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FirstEnergy Works to Distance Itself From Ex-Unit Amid Probe

Mark Chediak
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FirstEnergy Works to Distance Itself From Ex-Unit Amid Probe

(Bloomberg) -- FirstEnergy Corp.’s chief executive officer on Friday pushed to distance the company from its former unit that owns nuclear plants benefiting from an Ohio state law at the crux of an alleged racketeering and bribery conspiracy.

CEO Charles Jones said the company hasn’t had control of decisions made by its former FirstEnergy Solutions unit, now Energy Harbor, since November 2016. And he said FirstEnergy is in talks with U.S. Justice Department lawyers after receiving subpoenas related to the alleged racketeering conspiracy involving to the passage of the reactor subsides last year.

“FirstEnergy acted properly in this matter, and we intend to cooperate fully with the investigation,” Jones said on a call with analysts to discuss the company’s second-quarter results.

The company’s shares rose 7.6% at 2:15 p.m. in New York after earlier climbing as much as 10%.

KeyBanc Capital Markets analyst Sophie Karp said in a note that Jones and other FirstEnergy executives answered “challenging questions with confidence” from analysts on Friday.

“Based on the color provided on today’s call, we believe that the ‘Armageddon’ scenario that has quickly become priced into the shares is likely unfounded,” she wrote.

On Tuesday, federal authorities arrested Ohio House Speaker Larry Householder and four political associates, saying they took $61 million in bribes in connection to the bailout. Prosecutors said the money came from a corporation -- identified in court papers only as “Company A” -- in exchange for supporting the measure.

FirstEnergy has not been charged. Nor was it named in the complaint filed by federal prosecutors. Nonetheless, its shares have lost about one-third of their value since the scandal broke.

Jones said he didn’t believe that all the statements attributed to a “CEO” in court documents filed by prosecutors are referring to him.

“I don’t know who it was, but it was not me,” he said on the call. Jones added that he had never made a payment directly to a lobbyist nor asked a lobbyist to make a payment.

FirstEnergy Solutions changed its name to Energy Harbor when it emerged from Chapter 11 earlier this year and spun off from its parent.

(Recasts lead and adds analyst quote in fifth and sixth paragraphs.)

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