Appalachian Power and Wheeling Power filed a brief on Nov. 1 with the state Public Service Commission defending their request for a $297 million fuel cost rate increase.
The PSC already had granted the companies $124 million in fuel cost recovery earlier in the year.
“This proceeding should be guided by rational evaluation, not by emotion; its outcome based on facts, not on feelings,” the companies said in the filing, contending they had prudently incurred ballooning coal procurement costs.
The same day, one week before West Virginia’s general election, Appalachian Power was investing in influencing some very important feelings.
Appalachian Power lobbyist Sammy Gray spent $141.30 on a legislative lunch in Parkersburg that day for West Virginia House Energy and Manufacturing Chairman Bill Anderson, R-Wood; soon-to-become House Finance Chairman Vernon Criss, R-Wood; soon-to-become House Assistant Majority Whip Scot Heckert, R-Wood; House Banking and Insurance Chairman Steve Westfall, R-Jackson; Senate Banking and Insurance Chairman Mike Azinger, R-Wood; and soon-to-become House Energy and Manufacturing Committee member Bob Fehrenbacher, R-Wood.
According to a lobbyist activity filing with the state Ethics Commission, it was the fourth Appalachian Power-sponsored meal in an eight-day span Gray covered for a total of 29 current lawmakers at a cost of roughly $1,300. Gray was in his first month as an Appalachian Power lobbyist.
Gray would spend over $3,700 on meal and beverage expenses for governmental attendees the rest of the year, including an Appalachian Power-sponsored House Republican Caucus dinner in Charleston in December.
That same month, Gray’s name appeared in documents released last month by the Ohio Consumers’ Counsel, an independent utility consumer advocate, related to the FirstEnergy Corp. bribery scandal in Ohio in response to a public records request.
Gray was FirstEnergy’s West Virginia state affairs director prior to joining Appalachian Power in October. He was listed as the contributor on a $90,000 invoice from a group tied to the biggest bribery scandal in Ohio’s history in a Consumers’ Counsel-released document.
The invoice was from the Coalition for Growth and Opportunity, Inc.
Prosecutors’ filing descriptions show that Coalition for Growth and Opportunity is the unnamed group they say was a pass-through organization used to support 2020 primary candidates backed by former Ohio House Speaker Larry Householder.
A high-profile trial against Householder began last month in Cincinnati on charges he led a racketeering enterprise in a bribery scandal with FirstEnergy at its center. Householder has pleaded not guilty.
The $90,000 invoice was attached to a March 2017 email to Gray from former Householder political strategist Jeffrey Longstreth.
Longstreth pleaded guilty in federal court to participating in a racketeering conspiracy in October 2020.
Gray has not responded to requests for comment. Spokespeople for FirstEnergy and Appalachian Power parent company American Electric Power have declined to answer questions about the Gray payment to the Coalition for Growth and Opportunity and related emails.
It’s been up to other probes by agencies outside West Virginia to unearth links to the FirstEnergy bribery scandal given the Public Service Commission’s decision not to investigate potential scandal impacts on state ratepayers.
In July 2021, FirstEnergy agreed to pay a $230 million penalty upon admitting the utility and its subsidiary, FirstEnergy Service Company, conspired with public officials and other entities to pay and conceal millions of dollars through wire transfers to support passage of the plant bailout legislation.
Prosecutors say Householder received roughly $60 million in bribes from FirstEnergy and its affiliates to help secure the bailout.
The Federal Energy Regulatory Commission, the nation’s leading utility regulator, found in an audit released last year that FirstEnergy and its affiliates paid $70.9 million to dark money groups whose donors aren’t disclosed for lobbying and other “non-operative” purposes. The audit focused on improper accounting related to the scandal.
FirstEnergy identified $1.5 million charged to its electric and transmission utilities, including Mon Power and Potomac Edison, that had been improperly recorded, the FERC noted.
FirstEnergy subsidiaries Mon Power and Potomac Edison serve roughly 555,000 customers in 40 counties. The scandal has triggered utility commission investigations in Ohio, Pennsylvania, Maryland and New Jersey, but not West Virginia.
PSC Chairman Charlotte Lane, a former FirstEnergy lobbyist, has said a probe in West Virginia is unnecessary. Lane has asserted the only way West Virginia ratepayers could be affected by the scandal is through a base rate case. Mon Power and Potomac Edison haven’t filed such a case in West Virginia since 2014, predating FirstEnergy affiliate payments totaling $60 million to a dark money group that FirstEnergy admitted to in 2021.
But over 60% of the $6.6 million Ohio regulators found should be refunded to customers was charged through a demand-side management and energy efficiency rider, not base distribution rates.
“[T]here’s been no opportunity for us to examine FirstEnergy’s books to see what if any[thing], has happened as a result of what’s happened in Ohio,” Lane recently told the state House Finance Committee, citing the lack of a base rate case.
But other utility regulators have approved investigations of the scandal’s potential ratepayer impacts in their states outside base rate cases.
