seeks to strike down the law and prevent the fees from being collected from ratepayers.

“We are filing suit to protect ratepayers from being taken advantage of in one of the largest political corruption scandals in state history,” Cincinnati Mayor John Cranley wrote in a press release. “We will aggressively work to seek an injunction from the courts to stop the unconstitutional corrupt statute from taking effect in January 2021.

In 2019, the owner of the Davis-Besse and Perry nuclear power plants – then under the name FirstEnergy Solutions – filed an argument in Ohio Supreme Court to block a referendum attempt. The company said the new charges were a tax and therefore not subject to a referendum.

However, opponents of HB6 said the new electric bill charges could not be considered a new tax, since rate increases are frequently implemented through the Public Utilities Commission of Ohio and taxes must be approved by the state legislature. The Ohio Supreme Court decided to not weigh in on that issue.

The lawsuit names FirstEnergy as a defendant, but the hundreds of millions in subsidies will actually go to Energy Harbor, not FirstEnergy.

"We believe that FirstEnergy has inseparable ties to the origination and purpose of HB6," Klein said. "Additionally because the State of Ohio is required to collect and disperse the fees, we feel comfortable at this time to list Ohio governmental actors and FirstEnergy as the defendants. Of course, if we learn more as facts are uncovered, we will amend our complaint accordingly."

A bipartisan group of lawmakers have voiced support for repealing and possibly replacing the energy bill, after federal authorities announced bribery and racketeering charges against former House Speaker Larry Householder and four associates. Householder and others are accused of using $60 million in dark money for their personal and political gain, in exchange for passing the law and defending it from the potential referendum.

The investigation says a utility, widely believed to be FirstEnergy, and affiliates funneled millions into the dark money group to promote the $1 billion bailout. FirstEnergy CEO Chuck Jones has said he believes his company "acted properly in this matter," and the company is not currently facing charges.

So far, though, neither chamber has moved on repealing HB6, and the increased charges are set to show up on consumers’ utility bills in January. Ohio Attorney General Dave Yost is pursuing legal action to block those fees from going to the nuclear plants, although they'll still be collected from ratepayers.