|
|
|
|
|
PUCO Says Use Of FirstEnergy Name By Utilities' Former Competitive Affiliates Did Not Violate Corporate Separation Rules
The following story is brought free of charge to readers by VertexOne, the exclusive EDI provider of EnergyChoiceMatters.com
The PUC of Ohio has found that Ohio Edison Company, The
Cleveland Electric Illuminating Company, and The Toledo Edison Company (collectively, "FirstEnergy Ohio") violated several corporate separation laws, including by executing warm transfers, of customers calling FirstEnergy Ohio, from FirstEnergy Ohio to FirstEnergy
Products (FEP), and by allowing the use of the FirstEnergy Ohio utility bill by FEP to bill customers for services from FEP
FirstEnergy Ohio during the proceeding had said that, at the time of the relevant corporate separation audits, FEP was a business unit within FirstEnergy Service Company (FESC) that offered non-electric products and services on FirstEnergy Ohio's behalf rather than its own behalf (and thus FEP was not a competitive affiliate, unlike FirstEnergy Home, a competitive affiliate which also offered non-electric products and services)
A media representative for FirstEnergy Corp. provided the following statement concerning the matter:
"Today’s PUCO decision regarding the legacy audits closes a chapter tied to activities that do not represent the company we are today. FirstEnergy is committed to accountability, transparency and rebuilding trust.
"Under new leadership, we have transformed our culture, strengthened compliance programs and implemented rigorous oversight of our political and lobbying practices. These changes reflect the company we are today and the direction we are headed.
"Our focus is firmly on the future: operating with transparency, delivering reliable service and investing in the communities we serve. Between 2025 and 2029, we plan to invest $7.3 billion in our Ohio transmission and distribution infrastructure, people, processes and facilities – critical investments that enhance reliability for our customers, drive economic growth and prepare for the demands of tomorrow.
"We know trust isn’t restored through words alone. It’s earned through consistent action – by prioritizing reliability and transparency every day and keeping customers, communities, investors and our employees at the center of our mission."
--- Statement from FirstEnergy Corp.
In total, in an audit proceeding, PUCO found that FirstEnergy Ohio committed seven
violations of Ohio corporate separation law.
PUCO said, "FirstEnergy Ohio violated Ohio Adm.Code
4901:1-37-04(A)(2) and Ohio Adm.Code 4901:1-37-04(A)(3) because of warm transfers and
the comingling and lack of separation between regulated FEP [FirstEnergy
Products] and unregulated FEH [FirstEnergy Home].
FirstEnergy Ohio’s utilization of their customer bills for FEP business violated Ohio
Adm.Code 4901:1-37-04(D)(10)(c). Next, Ohio Adm.Code 4901:1-37-08(C) was violated
because FirstEnergy Ohio’s cost allocation review is not sufficient. FirstEnergy Ohio
violated Ohio Adm.Code 4901:1-37-08(I) when it was without a chief compliance officer at
the time Daymark was conducting its audit, and FirstEnergy Ohio did not have anyone to
complete those duties. As to CAM [cost allocation manual] requirements, FirstEnergy Ohio violated Ohio
Adm.Code 4901:1-37-08(D)(5) and Ohio Adm.Code 4901:1-37-08(D)(7) by missing required
elements in its CAM."
However, PUCO ruled that certain other behavior at issue in the proceeding did not violate corporate separation law
Notably, PUCO disagreed with one of its third party auditors and several intervenors who had alleged that the use of the "FirstEnergy"
name by competitive affiliates was in violation of Ohio Adm.Code 4901:1-37-04(D)(10)(a),
Ohio Adm.Code 4901:1-37-04(D)(10)(c), and other sections of the Ohio Administrative Code.
PUCO said, "There is a possibility that the use of the 'FirstEnergy' name could cause customer confusion,
but we believe it does not equate to a violation of corporate separation laws."
PUCO cited its precedent as well as the prior inclusion of the name FirstEnergy Solutions in a previously approved corporate separation plan, in reaching its conclusion concerning use of the FirstEnergy name
PUCO stated, "The
Commission has held that, absent other circumstances indicating that the use of the name
and/or logo is unfair, misleading, or deceptive, a CRES supplier should not necessarily be
prohibited from using the incumbent utility’s name and/or logo. In re the Comm.’s Rev. of
its Rules for Competitive Retail Elec. Service, Case No. 12-1924-EL-ORD, Finding and Order
(Dec. 18, 2013) at ¶ 18, citing Ohio Consumers’ Counsel v. Interstate Gas Supply, Case No.
10-2395-GA-CSS, Opinion and Order (Aug. 15, 2012). Furthermore, the Commission has
issued a CRES certificate for FES and renewal certificates many times over."
PUCO further noted that, "The Commission has also approved FirstEnergy Ohio’s
2009 corporate separation plan, which referred to FES [FirstEnergy Solutions Corp.] by name and discussed joint
marketing."
