A long-time political operative for utilities and telecom companies, Julia L. Johnson, is one of six members of FirstEnergy’s board of directors who will not seek re-election this year under a tentative settlement agreement in multiple shareholder derivative action lawsuits filed in response to FirstEnergy’s multi-million dollar bribery schemes in Ohio.
Johnson has been a member of the “Corporate Governance and Corporate Responsibility” committee since she joined FirstEnergy’s board in 2011, and became that committee’s chair in May of 2019. A former Florida utility regulator, Johnson has organized pro-utility astroturf efforts throughout her time on the board. The committee is “directly responsible for oversight of [FirstEnergy’s] political activities and practices,” the company says in SEC filings.
During Johnson’s tenure on the board, FirstEnergy became the poster-child for corruption in the utility industry. Federal prosecutors indicted Ohio House Speaker Larry Householder in July 2020 for racketeering charges connected to a bribery scheme that involved $60 million secretly paid by FirstEnergy, and resulted in Ohio’s House Bill 6. The 2019 Ohio law was poised to deliver a $1 billion ratepayer bailout to several coal and nuclear power plants owned by a bankrupt FirstEnergy subsidiary, plus a financial windfall for FirstEnergy’s other Ohio utilities, before parts of the law were repealed last year.
FirstEnergy admitted its role in the scheme in a deferred prosecution agreement reached with federal prosecutors last summer. The company also admitted that another secret $4.3 million payment it made had influenced the actions of former Public Utilities Commission of Ohio chairman Samuel Randazzo. Randazzo resigned from the PUCO in scandal after the FBI raided his home, but has not been charged with any crimes.
In the wake of the Householder charges, shareholders whose stock values plummeted filed lawsuits. FirstEnergy was named as a nominal defendant in the derivatives actions, but the lawsuits were filed by shareholders on behalf of and for the benefit of the company. The defendants include a mix of current FirstEnergy directors and officers, and former company leaders cut loose in the aftermath of the bribery scandal.
If the settlement that would remove Johnson and the other board members is finalized, FirstEnergy will receive $180 million from insurers of the defendants. The other outgoing board members would be Michael J. Anderson, Donald T. Misheff, Thomas N. Mitchell, Christopher D. Pappas and Luis A. Reyes, according to FirstEnergy. All six were board members during the time period covered by the federal criminal investigation.
FirstEnergy’s just-released proxy statement confirmed the six longtime board members will not stand for re-election at the company’s annual shareholder meeting in May.
Judge has serious reservations about settlement
The multi-case settlement requires the approval of several federal and state judges, one of whom has expressed concerns that the settlement would allow the individuals responsible for FirstEnergy’s bribe payments to avoid being held accountable for their actions.
FirstEnergy announced the settlement ahead of an earnings call in February.
After the earnings call, U.S. Northern District Court Judge John Adams denied, with prejudice, a motion to stay one of the lawsuits subject to the settlement while the agreement is finalized.
Adams also ordered attorneys in the case to name who at FirstEnergy paid the bribes. Jeroen van Kwawegan, lead attorney for the plaintiffs, named FirstEnergy’s fired CEO Charles E. Jones and lobbyist Michael Dowling in a sworn affidavit.
Jones and Dowling had already been widely reported to be two unnamed executives described in the Deferred Prosecution Agreement that FirstEnergy reached with federal prosecutors last summer. The sworn affidavit did not identify “other specific people” involved in the bribe payments that van Kwawegan alluded to, but refused to name, at a March 9 hearing, according to a transcript.
Adams has also questioned why the settlement would allow individual defendants responsible for the scheme to walk away without paying a price personally, given that insurers for the director and officer defendants would cover the $180 million payment to FirstEnergy.
At the March 9 hearing, Adams described millions of dollars in compensation that the individual defendants had received during the years in which the bribery scheme played out, and asked van Kwawegan why the settlement did not seek to recoup money from those responsible for the scheme.
“Ms. Johnson… was awarded $953,000 in fees, stocks, and other compensation,” Adams said.
“And do you seek recovery of those funds?” the judge asked van Kwawegan, who after a brief exchange confirmed the answer was no.
Van Kwawegan confirmed the settlement meant the plaintiffs would not seek recoupment of compensation from any of the individual defendants, though it would allow FirstEnergy to separately pursue recoupment from Jones, Dowling, and a third fired former executive, Dennis Chack.
The settlement appeared to be on shaky ground today, after Adams issued a new order that denied a renewed request to stay the case in his court.
The multi-case settlement has fared better in the U.S. Southern District Court, where Judge Alegnon Marbley is overseeing a derivatives action lawsuit where the Employees Retirement System of the City of St. Louis is the lead plaintiff. Marbley authorized a stay in that case while the settlement is being finalized.
