Pleasants Power Plant Owners Seek Judgment Against Justice’s Company
CHARLESTON – The owners of the Pleasants Power Plant who received a $12 million tax break from the state last summer engineered by Gov. Jim Justice are seeking a summary judgment against one of Justice’s coal companies.
FirstEnergy Solutions, now doing business as Energy Harbor, filed for a summary judgment Friday against Justice-owned Bluestone Energy Sales Corp. in the U.S. Bankruptcy Court for the Northern District of Ohio Eastern Division.
FirstEnergy Solutions, a spin-off from FirstEnergy Corp. and operators of the Pleasants Power Station in St. Marys, filed a complaint against Bluestone Energy Sales in 2018 as part of the company’s bankruptcy filing when it was spun off from the parent company nearly two years ago. FirstEnergy Solutions emerged from bankruptcy at the end of 2019 and reformed as Energy Harbor.
The electric utility alleges Bluestone owes $3 million to the power company for excess coal stockpiles Bluestone had agreed to buy back. Attorneys for FirstEnergy Solutions are asking the court to turn over the final payment due by Bluestone and declare Bluestone in breach of contract.
According to Friday’s filing for summary judgement, Bluestone Energy Sales made an agreement to purchase 130,771 tons of coal from First Energy Solutions in 2016 at $40 per ton, or $5.2 million. The coal was located at Bluestone Energy Sale’s stockpile in Kentucky. FirstEnergy Solutions agreed to let Bluestone Energy Sales make payments as it sold of the coal to third parties, but if any coal remained at the stockpile by Feb. 28, 2017, then Bluestone Energy Sales was required to pay First Energy Solutions for all remaining purchased tons by March 7, 2017.
Attorneys for FirstEnergy Solutions said that Bluestone Energy Sales started submitting checks to FirstEnergy Solutions shortly after the agreement, but the coal supplier did not file invoices showing weights and tonnage information for the coal that was removed from the stockpile despite numerous requests for the information. Bluestone Energy Sales paid FirstEnergy Solutions $2.1 million between October 2017 and February 2017 for about 53,711 tons of coal.
In a letter, Bluestone Energy Sales officials said they would need until April 15, 2017, to send the final payment to FirstEnergy Solutions with the intention of shipping the remaining stockpiles to customers. The final payment never came, resulting in a letter from a FirstEnergy Solutions official to Jay Justice, son of Gov. Justice and the person in charge of the Justice coal and agricultural business since Justice never put these businesses in blind trusts while he serves as governor.
“FES employee Ken Peace sent an email…to James ‘Jay” Justice, the chief executive officer of Bluestone, to ‘inquire about the status of the final payment,’” wrote Bridget Franklin, attorney for FirstEnergy Solutions. “Mr. Justice responded on June 2, 2017, stating that ‘lots of coal [is] still on [the] ground’ and that he would ‘get money moving again very soon to [FES].'”
“In his email, (Jay) did not dispute FES’s interpretation of the agreement, the amount of coal that remained in the stockpile, or the remaining amount owed to FES under the agreement. Indeed, Bluestone has never, prior to the initiation of this litigation, raised any dispute regarding the agreement,” Franklin continued.
Franklin argued for summary judgement, pointing out that the Bluestone Energy Sales has not disputed the details of the contract and has admitted it owes more money to FirstEnergy Solutions for their part of the agreement. In previous filings, attorneys for Bluestone Energy Sales have argued that the coal stockpiles at the Kentucky site degraded and lowered the value of the coal.
“It strains credulity that the parties, when entering into the agreement, intended that Bluestone could avoid its payment obligations by claiming that the purchased tons disappeared or degraded through Bluestone’s own neglect,” Franklin wrote. “Such an interpretation of the agreement leads to an absurd result, whereby Bluestone could reduce the amount owed to FES by neglecting the purchased tons in the stockpile.”
The FirstEnergy Solutions lawsuit against Bluestone Energy Sales came to light last summer one day after the West Virginia Legislature passed House Bill 207 on July 23, 2019, giving FirstEnergy Solutions a $12.5 million annual break on business and occupation taxes to the state. Before the bill passed, Pleasants Power was the only coal-fired plant still paying the B&O Tax due to its status as a merchant power plant. The bill was added to last summer’s special session on education by Justice after hearing from Pleasants County elected officials and FirstEnergy Solutions officials. Justice received $21,050 for his re-election campaign for governor from FirstEnergy PAC, lobbyists for FirstEnergy, and people connected to FirstEnergy. Around the same time, FirstEnergy Corp. was allegedly funneling millions of dollars into an effort to bail out two nuclear power plants in Ohio, resulting in criminal charges against Republican Ohio House Speaker Larry Householder and four associates. Householder and others were accused of racketeering and bribery in July by federal prosecutors.
FirstEnergy Corp., identified in the federal indictment as Company A, spent more than $60 million between 2018 and 2020. funneling the money through a non-profit controlled by Householder and his alleged conspirators. The money was allegedly used to help secure Householder the House Speaker’s gavel and to push through a fee to keep two nuclear power plants owned by FirstEnergy Solutions operating.