Leah C. Stokes | Vox

An FBI investigation shows Ohio’s abysmal energy law was fueled by corruption

2020-07-23T21:25:37-04:00

Republican Gov. Mike DeWine of Ohio gives his victory speech on November 6, 2018, in Columbus, Ohio. While DeWine has called for Larry Householder’s resignation, he has not called for the repeal of the coal bailout. | justin Merriman/Getty Images

Update, July 23: On Thursday, the day after this article was first published, Ohio Gov. Mike DeWine called for the repeal of HB 6, the energy bill passed in 2019 now tied to a bribery scandal in the Ohio legislature.

On Tuesday, the news broke that the FBI had arrested Ohio Speaker of the House of Representatives Larry Householder, the architect of HB 6, a law that passed in July 2019. That bill, widely recognized as the worst energy policy in the country, gutted Ohio’s renewables and energy efficiency laws while bailing out several coal and nuclear plants.

As I wrote in my book, Short Circuiting Policy, the law was a multibillion-dollar gift to FirstEnergy, a private electric utility that has resisted climate policy for decades. It turns out it was a gift paid for with $61 million in bribes.

Spending a few million to get more than a billion dollars? Not a bad return on investment.

Unfortunately, this kind of corruption is not an aberration for the electric utility industry. Across the country, most private utilities are resisting the clean energy transition, and many are buying off politicians with campaign contributions to do it. What’s more, the industry celebrates it — the Edison Electric Institute, the national private utility association, gave FirstEnergy an award for its work to pass HB 6.

Corruption like this within the electric utility industry is a barrier to solving the climate crisis. But the way forward is clear: Citizens must demand that politicians stop taking money from these fossil fuel companies and start holding them accountable.

Something is rotten in the state of Ohio

In March 2018, FirstEnergy spun off its debt into FirstEnergy Solutions, a subsidiary that went through bankruptcy. To deal with its financial problems, the company sought billions in subsidies from the Ohio legislature for its ailing coal and nuclear plants. And it had a champion in Speaker Householder, who was there every step of the way, working diligently within the legislature to get FirstEnergy its money.

By July 2019, the legislative session was over and FirstEnergy had not secured its bailout. Householder kept working, calling his colleagues back to the chamber with little notice. With narrow margins, he delivered the votes, and that same day Gov. Mike DeWine signed the FirstEnergy bailout into law.

At the time, many wondered: Why the urgency, Mr. Speaker? Did you really have to call all the legislators back from their vacations to pass this coal bailout? It appears the FBI was wondering the same thing.

It now seems clear that Householder was working directly with FirstEnergy and its affiliated companies. The utility funneled $61 million through an organization called Generation Now, which Householder, his political affiliates, and FirstEnergy lobbyists controlled. Based on its tax status, it was supposed to be a “social welfare” organization, acting in the public interest.

Instead, it is alleged in the FBI affidavit that Generation Now engaged in a conspiracy to financially benefit the utility and its affiliated companies through this dirty energy bailout — and to line Householder’s and his associates’ pockets while they were at it.

The dark money campaign funded political ads, mailers, and lobbying in support of HB 6.

It also put lobbyists across the state on retainer, creating conflicts of interest to tie them up, so they could not work for the clean energy advocates who wanted to stop the bill.

The dirty details in the FBI affidavit

The 82-page, 250 paragraph FBI affidavit — a collage of colorful text messages and political ads — is stunning in its simplicity: This is bribery.

The alleged participants in the scheme even used the term “pay to play” when describing what Householder and his associates were up to, saying that the funding from FirstEnergy for their political aims was “unlimited.”

Before the FBI arrests, many journalists and watchdog groups suspected that Householder was corrupt. He was a controversial choice for speaker — his last time in the role, during the early 2000s, he found himself under federal investigation for money laundering. Householder was only elected speaker last year after a contentious fight. Somehow candidates supporting his leadership found themselves with well-funded campaigns.