Settlement would be a win for the FirstEnergy directors and officers
Prior to the announcement of the settlement, the litigation had not been going well for the individual FirstEnergy director and officer defendants.
Forensic experts had to be brought in to try to restore texts Jones deleted, messages which were sought in discovery by the plaintiffs in the Northern District Court lawsuit overseen by Adams. FirstEnergy turned over hundreds of thousands of pages of documents in discovery in the same case.
Plaintiffs in that lawsuit were set to begin to depose defendants on the morning of February 10, the same day FirstEnergy announced the settlement. Johnson was scheduled to be deposed in April. In today’s order, Adams opened the door for the depositions to be rescheduled.
Five of the six outgoing director defendants – Johnson, Anderson, Misheff, Mitchell and Reyes – served on FirstEnergy’s Corporate Governance Committee during the time period in which the bribery scheme played out.
Last year, long before the settlement was announced, Marbley denied a FirstEnergy motion to dismiss the shareholder lawsuit in his court, noting that those same five directors had “served on the Corporate Governance Committee throughout the criminal scheme and claimed they ‘maintain[e] an informed status with respect to the Company’s practices relating to corporate political participation, and dues and/or contributions to industry groups and trade associations.’”
“Based on the Director Defendants’ contemporaneous representations about their oversight and their repeated efforts to encourage shareholders to vote against increased transparency and disclosure, it is more than plausible that Director Defendants were directly overseeing Jones’ and the Officer Defendants’ illicit political activities and that the five members of the Corporate Governance Committee were fully informed of the Company’s ‘practices relating to corporate political participation,’” Marbley wrote in his denial of the motion to dismiss.
“Taken as true, these allegations together support this Court’s inference that a majority of the Director Defendants recklessly disregarded their duties to the Company and allowed the criminal scheme to continue unchecked,” the judge also said.
Johnson has long history of working as a political consultant to advance utility, telecom interests
Johnson is no stranger to the relationship between utilities and the state and federal regulators who do so much to determine their profitability. Johnson herself served as a utility regulator on Florida’s Public Service Commission from 1992 to 1999.
The next year, she founded Net Communications, LLC, a consulting firm which worked to advance utilities’ and telecom companies’ political agendas. Johnson also ran a tax-exempt 501(c)(4) organization called the Emerging Issues Policy Form (EIPF), founded in the same year, which worked to advance utility industry interests.
Both organizations have operated outside the public eye, but tax filings from other entities show that they are funded by utility lobby groups. The Edison Electric Institute, the trade association for investor-owned utilities which is funded by dues that its utility members largely recover from ratepayers, paid $750,000 to NetCommunications in 2015 and also has contributed tens of thousands of dollars to EIPF, according to EEI’s tax filings.
Johnson first joined the board of Allegheny Energy in 2003; she joined FirstEnergy’s board when the companies merged in 2011.
FirstEnergy has not been shy about the fact that it valued Johnson as a board member because of her regulatory experience and political influence. Other energy utilities appeared to have done the same: Johnson served on the boards of Northwestern Energy and American Water Works, though she retired from the Northwestern board in 2021 after the Ohio bribery scandal became major news.
FirstEnergy’s annual proxy statements highlighted Johnson’s political experience and influence as key attributes she brought to the board
The Ohio scandals did not deter FirstEnergy from keeping Johnson and other directors on its board for nearly two years since they broke open, though. In 2021, months after the bribery scandals first made national headlines, FirstEnergy continued endorsing Johnson and other longtime board members for re-election at the company’s annual shareholder meeting.
Johnson-led group created private forum for utility execs to meet regulators
Johnson’s 501(c)(4) group, EIPF, paid for state and federal lawmakers and utility regulators to attend private meetings with utility industry executives and lobbyists at Florida resorts.
The IRS revoked EIPF’s 501(c)(4) status in 2012 after the organization failed to file required annual reports, but the group continued to operate. A 2017 investigation by the Energy and Policy Institute exposed its operations publicly for the first time.
The EPI investigation revealed how EIPF hosted Federal Energy Regulatory Commission chairman Neil Chatterjee and commissioner Cheryl Lafleur at a 2017 meeting at the Eau Palm Beach Resort in Florida. At the time, FERC was poised to determine the fate of a costly Trump Administration proposal to bail out struggling coal and nuclear plants. FERC, led by Chatterjee, ultimately rejected the proposal the following year.
Johnson’s name also appeared on a list of expected attendees for a Republican Governors Association watch party held at EEI’s headquarters in D.C. during Trump’s inaugural parade in January of 2017. Prosecutors point to former Ohio House Speaker Householder’s flight to D.C. for Trump’s inauguration aboard FirstEnergy corporate jet as the launching point of a multi-year bribery scheme. Householder, Jones, and others involved in the bribery scheme also appeared on the list of expected attendees for the RGA-EEI watch party. The list was obtained by Documented, an investigative watchdog and journalism project.
