Lawmakers from across the Ohio Valley have received nearly half a million dollars in campaign contributions from 2019-2020 from a political action committee associated with FirstEnergy Corp., the electric utility implicated in a $61 million bribery and racketeering scheme related to Ohio’s controversial energy bill that bailed out several struggling nuclear and coal plants.
FirstEnergy’s PAC donated $484,490 to elected officials in Ohio, West Virginia, Pennsylvania and Kentucky. The elected officials came from both parties and encompassed a vast range of political offices — from the U.S. Senate and House to statehouses and even state auditors offices — according to an analysis of Federal Election Commission documents compiled by HEATED, a climate-focused newsletter written by journalist Emily Atkin.
Last month’s revelation by federal prosecutors that the Ohio-based company funneled millions of dollars of dark money into a group, Generation Now, controlled by former Ohio House Speaker Larry Householder and his political allies, pulled back the curtain on the outsized political influence wielded by the utility, which is one of the largest in the country.
For example, recent reporting by the Kentucky Center for Investigative Reporting, found a highly-connected attorney with deep ties in Kentucky Republican politics is linked to the Ohio case. Former Kentucky Republican Party General Counsel Eric Lycan is listed as the treasurer of Generation Now. Lycan is connected to several PACs and tax-exempt organizations in Kentucky and West Virginia.
While the investigation is ongoing and continues to unearth connections between the utility, coal company Murray Energy and lawmakers, contributions made by FirstEnergy’s PAC during the 2019-2020 campaign cycle offer a window into the company’s priorities.
Six U.S. Senators from West Virginia, Ohio, Kentucky and Pennsylvania received campaign contributions from FirstEnergy’s PAC totaling $24,500.
The Country Roads PAC, associated with Sen. Manchin, and Wild and Wonderful PAC, associated with Sen. Capito, each received $5,000 in contributions from FirstEnergy’s PAC, records show.
West Virginia’s three U.S. House representatives — Republicans David McKinley, Alex Mooney and Carol Miller — each received $7,500 in campaign donations this election cycle. In addition, 21 Republican House candidates and six Democrats from Ohio and Pennsylvania also received campaign contributions.
Every member of Ohio and West Virginia’s U.S. Congressional delegation took political contributions.
Dozens of lawmakers in West Virginia also received donations from the utility’s federal PAC, including 45 members of the statehouse, Supreme Court of Appeals of West Virginia Chief Justice Tim Armstead, Secretary of State Mac Warner and State Auditor J.B. McCuskey.
West Virginia Gov. Jim Justice was the sole governor to have received money from the utility’s PAC. Justice, a Republican, received $2,800, records show. West Virginia Attorney General Patrick Morrisey, also a Republican, received $4,800. The Morrisey 2020 PAC received $2,800.
Money Returned
Some regional energy policy watchers argue the exposure of this dark money scandal should serve as a wake up call for lawmakers in states where FirstEnergy does business, including West Virginia. The company operates two coal-fired power plants in West Virginia — the Fort Martin Power Station and Harrison Power Station.
Its former subsidiary, FirstEnergy Solutions, which emerged from bankruptcy restructuring as Energy Harbor in February, is the largest beneficiary of H.B. 6. The company operates two nuclear plants in Ohio, one in Pennsylvania, and two coal plants — the W.H. Sammis plant in Stratton, Ohio and the Pleasants Power Station in West Virginia.
The Ohio Valley ReSource reached out to many of the politicians who received campaign contributions from FirstEnergy’s PAC asking if the officeholder was concerned about undue influence from the utility and if they had or would consider returning the money
Only Ohio Sen. Sherrod Brown’s campaign explicitly said the lawmaker had taken steps to distance himself from the donation. Brown’s team said the senator donated FirstEnergy’s contributions to local Ohio charities including food banks and YWCAs.
West Virginia lawmakers passed a bill on Tuesday that will give a $12 million tax cut to a struggling coal-fired power plant in Pleasants County.
House Bill 207 will exempt the 1,300-megawatt coal-fired Pleasants Power Station from paying state Business and Occupation tax for merchant power plants, or sites that sell electricity to wholesalers and not to retail customers.
Supporters of the bill argue the tax cut will save 160 high-paying jobs at the plant.
Operated by FirstEnergy Solutions, the Pleasants Power Station is one of only two coal-fired merchant plants in West Virginia, and the only merchant power plant paying the B&O tax. It’s one of the state’s eight major coal-fired power plants, the other six of which provide to retailers and are regulated by the West Virginia Public Service Commission.
“Given the revenue and cost situation of this plant, it is very much on the edge,” Judge said. “Even $12.5 million, in this case, makes a difference.”