We now know, according to the affidavit, that FirstEnergy funneled millions of dollars to 21 candidates who pledged to support Householder’s rise to power. All of these politicians supported Householder’s speakership, and only one voted against the bailout.

Per the FBI, Householder also benefited financially from the arrangement with FirstEnergy. According to the affidavit, at least $300,000 was used to settle a lawsuit against him, more than $100,000 went toward his Florida vacation home, and another $97,000 went directly to his campaign expenses. Householder also received personal favors from FirstEnergy, like a flight to President Trump’s inauguration on a corporate jet.

The corruption allegedly did not end when HB 6 became law. When groups wanted to let the public decide whether to overturn this draconian policy through a petition for a ballot initiative, FirstEnergy wired $38 million in funds to Generation Now. This money funded ads that falsely claimed the Chinese government would use your personal information if you signed the petition. It also paid for bribery, harassment, and even physical assault of people collecting signatures.

It was an anti-democratic dark money campaign, and it worked. Facing this well-funded opposition, the advocates failed to get enough signatures. Ohio voters were never given a chance to overturn the bailout. HB 6 remains law.

Given the investigation is ongoing, FirstEnergy and its affiliated companies are not yet named as defendants — they are referred to only as “Company A” in the affidavit. It’s likely more charges will be coming. In the six-month period leading up the bill’s passage, Householder had 30 phone calls with FirstEnergy’s CEO, Chuck Jones. The coming months will not be good ones for Mr. Jones.

We are only at the beginning of the end of this story. As US Attorney for Ohio’s Southern District David M. DeVillers put it in Tuesday’s press conference, “there are going to be a lot of busy FBI agents here in the Southern District of Ohio.” The same day, FirstEnergy acknowledged that it had received subpoenas. If I were a senior executive for FirstEnergy or its affiliated companies, I would be wondering when my subpoena would be arriving.

It’s not just a nuclear bailout — it’s a utility scheme to stop the clean energy transition

While the FBI has largely framed the policy as a nuclear bailout, that is a narrow view of Ohio’s terrible energy law. This bill also saved three large coal plants from closing.

It’s clear that FirstEnergy Solutions (now called Energy Harbor) used part of its nuclear bailout funds to save the Sammis coal plant that was scheduled to close. The law was written explicitly so that the utility would never have to open up its books to legislators. And the amounts the utility said it required to keep its nuclear plants open fluctuated continuously.

A few days after Gov. DeWine signed the law, a FirstEnergy Solutions spokesperson said they would no longer have to close the Sammis coal plant. This wasn’t surprising since the FirstEnergy Solutions CEO, John Judge, had previously said securing HB 6’s passage would allow them to invest $40 million to $50 million to keep this coal plant open. It seems that through some creative accounting, part of the nuclear bailout ended up funding a coal plant.

No matter how you slice it, this law cost Ohioans billions of dollars

The law also contained funding for several other coal plants that FirstEnergy Solutions has an ownership stake in — the so-called OVEC plants. Based on bankruptcy filings, I estimate that the OVEC coal bailout was worth $1.7 billion just for Ohio’s two big utilities, including FirstEnergy Solutions.

If HB 6 remains law, a lot more money will be spent bailing out these dirty coal plants than the state’s ailing nuclear fleet.

The law also gutted the state’s clean energy laws, which had been in place for more than a decade. The energy efficiency policy alone had saved ratepayers over $5 billion, yet the legislature rolled it back. The popular renewable energy goals, which Gov. John Kasich had already undermined, were eliminated in HB 6.

No matter how you slice it, this law cost Ohioans billions of dollars. And since these are monopoly utilities we’re talking about, if folks want to stop funding FirstEnergy’s corrupt activities by simply paying the monthly electricity bills, they can’t. There is no choice.

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A pattern of utility corruption

The Ohio case, while extreme, is not an aberration. Corrupt electric utilities using ratepayer funds to roll back climate policy is not limited to Ohio. As I described in Short Circuiting Policy, it is an unfortunately common pattern.

