FirstEnergy Turns to New Acting CEO Amid Cloud of Investigations
FirstEnergy’s Acting CEO Steve Strah got a chance to talk to investors Monday during the utility’s quarterly earnings call.
Strah acknowledged the cloud of uncertainty hanging over the company.
Last week FirstEnergy fired CEO Chuck Jones and two more executives in the wake of a federal bribery investigation into Ohio’s nuclear bailout law. Chris Pappas, executive director of FirstEnergy's board, says Jones and the two other executives were fired for violating policies but did not provide more details.
"When we determine that employee conduct is inconsistent with our policy and values no matter how senior the individual we have a duty to take action and that is what we have done here," Pappas said on the call.
The investigation led to the ouster of Ohio House Speaker Larry Householder.
Company officials acknowledged several lawsuits filed by both shareholders and customers related to the bailout bill, as well as an ongoing investigation by the Securities and Exchange Commission. FirstEnergy is under investigation for its possible role in a $61 million racketeering scheme.
Defendants have pleaded guilty saying that scheme helped the nuclear bailout that had many things on FirstEnergy's wish list become law. Among those defendants is Juan Cespedes, a FirstEnergy lobbyist, who says he orchestrated payments to a dark money group known as "Generation Now."
That group used millions of dollars to campaign for HB6, which bailed out nuclear power plants and accomplished other legislative objectives laid out by FirstEnergy.
The utility says, although the company is under investigation in possible connection to a bribery scheme, earnings are still up. FirstEnergy says it still projects earnings growth to result in $600 million in equity issued annually.
Acting CEO Steven Strah said on the call, "With that said, we are mindful that the current situation may present additional challenges to meet this objective."
One of those challenges could be the potential repeal of HB6, which is at the center of the racketeering case. FirstEnergy says a repeal could result in a $0.05 dip in earnings.
The company is no longer tied to the subsidiary that owned the two nuclear power plants, Energy Harbor formerly known as FirstEnergy Solutions. However, FirstEnergy executives said that dip in earnings would be from eliminating the "decoupling" provisions created in HB6.
Traditional decoupling cuts the link between the amount of electricity consumed and the profits a utility makes from that. But opponents of HB6 say the language in the bill guaranteed large profits for FirstEnergy.
FirstEnergy argues the decoupling provision encourages new programs without losing revenue needed for reliability.
Strah said he wished he had assumed his new role under different circumstances.
“While I find it disappointing that we have arrived at this point, I have great confidence, not only in the management team, but in the full support of the board of directors. And together we are committed to lead this company out of it,” he said.
Company officials expressed confidence during the call that Strah is the right person to lead the utility in the long run.