Ohio politicians found guilty in $60 million utilities bribery scandal

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FBI agents arrested one of Ohio’s most recognizable politicians, then-state House of Representatives Speaker Larry Householder, in connection with a $60 million bribery scheme nearly three years ago. The 80-page criminal complaint against him and four collaborators reads like a John Grisham thriller. According to the complaint, Householder and the others controlled a slush fund that received millions of dollars from three utility companies in the state. Householder used this money to help elect like-minded legislators. In exchange, he helped pass House Bill 6, a bailout law that halved the amount of renewable power utilities were required to buy, eliminated energy efficiency measures, and provided billions of dollars to utilities that owned nuclear and coal power plants in the state. It was a classic pay-to-play scheme.

Yesterday, a federal jury largely affirmed those allegations, finding Householder and ex-Ohio Republican Party chair Matt Borges guilty of conspiracy to participate in a racketeering enterprise involving bribery and money laundering. The two men face up to 20 years in prison and will be sentenced in the coming months. 

“Larry Householder illegally sold the statehouse, and thus he ultimately betrayed the great people of Ohio he was elected to serve,” said U.S. Attorney for the Southern District of Ohio Kenneth Parker in a press release.

Borges and Householder plan to appeal the verdict. “This is just step one,” Householder told reporters after the verdict. “Stay tuned.”

The bribery scandal in Ohio is an extreme instance of a common practice of utilities wielding behind-the-scenes influence on state legislatures — often to soften renewable energy standards and subsidize the rising costs of operating old, polluting power plants. In 2020, a utility in Illinois admitted to bribing the state house speaker, and a power company in Arizona acknowledged it donated millions of dollars to dark-money groups — 501(c)(4) nonprofits that are allowed to pay for political advertising without revealing the source of the money — in an attempt to get utility-friendly candidates elected to a commission that sets electricity rates for the state. 

“You don’t have to look far to see that the FirstEnergy scandal is part of a broader trend,” Dave Anderson, communications and policy manager of the nonprofit watchdog organization Energy and Policy Institute, told Grist in an email.

The Ohio corruption scandal began with a 2008 renewable energy law. The Ohio legislature, following in the footsteps of other states across the country, passed that law mandating wind and solar projects and creating programs to help residents and businesses use less energy. As these efforts materialized across the state, the utilities that primarily relied on nuclear and fossil fuel power began to see their profits dwindle. In response, they began lobbying the legislature and spending lavishly on allied politicians’ election campaigns. 

Some of those efforts succeeded, and the legislature repealed the renewable energy mandate in 2014. But relief came too late for one of the utilities, FirstEnergy, which found itself in the red. Simultaneously, Householder was considering returning to the state House (he had previously served in the early 2000s) and was looking for cash to mount a successful campaign as well as help like-minded politicians to run for office. After Householder was elected, his team set up a dark money group, and FirstEnergy began funneling money to it.  

What FirstEnergy and other utilities allegedly got in return was a $1.3 billion bailout. Soon after Householder took charge of the speaker’s podium in 2019, he proposed House Bill 6. It was touted as an effort to improve air quality, but it mostly included bailouts for coal and nuclear power. At the same time, it scaled back energy efficiency measures and added bureaucratic hurdles to prevent the growth of wind power. The bill was eventually signed into law. An independent analysis found that it would cost Ohioans $2 billion in excess utility bills and $7 billion in healthcare costs (due to worsening pollution) over nine years. 

Despite Householder’s 2020 arrest and widespread knowledge of the scandal, only parts of House Bill 6 have since been repealed. The ratepayer-funded bailout of two coal plants — which could eventually cost as much as $1.7 billion — still remains in effect, and the state’s energy efficiency requirements have not been restored. 

There are still additional loose ends in the scandal. During the course of Householder’s trial, FirstEnergy admitted to bribing Sam Randazzo, the former chair of the Public Utilities Commission of Ohio. (Neither Randazzo nor FirstEnergy employees have been charged with any wrongdoing, and Randazzo has maintained his innocence.) The Ohio state attorney general has also filed a civil lawsuit against Householder and others seeking damages for the scandal. Separately, the attorney general has filed a complaint against Householder for using campaign funds for his legal defense.

“The convictions provide new momentum for the ongoing federal criminal investigation into utility corruption in Ohio,” said Anderson with the Energy and Policy Institute. “Hopefully, the Department of Justice will follow the evidence wherever it leads.”

This story was originally published by Grist with the headline Ohio politicians found guilty in $60 million utilities bribery scandal on Mar 10, 2023.