Judge told the committee the plant generates $400 million in annual economic activity, leaving some lawmakers to question how effective the $12 million tax break could be.
The compressed timeline for debate of the bill drew criticism from Democrats. On Tuesday, before the House bypassed its three-day rule to pass House Bill 207 with one vote.
“We got this bill on Sunday and people wanted us to suspend the rules on Monday,” said Democratic Del. Barbara Fleischauer from Monongalia County. “And with all these questions — normally when we give a tax break, we look at it compared with the rest of our budget.”
Del. Larry Rowe, a Democrat from Kanawha County, tried unsuccessfully to amend the bill to limit the tax exemption to five years, allowing the Legislature to study the economic implications of the bill during the regular session. There’s currently no cap on how long the exemption will last.
Republicans said on Tuesday the bill is an effort to “level the playing field” in a state where most power plants paying the B&O tax can pass that expense onto their retail customers. With an amendment to the bill from Republican Del. Vernon Criss of Wood, the B&O tax exemption will begin Jan. 1, 2020.
The plant is the largest source of property taxes for Pleasants County. Proponents of the bill said the plant provides $400 million in annual economic activity, $128 million in economic impact and $1.2 million in local taxes to the county commission and the county board of education.
In 2016, former Pleasants owner Allegheny Energy Supply, a FirstEnergy Corp. subsidiary, put the plant up for sale. The company announced in February 2018 it would close the facility unless it could find a buyer. An attempt to sell the power plant to other regulated FirstEnergy subsidiaries, Potomac Edison and Monongahela Power, was shot down by federal regulators in January 2018.
Last October, Allegheny Energy Supply agreed to transfer the plant to bankrupt subsidiary, FirstEnergy Solutions as part of a larger settlement agreement approved by a bankruptcy court.
Several Republicans in the House said on Tuesday that House Bill 207 would save 160 high-paying jobs at the Pleasants plant. In addition, the company each year temporarily brings in a few hundred union tradespeople to work during a scheduled outage.
Just Transition
Some Democrats argued the tax cut ultimately won’t be enough to overcome the shifting market forces upturning the power sector. Over the last decade, cheap natural gas and the falling prices of renewable energy generation has posed a major economic challenge for coal-fired generators.
“If I believed that three years from now these jobs will be here, I’d vote for this bill in a heartbeat,” said Del. John Doyle, a Democrat from Jefferson County. “It is simply the economy and the market. … If I am right, then House Bill 207 is not a job saving bill, it becomes just another corporate giveaway.”
Democratic Del. Evan Hansen of Monongalia County called for a larger discussion on climate change. He cited the ongoing energy transition away from coal as context for what’s happening at the Pleasants Power Station.
“I don’t think it’s appropriate for us to have a discussion about coal in West Virginia, and coal-fired power plants… without at least addressing climate change in that discussion,” Hansen said.
He added that, for him, the issue isn’t about saving the jobs, it’s about ensuring there are new, more energy-responsible jobs to take their place.
“I think, we as a Legislature, have a responsibility to [do] what we can to manage that transition, so we have a just transition,” Hansen said. “So that we’re not just putting a bandaid on each crisis that comes our way, and not just giving tax break after tax break when they ask for it.”
The House passed the bill 77 to 5, with 18 members absent or not voting. The Senate passed it unanimously with 6 members absent or not voting.
It’s been two years since President Donald Trump took office and began rolling back environmental regulations on the coal industry.
At a November rally in Huntington, West Virginia, the president took credit for a coal comeback in front of a cheering crowd.
“We’ve ended the war on beautiful, clean coal and we’re putting our coal miners back to work,” he said. “That you know better than anybody.”
But federal data about the industry tell a different story.
Mine operators and independent contractors are required to report regular employment information to the Department of Labor’s Mine Safety and Health Administration, or MSHA. Preliminary figures for 2018 show 80,778 people were employed by mine operators and contractors. That’s a record low, and about a thousand fewer than were employed by coal in the last year of the Obama administration.
Credit Alexandra Kanik / Ohio Valley ReSource
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Ohio Valley ReSource
Nationwide, coal plant retirements neared a record high, and overall coal production dropped to the lowest level in nearly 40 years, according to the U.S. Energy Information Administration, a non-partisan government agency that tracks energy trends.
In the Ohio Valley, things looked much the same. In 2018 two prominent Ohio Valley utilities announced a spate of coal power plant closures, federal data show the region lost 150 industry jobs, and Westmoreland Coal, which has a substantial presence in Ohio, declared bankruptcy.
