SEC subpoenas American Electric Power for House Bill 6 documents

Plus: Mike DeWine’s calendars reveal meetings with leaders from AEP and an AEP-backed dark money group during the final weeks of DeWine’s 2018 campaign for governor

American Electric Power disclosed yesterday that it received a subpoena from the U.S. Securities and Exchange Commission seeking documents related to House Bill 6, the 2019 Ohio law at the center of a major corruption scandal that’s already engulfed FirstEnergy, another Ohio utility company.

AEP said in a statement that the subpoena came from the SEC’s Division of Enforcement, which investigates and litigates possible violations of federal securities laws.  

AEP also faces litigation related to HB 6 by shareholders who allege the electric utility company violated federal securities laws, as the company disclosed in a quarterly report to the SEC in April. The shareholders allege that AEP made materially false or misleading statements to investors, including about the company’s actions on clean energy and climate change, by misrepresenting or not disclosing the company’s role in what federal prosecutors have described as the largest case of public corruption in Ohio’s history.

The SEC is currently stepping up its enforcement around corporate misconduct related to “ESG” or “environment, social and governance”, including material gaps and misstatements in statements to investors about climate risks. 

Under HB 6, Ohio ratepayers will pay millions of dollars more in subsidies to bail out two coal-fired power plants operated by the Ohio Valley Electric Corporation, which counts AEP as its largest shareholder. 

How AEP is involved in the corruption scandal surrounding Ohio’s House Bill 6

American Electric Power admitted last summer that since 2015, it contributed $8.7 million to Empowering Ohio’s Economy, a 501(c)(4) dark-money group that counted AEP as its only funder. 

Tammy Ridout, a spokesperson for AEP, defended those contributions yesterday as “appropriate and lawful” in response to an email inquiry from the Energy and Policy Institute. 

Empowering Ohio’s Economy contributed $700,000 to Generation Now Inc., the 501(c)(4) that pleaded guilty earlier this year to participating in a $60 million racketeering conspiracy that resulted in HB 6, which included a $1 billion ratepayer-funded bailout of two nuclear power plants owned by a bankrupt subsidiary of FirstEnergy. Generation Now, Inc.’s guilty plea is one of three that federal prosecutors have secured in their case against former Ohio House Speaker Larry Householder and five others indicted last summer in connection with the nuclear bailout. 

FirstEnergy admitted to being the source of most of the money that secretly flowed into Generation Now, and has disclosed that it is seeking to reach a deferred prosecution agreement with federal prosecutors, a type of agreement that typically involves an admission of wrongdoing.

Last month, AEP’s lawyers included a copy of a 2017 grant agreement between Empowering Ohio’s Economy and Generation Now in a motion to dismiss a shareholder lawsuit related to HB 6. The grant agreement was signed by J.B. Hadden, president of Empowering Ohio’s Economy, and Jeff Longstreth, the executive director of Generation Now. Longstreth pleaded guilty last fall to racketeering in connection with HB 6.

Hadden is a lawyer at the law firm Murray, Murphy, Moul, + Basil who has worked as an outside attorney for AEP. 

Tom Froehle, a vice president of governor affairs for AEP, also served on the board of directors for Empowering Ohio’s Economy. Froehle actively lobbied in support of HB 6 for AEP in 2019. 

AEP also contributed $200,000 in 2017 to the Coalition for Growth & Opportunity, another 501(c)(4) that was led by Longstreth, and that supported earlier legislation to expand subsidies for two coal plants owned by OVEC, a consortium of utilities whose largest equity holder is AEP. AEP drafted that earlier legislation, which failed, but the bailouts materialized when HB 6 mandated that customers pay subsidies to the OVEC plants, which no longer operate economically. The Coalition for Growth & Opportunity was later referenced as an unnamed “Coalition” in the 2020 federal criminal complaint against Householder and his co-defendants, but it has not been charged in the case.   

AEP and FirstEnergy have also not been charged.

Mike DeWine’s calendars reveal previously unreported meetings with AEP and Empowering Ohio Economy’s leadership

Mike DeWine met with leaders from AEP and Empowering Ohio’s Economy during the final weeks of his successful 2018 campaign for governor, according to copies of his meeting calendars obtained by the Energy and Policy Institute. 