Last week, the Illinois utility ComEd — whose parent company is Exelon — admitted to engaging in bribery and agreed to pay a $200 million fine. It’s very likely that another speaker, Michael Madigan, is involved in that case — the Illinois governor has already called on him to resign.

In Arizona, which I examine in my book, the FBI similarly launched an investigation into an elected official over its ties to a private electric utility, Arizona Public Service. As we now know, Arizona Corporation Commission Chair Gary Pierce met privately with then-Arizona Public Service CEO Don Brandt numerous times. The utility also funneled over $700,000 through a dark money group to Pierce’s son’s failed bid for secretary of state.

Arizona Public Service also secretly spent tens of millions on campaigns to elect its own regulators in order to secure favorable decisions, including clean energy rollbacks and generous rate hikes. In 2018 alone, it spent upward of $40 million to successfully block a clean energy ballot initiative. The new CEO, Jeff Guldner, played a key role in directing the utility’s dark political spending.

And this isn’t a new strategy. Throughout the 1990s, electric utilities including FirstEnergy and Arizona Public Service were key funders of climate denial.

Virginia provides one hopeful counterexample, which shows us one solution to the problem of corrupt electric utilities. In 2017, grassroots activists started a campaign to push politicians to pledge not to accept money from electric utilities, most prominently Dominion. This electric utility has an atrocious track record of ripping off customers, polluting the climate, and perpetuating environmental racism.

By the 2019 election, Virginia state candidates refusing Dominion money won nearly 50 seats. Shortly thereafter, the legislature passed a landmark law requiring 100 percent clean electricity. Once the Virginia politicians stopped taking money from the electric utility, they could finally pass climate legislation.

The dogged folks at the Energy and Policy Institute — a utility watchdog that has turned up real-time facts in most of these cases — paint a clear picture for those paying attention: Most electric utilities are resisting the clean energy transition and using corruption to do it.

We must change this pattern. Politicians must pledge to stop taking money from electric utilities and the fossil fuel industry. Instead, they should change the law, disallowing ratepayer funds to be used for political work.

It’s time to repeal Ohio’s corrupt law

Now that it’s clear that Ohio’s draconian energy policy was passed based on bribery and corruption, legislators should act immediately to repeal the law.

While Gov. Mike DeWine has called for Householder’s resignation, he has not called for the repeal of the corrupt coal bailout. That’s perhaps not surprising, since DeWine has himself taken money from FirstEnergy. DeWine’s staff even made plans to fly legislators on a taxpayer-funded plane to make Householder’s last-minute vote for the bailout. The day after DeWine signed the law, he attended a Trump fundraiser hosted by coal baron Bob Murray. He seems quite cozy with the fossil fuel industry.

If DeWine is not in bed with FirstEnergy, then he should be calling for HB 6 to be reversed immediately. This law was passed by corrupt politicians. The effort to overturn it by popular will was thwarted by a corrupt utility. If DeWine can’t see this invalidates Ohio’s energy law, then perhaps he has a bigger problem.

We cannot allow utility corruption to continue to stall clean energy progress. This FBI affidavit is a wake-up call to all politicians: Stop taking electric utilities’ money.

Leah C. Stokes is an assistant professor at the University of California Santa Barbara. Her book, Short Circuiting Policy, examines the case of Ohio’s coal bailout and other examples of utility corruption. Find her on Twitter @leahstokes.

Correction: An earlier version of this story misstated the first name of Michael Madigan.

Michael Moore produced a film about climate change that’s a gift to Big Oil

2020-04-28T11:57:46-04:00

Executive producer Michael Moore, director Jeff Gibbs, and producer Ozzie Zehner on stage at the Traverse City Film Festival screening of Planet of the Humans on August 4, 2019. | Planet of the Humans

Last week marked the 50th anniversary of Earth Day. To celebrate the occasion, filmmaker Michael Moore dropped a new movie he produced, Planet of the Humans. In less than a week, it has racked up over 3 million views on YouTube.