Credit Alexandra Kanik / Ohio Valley ReSource
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Ohio Valley ReSource
However strong exports of one type of coal continued to support jobs for those who provide metallurgical coal, which is used to make steel. That boosted employment in West Virginia, where the president’s supporters say he is keeping his promise to revive the industry. Elsewhere, others aren’t convinced and are looking for ways to fill the void left by coal’s decline.
Environmental Rollbacks
The Trump administration has leaned heavily on the U.S. Environmental Protection Agency to try to boost the region’s coal industry. In March, 2017, Trump signed an executive order that kicked off an in-depth review of a series of environmental regulations. Since then, the administration has proposed a series of regulatory rollbacks aimed at helping struggling coal plants and operators.
The Trump EPA has also moved to roll back existing regulations that govern the storage of toxic coal ash. In December, the agency proposed a rule revision that would allow coal plants to emit more carbon dioxide per megawatt-hour of electricity generated by scrapping a requirement that plant operators install expensive technology that reduces emissions. The agency in December also proposed weakening a regulation that limits mercury and other toxic emissions from coal power plants.
But many industry analysts believe Trump’s looser environmental rules have not helped the industry.
“So we had some pretty significant regulatory rollbacks in 2018,” said Trevor Houser, a coal analyst at the independent research company Rhodium Group. “And yet, 2018 was a record year in terms of coal plant retirements.” [Story continues below map]
Houser said there is also little indication any utility in the country is planning on building a new coal-fired power plant, even under the current, more relaxed regulatory environment.
Across the Ohio Valley, utilities announced more coal power plant closures in 2018. After Ohio-based FirstEnergy Solutions declared bankruptcy, it announced it would close two coal-fired power plants, one in Pennsylvania and one in Ohio. Another of its plants in West Virginia will close by 2022. Another major utility, American Electric Power, announced it was moving up the closure date for some units in its Conesville plant in Ohio to 2019.
With more power plant closing there are fewer places to sell thermal coal, which is burned to make electricity, and that has a major impacts coal producers in the region.
“If you look at the share of where the coal was headed, the domestic utility market for West Virginia coal continues to decline,” said Jason Bostic with the West Virginia Coal Association. “And that’s extremely concerning.”
Nationwide and as well as in the Ohio Valley the amount of coal mined dropped to the lowest level in nearly 40 years. Coal exports, however, were up, driven largely by international demand for metallurgical, or met coal, by Asian countries.
Credit Jeff Young / Ohio Valley ReSource
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Ohio Valley ReSource
Kudzu grows near a coal preparation plant in eastern Kentucky.
“There’s the kind of continual disconnect between the poor fate of the thermal coal market and a little bit more resilient met coal market,” Houser said.
To meet higher met coal demand, some mines in West Virginia and Virginia have reopened. Federal data from MSHA show West Virginia mines added a little over 500 jobs in 2018.
Tom McLoughlin trains coal miners in southwestern Virginia, where some met coal mines have ramped up production. He said he’s been busy since Trump took office.
“As soon as Trump got elected It was like somebody taking the finger out of the dam,” he said. “There was all kinds of activity including especially the training, and it’s held up fairly well since.”
But even in West Virginia, where things have looked slightly better for the industry, there were also some high-profile mine closures. A mine in Wyoming County shut its doors in October, putting about 400 miners out of work.
There are a lot of indications that the international demand for met coal, especially by China, is cooling off.
“In 2019 we have some pretty troubling signs about the outlook for the Chinese economy this coming year and that could take the wind out of the sails of the metallurgical coal market pretty quickly,” said Houser with the Rhodium Group.
Temporary Bump?
It’s possible that West Virginia’s bounce in production could be a brief one. Elsewhere around the Ohio Valley coal employment has been stagnant, at best. Ohio mines added just 16 jobs last year, and Kentucky lost almost 400 jobs, according to MSHA data.
Retired Kentucky miner Larry Miller said it’s not surprising the data show the industry has not bounced back. He added that he didn’t have a lot of faith in Trump’s ability to revive the industry in the first place.
“I don’t think it’s sustainable,” he said. “The EPA relaxing of the rules might help some, but I don’t think it’s the main driver for the job loss.”
Miller worked for more than two decades underground and said he made a good living. In his own backyard he said he’s seeing first-hand that coal is often no longer an economic source for electricity. For example, near his slice of western Kentucky a group of utilities is installing an 800-acre solar farm, further evidence, he said, of coal’s declining importance.
“It’s not going to be gone but it’s not going to be the economic engine that it once was,” Miller said. “And I made a good living in coal for a long time and I liked it, so I don’t take pleasure in saying that.”