EPI obtained the calendars through a records request filed with the Ohio Attorney General’s Office, where DeWine served as state attorney general prior to his inauguration as Ohio’s governor in January of 2019. 

In 2018, Empowering Ohio’s Economy contributed $525,000 to State Solutions Inc. (also known as Make Ohio Great), a 501(c)(4) affiliated with the Republican Governors Association, which supported the DeWine campaign for governor with outside spending. 

DeWine’s calendar for October 15, 2018 included time to “prep for AEP meeting with JB” and listed DeWine’s director of campaign finance Mary Sabin and “Michael” as points of contact for the meeting. AEP’s political action committee reported making a $12,500 contribution to DeWine’s campaign on the next day. 

J.B. Hadden is a longtime associate of DeWine who had earlier served as the treasurer for DeWine’s campaigns for Ohio Attorney General. Sabin, who served as DeWine’s campaign finance director from 2016 to 2020, more recently included Hadden in an October 2019 email regarding “our weekly finance call” that was obtained by Common Cause Ohio.  

DeWine’s schedule also included a “HOLD” for “a meeting with AEP” on October 18, 2018, and a 9 AM meeting with “AEP Leadership” a few weeks later on October 31. The schedule listed Michael Hall, DeWine’s campaign policy director, as the point of contact for the meeting on October 31. Hall is now Governor DeWine’s chief of staff. 

It’s not clear exactly when in 2018 Empowering Ohio’s Economy contributed money to State Solutions Inc., but DeWine loaned his campaign $3 million in October 2018 to close out what was called the most expensive governor’s race in Ohio’s history. Empowering Ohio’s Economy described the purpose of the money it paid to State Solutions Inc. as “public education” in its annual report to the IRS for 2018. 

Sabin also arranged an October 10, 2018 meeting between FirstEnergy and DeWine at a Republican Governors Association fundraiser in Columbus. FirstEnergy Solutions contributed $500,000 to the Republican Governors Association the following day. 

When DeWine signed HB 6 into law in July of 2019, it included the nuclear and coal plant bailouts long sought by AEP and FirstEnergy.

AEP’s Ridout did not dispute that a meeting between AEP and DeWine took place in October 2018, but said she could not track down any details about the meeting, including who from the company might have attended.

“If DeWine’s schedule said we had a meeting, we likely did as it would be typical for us to have discussions with prominent elected officials who are actively engaged in public policy matters in Ohio,” Ridout said. “We were fully aware of his candidacy for governor at that time, so that could have been a subject discussed.” 

The Energy and Policy Institute had asked Ridout to comment on who from AEP met with DeWine, and whether any meeting that occurred included discussion of how AEP could support DeWine’s campaign, either directly or through an outside organization like Empowering Ohio’s Economy, State Solutions Inc., or the Republican Governors Association. 

Ridout did not respond to a question about whether Hadden was on contract with AEP in 2018, and sought to distance AEP from how Empowering Ohio’s Economy used the money it received from the electric utility. 

“Empowering Ohio’s Economy is a separate organization and you should direct any questions regarding their contribution process to them,” Ridout said. 

A spokesperson for DeWine did not respond to an email from the Energy and Policy Institute seeking comment, nor did Hadden. 

Money for gifts, food, drinks, and entertainment for DeWine’s policy meetings 

DeWine’s calendars also included a meeting with AEP’s CEO Nick Akin on January 3, 2019, not long before DeWine’s inauguration as Ohio’s new governor. 

Empowering Ohio’s Economy contributed $25,000 in 2019 to the Ohio Governor’s Residence and Office Foundation, a 501(c)(4) formed shortly after DeWine’s inauguration that January, which bought food and drinks for DeWine’s policy meetings. Hadden was listed as the group’s president and executive director on its annual report to the IRS for 2019. 

DeWine, Lt. Governor Jon Husted, and key members of their staff, later disclosed receiving gifts and/or food and beverages from the Ohio Governor’s Residence and Office Foundation on their annual financial disclosure statements for 2019 and 2020.

Ohio lawmakers repealed HB 6’s $1 billion nuclear bailout earlier this year, but have left in place the law’s OVEC coal subsidies.

Top photo is a public domain image of the SEC seal from WikiMedia Commons