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Big money, nuclear subsidies, and systemic corruption via The Bulletin of Atomic Scientists

By Cassandra JefferyM. V. Ramana | February 12, 2021

The “largest bribery, money-laundering scheme ever perpetrated against the people and the state of Ohio” came to light during an unexpected press conference in July 2020 in Columbus. Speaking haltingly and carefully, US Attorney for the Southern District of Ohio David DeVillers announced “the arrest of Larry Householder, Speaker of the House of the state of Ohio and four other defendants for racketeering. The conspiracy was to pass and maintain a $1.5 billion bailout in return for $61 million in dark money.”

Unravelling an intricate web of alleged illegal activities used to launder money, DeVillers broke down the complicated modus operandi of “Company A.” With a gentle smile on his face, he said, “everyone in this room knows who Company A is, but I will not be mentioning the name of Company A because of our regulations and rules. They have not, and no one from that company has as of yet, been charged”.

Company A is FirstEnergy Solutions, a fact most Ohians had been aware of long before the July 2020 press conference. FirstEnergy, now called Energy Harbour, is one of Ohio’s largest utility corporations. For years, the firm lobbied to get a subsidy to continue operating its unprofitable nuclear plants and maintain its revenue flow. When lobbying efforts failed to produce subsidies, it resorted to bribery to gain legislative support for House Bill 6, 2019 legislation that forces state consumers to pay into something called “the Ohio Clean Air Fund.” The green language is a smoke screen for the real purpose: to siphon nearly $150 million annually to FirstEnergy to keep its Perry and Davis-Besse nuclear power plants and two coal-fired power plants operating, while simultaneously gutting Ohio’s renewable energy standards. Also gone were the state’s energy efficiency programs, which had saved consumers and corporations millions of dollars. When citizens tried to organize a referendum to repeal the bill, FirstEnergy indulged in various dirty tactics to thwart this democratic opposition.

Ohio is not alone in its nuclear energy corruption. Also in July 2020, Commonwealth Edison (ComEd), a subsidiary of Exelon, was charged with bribery to “Public Official A” in Illinois. Though not named, the filing makes it clear that “Public Official A” is Illinois House Speaker Michael Madigan, who has denied wrongdoing. ComEd has agreed to pay a $200 million fine to resolve this case. Exelon also finds itself at the centre of another ongoing investigation by the United States Securities and Exchange Commission. The focus of the investigation is reportedly Anne Pramaggiore, a former Exelon CEO who stepped down from the company and from his post chair of the Federal Reserve Bank of Chicago. As in Ohio, the corruption charges relate to lobbying for state subsidies and special treatment of nuclear power plants.

Three other states—New Jersey, Connecticut, and New York—have implemented similar subsidies (although, to date, no allegations of wrongdoing related to them have been made public). 

[…]

Changing economics of electricity generation. These “economic reasons” have to do with an ongoing massive transformation of the energy sector. Over the last decade, the cost of renewables like solar and wind have dropped substantially; these renewables can generate electricity at much lower costs than fossil fuels and, especially, nuclear power. In the United States, unsubsidized wind power costs fell by 71 percent between 2009 and 2020, whereas unsubsidized utility scale solar energy costs declined by 90 percent during the same period. Nuclear energy costs increased by 33 percent between 2009 and 2020. The International Energy Agency has dubbed solar energy “the new king of electricity” and foresees it dominating future deployment in the electricity sector for decades.

The major beneficiaries of the subsidies for nuclear plants are large corporations: PSEG in New Jersey and Dominion in Connecticut, besides Exelon and FirstEnergy. […]

These companies and various associated organizations have engaged in extensive lobbying and large-scale propaganda campaigns to get governments pass legislation that makes consumers pay more for the electricity they use. In that sense, what has resulted would be better described as corporate welfare than as subsidies. The subsidies have improved these companies’ financial situation, which in turn contributes to their clout in state and national policy making and their ability to fund advocacy efforts—and even to pay politicians tidy sums of money. The larger significance of the political power these large utilities have amassed is their ability to block transition to a fully renewable and more environmentally sustainable energy system.

Financial subsidies. Subsidies take different forms in different states. In New York and Illinois, utility companies are required to purchase a specific amount of zero-emission credits from authorized nuclear generating stations, all of which are owned and operated by Exelon Corporation. Purchasing contracts in both states will be in effect for 10 to 12 years, and utility companies are mandated to tack on the cost to consumer bills. Over in New Jersey, “each electric public utility” is required to purchase “Nuclear Diversity Certificates” from nuclear power plants, with consumers paying for these programs through higher utility bills.

[…]

The NEI also tried to influence the appointment of officials to oversight bodies, including the Nuclear Regulatory Commission (NRC), declaring that it “shared names of potential candidates with the Trump administration and worked with member companies to urge Congress to communicate with the White House the need to nominate and confirm commissioners.” The NRC is the agency tasked with overseeing safety, and in 2017, the NEI proudly announced that it had “worked with the House Appropriations Committee to again reduce the NRC’s budget.”

[…]

Money begets money. The effects of enacting laws that favor nuclear energy firms are clear from the financial status of these corporations. Exelon share prices increased from $34.63 on April 1, 2017 to a high of $50.95 exactly two years later, while Dominion’s stock price grew from $64.19 on May 1, 2018 to $83.70, as of November 6, 2020. Similar increases have been recorded by FirstEnergy and PSEG.

[…]

The legislative means used to take money away from electricity consumers and bail out economically failing nuclear plants owned by these large corporations helps further their market power, as illustrated by Dominion’s value rising from $49.5 billion in 2018 to $69.4 billion in 2019. While it is well known that wealthy corporations have a lot of political power, it seems from these examples that the converse might also be true: The political power enjoyed by these large corporations is at the root of their economic power. Indeed, as political economists Jonathan Nitzan and Shimshon Bichler have argued at length, the standard economic concept of capital symbolizes “organized power writ large,” challenging the conventional division between politics and economics. The various bills passed in state legislatures offer a political assurance to investors that revenues for these utilities are assured for the foreseeable future, which naturally translates into higher stock prices and market capitalizations.

[…]

At a larger scale, Germany has shown that it is possible to retire nuclear plants and reduce emissions at the same time.

[…]

While the actions taken against these individuals have captured headlines, the picture painted in the media still misses the mark on less egregious, everyday forms of political action. Lobbying by deep-pocketed industries and other efforts to capture regulators are pernicious but often go unremarked, in part because under the rules that govern politics in the United States, such actions are often legal. Addressing these problems with the urgency they require will necessarily involve confronting the economic and political system that privileges profits and capital over people and the environment.

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