FirstEnergy set aside nearly $120M in second quarter to put HB 6 scandal behind it

FirstEnergy has set aside nearly $120 million in its second financial quarter to move past the House Bill 6 scandal , utility President and CEO Brian X. Tierney said on a Wednesday quarterly earnings call.

In its second financial quarter, FirstEnergy reached an "agreement in principle" with the U.S. Securities and Exchange Commission to tentatively pay the commission a $100 million settlement, Tierney said. And the utility has reserved an additional $19.5 million as part of its efforts to resolve an investigation by the Ohio Organized Crime Investigations Commission and a civil suit by Ohio Attorney General Dave Yost's office, Tierney said.

The company entered into a deferred prosecution agreement with federal prosecutors in July 2021. The three-year agreement required FirstEnergy to pay a $230 million penalty − $115 million to the U.S. Treasury and another $115 million to a program for low-income utility customers administered by the Ohio Development Service Agency.

Tierney told investors Wednesday that the U.S. Attorney’s Office for the Southern District of Ohio filed a status report last week "confirming that FirstEnergy successfully completed the obligations it was required to perform ... under the deferred prosecution agreement, including remediation measures and the implementation of a compliance and ethics program."

Utility regulator Public Utilities Commission of Ohio (PUCO) is also conducting audits on: FirstEnergy's spending on political and charitable causes, with an audit report due on Aug. 28; the utility's compliance with corporate separation laws, with discovery continuing and a hearing set for Oct. 9; and its " distribution modernization " and "delivery capital recovery" riders, with ongoing discovery and a hearing set for Feb. 3, 2025, Tierney said.

Meanwhile, according to a Tuesday Reuters report , FirstEnergy is facing a shareholder class action suit that the "company and its lawyers have aggressively challenged ... at every possible turn."

FirstEnergy requesting utility rate increase with state regulator

The utility is also seeking to increase Ohio consumer electricity rates in a request with PUCO, Tierney said.

FirstEnergy issued a filing to PUCO on Wednesday requesting the increase, which Tierney said factored into the company's electric security plan (ESP) and "other updates."

If FirstEnergy's proposed increase is approved by the commission, its Ohio customers who take the company's standard service offer (SSO) — meaning they do not choose a separate company to supply their energy — would see a bill increase, said utility spokeswoman Hannah Catlett.

For residential Ohio Edison customers using an average of 750 kilowatt-hours (kWh) of electricity each month, that translates to a $1.92, or 1.5%, monthly increase, Catlett said.

The Illuminating Company's residential customers who take the SSO and use an average of 750 kWh each month would see a $9.50 monthly increase, or 7.2%, while Toledo Edison's residential customers who take the SSO and use an average of 750 kWh per month would see an increase of $1.09, or 0.8%, Catlett said.

This month, PUCO granted FirstEnergy's request for a rehearing on its proposed ESP. In May, the commission approved a plan that varied from what FirstEnergy had proposed.

The Beacon Journal previously reported that FirstEnergy cannot charge its customers to pay its fines in the H.B. 6 scandal.

Generally, Tierney said he believes "a well-run and growing utility" should regularly opt for rate changes, adding: "I think in most jurisdictions, we should be going in every two to three years at the max."

Personnel changes coming to FirstEnergy

On June 1, Tierney celebrated a year with FirstEnergy. His most recent role prior to joining the utility was serving as senior managing director and global head of operations and asset management for Blackstone Infrastructure Partners.

FirstEnergy's Chris Walker, chief of human resources and corporate services, and Irene Prezelj, head of investor relations and communications, are retiring, Tierney said.

Company leadership is also working with unions that represent utility workers to make pay adjustments "to help ensure we are paying competitive wages to our represented workforce," Tierney said

Additionally, Tierney said: "We started an effort to hire journey-level line workers to better serve our customers, and we are forming a new apprenticeship program to further support a skilled and well-trained workforce to serve our customers going forward.”

FirstEnergy operating EPS up, GAAP EPS down compared to 2023

FirstEnergy's operating earnings per share (EPS) were at $0.56 for the second quarter of 2024, compared to $0.47 EPS for the second quarter last year.

However, FirstEnergy's Generally Accepted Accounting Principles (GAAP) EPS were down to $0.08 for the second quarter of 2024, compared to $0.41 GAAP EPS for the second quarter last year.

Also for year-to-date figures through June, operating EPS were up and GAAP were down compared to last year.

FirstEnergy closed at $41.91 per share Wednesday, up 11 cents (0.26%).

Patrick Williams covers growth and development for the Akron Beacon Journal. He can be reached by email at pwilliams@gannett.com or on X, formerly known as Twitter, @pwilliamsOH.

This article originally appeared on Akron Beacon Journal: FirstEnergy set aside nearly $120M in second quarter to put HB 6 scandal behind it