But the film, directed by Jeff Gibbs, a long-time Moore collaborator, is not the climate message we’ve all been waiting for — it’s a nihilistic take, riddled with errors about clean energy and climate activism. With very little evidence, it claims that renewables are disastrous and that environmental groups are corrupt.

What’s more, it has nothing to say about fossil fuel corporations, who have pushed climate denial and blocked progress on climate policy for decades. Given the film’s loose relationship to facts, I’m not even sure it should be classified as a documentary.

There are real tradeoffs in the clean energy transition. As a scholar, I’ve done my fair share of research and writing on those exact issues over the past decade. Renewables have downsides. As do biomass, nuclear, hydropower, batteries, and transmission. There is no perfect solution to our energy challenges.

But this film does not grapple with these thorny questions; it peddles falsehoods. Films for Action, an online library of free progressive films, agrees with me. It briefly pulled the movie from its site, after documentary filmmaker Josh Fox wrote an open letter, co-signed by climate scientists and energy experts.

“We are disheartened and dismayed to report that the film is full of misinformation — so much so that for half a day we removed the film from the site,” Films for Action’s April 25 statement reads. “Ultimately, we decided to put it back up because we believe media literacy, critique and debate is the best solution to misinformation.”

Here, I will lay out the case for why this film should have stayed on the cutting room floor.

The film has several factual errors about clean energy

It’s not surprising that the film gets basic energy facts wrong and that information included is out of date: There are hardly any climate or energy experts featured.

Early in the film, Gibbs goes to see an electric vehicle demonstration. He concludes they are dirty because they probably run on coal.

Except it’s not true. Two years ago, electric vehicles already had lower emissions than new gas-powered cars across the country. This is because the US electricity system has been slowly getting cleaner over the past decade.

The film’s wind and solar facts are also old. It quotes efficiency for solar PV from more than a decade ago. And it doesn’t mention the fact that solar costs have plummeted since then, and that we’ve learned how to get more wind and solar onto the grid. The film instead acts like this is impossible to do.

The largest share of the movie’s scorn goes to biomass — generally, burning wood — which supplied less than 2 percent of the US electricity mix last year. But the filmmakers obscure that fact, showing graphs that imply biomass is leading to forest destruction across the US.

When Gibbs questions environmental activists about biomass, they tell him it’s complicated. Because, well, it is.

When we burn wood for electricity, we are using carbon that is already moving between our air, oceans, and land. By contrast, when we dig up and burn fossil fuels, we’re bringing carbon up from underground. That is how we got increasing carbon levels in our atmosphere and oceans. Burning fossil fuels, not wood, is the main cause of climate change. It’s a basic fact I teach to my undergraduates. But the filmmakers neglected to learn it.

That said, biomass can be — and often is — done poorly, with significant environmental harms. Scientists have raised concerns over the European Union’s incentives for renewables leading to wood being shipped from North America. Environmental groups, including the ones pilloried in the film, have criticized the industry. But you wouldn’t learn any of these facts from watching Planet of the Humans.

Planet of the Humans, you might mistake him for a robber baron. | Erik McGregor/Pacific Press/LightRocket via Getty Images" data-portal-copyright="Erik McGregor/Pacific Press/LightRocket via Getty Images" />

A biased take on the environmental movement

There are critiques that can be made of environmental NGOs. But the way activists are portrayed in this film is inaccurate. One of the film’s main theses is that the climate movement is captured by corporations. As Gibbs puts it, environmentalists are “leading us off the cliff.”

The evidence for this assertion? The Union of Concerned Scientists’ support for electric vehicles. And Sierra Club’s promotion of solar. And the fact that 350.org has received funding from environmental foundations. I fail to see how any of these facts are problematic.

