2nd quarter report to SEC will be late, FirstEnergy says

Larry Limpf

FirstEnergy Corp. has notified the Securities and Exchange Commission it will be late filing its 10-Q financial report for the second quarter due to the federal investigation into Larry Householder, the former speaker of the Ohio House of Representatives, and House Bill 6, which benefited a former subsidiary of FirstEnergy.
In its notification of late filing to the SEC, the company states it received subpoenas for records on July 21 from the U.S. Attorney’s Office for the Southern District of Ohio – the same day a complaint and affidavit listing federal criminal allegations against Householder and four associates were unsealed.
“The company was not aware of the criminal investigations, affidavit or subpoenas before July 21,” the notification says. “The company is cooperating fully in the investigation.”
In addition to the subpoenas, some company stockholders and customers in late July filed several lawsuits against the company and “certain current and former directors, officers and other employees” relating to the allegations against Householder and those allegedly affiliated with him.
“In connection with the investigation, subpoenas and subsequent pending and threatened litigation, the company requires additional time to complete its quarterly review and closing procedures and to provide appropriate disclosure in the Form 10-Q,” the notification says.
A 10-Q report includes condensed financial statements, management discussion and analysis of the company’s financial condition, as well as legal proceedings and the use of proceeds from the sale of equity securities.
Companies are required to file their 10-Qs within 40-45 days after the end of their quarters depending on the size of their public float, which is the portion of shares held by the public and not by company officers.
According to the criminal complaint filed by the district attorney’s office, from March 2017 to March 2020, millions of dollars were paid in exchange for the assistance of then speaker of the House of Representatives, Larry Householder, and four associates, in passing House Bill 6 and then working to defeat a ballot initiative that, if passed by voters, would have rescinded the legislation.
In all, about $60 million was funneled through Generation Now, an entity formed as a 501(c)(4) organization, from an “energy company and its affiliates during the relevant period,” the complaint says.
House Bill 6, passed by the state legislature last summer and signed by Gov. Mike DeWine, created the state’s Clean Energy Program but provides subsidies for coal and nuclear plants.
FirstEnergy Solutions, a former subsidiary of FirstEnergy Corp., emerged from bankruptcy as a separate entity early this year with a new name, Harbor Energy. FES filed for bankruptcy protection in federal court in 2018, arguing its coal and nuclear plants could not compete against cheaper energy sources such as natural gas.
Utility executives turned to the legislature for financial assistance and in April 2019 House Bill 6 was introduced, passing with bi-partisan support three months later. Without a ratepayer subsidy, the FES-operated Davis-Besse Nuclear Power Station and Perry Nuclear Power Station would be closed, FES management said.
In a July 27 statement, Charles Jones, CEO of FirstEnergy Corp., said the parent company and FES began discussing a separation in November 2016.
“At that point, I and other members of FirstEnergy leadership no longer had any decision-making power regarding the strategic direction of FES,” he said.
Bills have been introduced in both chambers of the legislature to repeal House Bill 6 and Gov. DeWine has said he supports repealing the bill.


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