As part of the deferred prosecution agreement with federal prosecutors, FirstEnergy admitted it paid $5 million to an unnamed dark money group associated with a federal official, or officials, in 2017, as it lobbied the Trump administration for a federal bailout. Evidence first reported by the Akron Beacon Journal indicates that America First Policies, a 501(c)(4) group formed by Trump insiders in 2017, is the unnamed 501(c)(4) described in FirstEnergy’s agreement with prosecutors.
Jones, then still FirstEnergy’s CEO, also personally lobbied President Trump and top Administration officials for the bailout. As it became clear Trump could not deliver on the federal bailout, FirstEnergy refocused its lobbying efforts on Ohio, leading to the scheme that culminated in the passage of HB 6.
In 2012, FirstEnergy’s then CEO Anthony Alexander joined an EIPF meeting at the Omni Amelia Island Resort. Alexander attacked state renewable energy and energy efficiency “mandates” for electric utilities. Years later, in 2019, HB 6 achieved the company’s long-term objective of rolling back the state’s clean energy standard.
EIPF received funding from other utilities and there is evidence that some, including American Electric Power, may have misused ratepayer money to fund for EIPF’s political activities.
Johnson worked on behalf of utilities and telecoms to create appearance of support from people of color
The website for Johnson’s consulting firm, Net Communications, LLC, today offers only a message that says it is “coming soon… under construction.”
one of the nation’s leading public policy and advocacy firms specializing in African American, Hispanic, and women’s constituencies …
We are strategic advisors for major companies in the broadcasting, advanced communications, information technology, telecommunications, energy, and water industries.
An Our Expertise page from 2014 said that:
Our grassroots alliances, relationships with policy influencers and decision makers, rapport with local, state, and national minority and women’s organizations, and our impeccable reputation for getting our client’s message heard through a myriad of venues, is something that our clients depend on.
Little information is publicly available about Net Communications’ activities, but The Intercept reported in 2017 that Net Communications had registered the domain name for a site called Politic365,which referred to itself as “the premier digital destination” for “policy related to communities of color,” and which ran articles that parroted utility talking points about rooftop solar energy being harmful toward low-income and Black people.
The site also offered “gamechanger” awards to investor-owned utility executives. Kristal High Taylor, Johnson’s step-daughter, was Politic365’s editor-in-chief.
NetCommunications took its site offline a few months before The Intercept’s 2017 report, according to Internet Archive snapshots of the site. Politic365 stopped publishing negative portrayals of distributed solar energy around the same time. (The site now appears to operate under other management.)
Evidence of Johnson’s work pushing utilities’ agenda shows up in other organizations as well. She served as the corporate chairwoman of the National Organization of Black Elected Women (NOBEL-Women), and as the Chairwoman for Communications Policy Development and Outreach for the Florida State Conference of the National Association for the Advancement of Colored People (NAACP), according to an undated biography from the Foundation for Florida’s Future, where Johnson is listed as a current trustee.
Around the time of Johnson’s involvement, both organizations received utility money and both supported the industry’s crusade against distributed solar power.
NOBEL-Women has received annual donations from the Edison Electric Institute, the utility lobby group, according to EEI tax filings. The organization passed a resolution in 2014 stating that “many states’ current policies regarding on-site solar power reinforce historic economic and racial inequities in the energy space” and that “African American families, which already devote more of their income to energy than other demographic groups, cannot afford to devote yet more income to subsidize wealthier households with solar installations.”
The Florida NAACP received money from that state’s biggest utilities in exchange for its support for their anti-rooftop solar policy positions; the group later publicly rejected money from the utilities and changed course on questions of solar policy, according to a New York Times exposè.
FirstEnergy pursued a similar strategy of funding a Cleveland church as part of an effort to win over the support of Black clergy and civil rights activists who had opposed one of the utility’s earlier proposals to force Ohio ratepayers to bail out its struggling coal and nuclear power plants.
The strategy has backfired in recent years. The Cleveland chapter of the NAACP changed course after several years of supporting FirstEnergy’s bailout proposals, and in 2018 opposed a bailout plan that was proposed by then-Secretary of Energy Rick Perry and backed by FirstEnergy and coal-producer Murray Energy.
In 2019, the national NAACP published a report, “Fossil Fueled Foolery,” that revealed how fossil fuel and utility “companies target the NAACP for manipulation and co-optation.”
“… if you do take fossil fuel company money, don’t allow it to sway you for standing up for justice for your community and don’t allow them to use your name or reputation as a cover or legitimization for their deeds,” the NAACP report recommended.