In December, the FERC issued a $3.86 million civil penalty to FirstEnergy for not providing information related to its lobbying efforts and associated payments to the agency’s auditors.
AEP also has been implicated in the FirstEnergy scandal. The company backed a purported economic development 501©(4) organization, Empowering Ohio’s Economy, that contributed $700,000 to another 501©(4) group that received undisclosed donations as a benefit to Householder, according to FirstEnergy’s 2021 deferred prosecution agreement with the U.S. Attorney’s Office for the Southern District of Ohio.
AEP has reported receiving two subpoenas from the U.S. Securities and Exchange Commission seeking documents related to the FirstEnergy scandal and AEP policies since 2021.
The utilities’ arsenals of lobbying personnel are among West Virginia’s largest.
FirstEnergy and Appalachian Power each have six lobbyists registered with the West Virginia Ethics Commission, more than any other entity except the Gas and Oil Association of West Virginia, which has seven, according to the state directory of registered lobbyists. Gas and Oil Association of West Virginia spokeswoman Ava Iuliucci said three of the lobbyists listed under the trade group’s name are advisors on regulatory matters rather than lobbyists.
Dave Anderson, policy and communications manager of utility watchdog group Energy and Policy Institute, said the large volume of lobbyists in West Virginia employed by FirstEnergy and AEP speaks to what he said was an undue influence the utilities have over state policymakers.
Julie Archer, coordinator of West Virginia Citizens for Clean Elections, an election transparency advocacy coalition, views utilities covering state lawmaker dinner expenses while lobbying on issues important to them with concern.
Archer is a registered lobbyist for the West Virginia Citizen Action Group, a progressive advocacy organization, and the League of Women Voters of West Virginia. She sees the dinners as an example of disproportionate influence from the utilities who provide in power in West Virginia over the decision-making of those who wield it.
“[I]t makes it more challenging for regular West Virginians to make their voices heard when they can’t be in Charleston wining and dining their representatives,” Archer said in an email.
AEP and FirstEnergy political action committees have liberally supported West Virginia lawmakers. Of the Senate Energy, Industry and Mining Committee’s 13 members, 11 received contributions from AEP or FirstEnergy PACs in their last election cycle — support that totaled over $23,000. Five members received campaign contributions from both utility PACs, including committee Chairman Randy Smith, R-Tucker.
The utilities contributed another roughly $21,000 combined to the campaigns of 11 members of the House Energy and Manufacturing Committee. Bill Anderson, the committee chairman, was one of six panel members to receive campaign contributions from both utility PACs.
Anderson and Smith did not respond to requests for comment.
As West Virginia customers pay more and more to their electric utilities tied to tainted political spending, state ratepayer and government accountability advocates are looking for a power switch that hasn’t come so far this legislative session.
“The bottom line is the wealthy special interests have a disproportionate influence in deciding both who can run for office and what policies our representatives will consider once they are elected,” Archer said.
Legislative priorities
Appalachian Power spokesman Phil Moye noted the company’s lobbyists are responsible for communicating with legislators and providing its perspective whether bills are in the best interests of its customers and the state.
“[S]ometimes those meetings involve expenses, such as meals,” Moye said in an email.
“As a legitimate means of advocating on behalf of FirstEnergy, our employees and customers, our lobbying goal is to explain the positions we take and why to policymakers in a transparent manner,” FirstEnergy spokeswoman Hannah Catlett said in an email.
Most of Appalachian Power’s and FirstEnergy’s 12 lobbyists registered in West Virginia did not respond to or declined requests for comment. One that did comment was a former chief of staff for Sen. Joe Manchin, D-W.Va., when Manchin was governor and a subsequent former chair of the West Virginia Democratic Party.
That lobbyist, Larry Puccio, last listed energy regulation under lobbying activity for the first quarter of 2022. He said in a phone interview FirstEnergy has had no lobbying requests for him this legislative session.
Puccio is registered as a state lobbyist for a wide range of organizations, as are many lobbyists for FirstEnergy, Appalachian Power and other groups with several lobbyists. Puccio is registered to represent 14 other organizations, including Diversified Gas and Oil Corp., Google LLC, Alpha Metallurgical Resources and Greenbrier Resort Hotel, the luxury resort owned by Gov. Jim Justice.
Dave Anderson said Puccio’s lobbying for both FirstEnergy and Justice’s resort seems “particularly problematic” considering the history between one of Justice’s coal companies and the Pleasants Power Station.
In 2018, FirstEnergy Solutions Corp., then owner of the Pleasants Power Station, sued Justice’s Bluestone Energy Sales Corp., contending Bluestone cost FirstEnergy Solutions $3 million by breaching a coal purchase agreement entered into less than a month before Justice was elected governor in 2016. Bluestone and FirstEnergy Solutions successor Energy Harbor reached a settlement in 2021 that included a 10,000-ton coal transfer from Bluestone.
FirstEnergy Solutions Corp., a FirstEnergy generation subsidiary that ran coal and nuclear plants, emerged from bankruptcy in 2020 as independent power producer Energy Harbor. Energy Harbor is expected to close the Pleasants plant this spring as it transitions to carbon-free energy.