Credit Becca Schimmel / Ohio Valley ReSource
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Ohio Valley ReSource
TVA’s new gas fired facility, with the older coal units in background.
Recently, the EIA adjusted downward its coal forecast. It says coal production is expected to hit a record low in 2019. Appalachia will see its overall coal production drop from 201.5 million tons in 2018 to 170.1 million tons in 2020, according to the EIA forecast.
Limited Retraining
That doesn’t bode well for miners. Houser, with the Rhodium Group, said while the Trump administration doubled down to boost coal, it has not offered any additional aid for job retraining.
“The past few budget proposals from the Trump administration have actually reduced the amount of support for retraining and economic diversification and coal retraining in coal country,” he said.
Clemmy Allen has been retraining coal miners for more than 30 years for the United Mine Workers of America.
Since 2012, the UMWA’s Career Training Centers in Appalachia has relied on a Department of Labor grant, which provides $5000 in tuition assistance and a $20 daily stipend to West Virginia miners who have been laid off or lost their jobs. He said thousands of miners have taken advantage of the program, but acknowledged it’s also limited.
“It’s very, very difficult for for a person just to … just shut down and go into training and not have money to, you know, meet their monthly obligations,” he said.
Allen said in previous years the center had more federal grants to retrain miners in other states, and he says there are thousands of miners who have lost their jobs over the years who have since found work, but would like to be retrained to do something else.
“We never have enough resources, never,” he added.
Correction: An earlier version of this story incorrectly stated where Tom McLoughlin is based. He is based in southwestern Virginia, not northern Virginia.
A spokesperson for electric utility FirstEnergy Corp. — whose subsidiary Allegheny Energy Supply owns and operates the plant — said the plant’s ownership will change. The deal will allow Pleasants to continue operating past January 2019 when it was previously slated to close.
“Keeping Pleasants in operation through May 2022 allows the plant to fulfill current capacity obligations and provides additional time for evaluation of the long-term plan for the station prior to deactivation,” Jennifer Young, a spokesperson for FirstEnergy Corp., said in an email.
Allegheny Energy Supply will transfer the plant to bankrupt subsidiary, FirstEnergy Solutions. The deal is part of a larger settlement agreement approved by a bankruptcy court last month.
Under the agreement, FirstEnergy Corp. will make a settlement payment of $225 million to FirstEnergy Solutions and issue $628 million in notes for the subsidiary that will mature on Dec. 31, 2022. Collectively, this money will be used to pay down the $2.1 billion owed to its creditors.
Allegheny Energy Supply will continue to operate Pleasants until the transfer is complete. A date has not been set for when that will happen. Under the agreement, FirstEnergy Corp. will continue to own the plant’s coal ash impoundment, McElroy’s Run, and any related liabilities.
In 2016 FirstEnergy Corp. put Pleasants, which employs about 190 people, up for sale. The company announced in February it would close the 1,300 megawatt power plant unless it could find a buyer. An attempt to sell the power plant to other FirstEnergy subsidiaries, Potomac Edison and Monongahela Power, was shot down by federal regulators earlier this year.
Federal Help?
In a statement, Gov. Jim Justice praised the move and specifically thanked President Trump, Department of Energy Secretary Rick Perry and others for their help “to make sure this plant stays open.”
However, it’s unclear what role the federal government played. A plan to bail out coal and nuclear plants by forcing grid operators to buy power from those struggling plants for two years has stalled.
One statute outlined in the plan is the 1950 Defense Production Act. The law addresses options for keeping essential supply chain facilities open during wartime or similar emergencies.
The Department of Energy could also use emergency powers under the Federal Power Act. Known as section 202(c), the provision would allow the agency to intervene if the electricity grid faces an emergency. In the past, it has been used during times of war and during natural disasters.
FirstEnergy Solutions lobbied the agency to immediately intervene to stop a series of plant closures. Days later, it declared bankruptcy.
Recent reporting by Politico indicates the bailout plan, as written, has been shelved because it faces opposition from inside the White House.
A request to both the Department of Energy and governor’s office for more information went unanswered.
Even if the federal government revives the plan, many energy analysts say subsidies will only go so far to help keep struggling coal plants going because they do not change the underling market forces: cheap natural gas and stagnant energy demand growth have made coal a more expensive source of electcity.
In June, federal regulators did order regional grid operator PJM Interconnection to redesign how it buys electricity, which could benefit Pleasants down the road. Many of the proposals being considered eliminate the effects of state-subsidized nuclear and renewable resources, which would place electricty generated by coal plants, including Pleasants, on a more even footing.
Officials are not expected to finalize the redesign until 2020.