The most egregious attack is made against Bill McKibben, a dedicated and kind environmental leader. As he has said, he has never taken any money for his environmental activism with 350.org. Watching this film, you might mistake him for a robber baron.

McKibben wrote to the filmmakers, to clarify his views. They did not write back. As he put it: “That seems like bad journalism, and bad faith.”

Unlike the uninformed contrarians behind this film, McKibben spent his Earth Day talking with young activists, and pushing banks to stop funding fossil fuels. On April 23, one of those banks, Morgan Stanley committed to not provide financing for drilling in the Arctic refuge. For a “corporate hack,” Bill McKibben sure spends a lot of time taking on corporations. And those corporations in turn spend a lot of time harassing him.

If the corporate capture of the environmental movement is the problem, it’s puzzling why the film has almost nothing to say about corporations themselves. You know, the fossil fuel companies and electric utilities that lied about climate science for 30 years? The climate denial campaign is not mentioned.

Instead, the film denigrates the crucial work of the Sierra Club’s Beyond Coal campaign. Led by Mary Anne Hitt, this program helped stop the construction of 200 coal plants, and successfully pushed for the retirement of 300 others.

Rather than recognizing the Sierra Club’s achievement, the filmmakers falsely attribute the growth in natural gas to Beyond Coal. Alas, environmental groups are not in charge of planning new power plants: if they were, we would have a lot less fossil electricity. Utilities propose power plants to regulators, who approve them. Over the past decade, electric utilities have proposed an enormous amount of new gas facilities, which groups like the Sierra Club have opposed.

Perhaps the most insulting thing is that this film comes at a time when the youth climate movement is finally gaining momentum. Young women like Greta Thunberg and Varshini Prakash have helped climate change break into the mainstream. Rather than bolster the work of the Sunrise Movement, Fridays for Future, or Zero Hour, it undermines these activists’ achievements by sowing confusion and doubt.

Why is Michael Moore promoting misinformation on climate change?

Throughout, the filmmakers twist basic facts, misleading the public about who is responsible for the climate crisis. We are used to climate science misinformation campaigns from fossil fuel corporations. But from progressive filmmakers? That’s new.

It’s difficult to understand Michael Moore’s motivations for blaming clean energy and environmental groups instead of fossil fuel companies or electric utilities. His previous films— like Roger & Me, Sicko, and Bowling for Columbine —were centered on holding corporations accountable. More recently, he endorsed Sen. Bernie Sanders at the same rally as climate champion Rep. Alexandria Ocasio-Cortez. The Sanders campaign centered on an ambitious 100 percent renewable energy goal.

Yet, the film Moore backed concludes that population control, not clean energy, is the answer. This is a highly questionable solution, which has more in common with anti-immigration hate groups than the progressive movement.

The fact is that wealthy people in the developed world have the largest environmental footprints — and they also have the lowest birthrates. When this message is promoted, it’s implying that poor, people of color should have fewer children.

Not to mention the fact that pushing population control is completely disrespectful of women’s reproductive autonomy. Notably, almost all the “experts” featured in the film are white men.

It is sad to think of the world we are leaving for children. Yet, if we embraced clean energy, then they would not have to grow up in a world tied to dirty fossil fuels.

Unfortunately, many people are taking this film seriously. It got 4 out of 5 stars from The Guardian, normally a paragon of climate reporting. And The Late Show with Stephen Colbert gave Moore precious air time to promote it on Earth Day. I would have rather seen Colbert interview a young climate activist. She would have known more about the subject.

We have already warmed the planet by more than 1°C, and we are running out of time to scale up clean energy. Planet of the Humans has sowed confusion at a time when we need clarity on the climate crisis.

My only hope is that this film will be buried, and few will watch it or remember it. Much like fossil fuels, it would be best left underground.

Leah C. Stokes is an assistant professor at the University of California Santa Barbara. Her new book, Short Circuiting Policy, examines electric utilities’ role in holding back progress on clean energy and climate policy.