NEW YORK (Reuters) - Ohio’s legislature will likely require the owner of two nuclear power reactors to prove they need financial assistance to remain in service following a bribery scandal related to passage of the state’s 2019 nuclear bailout, analysts said on Friday.
FirstEnergy Corp lobbied state officials to provide more than $1 billion to fund the continued operation of its Davis-Besse and Perry reactors.
The Ohio reactors are now owned by Energy Harbor, which emerged from the bankruptcy of FirstEnergy’s FirstEnergy Solutions unit in February. The reactors likely still need financial help to keep operating.
FirstEnergy was not alone in seeking state funding for its reactors. Nuclear plants in Illinois, New York, New Jersey and Connecticut also received subsidies in recent years.
In Ohio, however, the U.S. Federal Bureau of Investigation (FBI) arrested Larry Householder, Speaker of the Ohio House of Representatives, in July, alleging bribery related to the passage of the state’s nuclear subsidy law, known as House Bill 6 (HB6).
In an effort to undue damage done by the scandal, Ohio politicians have proposed new legislation that could remove or reduce the nuclear subsidies in HB6.
“Ultimately, the subsidies may be reduced following the audit but we are skeptical they’ll go to zero when all is said and done,” said Josh Price, senior analyst at Height Capital Markets.
FirstEnergy shares fell over 3% on Friday to their lowest since September. The company said Thursday its decision to fire CEO Chuck Jones in October was related to a payment of approximately $4 million to an entity associated with a person who subsequently became a utility regulator.
Earlier this week, the FBI raided a home owned by Sam Randazzo, chairman of the Public Utilities Commission of Ohio (PUCO). Randazzo resigned on Friday, according to the state governor’s office.
Officials at the PUCO had no comment. Energy Harbor was not immediately available for comment.
In regards to violations of company policy, FirstEnergy said its “Board will continue to take decisive action to address this matter.” Separately, the company said it believes it is in the “best interest” of Ohio and the nation to maintain clean and reliable nuclear power.
Reporting by Scott DiSavino; Editing by Marguerita Choy
Our Standards: The Thomson Reuters Trust Principles.