"To now find that the use by an
affiliate of the 'FirstEnergy' name was in violation of corporate separation laws without
advanced notice to the utilities would be fundamentally unfair," PUCO said
Regarding the violations found by PUCO, PUCO stated, "We find FirstEnergy Ohio to be in violation of Ohio Adm.Code 4901:1-37-
04(A)(2) and Ohio Adm.Code 4901:1-37-04(A)(3) because of soft/warm transfers and the
extent to which employees were shared between FESC [FirstEnergy Service Company], FES, and Suvon, and lack of
separation between FEP and FEH."
PUCO found that, "FirstEnergy Ohio improperly engaged in the practice of warm transfers by
transferring customers who called their utility to FEP. In addition, FEP accumulated
revenue through warm transfers during the audit period, which was a competitive
advantage that FEP had over its competitors. The warm transfers allowed FEP to gain new
customers without marketing costs, as the customers’ calls were transferred to FEP from the
utilities. These actions violated Ohio Adm.Code 4901:1-37-04(A)(2) and 4901:1-37-04(A)(3)."
PUCO recited an audit finding that stated, "FEP Operations provides
back-office support to both FEP (the regulated channel) and [FEH] (the unregulated
channel)," and that, "a team within FirstEnergy Shared services (Products and Services) markets
and sells products and services through both FEP and [FEH]"
"These
findings demonstrate that the internal group servicing both entities has improper access to
confidential regulated customer information when working on behalf of FEH," PUCO said
PUCO said that an audit's findings, "also establish that FEP and FEH share services and do not operate
independently of one another, in violation of Ohio Adm.Code 4901:1-37-04(A)(2) and Ohio
Adm.Code 4901:1-37-04(A)(3)."
However, PUCO declined to find that a sharing of senior executives among FirstEnergy Ohio and competitive affiliates was a violation of corporate separation law
"As to the sharing of senior executives, the Commission has
never previously found that practice to be a violation of corporate separation requirements,
and we decline to find it a violation at this time," PUCO said
In terms of billing non-utility products on the FirstEnergy Ohio bill, PUCO found that FirstEnergy Ohio’s utilization of its customer bills for FEP
business was in violation of Ohio Adm.Code 4901:1-37-04(D)(10)(c).
PUCO stated, "FirstEnergy Ohio emphasizes that it has tariff
authority to provide non-electric products and services, but this tariff authority does not
explicitly authorize FirstEnergy Ohio to bill for these products and services through its
utility bill. Moreover, using its utility bill to bill and collect payments for competitive nonelectric products is an advantage that competitors do not have. And tariff provisions do not
excuse utilities from compliance with corporate separation requirements. To the extent that
the Companies assert that there is no affiliate preference because FEP offers non-electric
products and services on behalf of the Companies, we note that FEP is a business unit within
FESC, an affiliate. Any competitors of FEP do not have access to the Companies’ utility bills,
so FEP receives preferential treatment."
However, PUCO declined to mandate that FirstEnergy Ohio provide billing for retail suppliers' non-commodity services as a remedy for this violation.
PUCO noted that the Commission has addressed this matter by rule and, as previously reported, utilities may comply with the non-discrimination billing rule by either providing non-discriminatory access to billing for non-commodity services, or by not providing the ability to bill for non-commodity services to any party
PUCO also declined to prohibit any retail supplier from being an affiliate of FirstEnergy Ohio for a
period of ten years, as recommended by certain intervenors
PUCO noted that FirstEnergy Ohio currently does not have a retail supplier or broker affiliate in Ohio, and noted that any future retail supplier or broker affiliate would need to seek a license
PUCO also noted that competitive affiliate FEH wound down its operations and no longer markets or offers products or
services, and that FEP no longer operates in Ohio
PUCO said that the "sizable" forfeiture imposed on FirstEnergy Ohio, which is designed to "discourage" future violations, is "sufficient" to address concerns about any potential future affiliation between FirstEnergy Ohio and a retail supplier or broker
Specifically, PUCO imposed on FirstEnergy Ohio a forfeiture of $23,360,000 for the violations which PUCO found in the audit proceeding, as described above
In a separate order, PUCO ordered FirstEnergy Ohio to provide customer refunds of about $186 million for violations related to the HB 6 scandal
PUCO also imposed an additional $40 million civil forfeiture for certain additional corporate separation violations, not related to retail energy or product marketing or preferential treatment
Case 17-0974-EL-UNC, 17-974-EL-UNC
ADVERTISEMENT Copyright 2025 EnergyChoiceMatters.com. Unauthorized copying, retransmission, or republication
prohibited. You are not permitted to copy any work or text of EnergyChoiceMatters.com without the separate and express written consent of EnergyChoiceMatters.com
Potential For Customer "Confusion" From Shared Name Does Not Equate To A Violation Of Corporate Separation Law, PUCO Says
PUCO Finds CRES Competitors Were Harmed By FirstEnergy Ohio EDCs' Warm Transfers, Consolidated Billing For Products Business
PUCO Imposes $23 Million Forfeiture On FirstEnergy Ohio EDCs For Violations Found In Audit
PUCO Denies Certain Relief Sought By Retail Supplier
November 19, 2025
Email This Story
Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
NEW Jobs on RetailEnergyJobs.com:
• NEW -- Account Executive (Commercial Retail Energy)
|
|
|
|
|