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FirstEnergy has friends in high places

08/19/03

Sandy Theis, Stephen Koff and Mark Naymik
Plain Dealer Reporters

Among Ohio's powerful electric utilities, Akron's FirstEnergy Corp. generates the most political juice.

When state legislation threatened its financial health, the firm hired a state senator, a former Ohio House speaker and the governor's top aide.

For help with federal bills and regulations, it employs lobbyists whose previous bosses were U.S. presidents and heads of agencies that oversee the regulators.

It ranks sixth nationally in money spent by utilities on lobbyists. And its executives - from the CEO to in-house lawyers - have opened their wallets to politicians from Toledo City Council to the White House. Twenty-five executives have contributed a total of $33,500 to President Bush's re-election campaign so far, according to Political Money Line, a database service that tracks money in politics.

What has the company gotten in return for its political clout?

"Everything it ever wanted," said State Sen. Robert Hagan, a Youngstown Democrat who joined the chorus of critics demanding to know more about FirstEnergy's role in what caused North America's biggest blackout.

FirstEnergy spokesman Ralph DiNicola said the company "has a right to participate in the political process."

He noted that contributions made by executives fall within all the federal guidelines and are "recorded in all of the appropriate places." He termed the lobbyists a "team of experts" who have been hired to deal with complex federal and state regulations.

FirstEnergy appears well-positioned for its latest troubles. Records in Washington show that over the last year its lobbyists have included Joshua Rokach, a former Federal Energy Regulatory Commission lawyer who was involved in electrical transmission restructuring. FERC, which regulates the electricity grid, is involved in determining the cause of last week's power failure.

And on May 1, FirstEnergy retained Willkie, Farr & Gallagher to help it with "legislation relating to air pollution," according to the federal lobbying registration. Specifically working for FirstEnergy at the firm: Donald Elliott, general counsel of the Environmental Protection Agency under former President Bush, and Russell Smith, former Republican counsel to the House Energy and Commerce Committee. Smith's old committee has launched an investigation into what caused last week's multistate blackout.

Some authorities believe the trouble began at lines owned by FirstEnergy, and they note that government monitors have been increasingly troubled by strains on the system.

Gov. Bob Taft - still vacationing in Canada - isn't assigning blame for the blackout, and he issued a statement yesterday saying he hopes the crisis will prompt passage of energy legislation that has been stalled in Congress.

Yet Democrats and some consumer groups say they fear that FirstEnergy will use its political clout to stall meaningful reforms.

"The utility companies pretty much have free rein," said Hagan. "I don't have a lot of confidence that this will be resolved in a way to help the consumer."

His prediction, he said, is based on the company's legislative successes.

Its highest-profile victory came three years ago in Columbus, when Taft signed into law a bill designed to bring competition to the electricity market.

One of the bill's most contentious provisions allows FirstEnergy to bill its customers for past investments, mainly in its nuclear power plants. Consumer groups say that customers will be forced to pay $9 billion. FirstEnergy contends the figure is inflated, but it has refused to produce records documenting the true price.

Before the vote on the bill, the company enlisted some of the state capital's most influential lobbyists and consultants and showered elected officials with campaign donations.

A study by Citizen Action showed that Ohio's four largest electric utilities spent $604,235 on campaign donations between 1997 and 1998. FirstEnergy led the list of givers ($209,970). Taft led the list of receivers ($114,258.)

FirstEnergy began work on the deregulation legislation in the mid-1990s, hiring more than 20 lobbyists and a half-dozen consultants.

In 1997 - the same year the firm attempted to cut costs by laying off 400 employees - it spent $9.3 million on consultants, according to records filed with FERC. The total included money paid to Kingwood Consulting, founded by the late Paul Mifsud, who served as chief of staff to then-Gov. George Voinovich.

The firm paid Mifsud $453,700 over two years.

In addition to retaining Mifsud, the firm hired former House Speaker Vern Riffe, Summit County GOP Chairman Alex Arshinkoff and Roy Ray, a former state senator from Akron. Ray received $124,000 from FirstEnergy sister firm Ohio Edison, then introduced legislation favorable to the company.

An ethics investigation concluded that Ray had done nothing wrong.

Today the firm employs more than two dozen lobbyists in Columbus and Washington.

In April, it expanded its Washington lobbying stable to include the Federalist Group and its all-star Republican team: John Green, who previously ran Sen. Trent Lott's political action committee, the New Republican Majority Fund; Stewart Hall, former legislative director for Sen. Richard Shelby of Alabama; and Drew Maloney, former legislative director to House Majority Leader Tom DeLay.

FirstEnergy's Ohio lobbyists include Arshinkoff, who has close ties to President Bush, and former Ohio Democratic Party Chairman Jim Ruvolo, who is a native of Toledo.

With help from Ruvolo, Toledo City Council voted last summer to continue its dealing with FirstEnergy rather than switch to a competitor. Council members cast their votes after heavy lobbying - and a flurry of campaign donations - from Ruvolo and others affiliated with FirstEnergy.

The firm's political maneuverings date back decades, said Ashley Brown, a former member of the Public Utilities Commission of Ohio who is now executive director of the Harvard Electricity Policy Group at the Kennedy School of Government.

Brown said that when he joined the PUCO in 1983, he put together a list of the law firms retained by Cleveland Electric Illuminating, one of FirstEnergy's affiliates.

"The list was mind-boggling," Brown said. "Back then, you had sitting legislators on retainer to the company. It was amazing stuff."

To reach this Plain Dealer reporter:

stheis@plaind.com, 1-800-228-8272


2003 The Plain Dealer. Used with permission.
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