The Legislature bailed out the plant in 2019 by approving $12.5 million in annual tax breaks.
Now state legislators and Justice are urging FirstEnergy to buy the Pleasants Power Station, a move some ratepayer advocates fear would add to what has been a disproportionately heavy burden on West Virginia ratepayers in recent years.
West Virginia electric bills have ballooned as the state has clung to coal. State ratepayers faced a 90% climb in average residential electricity retail price from 2005 to 2020, according to U.S. Energy Information Administration data. Only Michigan had a greater increase by percentage.
Puccio said any time he encounters a potential conflict when taking on a new client, he clears it with the existing client first and then the new client. Puccio declined to say what groups he was lobbying for at the state level this session.
Good lobbyists “do their homework” and bring legislators data so they can “read, do their due diligence and make a good, informed decision,” Puccio said.
Moye said Appalachian Power is following over 50 bills this session that might impact the utility’s ability to provide electric service. Moye declined to highlight specific bills.
Appalachian Power has indicated opposition to proposed legislation that would enable community solar in West Virginia.
Community solar is a setup in which customers receive solar energy without having to install their own system, typically benefiting from energy generated at an offsite array.
As of December, 22 states had policies supporting community solar deployment, according to the U.S. Department of Energy.
Moye claimed community solar would “socialize” electric infrastructure maintenance costs among nonparticipating customers, causing electric utility rates to rise.
But federal and local government officials throughout the country have said community solar can slash energy costs covered by subscribers, with proponents projecting savings of 10% or more. Community solar supporters say it would open up affordable renewable electricity to low- and moderate-income customers and extend the benefits of solar to people unable or unwilling to have solar arrays installed where they live.
Community solar would mean more options for West Virginians other than the solar generation offered by utilities enabled by Senate Bill 583 of 2020, a measure that opened up the state to utility-scale solar development.
Community solar adoption topped a list of 2023 legislative priorities on energy issues published by the West Virginia Environmental Council, an environmental advocacy group.
SB 627 and House Bill 2159, neither of which have been taken up in committees, would enable community solar by allowing subscribers to gain credits against their utility bills. They would require the PSC to create rules that “ensure broad competition” for community solar facility development and operation, including a separate program for third-party, non-utility entities that produces at least half of program capacity.
When asked about West Virginia community solar legislation, Catlett noted that FirstEnergy subsidiaries Mon Power and Potomac Edison have their own solar programs.
The Environmental Council and the West Virginia New Jobs Coalition, a progressive economic development-focused group, urged supporters in emails this week to press Senate Government Organization Committee members to approve SB 627. In the House, HB 2159 has languished in the Anderson-led Energy and Manufacturing Committee.
The House did approve HB 3308, an Appalachian Power-supported bill that would authorize the PSC to issue financing orders to utilities to allow recovery of certain costs through securitization via consumer rate relief bonds.
The PSC, Appalachian Power and FirstEnergy have touted that provision as a way to spread out costs recovered by utilities from captive ratepayers over time and to reduce rate shock.
James Van Nostrand, director of the Center for Energy and Sustainable Development at the West Virginia University College of Law, has criticized HB 3308 as a way for utilities to avoid consequences of mismanaging power costs.
HB 3308 defines eligible costs to be securitized as historical and projected costs, including financing costs, carrying charges on under-recovery balances, and costs incurred prior to any enactment of the legislation, related to environmental control, fuel or storm recovery costs or underappreciated generation utility plant balances.
Van Nostrand called HB 3308 a good short-term bill for ratepayers that will allow them to duck a steep rate increase but will mask long problems from financing recurring costs with long-term bonds.
“It’s like getting a second mortgage on your house to buy groceries,” Van Nostrand said in an email. “Just a poor financial management practice.”
Meals and bills
Late February usually is an especially consequential stretch in West Virginia’s 60-day legislative sessions. Bills are due out of committees in their chamber of origin Sunday. Bills that aren’t budget or supplementary appropriation legislation must pass their chamber of origin by Wednesday.
Monday marked one year since Appalachian Power lobbyist Steve Stewart spent $140.98 each on meals and beverages for Anderson and then-Energy and Manufacturing Committee Vice Chairman John Kelly, R-Wood, according to a state lobbyist activist report filed by Stewart. The report notes they discussed energy issues.
Stewart reported spending another $482.34 over the following 10 days on meals and beverages for House Judiciary chairman and 2024 gubernatorial candidate Moore Capito, R-Kanawha; Senate Energy, Industry and Mining Committee member Eric Nelson, R-Kanawha; Delegate Brandon Steele, R-Raleigh; and Delegate Geoff Foster, R-Putnam.
That same month, the Citizens Utility Board, an Illinois consumer advocate group, released a ranking of electric utility performance among all states in which West Virginia ranked dead last.
“FirstEnergy and AEP’s lobbying is detrimental to everyday ratepayers in West Virginia,” Dave Anderson said.
